Natural Resources Committee on May 7th, 2021

[The Chair, Liberal, James Maloney]

I call this meeting to order.

Welcome, everybody, to our 25th meeting of the Standing Committee on Natural Resources. Again, thank you, everybody, for the patience. Technical problems sometimes occur. Today was an example of that.

We're going to jump right in. I should let everybody know that I was going to stop a few minutes before three, because we have one or two very quick housekeeping items we have to deal with before the meeting ends to prepare for our meeting on Monday. However, in the absence of any strenuous objections and because we're starting a bit late, I might just go a little bit beyond three o'clock to do that.

Jumping in then, I want to welcome our panels of witnesses. We have six witness groups today, which is fantastic. The process, for those of you who may not be familiar with it, is that each set of witnesses will get up to five minutes to make opening remarks. Once all of the opening remarks have been completed, we'll open the floor to questions from members.

You are welcome to and encouraged to speak in either official language. You have translation services available to you. It requires a little bit of patience to do meetings virtually. Try not to speak over others when they are talking. There are a lot of people in this meeting. I will do my very best to get names right today, because there seemed to be a lot of identity appropriation going on before the start of the meeting. I will try to work around that as best I can and not call on anybody incorrectly.

I will start then at the top of our agenda. Appearing today as an individual, I would like to welcome Dr. Amit Kumar.

Professor, the floor is yours.

[Dr. Amit Kumar, Professor and Natural Sciences and Engineering Research Council of Canada Industrial Research Chair in Energy and Environmental Systems Engineering, University of Alberta, As an Individual]

Good afternoon, members of Parliament and everybody in the audience. It is a pleasure to be here, and thank you for giving me the opportunity to share my thoughts on the challenges and opportunities for the biofuel industry in Canada and the life-cycle greenhouse gas—that is GHG—emissions of biofuels.

My name is Amit Kumar. I lead a large research program in energy and environmental systems engineering at the University of Alberta, and I am an energy engineer by training. My comments today will be focused on the use of lignocellulosic biomass for the production of fuels and chemicals and its potential to significantly reduce GHG emissions in Canada. I will also focus my remarks on the potential to integrate our energy industry with the forest industry, the agriculture industry and municipalities. I will also also talk about how this integration provides an opportunity to make significant contributions to Canada's net-zero emission target by 2050.

My research group's work includes assessing the cost and environmental footprints of energy pathways, including bioenergy and biofuel pathways, with a focus on GHG emissions in a product's life cycle, that is the entire chain from biomass production, processing, transportation and conversion to the end use. We also assess optimal locations for biomass and waste conversion and processing facilities, taking into account not only biomass availability but also the available infrastructure and municipal guidelines. We also work in the area of thermo-chemical conversion of biomass—gasification and pyrolysis—to produce liquid fuels.

To look at biomass, biomass feedstocks are generally categorized based on their source, for instance, agricultural biomass, forest biomass and waste biomass. Agricultural biomass includes grains—wheat, barley and canola—straw, corn stover and energy crops. Forest biomass includes whole tree biomass, logging residues, mill residues, trees killed by insects like the mountain pine beetle and hybrid species, for instance, willow and hybrid poplar. Waste biomass includes animal waste like manure and municipal solid waste. All of these are available in large quantities in Canada.

Today, most commercial-scale biofuel production uses grains. The production of bioenergy for heat and power uses mill residues, which are mostly spoken for. In my view, there is a significant opportunity to use lignocellulosic biomass—that is straw, forest biomass and municipal solid waste. In Canada, the potential availability of biomass is large from both agricultural and forest biomass. Using them to produce fuels and chemicals is a key opportunity.

There are several lignocellulosic biomass conversion pathways for the production of fuels and chemicals and these are at various stages of research, development, demonstration and commercialization. These pathways are broadly in the area of thermal conversion, thermo-chemical conversion and biological conversion, and include, for example, combustion, gasification, pyrolysis, hydrolysis and saccharification, and anaerobic digestion to produce biogas.

My research group has evaluated several biomass pathways for the production of fuels and chemicals in terms of their life-cycle GHG emissions and costs over several years. These pathways consider the production of a range of fuels and chemicals such as renewable diesel, bioethanol, biohydrogen, bio-oil, biochar, biopower and others.

The life-cycle GHG emissions of bioenergy and biofuels vary with the jurisdiction where they are produced, as the inputs in each jurisdiction have different GHG footprints. In addition, the potential GHG mitigation benefits from bioenergy, biofuels or bioproducts depend on the application and their intended use.

For example, in Alberta, replacing fossil diesel with renewable diesel helps reduce the GHG footprint by 50% to 60% per unit of energy. Replacing fossil fuel-based power, for example, can mitigate GHGs by 80% to 90% compared with fossil fuels. The location of the plant is a critical aspect of the biomass life cycle.

Some key challenges the industry faces are the security of long-term biomass supply, scaling up, a uniform regulatory framework that incentivizes the development of bioenergy and biofuel, and the export demand for raw biomass feedstock from outside.

The scale of processing is critical as the cost to produce biomass-based fuels and chemicals—that is, dollar per litre of ethanol, dollar per tonne of renewable chemicals and dollar per megajoule of renewable gas—decreases as the plant size increases. There is a size for field or forest-based biomass at which the cost of production is lowest. This size we refer to as the economic optimum size. Most of our facilities are below optimum because of the challenges I mentioned earlier.

[The Chair, Liberal, James Maloney]

Dr. Kumar, I'm going to have to ask you to wrap up very quickly please.

[Dr. Amit Kumar]

Yes.

Canada could become a key player in the biomass-based economy because we have a large potential for biomass and well-developed forest, agriculture and energy industries. Existing infrastructure and expertise can be used to develop the bioeconomy. These are opportunities to integrate the biomass feedstock with the energy industry.

In addition to forest and biomass, I would say municipal solid waste has big potential in Canada.

In summary, Canada has both large biomass feedstock potential and the expertise to be a leader in biomass use. This would help create jobs in the forest, agriculture and energy industries and contribute to Canada's net-zero emission goal.

Thank you very much. I look forward to the discussion.

[The Chair, Liberal, James Maloney]

Thanks, Dr. Kumar.

I would ask the witnesses to try to stay on the five-minute timeline. We have a lot of presentations today, so time is precious.

Next up we have Canada Clean Fuels Inc. Either Mr. Freeman or Mr. Angelucci is going to provide opening remarks.

[Giovanni Angelucci, Vice-President, Business Development, Canada Clean Fuels Inc.]

Good afternoon, everyone. Thank you, Mr. Chair and all the members of this committee, for the opportunity to discuss with you today the cost-effective opportunity to reduce pollution through the use of biodiesel.

For those not as familiar with it, biodiesel is a type of fuel processed from biological matter and other non-fossil fuel feedstocks and blended with diesel for use in diesel engines. One litre of pure 100% biodiesel, or B100, has a carbon intensity that is roughly 92% lower than one litre of conventional diesel fuel and also reduces other pollutants and criteria air contaminants by up to 100% versus regular diesel.

As a climate change solution, biodiesel is broadly supported by both environmental organizations and farmers' organizations. Biodiesel blends, ranging from B5 to B20, which means there is 5% to 20% biodiesel, are used by municipalities like Toronto, York Region, Waterloo, Guelph, Kingston, Brampton, Mississauga, as well as corporate fleets like Loblaws, Labatt and Robert Transport. The State of Minnesota, the entire state, mandates B20 biodiesel in all diesel sold between May and October. In these jurisdictions, blends are adjusted in extreme cold temperatures to account for a higher cloud point in biodiesel.

In instances that are more controlled for temperature, like shipping and underground mining, adjusting the blends is generally less necessary. For example, we are currently supplying a pilot project in the Great Lakes that is running B100 pure biodiesel in a major shipping fleet. We also supply mines in northern Ontario with high-blend biofuels.

If this is true, why aren't more companies and municipalities using it?

What stands in the way of a rapid scale-up in biodiesel is the price gap between biodiesel and regular diesel. Currently, that gap is roughly 15 cents per litre of B20 or about 75 cents per each pure litre of B100. Eliminating this delta would expand biodiesel from a relatively small segment of our economy willing to pay the premium for the social licence of using a cleaner fuel, to a broader market of those willing to adopt a cleaner fuel because it doesn't cost them more. It would also encourage those using a low blend to use a higher blend.

As is reasonably expected, we can't expect companies to pay more for cleaner fuel when their competitors have the option not to. That green premium can only be closed in two ways: either accurately add the social costs of conventional fuels to the price of conventional fuels, or help bring down the cost of the alternatives.

While the clean fuel standard may reduce the price gap over time, third party modelling shows it is expected to take about five years for the CFS to have a meaningful impact on the difference. Similarly, the carbon price currently has an impact, but the price is too low on its own to prompt the market shift we need. In addition, many sectors are granted exemptions to the carbon price and, therefore, it doesn't apply to their cost of conventional fuels anyway. Mining and shipping are two such sectors.

We recommend the federal government put in place a blender's credit to eliminate the price gap between diesel and biodiesel. The credit should be limited to those using a high blend of fuel to avoid funding those who are already using a low blend or those who are complying or need to comply with federal or provincial mandates. This type of credit already exists in the U.S. and is the reason that their average blend is higher than in Canada.

Based on calculations by Golder Associates, the average cost to the government will be approximately $50 per tonne, based on the average price for biodiesel over the past few years. As the price fluctuates and the gap narrows, that price per tonne or blender's credit could also reduce.

There are few, if any, initiatives in this part of the transportation sector that can achieve reductions at this price, and other options would also force us into path dependency. There are significant co-benefits with biodiesel, such as the advantages of deriving much of that feedstock from domestic sources closer to where the fuel is being used. Biodiesel would be cheaper and utilizes existing infrastructure so that money spent here doesn't lock us into a technology that may limit us in the future.

I would like to thank you all for giving us this opportunity. I look forward to any questions you may have.

[The Chair, Liberal, James Maloney]

Thank you very much. You're ahead of time. I appreciate it.

Next up we have the Canadian Fuels Association, Mr. Bob Larocque and David Schick.

[Bob Larocque, President and Chief Executive Officer, Canadian Fuels Association]

Good afternoon, Mr. Chair and members of the committee. Thank you for the opportunity to participate in your study of the low-carbon and renewable fuels industry.

I would like to begin by acknowledging the land on which I am on today is the traditional unceded territory of the Algonquin Anishinabe people.

My name is Bob Larocque. I'm the president and CEO of the Canadian Fuels Association. Also joining me today is Dave Schick, our vice-president of western Canada.

Canadian Fuels Association members provide 95% of the gasoline, diesel, marine and aviation fuels that are used across our country every day. Our members also produce more than 25% of the current biofuels made in Canada. We represent 117,000 workers who are on the job 24 hours a day, seven days a week, at Canada's 16 refineries, more than 90 fuel terminals and 12,000 retail sites.

It would be impossible for me to be here today and not speak of the pandemic. It has taxed our health care system, severely impacting Canadians, especially our most vulnerable. We're very grateful to those who have put their own lives at risk, and, as an essential industry, proud of our role in supporting the movement of essential workers, protective equipment and vaccines in the battle against COVID-19. Canada can count on our sector as we look forward to the pandemic recovery.

Last fall, we released our vision for the future, “Driving to 2050”, in which we outline how our industry can make a foundational contribution to Canada's low-carbon future. We believe there are significant opportunities to advance the production and use of low-carbon liquid fuels in Canada and to accelerate large-scale GHG reductions, starting today, using proven technologies.

Governments have a key role to play in working with industry to maximize these reductions. We have the following recommendations.

One, align and integrate federal and provincial policies to accelerate the production and use of low-carbon fuels in Canada.

Currently, there is an opportunity to collaborate with provincial governments to align, enhance and build on strategies or frameworks for low-carbon fuel, hydrogen and electrification. When it comes to regulations, tax incentives and funding programs to drive change with a common goal of reducing emissions in both the short and long term, it is important they all share common structures such as quantification methodologies, targets and complementary credit generation and funding criteria.

Two, all programs and policies should support investments in production and infrastructure to ensure low-carbon fuels are readily available to Canadian consumers.

Canada's existing refineries, fuel terminals and retail sites are strategic assets that can be leveraged and adapted to support expanded use of biofuels across the country. In order to meet our climate goals in a timely and efficient way and to maintain a reliable and affordable supply of low-carbon fuel, all facets of the fuel supply chain must be considered, from production to terminal to retail sites. Support for many of these smaller businesses will ensure the broad availability of these low-carbon products as they will need facility upgrades to provide these products to Canadians.

Three, ensure North American alignment of biofuel policies.

The North American fuel market is integrated and Canada-U.S. biofuel policies must operate in unison. As the Canadian demand for biofuels increases, we have an opportunity to produce and use Canadian-made biofuels. Incentive programs, feedstock eligibility and trading flexibility are all examples of measures that, if significantly different, will influence the flow of low-carbon fuels between Canada and the United States.

Low-carbon liquid fuels could contribute more than a 50% emissions reduction in the transportation sector by 2050. The only way to get to net zero is to consider multiple pathways, such as ethanol, bio-based diesel, hydrogen and other advanced biofuels, as well as electrification. This will require significant investments of more than $20 billion to $30 billion and a strong supply chain for feedstock, production, refining, blending and retail access. Let's all collaborate to ensure that these investments occur in Canada, that the fuels are produced in Canada and that consumers have access to these low-carbon fuels.

Our members are already working towards making these goals a reality. Recently a new $850-million investment was announced by Shell, Suncor and other partners to produce next-generation biofuel from wood waste and other residuals in Varennes, Quebec. Tidewater Midstream, in British Columbia, has also announced an investment of $250 million to produce renewable diesel that will be 80% to 90% less carbon intensive than conventional fuels.

These investments are only the beginning of a made-in-Canada solution that would not only help us achieve our net-zero goal but also create significant employment opportunities across the country.

Tens of thousands of workers will be called upon during the construction phases of these new biofuel facilities and thousands of jobs will be created to operate these new facilities in the future. These are exciting times and we see remarkable changes ahead for Canada's transportation system.

Thank you again for the opportunity to speak today. I look forward to your questions.

Thank you for your attention.

[The Chair, Liberal, James Maloney]

Thanks, Mr. Larocque.

Next we have from Covenant Energy, Josh Gustafson.

[Josh Gustafson, President and Chief Executive Officer, Covenant Energy Ltd.]

Good afternoon, everyone. Thank you for the invitation to appear today to talk about Canada's low-carbon and renewable fuels industry.

As president and CEO of Covenant Energy, I'm excited to be here to share our experience and provide some insight to the committee about the opportunities to ensure that Canada remains a world leader in producing low-carbon and renewable fuels.

Covenant Energy was founded in 2019 with a mission to become a Canadian leader in the low-carbon fuel industry. We want to achieve this by producing clean renewable diesel and sustainable aviation fuel. To do this, Covenant Energy is developing one of the first stand-alone hydrogenation-derived renewable diesel facilities in Canada. Our plant will be located in southern Saskatchewan and use Canadian-farmed and processed canola as the primary feedstock to create a top-quality biofuel. We estimate that our facility will produce about 325 million litres of renewable diesel annually and we will have the capacity to produce Arctic-grade renewable diesel and sustainable aviation fuel.

We know that there's a great interest in both arctic-grade renewable diesel and sustainable aviation fuel as there are continued needs from the transportation sector and for remote power generation. For Canada, having a reliable domestic supply of arctic-grade renewable diesel is particularly important to decarbonizing our northern communities. Many of our northern and remote communities will continue to rely on diesel fuel for many more years. Covenant Energy would like to supply a drop-in alternative that will instantly decarbonize existing equipment. We also believe that sustainable aviation fuel is the way of the future for the aviation industry.

We expect to hire 50 employees directly and create 200 to 300 jobs for the design and build of the project. There will also be extensive indirect employment in the agricultural, shipping and processing industries that will lead to economic benefits for southern Saskatchewan.

Our commitment to renewable fuel production has made it possible for other companies along the supply chain to grow in southern Saskatchewan. Recently, there has been news of three crush facilities being expanded or opening in Saskatchewan with potentially more to come. This is the result of projects like ours that will help provide demand for crushing capacity.

Our facility will also be using renewable hydrogen created in the process to replace about 90% of natural gas consumption. We're also exploring how to incorporate cutting-edge carbon capture, utilization and storage technology. Currently, Covenant Energy plans to be in operation by the end of 2023, which aligns with the implementation of the clean fuel regulations.

I am part of a fifth-generation Saskatchewan canola-farming family with over 13,000 acres of production. Supporting renewable fuel production in Canada is something that should be done and will be beneficial to our agricultural producers and value-adding processors, and will create local jobs in the green economy. Currently, the majority of canola that is grown in Canada gets exported and transformed into other products, including biofuels. Our processing plant will give us an opportunity to close the supply chain loop and provide a valuable component to the emerging low-emissions fuels economy in the Prairies.

The current design of the plant also gives us the flexibility to double our production capacity in the future. By creating an increased local demand for canola, we will help protect our canola industry from the fluctuations felt as a result of trade disputes.

Our project's success will depend on the successful implementation of the government's clean fuel regulations. While we expect domestic demand to take up most of our supply, our proposed location is situated on a class I railway, giving the flexibility to access feedstock from across Canada and the U.S. and providing the potential to sell a finished product into the U.S. market, helping to export Canadian clean fuels to our neighbours who are also moving quickly on building similar facilities.

Just two weeks ago there was an announcement for a renewable diesel plant in Hastings, Nebraska, that is expected to produce 80 million gallons of renewable diesel annually.

We want to be part of the project to help lower emissions and increase competitiveness for Canadian clean fuels. Covenant Energy strongly believes that it can help meet both current and future demands for renewable diesel in Canada. We are excited about the opportunities that our processing plant will bring to the Prairies and the rest of Canada.

Thank you again for the opportunity to speak here today. I'm happy to answer any questions you may have.

[The Chair, Liberal, James Maloney]

Thanks very much.

Next up, from Dow Canada, we have Scott Thurlow.

[W. Scott Thurlow, Senior Advisor, Government Affairs, Dow Canada]

Good afternoon. Thank you very much for having me here today, Mr. Chair.

My name is Scott Thurlow. I am a senior adviser for government affairs for Dow Canada.

For more than 75 years Dow has been proudly innovating in Canada. We develop basic chemicals and polymers used to make a broad range of innovative and technology-based products and solutions in the packaging, industrial, infrastructure and consumer care industries. We are one of the largest resin producers in the world.

We are here today to talk about how a regulatory initiative can have multiple goals and simultaneously solve several different environmental problems. We believe that the recently proposed clean fuel regulations can do just that. It is our view that another problem that we could be addressing through the CFR is plastic waste, and this is an issue of paramount importance for our company.

How a product's life cycle is defined is very complex. It is true that fuel derived from recovered plastic will have a modest GHG improvement when contrasted to fuels derived without any recovered plastic content, but that GHG reduction is modest when compared to the overall social benefit of having reduced waste in landfills and preventing fugitive plastic waste from entering the environment.

The CFR should allow for compliance credits to be generated for environmental benefits that are not as clearly tied to GHG reduction but have other demonstrated environmental benefits. Rewarding the potential for products from the pyrolysis of plastic waste, such as fuel oil or diesel, to meet the standard for compliance category 2 low-carbon fuels can do just that.

At Dow we have taken many steps to address the plastic waste problem. One such example is our leadership in the development and implementation of the “Hefty Energy Bag” program in London, Ontario, in October 2019. The purpose of this program is to collect hard-to-recycle plastics at residential curbside and to divert plastic from landfills. The process could not be any easier for everyday consumers who want to do their part to create a circular economy.

It offers more than 13,000 households in London a distinguishable orange bag to discard their clean and dry plastics that are not normally accepted in the recycling bin. These include plastic wrap, flexible plastic reusable pouches, foam takeout containers, plastic utensils and snack food bags. How does it work? Once the hard-to-recycle plastics are collected, our project partners allow for the use of the existing waste management infrastructure to seamlessly collect and repurpose these plastics into valuable resources. Around the world we have used plastic waste to build roads and fuel municipal buses.

That said, this committee needs to know that investments in advanced recycling facilities are difficult to secure. Chemical depolymerization is energy-intensive, and that makes it very difficult for the recovered product to compete with virgin resin from a financial perspective. That is where the compliance pathway for the clean fuels regulations can come in. The opportunity to generate CFR credits would create an additional incentive to create the supply in Canada. In turn, this would enable a supply chain for hard-to-recycle plastics and enable an earlier transition to a circular economy for hard-to-recycle plastics.

With that having been said, I want to take a moment to discuss the Prime Minister's pledge to ban certain single-use plastics by the end of this year. A ban will not deal with the fact that our waste management processes need improvement. A ban should be the last step that a government takes as it works to deal with an issue, not the first.

The minister has proposed regulations under CEPA to give life to this ban. We do not believe CEPA is the right tool for regulating plastic. We believe that this is an issue that is fundamentally an issue of waste management, a provincial responsibility. We believe that there is a federal role through the CCME, but we do not support banning certain plastics. We certainly don't agree with making a legal determination that plastic manufactured items are toxic substances. The issue with plastic waste is not the plastic itself but the behaviour that allows it to leak into the environment. As a criminal law statute, CEPA is meant to punish actions, not objects.

In conclusion, no one believes that plastic belongs in the natural environment. We support actions to protect the world's oceans. We think that the clean fuel regulations can help achieve that goal.

I would welcome the opportunity to answer your questions on any of these vitally important issues.

[The Chair, Liberal, James Maloney]

Thank you very much.

Last is the Quebec Forestry Industry Council, Jean-François Samray and Louis Germain.

[Jean-François Samray, President and Chief Executive Officer, Quebec Forest Industry Council]

Thank you, Mr. Chair.

My name is Jean-François Samray. I am the president and chief executive officer of the Quebec Forest Industry Council, the QFIC.

On behalf of the QFIC, I thank you for giving me the opportunity to have this discussion with you as part of your work on low-carbon and renewable fuels.

To begin, allow me to say a few words about our organization. The QFIC is the voice of Quebec's forest industry.

[The Chair, Liberal, James Maloney]

Can I interrupt you for a moment, please?

[Jean-François Samray]

Yes, go ahead.

[The Chair, Liberal, James Maloney]

I'm not getting interpretation. I don't know if other people are experiencing the same.

[Bob Zimmer, Conservative, Prince George—Peace River—Northern Rockies, BC]

I'm not getting it either.

[Jean-François Samray]

Is it okay now?

[The Chair, Liberal, James Maloney]

Mr. Samray, please continue.

I'm sorry for the interruption.

[Jean-François Samray]

Okay.

The QFIC represents the interests of companies working with softwood and hardwood lumber, plywood, pulp, paper, cardboard and panels, of engineered lumber manufacturers, and of the goods and services companies that support them.

With our foundation on the expertise of ourselves and our partners, the QFIC guides and supports our members on a number of issues, including the environment and energy. As you know, the forest industry is a major engine of economic development for Canada and for Quebec.

In 2019, it paid $4.8 billion in taxes to governments. For the federal government, that represented $50 per cubic metre in 2019. Given the current price of wood, you will understand that the amount is actually well in excess of $50. For the provincial government in 2019, the amount was $100 per cubic metre. Also in 2019, the industry provided 17.4% of Quebec's exports and 4.7% of the province's GDP.

The work that your committee is undertaking today is of major importance for us. In the current context, every action designed to fight climate change counts. The forest industry, which depends on the forest for its raw material, is well positioned to assess the issues of global warming, and its current and future effects on the evolution of the forest ecosystems on which we depend. For our sector, climate change is an inexorable reality with which we must come to grips.

In fact, we have been doing so for a number of years and our performance speaks volumes. Since 1990, the emissions of greenhouse gases, GHGs, attributable to our industrial activities have decreased significantly. The decrease is 68% in total and 60% in intensity, or almost twice the target that Quebec set for itself for 2030. For the same period, the reduction of GHG emissions for all Quebec's industrial sectors combined, has been 24%. In other words, the forest industry has produced almost three times the average reductions.

The paper sector alone has recorded a reduction of 3.1 million tonnes. As a result, it remains a leader, both in Canada and internationally, in terms of pulp and paper production. We began the fight against climate change a number of years ago precisely because we have long been aware that our industry depends on the forest and that we must manage it sustainably. Canada is a leader in this area. In fact, 40% of the certified forests on the planet are found in Canada. Quebec has one quarter of them. That means that 10% of all certified forests are located in our province.

We know full well that battles are not won in advance. We must advance resolutely on all fronts. The energy transition is a key issue for us. The forestry industry consumes a lot of energy. To give you an idea of how much electricity we consume, I can tell you that it is about 40% of what Hydro-Québec Distribution sells. We also need fossil fuels, especially for our forest operations. Each year, to operate the machinery in the forest and to transport the wood, we require no less than 500 million litres of diesel fuel.

Despite the progress we have made up to now, we are aware that greater efforts can and must be made. We are ready for the task. However, the gains that we could make in our industry have in large part been made. Each additional gain requires a greater effort that we cannot make alone. This is exactly why your work is so important. At the QFIC, we are convinced that additional reductions in GHGs will be made possible mostly by renewable low-carbon fuels. We are reassured to see that your committee is addressing that precise issue.

In our view, four major issues must be the focus of your attention. First, the forestry biomass that is currently available is valued in various ways, especially in terms of extracting its energy content. The inevitable effect of developing bioenergy will be to increase the demand for biomass in various forms. The result will be a shift in the current balance between supply and demand. The production of biofuels must not have the effect of diverting the material that is essential to the balance of the forestry industry's ecosystem, especially in secondary and tertiary processing. When projects are being analyzed, therefore, it is becoming important to establish a kind of hierarchy of uses in order to use the resources optimally and to maximize their added value to the economy.

Second, the QFIC is concerned by the increasing number and complexity of regulations on reducing GHG emissions. Mostly federal, they are now in addition to the provincial ones.

It has been calculated that the financial impact for our industry might exceed $1 billion by 2030. This financial burden may well harm our company's competitiveness on international markets if Canada acts alone.

Third, Canada is vast, as is Quebec. Access to a supply of renewable fuels in remote regions remains a challenge. It may well be difficult for companies to reduce their GHG emissions without that access to biofuels at a competitive price.

As one of the witnesses mentioned earlier, the price difference will become important. It will be the reason why biofuels are used and therefore why GHG emissions will be reduced in the long term.

[The Chair, Liberal, James Maloney]

I'm going to have to ask you to wrap up very quickly, sir.

[Jean-François Samray]

Okay.

Fourth, the hydrogen strategy—especially green hydrogen—can be an outstanding solution because the CO2 still emitted by paper mills can be used with green hydrogen to make methanol, biodiesel or any other form of fuel. That really would be a winning formula for Canada.

I will gladly answer your questions.

Thank you for giving me the opportunity to join you today.

[The Chair, Liberal, James Maloney]

Thank you very much.

Now we'll open the first round of questions, for six minutes each, starting with Mr. Lloyd.

[Dane Lloyd, Conservative, Sturgeon River—Parkland, AB]

Thank you, Mr. Chair. I'll get right into it.

Dr. Kumar, thank you for your testimony. You're obviously an expert on this issue. I'm just wondering what the capacity is. You said that there's a lot of municipal waste that's not being used, and forest biomass, straw, oilseeds, things like that. In order to achieve what some people are talking about—having 60% of all fuels as renewable—what would need to be the production growth in these various areas, mostly around canola, wheat and forest biomass?

What would we need to produce in order to achieve that?