Natural Resources Committee on May 28th, 2021

[The Chair, Liberal, James Maloney]

I call this meeting to order.

Welcome to meeting number 28 of the House of Commons Standing Committee on Natural Resources.

We are here today pursuant to two motions to address the main estimates and the supplementary estimates (A).

I want to thank all our departmental staff, deputy minister and the five assistant deputy ministers for joining us yet again. The frequency of your appearances here is greater and greater as time passes, and we are very grateful for that. You provide great assistance to us.

As well, the minister is here until 2:30 p.m. today, and I want to thank him for making himself available. The supplementary estimates (A) were tabled yesterday, which enables us to deal with both today, so onward we move.

I don't need to go through all of the rules, because everybody here knows them as well or better than I do, so let's just jump right in.

Minister, thank you again, and I will turn the floor over to you, sir.

[Seamus O'Regan, Liberal, Minister of Natural Resources]

Thank you, Mr. Chair.

I'm pleased to join you from the island of Newfoundland—the ancestral homeland of the Mi'gmaw and Beothuk peoples.

It is also one of Canada's proud oil-producing provinces.

It’s great to be back in front of this committee. I mean that, because I always enjoy my appearances here as part of the estimates cycle, and I recently appeared on Bill S-3, which we unanimously adopted at third reading yesterday in the House.

Since my last appearance on the main estimates and the supplementary estimates (C), the recovery has come along and regions are reopening. The natural resources sector is leading the recovery. Over half of Canadians have received their first dose of the COVID-19 vaccine.

I want to start my remarks talking about some of the significant developments in recent weeks, and even recent days, in energy. We are at a particular moment in time, I think a defining moment, one at which globally an increasing number of jurisdictions, countries and companies are charting their pathways to net zero.

The International Energy Agency recently issued a report called “Net Zero by 2050: A Roadmap for the Global Energy Sector”, which I’m sure we will talk more about today. It is something Canada called on the IEA to do, and it is the first analysis that is compliant with limiting a rise in global temperature to 1.5°C. We asked it to conduct the report because we wanted to have a view, a highly technical view, of what the world needs to know and what the world would look like in order to get to net zero.

The climate and environment ministers of the G7, shortly after, met and agreed jointly to keep a limit of 1.5 degrees Celsius within reach by aiming to achieve net-zero emissions as soon as possible, by 2050 at the latest.

In my province of Newfoundland and Labrador, Dame Moya Greene issued a report on the future of this province, and it was an unflinching look at a dire financial situation. There is no sense in beating around the bush on that. There is a lot of hard work ahead of us and a lot of tough decisions, and a lot of that conversation is around energy.

On Wednesday of this week, there were three events, the reverberations of which are still being felt. People in the industry are still reeling about these. There was a landmark decision by a court in the Netherlands ordering Royal Dutch Shell to cut emissions by 45% by 2030. Shareholders of another major oil company, Chevron, backed a proposal by a convincing majority of 61% to cut its Scope 3 emissions, the emissions generated by customers' use of the products it sells. As well, ExxonMobil shareholders voted to install two new independent directors in what the Financial Times, economists and everybody are calling a clear rebuke of the company’s efforts, or lack thereof, to meaningfully address climate change to date.

What all of these events demonstrate is that the world is calling for increased climate ambition. The market is demanding it. Investors are demanding it.

I've said it before and I'll say it again: the market demands that businesses fight climate change.

Governments are taking action. Last month, at the global leadership summit, countries announced historic new climate ambitions. Forty countries—Canada among them—accounting for half of the world's economy, committed to act. We committed to lower emissions. Companies are taking action, some too slowly but some very decisively. On Wednesday, Suncor committed to net zero by 2050, actually increasing their ambition—real Canadian leadership. That's to match the mark set by Cenovus Energy earlier last year.

Yesterday, Canada's oldest oil and gas trade association announced a new name and a new brand and mandate. After 72 years, the Canadian Association of Oilwell Drilling Contractors is now the Canadian Association of Energy Contractors, which just broadens their horizons, I think. It increases their ambition in looking at hydrogen, geothermal and CCUS. That is Canadian leadership right there. That is meeting the moment.

That's basically it. We can duck and run for cover, as some would have us do, stick our heads in the sand, avoid those tough conversations and ultimately leave Canadian workers and our proud industry behind, or we can lead by facing these challenges head-on with conviction and tenacity, leveraging that innate Canadian capacity, the capacity of our workers to use their ingenuity, their expertise, and their experience to meet Canada's challenges head-on. I choose the latter, as I have said before in this committee.

We have to define the moment we find ourselves in. We have to meet the challenges that this moment presents. Canadians, I think for the most part, understand that we need to choose the latter. Workers, I think, are choosing the latter.

This committee chooses the latter. You are studying the opportunities provided by the renewable and low-emission fuels industry. You have also studied opportunities in the critical minerals industry, in which Canada has a clear and distinct advantage. We have the opportunity to be a world leader.

You've studied the opportunities in forestry. On that point, I'd like to thank the committee for your good work on your recent report, “Economic Recovery in Canada's Forestry Sector: Green and Inclusive”. We are analyzing the recommendations and are working on a forthcoming response to it.

Budget 2021 chooses the latter. Four major investments put Natural Resources Canada at the centre of our green recovery.

$319 million over seven years to encourage an expansion of carbon capture, utilization and storage technologies.

$36.8 million over three years to advance critical battery mineral processing and refining expertise.

$9.6 million, also over three years, to create a critical battery minerals centre of excellence.

And finally, $1.5 billion over five years for the clean fuels fund to position Canada as a global leader in areas like hydrogen and biomass.

Mr. Chair, budget 2021 continues to build on the progress of our government over the past few years and the priorities that we're working on at Natural Resources Canada in the 2021-22 main estimates and the supplementary estimates (A), priorities that underpin our support for workers and our drive to lower emissions, and the steps on Canada's pathway to net zero, such as the $570 million in the main estimates for the emissions reduction fund. It is a fund that is working. There has been high uptake across streams.

We recently announced the first set of projects: 40 projects across Manitoba, Saskatchewan, Alberta and British Columbia, and 16 projects in my province, in the Newfoundland offshore. These are real projects that are creating real jobs for workers, and they're under way right now to lower emissions.

The mains also include $84 million for last year and $309 million this fiscal year for greener homes. Yesterday we launched the Canada greener homes grant, so that Canadians can lower their energy bills and lower emissions. It's a program that drives economic activity. It creates jobs for energy advisers and local trades and for manufacturers of energy-efficient products such as windows, doors and solar panels.

The mains also provide $174.5 million in 2021-22 to support forestry diversifying and innovating, especially in the emerging bioeconomy, something which, again, I commend this committee for studying. There is funding for programs like the investments in forest industry transformation program and the forest innovation program, programs that this committee has heard at length about in terms of the positive impact across the country, programs that sustain jobs and increase the sector's competitiveness.

The supplementary estimates (A) further support forestry. There is a down payment there of $71.4 million for our two billion trees program to increase forest cover—an area 10 times the size of P.E.I. Trees are being planted this spring. I look forward to sharing more about this very soon.

The last program I'll highlight is on creating green jobs for Canada's youth. Supplementary estimates (A) include $43.9 million for our science and technology internship program, creating 1,500 green jobs for youth with a focus on indigenous and northern youth, jobs such as designing and implementing new wind energy systems, so that youth can lead and be a part of the net-zero solutions we need to build our low-emissions energy future.

Those are just some of the priorities we're working on. I don't have enough time in my opening remarks to speak to all of them.

As Minister of Natural Resources, I would say that every day I am constantly impressed by the drive of the officials and the staff at Natural Resources Canada. They are meeting the moment, I believe. They are ready to tackle the challenge. Some of them, as you know, are here alongside me today, as they always are.

There are challenges that we continue to face, such as those related to Line 5 and softwood lumber. We remain steadfast in our resolve to defend Canadian interests against these challenges.

But to leave off where I began—the moment we find ourselves in is a moment of opportunity for our country and for the workers who built this country.

No other democracy in the world has the natural resources that we do. We are the fourth-largest producer of oil and gas in the world, with the third-largest reserves. We are third in the world in hydroelectricity. We are one of only five tier-one nations for nuclear energy. We are a pacesetter in clean hydrogen and fuel-cell technologies. We are a supplier of choice for the minerals critical to powering a clean energy future. We are a top-ranked country for clean technology, including smart grids, storage technology and carbon capture.

We became all of those things not by sheer happenstance or coincidence. We became what we are because of the workers at the heart of these industries. These are proud, pragmatic, practical people who work in natural resources sectors right across the country. They don't avoid tough conversations or the challenges. They confront them head-on. They are leading, as are we. We have a common mission: net-zero emissions by 2050, a prosperous economy that continues to create jobs and a low-carbon future that leaves no one behind.

I am joined today by my officials: Jean-François Tremblay, deputy minister; Shirley Carruthers, assistant deputy minister, corporate management and services sector and our chief financial officer; Glenn Hargrove, assistant deputy minister, major projects management office and strategic petroleum policy and investment office; Mollie Johnson, assistant deputy minister, low carbon energy sector; Jeff Labonté, assistant deputy minister, lands and minerals sector; and Beth MacNeil, assistant deputy minister, Canadian Forest Service.

One last word: I am proud to have appeared before this committee three times over the past four months. I am proud of the constructive relationships I have with my opposition critics—Greg, Mario, Richard—as well as other members of this committee. We hardly agree, nor should we. We all have jobs to do, but I do believe that constructive relationships are how we best serve Canadians. It's how we tackle the challenges that we face. I look forward to continuing this important work.

With that, I welcome your questions.

I thank you for your attention.

[The Chair, Liberal, James Maloney]

Minister, thank you very much.

You're quite right. Your departmental officials are stellar, and we are always very grateful for their input and your input. We're very proud of the working relationship we have on this committee too. We get along famously. We respectfully disagree at times, but respectfully is the key word there. Thank you for those remarks.

I forgot at the outset to welcome Mr. McLeod back to our committee. He is substituting for Mr. May today. This is a homecoming of sorts for him because Mr. McLeod was on this committee back in 2015 for a number of years.

We're glad to have you here today, Mr. McLeod.

We will start our first round of six-minute questions with Mr. McLean.

[Greg McLean, Conservative, Calgary Centre, AB]

Thank you, Mr. Chair.

Thank you, Minister, for being generous with your time with us today at this committee. I really appreciate your comments, and I'm going to start with something you mentioned there.

I want to take a top-level look first of all at the estimates. You talked about Canada's natural resource wealth and how, of course, across the world we stand out in so many ways, yet when we look at the budget for your department, last year the main estimates were $1.4 billion for the Department of Natural Resources, and this year they are $2.2 billion. They went up over the course of that time from $1.4 billion to $1.8 billion to $2.2 billion.

It's safe to say that over the last year there has been no real development in the natural resource industry sector in Canada, so is it safe to say at this point in time that you are becoming a cost centre for the Canadian taxpayers as opposed to a sector that used to be a profit sector for the Canadian taxpayers?

[Seamus O'Regan, Liberal, St. John's South—Mount Pearl, NL]

You weren't kidding when you said that's a high-level question, Mr. McLean, and you're right to pose it.

No. I don't agree with that assessment. I would say, first of all, that we are looking at making very strategic investments in the sector. I would also say that there are many other departments—and I think here strongly of Innovation, ECCC, and Infrastructure Canada—that have helped us make the investments that we need to make, particularly when we look at the challenges facing our energy industry and things like net zero and the net-zero accelerator. I would like to think that, in fact, the natural resources sector is so high on our priority list that it sometimes branches out beyond this one department.

I have made quite clear where we stand as a sector in driving this economy. If other ministers and departments want to share in that enthusiasm and in that wise investment, then I welcome it.

[Greg McLean, Conservative, Calgary Centre, AB]

Thank you.

Let me punch into the numbers a little more directly now. We talk about the extra money that's being spent here—or less money that's been spent in some cases.

The clean growth program in Natural Resources for sector innovation is down by $10 million to $28 million in this set of estimates, and the contribution to support expanding market opportunities is up by $17 million.

Tie that in with what's happening with the liquefied natural gas sector on the west coast of Canada, where we used to have over 20 projects vying for export opportunities around the world. They competed with, obviously, opportunities elsewhere in the world, and now that's down to two that are in process right now.

Recently, as you know, Woodside finally pulled out of its joint venture with Chevron, so Kitimat LNG is not proceeding as well. That's another big loss for the country.

How does putting more government money in to replace the private sector money, which is, obviously, leaving for a reason...? I will note that large organizations—and Woodside is not a large organization—do not put $3 billion into a project in a foreign country and then walk away without something having changed as a result of macroeconomic factors. Those macroeconomic factors are not external; they are in Canada.

Please explain that for me.

[Seamus O'Regan, Liberal, St. John's South—Mount Pearl, NL]

I share the member's disappointment with the news about Woodside and the fact that they withdrew from the project. That affects the local communities, particularly the Haisla First Nation, which is supportive of the project.

It was a market-based decision. The CER had already approved the Kitimat LNG application for an export licence. The project was ready to proceed.

I will share with you what the CEO of Australia's Woodside Petroleum had to say about the decision. He said purchasers of LNG don't want to commit to long-term contracts because the price of renewable generated electricity such as wind and solar has dropped 80% to 90% over the last 10 years. It's easy to blame the regulatory process, and it's easy to blame the government. The reality is that the market is moving, and it has moved particularly fast over the past year or year and a half, as I said in my opening remarks. The energy landscape is changing. Companies are reacting. I would certainly agree that governments have to be equally nimble in this marketplace, but it is moving extraordinarily fast. One reason is that the price of renewable generated electricity like wind and solar has plummeted over the last little while and continues to do so as the market reacts.

[Greg McLean, Conservative, Calgary Centre, AB]

Yet, Minister, we know for certain that the coal combustion growth is going to continue in Asia for decades yet. Look at the number of projects that are on the books or are being built in Asia. They're looking for cleaner alternatives, including Canadian liquefied natural gas, and we're not able to provide it here. The reason for this is that we no longer have clarity of outcome. That has been clear in the regulatory process under your government, and it does push the timeline. In business, time is money, as you would know.

You did mention the indigenous partnerships as well. In this set of estimates, you're talking about $6 million more for indigenous natural resources partnerships and contributions of $3 million in support of indigenous economic development, so that's $9 million more, yet what we've forgone here in Kitimat alone is about a $2-billion economic benefit for the Haisla First Nation and tens of millions of dollars in contracts for all 16 first nations along the Pacific Trail Pipeline that was going to be built along the way.

Putting more money into these partnerships to replace the billions and tens of millions that were spent by these companies is a drop in the bucket for indigenous economic reconciliation. How do you square that?

[Seamus O'Regan, Liberal, St. John's South—Mount Pearl, NL]

First let me speak to the issue of LNG. I agree with you: I think there are certainly jurisdictions in the world that are attempting to get off coal—here I'm thinking particularly of markets in Asia—where LNG could come in quite handy. Ultimately, our focus can and must be on lowering emissions. We see a market for Canadian LNG in displacing coal in those marketplaces that do not have the option.

I would say on indigenous...that I look at indigenous natural resource partnerships. We announced those I think in November of last year. I think these are pivotal. With the INRP, it's up to $12 million in additional funding over two years. That's in addition to the existing program, but this is something that I'm intimately familiar with because I've studied it. I've been there on that capacity building of indigenous groups.

When we build up those capacities, that then does help their participation in economic development through natural resources, should they choose to pursue it. It is an incredible bang for the buck, because it allows them to participate with confidence in the environmental assessment process, and wherever we can have that surety and that certainty, as you mentioned and as I've brought up before, then the chances of getting good projects done in this country increase demonstrably.

It's modest funding—

[The Chair, Liberal, James Maloney]

Thank you—

[Seamus O'Regan, Liberal, St. John's South—Mount Pearl, NL]

—but a big bang for the buck.

[Greg McLean, Conservative, Calgary Centre, AB]

Thank you, Minister.

Do I have more time?

[The Chair, Liberal, James Maloney]

No. In fact, you owe me some.

[Greg McLean, Conservative, Calgary Centre, AB]

Thank you.

[The Chair, Liberal, James Maloney]

Okay.

We're moving on to Mr. Weiler.

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

Thank you, Mr. Chair, and thank you, Minister, for joining our committee today to talk about the main and supplementary estimates.

I really appreciate your opening comments about the breadth of all of the different programs that are under your mandate here, everything from traditional natural resource sectors to a lot of the areas that we're moving towards right now as well, which are going to lead to job growth in our country in the future.

In the estimates this year, Natural Resources Canada is requesting $24 million in support for electric vehicles and alternative fuel infrastructure deployment, and $34 million in support of the zero-emissions vehicle infrastructure program. These two programs have made a huge difference in my riding, with 27 new charging stations being established in Whistler and Squamish just last year. I know that the Village of Lions Bay is interested in it. As well, the District of West Vancouver is in the midst of considering transitioning its entire fleet to electric vehicles.

More charging infrastructure and support from both the federal and the provincial level for the temporary additional costs that we're going to see for EVs until they reach parity in a few years is why B.C. has the fastest electrical vehicle adoption rate in North America right now. We know this is important, because Canada has the least fuel-efficient fleet in the world and transportation is our second-largest source of emissions right now.

What opportunities do you see for Canada's economy with the rollout of cleaner transportation throughout the whole value chain, and how do these programs fit into it?

[Seamus O'Regan, Liberal, St. John's South—Mount Pearl, NL]

It's been a remarkable time for EVs, even in the fact that we're seeing such enthusiasm south of the border for this now. I think just a couple of weeks ago we saw President Biden in Detroit rolling off a Ford F-150 Lightning. If a pickup like the F-150, which is without a doubt the most popular vehicle in my province, goes electric and the consumer buys into it, that's a real turning point. GM is saying that they would stop internal combustion engines after 2035. This is remarkable.

Canadians want those greener options, so we're trying to give it to them. We have an ambitious goal of 100% of light-duty vehicle sales, zero emissions, in Canada by 2040. We are building, as you said, coast-to-coast networks of zero-emission vehicle chargers so that Canadians no longer have to worry about range anxiety, which is a big one for a lot of people, or the accessibility of charging infrastructure. We're making the switch to electric and zero-emission vehicles easier where we can. We're installing those chargers where Canadians work, where they live and where they play. Our investments have been working.

At NRCan we offer two funding streams. Both see heavy uptake during the call for proposals. We have the electric vehicle and alternative fuel infrastructure deployment initiative. It has resulted in 1,087 chargers funded, nearly half of which are currently open. We have the zero-emission vehicle infrastructure program. That has also been hugely successful, running three calls for funding each year, yielding proposals for thousands of chargers. In 2019 we had one call for proposals alone that yielded 52 projects to install 1,866 level two and 351 fast chargers. For our 2020 calls for proposals, we received nearly 100 project proposals for a potential 10,000 charging stations.

It's through programs like these, installing charging infrastructure and incentives to make EVs more affordable, that you get to net zero by 2050. It is very popular with Canadians, but you have to meet them halfway, and that's what we're attempting to do here. You can't have people with range anxiety. Ultimately, I think a lot of people will find that charging their car at home or at the office will be just as easy as charging their phone, which we do habitually, and will save money. This will only work if people feel they're saving money and in fact are saving money.

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

Absolutely. I think a lot of Canadians don't realize just how much money you can save in terms of operational costs by having an electric vehicle. I think there's a need to get more of that information out there.

In the fall economic statement, the federal government committed $2.6 billion toward a home retrofit program. In the estimates this year, Natural Resources is requesting $210 million in grants in furtherance of it. This is the program I get asked about just about as much as anything else—

[Seamus O'Regan, Liberal, St. John's South—Mount Pearl, NL]

Good.

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

—because I know that constituents are very interested in doing what they can to shrink their own carbon footprint as well as save money on home heating bills. I also speak to contractors very frequently who are interested in doing work in this space, although of course they're very busy these days.

I was hoping you could talk a little bit more about the details of this program. When and how are people going to be able to access it?

[Seamus O'Regan, Liberal, St. John's South—Mount Pearl, NL]

Right now: Go to our website. It gets back to the answer I gave to your previous question, Mr. Weiler. This will only work if people feel they're saving money and in fact are saving money.

To be honest with you, my own personal thought on this is that so much of the talk on climate change and combatting climate change has the tone of sacrifice, sacrifice, sacrifice. In fact, if it's done well, people save money. If we can get the incentives right, if government can play its part, then it's about efficiency, and through efficiency people should be able to save money.

That's how you make sure it's sustained. Let the marketplace take over, which we're seeing, as I mentioned earlier, with oil companies around the world right now. It's happening at a macro level. Here we're switching over and going to a micro level, to the household level. We're giving Canadians up to $5,000 to make their homes more energy efficient, and have lower bills and lower emissions. It's climate action starting at home, and it's not just saving money. Retrofitting homes creates jobs. I'm very sensitive to creating jobs in every part of the country.

As I've said to this committee before, I grew up in Happy Valley-Goose Bay, Labrador. Federal programs were not something that included us very often. It was very cookie-cutter. We wanted to make sure that we worked with the provinces and the utilities—every one of them, in this case—to get it right from the ground up. Retrofits have to happen in your home by people, by contractors, who have to be in or near your community.

[The Chair, Liberal, James Maloney]

Thank you—

[Seamus O'Regan, Liberal, St. John's South—Mount Pearl, NL]

You have work for them, work for contractors and work for energy advisers.

[The Chair, Liberal, James Maloney]

Thank you.

I hate interrupting. I'm always looking for the opportune time when there is a break. People are very enthused about this topic today, so it's more challenging. I apologize for interrupting.

Mr. Simard, we'll go over to you, sir.

[Mario Simard, Bloc, Jonquière, QC]

Thank you, Mr. Chair.

I want to start by thanking you for being with us, Mr. Minister.

I listened carefully to your opening remarks. You talked about how this is a defining moment to move toward net-zero emissions. You also talked about the International Energy Agency, which said in a study this week that no new oil and gas projects should be initiated.

I have to tell you that I'm a bit transfixed, because if I remember correctly, in January 2020 the government announced the launch of 40 new offshore drilling projects. And what struck me was that the environmental assessment process had not been changed, it had been abolished. So I don't see how such projects are reconcilable with the defining moment to move toward net-zero emissions.

In my opinion, the icing on the cake is the proverbial $559-million emissions reduction fund. That's the amount of money you are going to give in financial support to the oil and gas industry to make it greener. I don't know on what basis you made that decision, but I personally see it as what we call “greenwashing”.

That is a lot of money, which could have been invested in natural resources that already show promise in addressing climate change. I'm thinking of the forestry industry, among others.

My question is simple, Mr. Minister. On what basis did you make the decision to provide $559 million in financial support to the oil and gas industry?