Natural Resources Committee on May 24th, 2018

[Karine Péloffy]

In an ideal world, that would be the case.

If we had more data, I believe that, in the short term, it would show how far we are from reaching the objectives and it would show, unfortunately, that we probably have more problems than we thought.

We are actually not counting a number of sources of emissions: fugitive emissions, and emissions coming from changes in land use. If we were to really focus on that, we would realize that our challenge is probably even greater. However, it could certainly give us a much clearer idea of the direction we have to take in order for our actions to be more effective.

Let me quickly go back to the questions you put to Mr. DeRochie. I am no expert in what other countries are doing either, but I can say that, in the United Kingdom, in Denmark, and in Germany, the transition is much further along; I believe that this is because of information and information systems that are much more robust.

As for looking for information on the North, I hope that this will be done in collaboration with the people who live in the North. Perhaps they do not have the same ideas on the development they would like. In my view, one of the avenues of inquiry should be to find out where the reservoirs are, the peatlands we hear so much about, the great carbon reservoirs. Then we should try and keep those areas free from development. If we were to go to those places, we would definitely run the risk of letting a climate bomb escape into the atmosphere.

[Marc Serré, Liberal, Nickel Belt, ON]

Thank you very much.

[The Chair, Liberal, James Maloney]

Mr. Falk.

[Ted Falk, Conservative, Provencher, MB]

Thank you, Mr. Chair.

Thank you, witnesses, for your presentations to the committee this morning.

Mr. DeRochie, I'll start with a few questions for you. You said that there will be a decreased demand for oil in the future. Can you cite a study that would show that?

[Patrick DeRochie]

Sure. I would refer to Carbon Tracker Initiative's annual studies. I would refer to a recent report produced by Shell, the oil company.

Statoil recently put out an annual report showing that they expect decreased demands. They also changed their name to Equinor, because they recognize that the future will be in renewable energy. They want to get away from being labelled as an oil company.

[Ted Falk, Conservative, Provencher, MB]

Can you explain to me why they would continue to want to develop the oil sands if there is going to be a reduced oil demand? This is their money that you suggest they're throwing away. Why would they do that in a decreased oil environment?

[Patrick DeRochie]

As you know, most of the global oil majors, whether it's Statoil, Repsol, ExxonMobil, or ConocoPhillips, have actually pulled out of the oil sands. They've sold all their assets to Canadian companies, recognizing that it's not economical to invest further in exploration and production. They've already made an exodus from the oil sands, those global oil majors, recognizing that there are cheaper oil fields to develop elsewhere, easier to get to and easier to transport.

[Ted Falk, Conservative, Provencher, MB]

Would that be because of our regulatory burden here?

[Patrick DeRochie]

No. I would say that it's because the oil sands have some of the highest-carbon oil—

[Ted Falk, Conservative, Provencher, MB]

What would they say?

[Patrick DeRochie]

They would say that it's because of the high carbon of Canada's oil in the oil sands—it's some of the highest-carbon oil in the world—and that it's difficult to transport.

[Ted Falk, Conservative, Provencher, MB]

I believe they would say that, because of the regulatory environment in Canada today, it's not economically feasible to pursue development at this point. I've met with these folks.

[Patrick DeRochie]

As have I, and that may be what they say, but I think they are looking at a business case here.

[Ted Falk, Conservative, Provencher, MB]

Right. It doesn't exist under this environment.

[Patrick DeRochie]

It doesn't exist, not because of the regulatory environment but because of the costs of producing oil. It's extremely expensive to invest in the oil sands and it's a long-term investment, so when they're looking at where they're going to put their oil for current and future oil production, which is becoming more limited, they're going to look at areas like Texas, like the Permian Basin, for example, where they can drill for shale, get it quickly, get it out, and it doesn't require a 30- or 40- or 50-year timeline for return on investment. They're going to look at places like Norway or Saudi Arabia, where you can just tap the ground and the oil comes out. It doesn't require massive mines or massive investments in in-situ projects as it does in Canada.

[Ted Falk, Conservative, Provencher, MB]

In one of your recommendations, you say that the reporting should be quarterly and then a couple of bullet points down, you say there's too much lag time, even though you called Stats Canada this morning and received quarterly information. There seems to be some contradiction there in what you're asking for that isn't happening and what is happening.

[Patrick DeRochie]

Yes, I think we can separate it. The StatsCan numbers we referred to were the supply of liquid fuels in Canada. I think that can be done on a monthly basis, which the U.S. EIA is already doing.

[Ted Falk, Conservative, Provencher, MB]

But you've asked for quarterly reports.

[Patrick DeRochie]

For the quarterly reports, I would like to see updates on the alignments of Canada's targets with our energy supply-and-demand scenario. I don't think it's reasonable to do that kind of work on a monthly basis, but I think it is reasonable to do it on a quarterly basis, with increased investments in energy information.

[Ted Falk, Conservative, Provencher, MB]

You also said you're familiar with or you work with clean water solutions. In Saskatchewan, SaskPower and the Saskatchewan government did their Boundary Dam project. They invested, I think, $1.4 billion in carbon capture there. What are your comments on that project?

[Patrick DeRochie]

On carbon capture...?

[Ted Falk, Conservative, Provencher, MB]

No, specifically the Boundary Dam project by Estevan, Saskatchewan.

[Patrick DeRochie]

I can't speak to that project in particular. My organization is based in Ontario and doesn't do a whole lot of work in the prairie provinces, but as for carbon capture and sequestration in general, these investments require federal subsidies or government subsidies in other countries. They have not proven that they're effective, that they succeed in reducing emissions. They haven't proven that they can be deployed on a large commercial scale. If we are going to look at ways to reduce emissions, there are much cheaper ways that create more jobs and more economic activity by simply investing in renewables or energy efficiency than investing in CCS.

[Ted Falk, Conservative, Provencher, MB]

In your calculations of meeting our climate objectives, are they taking into consideration the carbon sequestering that our vast land mass and our forests and our vegetation spawns, like the peat moss that Ms. Péloffy has referred to? Are those being considered in your calculations of meeting our carbon commitments?

[Patrick DeRochie]

They are not. That would not be compliant with the United Nations framework for assessing carbon emissions country by country, and Canada is not responsible for doing that to reduce emissions. That's just the forest existing and sequestering carbon, so there's not any climate action on Canada's part by simply not cutting down a forest that stores carbon.

I would defer to Karine on that question as well, because she probably knows a lot more about the boreal forests and its climate benefits than I do.