Natural Resources Committee on May 22nd, 2018

[Mary Ng, Liberal, Markham—Thornhill, ON]

Thank you so very much for your testimony today.

[Theresa McClenaghan]

You're welcome.

[The Chair, Liberal, James Maloney]

Thank you, Ms. McClenaghan.

That's all the time we have this morning, unfortunately. We appreciate your taking the time to join us today and participating in the study.

We will suspend for a few minutes and then come back for our next witness.

[The Chair, Liberal, James Maloney]

We're all set to resume. We are joined in our second hour by Pierre-Olivier Pineau.

Thank you, sir, for taking the time to be with us today.

The process is that you will have the floor for 10 minutes and then we will open it up to questions from members around the table. You may speak in French or in English and anticipate questions in both languages as well. The floor is yours.

[Professor Pierre-Olivier Pineau, Professor, Energy Sector Management, HEC Montréal, As an Individual]

Thank you very much. I'll do my presentation in English because I think it's easier for the committee.

Thank you for inviting me. It's a pleasure to be here, speaking to you about energy data in Canada.

I'm a professor at HEC Montréal, which is the business school of the University of Montreal. I have been a professor for the last 20 years, and for the last five years I've had this chair in energy sector management, which is one of the few places in Canadian universities, in terms of business schools, to have energy research going on. If you think about business schools across Canada, there are not very often professors with a strong interest in energy economics and energy data and research. I think that's key to the whole discussion here because in Canada we have a lot of natural resources, lots of energy, but we don't study energy from a management perspective very often. I have very few colleagues across Canada who have a strong interest in energy research. There are some but not enough.

I prepared some slides that you will receive later on. The title of my quick notes would be energy data for an energy superpower. We very often present Canada as an energy superpower, which it is when you look at the production numbers. We're also an energy superpower when it comes to consumption because Canadians are the highest energy consumers in the world per capita.

The problem is that we don't measure all that energy very well. We don't know in detail exactly how we use it, and this is, I think, a key issue. Part of my research every year is the publication of a 50-page booklet on the state of energy in Quebec. This research is mostly on Quebec. It gathers all the energy statistics from the production to the transformation to the consumption of energy in Quebec. We have published this booklet for the last five years because there was an almost total absence of accessible energy data in Quebec and in Canada. I'm focusing on Quebec because I cannot cover the whole country, but I believe there isn't any kind of compilation of energy data for every province like the one we're publishing in Quebec. Next year this document will become the official Quebec government document on energy data because they don't publish the state of energy data in the province, which I think is very important because we need to know where we're at in energy consumption, energy production, imports, exports.

Because you have already invited many speakers to your committee you are already aware of these issues. Maybe I will repeat to some extent what you've already heard but hopefully I'll reinforce the need to have better energy statistics across Canada.

The reason we publish this is that it is difficult to access energy data. We use data. We don't generate data. I go to Statistics Canada, Natural Resources Canada, Environment Canada, and other websites to compile energy data to provide them to users. I hear a lot of comments from political parties, industry, researchers across Quebec—mostly Quebec but sometimes across Canada—that this is extremely useful because it is difficult to access energy data.

To summarize there are three problems with energy data in Canada.

First, energy data is not complete. The best example I would provide for this is in the report on energy supply and demand in Canada. In one of the main reports from Statistics Canada on energy, biomass is absent. Biomass is not in the report on energy supply and demand in Canada, according to Statistics Canada's main report. As you know, biomass is extremely important in Canadian energy. It's not as important as oil or electricity but we have a lot of forests, we produce a lot of biomass, it's been used historically across Canada, and it's not there. It's a renewable resource and it's very strange that it's not part of the main statistics.

Incompleteness is the first problem, and I just provided you with one example of a major report on energy data that totally ignores biomass in its statistics.

The second problem is incoherence in energy data. I have another example for you. Again, according to the same report from Statistics Canada, for the last 10 years provinces like Quebec or Ontario have used more natural gas than what was available. Basically, if you read the report from Statistics Canada on energy demand and supply, for the last 10 years, Quebec has used more natural gas than what was accessible in Quebec for the last 10 years. Of course it's not possible to use more than what you have, but if you just read the data, that's what you see. There is no explanation for why this is the case. I did, actually, ask Statistics Canada why that was the case, and they told me in a private email that it's that they have two different surveys that are incoherent. Instead of solving the problem, or instead of just writing a note saying it is incoherent and they are aware of it and are working on solving the issue, they just publish the data and let people figure out how you can use more than what you have. You cannot go to the bank and borrow energy. You need to have the energy, but the way the data is written, it's as if you are using more than what you have.

That's only one instance of incoherence. I could have a long list of issues and problems of incoherence, but I'll spare you because I have only 10 minutes. I already sent three or four pages to Statistics Canada, listing all the problems I've noticed. That was more than a year ago. I have Ph.D. students working on problems and issues. They compiled more problems with the energy data across Canada.

The last problem with energy data, after incompleteness and incoherence, is scatteredness. Energy data is scattered across so many different locations that it becomes a problem to have a single window to access energy data. That was one of the motivations to publish my state of energy in Quebec in one PDF document that contains all the information you can want to have in terms of production, imports, transformation of energy, and consumption of energy in all the different sectors—transportation, buildings, and industry. We do have that and it explains all the statistics—not all but most of the available statistics—from production to consumption that are key for anyone who wants to understand the dynamics in this sector. Energy is important in Canada. We produce a lot of energy. We use a lot of energy, but we don't have the data to manage that energy.

Why is it a problem? It's a problem not to have the correct data for three reasons. There's a lot of debate in Canada. You are, of course, fully aware of all the debate in Canada on how we use energy and all the pipeline debates, but we don't have the data. What are the spillage rates? How reliable are our pipelines? What's better? Where is the source? Where should we go to get that information to settle the debate and try to bring more rationality into the debate? That's the first reason we need stronger and better energy data, to try to have a more rational debate on energy with strong and reliable data, which we don't have at this point. We do have some data, but not to the point where it should be.

The second thing is that we have ambitious environmental objectives. As you know, Canada has the target to reduce greenhouse gases by 30% by 2030, compared with the 2005 initial levels. We have a lot of work in front of us. We need to know where these emissions are coming from. They're coming mostly from the energy sector, so from where in the energy sector are they coming? We need to be able to design programs to understand where we can be better at using energy to reduce our emissions, to save money, and basically, to make Canada richer. Most of the debate on greenhouse gases shouldn't be on the environmental side. It should be on the economics.

We are extremely wasteful in Canada. As I said already, we in Canada are the biggest energy consumers per capita in the world. That means that we are wasting a lot of energy because we're not efficient. There's a good reason for that: we have plenty of energy, it is cheap, we have a large country, and so it's there. We've been using it without thinking about it because it was available.

Times, however, are changing. We have unresolved issues of environmental growth. It costs us money. People complain about the gas prices at the retail pump when they buy gasoline; that's an issue. We need to provide alternatives to citizens, and for that we need strong data. Because we want to be good stewards of our natural resources, we need to optimize the use of natural resources, and if you want to optimize any process, you need the data to understand how to produce, how to transform, and how to use it.

Ultimately, it's about trust in government. If the government wants to have the citizens trust the government, then the government has to show the population that it knows what it should know about: what the natural resources are, what the numbers are, what the costs are, what amount we're consuming. At this point it's extremely hard to have a clear energy picture of the Canadian energy system.

Ultimately, it's about trust in our institutions and trust in government. That is one of the key reasons we need stronger energy data.

I'll be quick in the solutions.

[The Chair, Liberal, James Maloney]

You're going to have to be very quick. You could wrap up.

[Prof. Pierre-Olivier Pineau]

There are many best practices that I could speak more about and international statistics that are provided. Look for the best solutions around the world. There are examples. In my presentation, you'll see what examples I'm using.

With that I'll stop. What we need is to become inspired by the best practices and then work hard and ask people at Statistics Canada to work harder. Give them resources to be able to get their act together and make sure that they provide surveys, which they already provide, but at a better level and a higher quality.

I'm sorry I used all of my time, but I think we have some time for discussion. Thank you very much for listening to my brief comments.

[The Chair, Liberal, James Maloney]

Thank you for the presentation.

Mr. Serré, you're going to start us off.

[Marc Serré, Liberal, Nickel Belt, ON]

Thank you, Mr. Chair.

Mr. Pineau, thank you very much for your testimony and for all the work you do.

I would like to get a copy of the three pages you sent to Statistics Canada.

[Prof. Pierre-Olivier Pineau]

Okay.

[Marc Serré, Liberal, Nickel Belt, ON]

I would appreciate it if you would send them to the committee clerk.

[Prof. Pierre-Olivier Pineau]

Perfect.

[Marc Serré, Liberal, Nickel Belt, ON]

You talked about your efforts to find investments. That is key here. From a political point of view, the opposition will obviously say that, in the past two years, the government has not been able to complete any major projects.

You are referring to statistics that we have not had for decades. So this is not a political issue. The issue does not pertain to the last 30 months; it is a long-standing one.

Do you think there should be a national institute or should funding be provided to the provinces? You are from Quebec and I am Franco-Ontarian, so I am asking this with respect to provincial jurisdiction.

Should there be provincial institutions working with Statistics Canada, for instance, or a national institute working with you?

[Prof. Pierre-Olivier Pineau]

Thank you for your question.

I think there are a number of possibilities. I do not have a clear-cut opinion on how to proceed, but I think centralizing information is extremely important in order to have consistent data.

Above all, I think it is vital to have national standards and a federal institution to make sure we have statistics for Canada and for all the provinces so we can have energy data for each province. The first thing to do, I would say, is for the federal government to set national standards that the provinces would follow.

Could certain aspects be decentralized? Absolutely, but I do not think that is necessary. The National Energy Board is based in Calgary, and there is no problem with that. A statistics office could be based in Toronto, Ontario, or in the Maritimes. The key is having detailed, national coverage of the various issues, something we do not currently have.

[Marc Serré, Liberal, Nickel Belt, ON]

Okay, thank you.

Like a number of other witnesses, you talked earlier about data collection in relation to data analysis. There is a lot of data, but not much analysis, it would appear.

As an academic, do you have any specific recommendations to make? Even if we created a national institute or research centre, if the data was not analyzed by a university, something would be missing.

What are your thoughts on the analysis of the data?

[Prof. Pierre-Olivier Pineau]

I completely agree with you.

As I said in my introduction, I am from a business school where very few of my colleagues are interested in the energy sector. This can be attributed to the fact that we have always invested a great deal of money in engineering research. A lot of attention is given to how oil is extracted from the tar sands and on how to improve electrical processes. A lot of money is invested in research on technical aspects, which is very important, except that we have reached a point where we have a lot of technical knowledge, but insufficient management knowledge. That means that management practices are not sufficiently developed.

Universities should actually do much more research and analysis. Statistics Canada could also do more analysis and research.

In the presentation I submitted to the clerk that you will receive today, I mentioned Statistics Norway, the equivalent to Statistics Canada. It is Norway's statistical research agency. In addition to gathering statistics, the agency's researchers and analysts use that data to conduct research and inform the government, the investment community, and users on energy use, production, and processing in Norway.

That is done within the Norwegian government. Norway is very similar to Canada in that it produces a lot of oil, hydroelectric power, and biomass. Its climate is also comparable to ours. The country would be a good source of inspiration for us. It has a population of 4 million and the government conducts more research on the energy economy than the Canadian government does.

[Marc Serré, Liberal, Nickel Belt, ON]

Mr. Chair, how much time do I have left?

[The Chair, Liberal, James Maloney]

You have one minute.

[Marc Serré, Liberal, Nickel Belt, ON]

I will give the last minute of my time to my colleague, but first, I have one last question for you, Mr. Pineau.

You talked about energy waste. Do you have any information to share with the committee about that? As you said, Canada is one of the biggest energy consumers in the world. You said something about waste that interests me.

[Prof. Pierre-Olivier Pineau]

Canada consumes a lot of energy, primarily in transportation. On the whole, our vehicles are larger than we need and, overall, the energy efficiency standards for those vehicles are not extremely stringent.

The same is true of buildings, although there is improvement in this area. The energy efficiency of buildings is improving, but houses are getting bigger and bigger. In short, energy efficiency is higher per square foot, but our houses have more square feet. As a result, our energy consumption is rising steadily whereas, technically, we have the means to reduce consumption.

Our transportation systems consume a great deal of energy, as compared to best practices around the world. There could be less congestion and greater mobility for Canadian society, and at a lower cost.

[Marc Serré, Liberal, Nickel Belt, ON]

Thank you.

Mr. Fragiskatos, you have the floor.

[Peter Fragiskatos, Liberal, London North Centre, ON]

Professor, you talked about the fact that energy data in Canada is scattered. To what extent is that the result of the fact that Canada is a federation? Does federalism play into this at all?

[Prof. Pierre-Olivier Pineau]

No.

[Peter Fragiskatos, Liberal, London North Centre, ON]

Do the unitary states have an easier time in terms of generating a centralized base for data?

[Prof. Pierre-Olivier Pineau]

No. I don't think that's a strong explanation, because within the federal government energy data is scattered across Statistics Canada, Natural Resources Canada, and the NEB. They have a hard time coordinating themselves and collaborating to share data.

I'm not saying that they don't share, but they don't send you easily from one place to the other. It seems that their efforts are really separated, and that has nothing to do with the fact that we are a federation. These are three institutions that decentralize amongst themselves. One of the examples—