Evidence of meeting #25 for Natural Resources in the 43rd Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was biomass.

A recording is available from Parliament.

On the agenda

MPs speaking

Also speaking

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
Giovanni Angelucci  Vice-President, Business Development, Canada Clean Fuels Inc.
Bob Larocque  President and Chief Executive Officer, Canadian Fuels Association
Josh Gustafson  President and Chief Executive Officer, Covenant Energy Ltd.
W. Scott Thurlow  Senior Advisor, Government Affairs, Dow Canada
Jean-François Samray  President and Chief Executive Officer, Quebec Forest Industry Council
David Schick  Vice-President, Western Canada, Canadian Fuels Association
Clerk of the Committee  Ms. Hilary Jane Powell

2:15 p.m.

Conservative

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

Do you have that number?

2:15 p.m.

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

Dr. Amit Kumar

Yes. The number for, let's say, the natural gas for power, if I have to give you a number, would be somewhere in the range of 400 to 430 grams of CO2 per kilowatt hour. There is a range for that.

2:15 p.m.

Conservative

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

Is that natural gas?

2:15 p.m.

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

Dr. Amit Kumar

That's natural gas, yes.

2:15 p.m.

Conservative

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

Okay. What about renewable now?

2:15 p.m.

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

Dr. Amit Kumar

If I have to take the renewable portion, probably the renewable portion would be almost 60% to 70% less, because we don't take the combustion emissions into account. I can get back to you with the exact number, but key are the combustion emissions, which we consider for biomass as carbon neutral.

Whatever you burn during the combustion of renewable natural gas is taken up by the trees or plants when they grow over their life cycle. That's where it's carbon neutral. That big chunk of combustion emissions is considered carbon neutral. That's where your biggest savings in GHG emissions over life cycle comes in.

2:15 p.m.

Conservative

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

What would the number be, again, then? We said it was 430 grams per kilowatt hour for natural gas. What would be the number for renewable, then?

2:15 p.m.

Liberal

The Chair Liberal James Maloney

Give a very quick answer, sir.

2:15 p.m.

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

Dr. Amit Kumar

I'll have to say 50% to 60% less than that.

2:15 p.m.

Conservative

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

Can you give us, for the committee—?

2:15 p.m.

Liberal

The Chair Liberal James Maloney

I'm sorry, Mr. Zimmer, you're out of time. Thank you.

Mr. Weiler, we'll go over to you.

2:15 p.m.

Liberal

Patrick Weiler Liberal West Vancouver—Sunshine Coast—Sea to Sky Country, BC

Thank you, Mr. Chair. I'd also like to thank all of our witnesses for the really fascinating discussion we're having today.

The first questions I have are for Canada Clean Fuels. It's a really interesting proposal that you put forward about the blender's credit.

My question for you is this. You mentioned that the price gap now stands at 15¢, a point at which it would be competitive with other fuels. I'm wondering why you're proposing this blending credit just for biofuels.

Of course, the proposal and the regulations and the systems we've been looking at are really agnostic about the types of fuels right now. We're really focusing on the absolute emissions reductions that we can get through them. Why focus particularly on a blender's credit rather than on things such as the clean fuel standard, which would reduce those for all different types of inputs?

2:15 p.m.

Vice-President, Business Development, Canada Clean Fuels Inc.

Giovanni Angelucci

Thank you, Mr. Weiler. That's a great question.

I want to preface this by saying that the fact that we're advocating for one doesn't mean we're not advocating for others. As I said, I think our transition will be full of a bunch of different, innovative technologies to get us to where we have to be as a nation, and ultimately to get ourselves to net zero.

The reason we push for biofuels in particular is that biofuels offer a way to use all of our existing infrastructure. The diesel trucks that are out there, the diesel tanks that are out there and the diesel stations that are out there can all use a biofuel blend. It's a very simple and ultimately cost-effective way per tonne to get megatonnes of emissions...just because we use so much fuel.

The other benefit of a blender's credit is that if you make the cost of the end product cheaper, then all of the other pieces of the chain fall into place. You can get financing for a plant to build it, because they know there's offtake for their product in a profitable way. Low-cost financing for green alternatives, especially now, abounds.

It's one piece of the puzzle. It's something we are focused on, know well and that we've seen work. The U.S. has a blender's credit. It functions for both producers and discretionary blenders and for upstream oil and gas players, depending on who wants to use it. It's the reason their average blend level for biofuel is about twice what it is in Canada right now.

2:15 p.m.

Liberal

Patrick Weiler Liberal West Vancouver—Sunshine Coast—Sea to Sky Country, BC

Thank you for that.

The next question I have is.... Transportation is almost a quarter of our emissions. It's the second-biggest source right now. Collectively, with oil and gas, that's more than half of our country's emissions. I was hoping you could speak to the importance of having a long-term steadily rising price on pollution as a mechanism to ensure that you have the investment being made into some of these renewable and cleaner alternatives, such as biodiesel, to reduce emissions from the highest sources in our country.

2:15 p.m.

Vice-President, Business Development, Canada Clean Fuels Inc.

Giovanni Angelucci

Thank you. That's another great question.

Having something that steadily rises and is predictable is one of the best tools the government can use to encourage business investment. People and business leaders like certain things. Sometimes it falls in their favour and sometimes it's a little bit out of favour, but having that predictability allows them to plan and adjust for that.

Having a steadily rising carbon tax tells everybody that we're putting the price and the social cost of conventional fuels onto the cost of that fuel, but we're not doing it so quickly that Canadians will be hurt by this carbon tax. This gives other folks who are in the production or blending part of the economy the time and the foresight to see where they will break even or where their fuels become cost-effective. In doing so, you help create a thriving renewables industry.

2:20 p.m.

Liberal

Patrick Weiler Liberal West Vancouver—Sunshine Coast—Sea to Sky Country, BC

Thank you.

I'd like to ask the same question to Covenant Energy. You mentioned that your plant is going to be coming online in a couple of years to produce some feedstock from canola for hydrogen and other biodiesels. I'm wondering what would happen for your business and your business plan if the clean fuel regulations didn't go into effect at that time.

2:20 p.m.

President and Chief Executive Officer, Covenant Energy Ltd.

Josh Gustafson

The bottom line is that the reason there haven't been any renewable diesel plants popping up prior to this one is the uncertainty about the clean fuel regulations, just to be very clear.

We're dealing with being a “first of its kind” facility here. You see what happens, I guess, when you look at the United States. There are policies put in place in California and Oregon—and even Washington state is now following suit. Policies are put in place, and policy drives investment. With the policies there, all of a sudden you're seeing an explosion of renewable diesel facilities going up. To have any uncertainty or any wavering on the Canadian side is really going to hurt investors in terms of having the confidence to move forward with projects like ours.

2:20 p.m.

Liberal

The Chair Liberal James Maloney

Thank you.

Thank you, Mr. Weiler.

We will go to Mr. Simard for two and a half minutes.

2:20 p.m.

Bloc

Mario Simard Bloc Jonquière, QC

Thank you, Mr. Chair.

Could I just take a second to send my regards to my friend Bob Larocque, although I have no questions for him?

I would like to go back to some comments from Mr. Samray and Mr. Kumar.

Mr. Kumar was talking about high-capacity plants. In another study we did on the forest industry, I was told that a high-capacity biorefinery could cost about $2 billion.

Earlier, Mr. Samray was telling us about the program called investments in forest industry transformation, which is being funded to the tune of $35 million over two years. That is clearly insufficient.

Could Mr. Samray or Mr. Kumar tell me whether a high-capacity lignocellulosic biomass processing plant requires an investment of about $2 billion?

I have another question for Mr. Kumar and it is little more specific.

Mr. Kumar, when you process lignocellulosic biomass, do you just make biofuels, or can you make other products that can, for example, replace petrochemicals in plastics?

2:20 p.m.

President and Chief Executive Officer, Quebec Forest Industry Council

Jean-François Samray

That one is for you, Mr. Kumar.

2:20 p.m.

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

Dr. Amit Kumar

I'll comment on the key aspect, in terms of the investment that is needed. Any of these that you were to do would need to be a partnership between the public and private sectors. Only then can you go to these larger plants. I can get the specific numbers to you concerning what they would entail.

In terms specifically of your second question, related to.... Could repeat your second question, which was related to the optimum scale, Mr. Simard?

2:20 p.m.

Bloc

Mario Simard Bloc Jonquière, QC

Can $2 billion be the investment we need to have a high-capacity plant?

2:20 p.m.

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

Dr. Amit Kumar

We'll have to look at it in terms of the investment, but on the scale we are talking about, the large forest industry plants are at the same scale, so the amount of investment needed to build these plants would be similar. You're processing half a million tonnes of biomass per year, which has been done, and then you invest into these forestry plants. A similar type of investment would be needed.

The other question, I now remember, is in terms of the biorefinery. You said that only the ethanol could be produced, but I think the concept we are thinking of in terms of processing—

2:25 p.m.

Liberal

The Chair Liberal James Maloney

Dr. Kumar, I hate to keep doing this to you. It seems as though I'm picking on you, but I'm not, trust me. I have to cut you off again. We have to stick to the time limit, so we'll have to move on.

Mr. Cannings.

Thanks.

May 7th, 2021 / 2:25 p.m.

NDP

Richard Cannings NDP South Okanagan—West Kootenay, BC

Thank you.

I'm going to turn to Mr. Gustafson of Covenant Energy Ltd. and pick up on some of the food-versus-fuel questions.

We talk about the use of canola around the world. Some goes to fuel. Some goes to food. I'm just wondering, as canola prices go up, what the pressures are on farmers on the Canadian prairies to convert their cropland from, say, wheat to canola once canola gets just too good to resist. Is that a situation in which we could see a reduction in wheat and other food crops and their being changed over to canola fuel crops?

I have the same sort of debate in my riding, but it revolves around changing from peaches and apricots to wine, and people complain about that—some people do.

I just wanted to know what the dynamics of this are for farmers on the prairies.