Natural Resources Committee on May 28th, 2021

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

Thank you for the question.

Forgive me, once again, Mr. Simard, for my English and my inability to answer you substantially in your language. I'm working on it.

First of all, I will speak briefly about the IEA report, and then I want to dig into your comments about the offshore, which is obviously something that I'm very passionate about. As this committee knows, Newfoundland and Labrador relies more on the royalties from its oil industry than even Alberta, which is obviously substantial.

To speak to the IEA report, it is something that we're looking at very carefully in its implications for this country. We had asked them to commission this report. It's helpful to remember that the IEA was formed by the OECD in 1974, after the price shocks of the 1970s, to make sure that the world had enough oil. For the IEA to come out in 2021 and say that they think the world does have enough oil is seminal; I think it's worth saying that. It's not coincidental that we saw on the 26th the upheaval that we have seen in three major oil companies. The shareholders and investors are reacting. Having said that, it's very sweeping and is not particular, in some cases, to Canada.

I would say this about the offshore. First of all, Newfoundland and Labrador's light sweet crude has some of the lowest-intensity emissions per barrel in the world. Even the IEA acknowledges that oil and gas will be in the mix for quite some time, up to and including 2050. We are laser-focused on lowering emissions. If you can begin with a product that inherently has lower emissions, that is a good thing, but we are also looking at working with the industry to lower emissions in the extraction and operation—

[Mario Simard, Bloc, Jonquière, QC]

Excuse me, Mr. Minister, but my time is very short.

I'd like to focus primarily on the so-called emissions reduction fund.

On what basis did you make the decision to inject $559 million into a program that applies only to the oil and gas industry?

How do you justify that decision?

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

If they are lowering emissions and are doing so in a substantial way, we will back it. I've made that very clear. This is all singularly about lowering emissions. The emissions reduction fund is something that I am actually quite proud of. We put it in place during the pandemic. It is a way to create jobs, to maintain the workers and also to facilitate economic activity at a time when this industry was hurting crucially, and it is all about lowering emissions.

Those projects are under way right now, with 16 in my province, in the Newfoundland offshore. One is with Atlantic Towing Ltd., which has demonstrated battery and electric technologies in offshore supply vessels. We have two projects on the Hibernia platform. One is on flare reduction technology, and the second is on building a prototype digital power generation system to optimize platform energy use. We're also working with Planetary Hydrogen to research whether their CCUS technology can be applied to offshore facilities. That's just for the offshore.

For the onshore, we have 40 projects under way in Manitoba, Saskatchewan, Alberta and British Columbia: projects that will eliminate methane emissions equivalent to 3.1 megatonnes of carbon dioxide. That's 674,000 cars off the road. Tundra Oil & Gas is teaming up with Steel Reef infrastructure on a project that straddles the Manitoba-Saskatchewan border and is to capture methane emissions, because emissions know no borders.

These are real projects with real jobs for workers and for lowering emissions—that is our singular focus.

[The Chair, Liberal, James Maloney]

Thank you, Minister.

[Mario Simard, Bloc, Jonquière, QC]

Is—

[The Chair, Liberal, James Maloney]

Thank you, Mr. Simard. That's all your time, unfortunately.

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

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

Thank you, Mr. Chair.

Thank you, Minister, for being here with us today.

I'm going to follow up on Monsieur Simard's questions about the tie-in to that International Energy Agency report. I'm happy to hear that Canada was one of the players that actually commissioned that report and asked for it.

I assume you accept the findings. One of the findings is that no new oil and gas projects are needed in the world. As you say, we have enough oil. Another one is that North American sources of oil and gas will see a real diminishment in their market share, as opposed to other parts of the world. This will obviously have real impacts on the Canadian energy sector.

The Canada Energy Regulator came out with a report that said we didn't need Trans Mountain expansion and we didn't need Keystone XL—that we had enough pipeline capacity with other pipelines—and yet we're doubling down on the Trans Mountain expansion. The cost of that pipeline to the Canadian taxpayer is about the same as your projected investments over the next 10 years in climate action. We have independent analyses that show there won't be any real profits for Canada from the Trans Mountain pipeline.

Without any real profits, why not have a real plan to spend that money, that $15 billion, on projects for the future? You've outlined a lot of the good things that the government is starting to do to fight climate change. Why not double down on that to create good, long-term jobs for the future to really respect the workers in the energy sector? They're facing a really uncertain future when they see reports like the IEA report. We should be respecting them by investing in other sectors instead of the oil and gas sector.

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

Mr. Cannings, first of all, thank you for the questions.

I would perhaps dispute a couple of assertions you made.

TMX is not about a new project. It is about making sure we get oil to the right place and to the right markets and at the right price and not suffer the discounts we suffer at the moment.

I would also say that I recognize the IEA report as being seminal. We are still sifting through it and making sure we get a good analysis of it. I am invested in it. I'm a founding member of the IEA's Global Commission on People-Centred Clean Energy Transitions—the wording is a bit cumbersome, but I think you get the idea—and that is because I am advocating consistently and every time I meet with the IEA. We're meeting again on that commission next week to talk about workers. I agree with you on that point. While lowering emissions is urgent, it must be done effectively and it must be done in an orderly fashion. That word “orderly” sounds...but it's very important that we get it right in order to make sure we protect our industry and our workers and at the same time lower emissions with urgency. I do believe meeting that challenge is possible.

I would say on the IEA, again, to come back to my earlier point, that there are different types of oil. There are some that are inherently lower emitting than others. That is a fact. Newfoundland and Labrador, for instance, has some of the lowest in the world.

Second, we have the capacity in this country to make sure that we lower those emissions even further. For instance, on natural gas, not all natural gas can be utilized in the same way. We see it as a very positive thing for blue hydrogen. Blue hydrogen, as part of our national hydrogen strategy, is where we see Alberta going. It's where we see Saskatchewan going. Right now we have about a 90% efficacy, and that 90% will be captured by CCUS. We believe we can drive those numbers higher—I have great faith in our ability to do that—so we can get closer to 100%. Blue hydrogen being used in that space to produce hydrogen is only a plus for lowering emissions and for Canadian competitiveness and for Canadian workers.

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

Thank you.

I guess I would dispute your assertion that Trans Mountain is not about new projects. It's an expansion project after all. It's about exporting more oil from Canada, and that clearly really won't be necessary under this new study.

I'd like to turn now to the where I'd like to see more money spent, and that is in projects like retrofits. I'm very happy the government has basically restarted what was the ecoENERGY retrofit program with these grants of $5,000. It's a very good sign. I had a private member's bill on that in the last Parliament. I'm happy to see the loan programs, but as I said when you came before this committee the last time, we're leaving out people who are in energy poverty, the people who pay more than 6% of their household incomes in energy costs.

I'm just wondering if there are any plans—I know you've heard from me and you've heard from Efficiency Canada—to bring in a no-cost turnkey plan that would help those people retrofit their homes at no cost to themselves. These are the older homes that need it. Are there any plans to do that?

[The Chair, Liberal, James Maloney]

Please be brief if you can, Minister.

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

Yes.

I would just say that it's interesting, Mr. Cannings, that I just came from making an announcement on social housing, appearing virtually with Minister Hussen, on eight new social housing units right in the middle of my riding, all with EnerGuide, all with home efficiency. My department was involved.

You have the Canada greener homes grant, which is open to thousands, if not millions, of Canadians. I'm happy to say that our website crashed yesterday, although we brought it back fairly quickly, and I'm proud of my department for doing that. But there are other areas, particularly under Minister Hussen's department, where we are making sure that reach is broader. As I said yesterday in the media, I personally believe we are only going to build this up. Doing it just makes too much sense; I agree with you.

[The Chair, Liberal, James Maloney]

Thank you, Minister.

Thanks, Mr. Cannings.

We're now moving into the second round of five minutes per questioner, starting with Mr. Zimmer, I believe.

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

Thank you, Mr. Chair.

Thank you, Minister, for coming today.

We talked to the Minister of International Trade previously about a softwood lumber agreement. She gave us the impression that negotiations were happening. Then we saw the May 16 Reuters article. There was a quote from Katherine Tai, the U.S. trade representative, who told U.S. senators:

despite higher prices, the fundamental dispute remains

—and this is between Canada and the U.S.—

and there have been no talks on a new lumber quota arrangement. In order to have an agreement and in order to have a negotiation, you need to have a partner. And thus far, the Canadians have not expressed interest in engaging.

Can you just speak to that, Minister? Are you aware of whether or not there is a negotiation going on?

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

I will say, look, Minister Ng is very active on this file with her American counterparts right now, and we've consistently raised this issue. We raised it with the president directly. We've raised it with members of his cabinet. U.S. duties on Canadian softwood lumber are unwarranted. They are unjustified. They are unfair. They hurt our workers. They hurt our forestry sector and, frankly, they hurt their sector as well.

We are still pressing for a negotiated settlement. It's in the best interests of both countries. The U.S. needs our softwood lumber. We supply roughly a quarter of what is consumed in the U.S. That's over $8 billion. The U.S. housing market continues to rise. The demand for softwood lumber is only going to increase as a result.

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

Let me ask you this, then, to follow up on that, Minister, because I guess we need to understand that “active” actually means, because it was a day after that when we saw what Minister Ng....

This is from Reuters:

A statement from Canada’s trade ministry said Ng also raised concerns about U.S. trade policies but the two agreed on the need to strengthen North American supply chains....

We agree.

Reuters continued:

Minister Ng reiterated that it was in the best interest of both countries to reach an agreement on softwood lumber....

I'm going to ask you a really blunt question. Are you, as a government, negotiating a new softwood lumber agreement, yes or no?

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

Minister Ng continues to work on this file. She works on it with her American counterparts, obviously. Preserving rules-based trade is essential. It's why we included an effective and transparent dispute settlement resolution mechanism in chapter 10—

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

I appreciate the—

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

—for CUSMA. We will use—

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

This was just a yes-or-no question. Is it being negotiated?

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

—whatever tools we need to to defend Canada's forestry workers, particularly in the softwood lumber industry, including through litigation under chapter 19 of NAFTA, including chapter 10 of CUSMA and the World Trade Organization.

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

Thank you, Minister.

I didn't get an answer there, but I think, based on what my colleague had asked, I—

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

Let me—

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

Just hold on.

Clarity—

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

I can be blunt with you about this, though. Look, I think the U.S.—

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

I asked for a yes-or-no answer, Minister. You didn't give me a yes-or-no answer, so I again gave you the time to do it. My time is short, so please—yes or no?