Natural Resources Committee on Dec. 11th, 2020

[Jeff Labonté, Assistant Deputy Minister, Lands and Minerals Sector, Department of Natural Resources]

Of course, the mining sector remains one of Canada's more dominant sectors. It produces significant amounts of jobs, GDP and growth.

With specific reference to your question on the geoscience, the government announced the renewal of the geoscience GEM program, which is geo-mapping for energy and minerals, with $131 million over seven years to renew that program, as well as the targeted geoscience program. As has been pointed out, these are, if you will, the pipelines that produce the knowledge and research that allow exploration companies to then further assess the potential for mineral development in Canada.

The economic return to the investments in these programs ranges between $1 and $7, so $7 of investment for every $1 spent by public funding. The geoscience can go up to $10 worth of private investment.

These are the projects that start, and I would point out that they sustain and support some 600 different communities across the country where mining and mining services, mining operations, exploration and science are very predominant. There are over 280,000 direct and indirect jobs in the mining and minerals sector.

What is substantially important to point out is that the mining and mineral sector is the largest employer of indigenous peoples across the country, with some 16,500 indigenous Canadians employed by the mining sector.

Canada has a very healthy mining and minerals sector. About half of the world's mining operations, mining projects, mining financing and background are financed by Canadian companies through the stock markets here in Canada, so we have the opportunity to also influence how the rest of the world develops mining operations and to make sure that community engagement, local employment and the right environmental and industrial standards are used. That will extend Canada's footprint well beyond our own country.

[Paul Lefebvre, Liberal, Sudbury, ON]

Yes, on that point, I've seen first-hand when we go to PDAC in March each year, the world comes to Toronto to talk to Canada. I've been very fortunate to speak with a lot of ministers of mining from around the world. They are always asking us how we're doing it here.

You raised a point on indigenous participation. I think we've done well, but there is so much more to do and the potential is huge.

Again, we are leaders in the world, but I'd like to hear from you on the Centre of Excellence for Indigenous Minerals Development, which is an initiative we started. Do you have anything on that centre you could share with us as well? It is so important. When the world looks at us, we look at the world and see that our practices here should be repeated and certainly looked at, but how are we doing in that sphere?

[Jeff Labonté]

Indeed, there is a lot to be proud of, and there's also further work that needs to be done. We can build on the expertise that we have. The centre is one of those forums where, working with indigenous communities, associations, the service sector and all the supporting institutions, Canada can sustain those jobs held by indigenous peoples and increase the number of indigenous Canadians involved in the mining and mineral sector.

At the same time, on the minerals and mining sector that's in transition, we look at critical minerals and the minerals that will be needed in the future. Those minerals are significantly important to Canada's clean technology sector, and to reducing emissions and producing some of the advanced products and services that are demanded by the world today.

When we look at the move to renewables, we look at the move to advanced materials, lighter metals—

[The Vice-Chair, Conservative, Greg McLean]

Quickly, please.

[Jeff Labonté]

—and new components. All of our semiconductors, all of those materials that we use as a society, are based on critical minerals. Canada is deeply fortunate to have the vast majority of those minerals available. They can be developed and part of our science program is supporting—

[The Vice-Chair, Conservative, Greg McLean]

Thank you, Mr. McLean and Mr. Lefebvre.

The next speaker is Mr. Simard.

You have six minutes, Mr. Simard.

[Mario Simard, Bloc, Jonquière, QC]

Thank you very much, Mr. Chair.

I have a question for the deputy minister. With a Simard talking to a Tremblay, you would think we were in Saguenay—Lac-Saint-Jean.

When I add up all funds allocated to all existing programs and initiatives to support the forest industry—such as the forest innovation program, the investments in forest industry transformation program, the expanding market opportunities program, and the indigenous forestry initiative— I get a total of $251 million a year. To me, that's pretty astounding because it's half of what was invested to support Coastal GasLink, which was $500 million.

We heard from people on the committee that the costs of converting pulp and paper mills are very high. With a budget of about $82 million a year for IFIT, the investments in forest industry transformation program, I can only think of one way to explain it, and that is a lot of projects get rejected.

[Jean-François Tremblay]

You're right, it feels like we're in Saguenay; I'll try to lighten up my accent, otherwise we will lose the interpreters.

Thank you for your question. The interest in and importance of industries is not necessarily calculated in dollars alone. I can tell you that the effort is the same for us. You noticed that we received the money for planting the trees. We are continuing on with the IFIT.

It's not a question of choosing between different sectors. We work with all sectors. You raised one of the key points: we need to work on the bioeconomy and find out how we can actually use the forest more and more to try to produce new products that we can market, such as plastics. So we're working with all industries. If I may say so, I feel you're giving a false indication when you only bring up the numbers.

Are we rejecting projects? We reject them in all sectors. However, we have just received submissions for the IFIT program. We are still encouraging submissions and we expect to have more. I can refer to Ms. MacNeil if you want more details.

[Mario Simard, Bloc, Jonquière, QC]

No, that's fine.

It is also my role to point out that it's clearly inadequate. To be frank, I have toured the entire forest industry in Quebec, both with the association and the stakeholders, and what I'm told is that federal government support is clearly inadequate.

On that note, I would like to tell you about something that bothered me. I looked at the expanding market opportunities program, with the knowledge that Quebec is the most important player in the forest industry in Canada, and it seems that the program was tailor-made for British Columbia, since almost 80% of the envelope was granted in British Columbia. But British Columbia is not the biggest player in the country. What I'm hearing from people on the ground is that the program was designed to meet British Columbia's interests and that some changes should be made to allow for greater sensitivity to developing added-value product markets.

Are you aware of this issue?

[Jean-François Tremblay]

We don't choose one province over another, I want to make that clear.

In terms of investing more in added value, that's something governments and industry need to work on together. We need to innovate more. You know as well as I do that forestry has long been a fairly traditional and conservative sector. So it has to adjust.

The good news right now is that things are going pretty well in the wood industry. We have even returned to very high rates. The paper mills are still having some difficulties on the pulp side, as you know. These are sectors where innovation will need to be stepped up and where we will have to work with industry to find new solutions. However, companies like FPInnovations are working a great deal with industry.

Many of the challenges we face have to do with forestry.

[Mario Simard, Bloc, Jonquière, QC]

The research is there. It's obvious, but if they want to get things to market, I feel that the federal government's support is inadequate.

I would like to end with the big question of hydrogen. I know that you will be announcing a hydrogen policy. Everyone I consulted told me that, based on scientific knowledge, it was a very bad idea to produce hydrogen from fossil fuels.

I'm wondering, did you consult with experts in the field to come up with your hydrogen strategy?

[Jean-François Tremblay]

Yes, we consulted experts, of course. I can refer to Ms. Johnson, who has worked on that.

We believe that ideas must be built on facts, on evidence produced by science. That is what determines what's best in the end. Our goal with the hydrogen strategy is indeed to develop new markets, but above all, it is also to work on carbon neutrality and reduce emissions. As the minister pointed out, no one—

one-size-fits-all approach on this.

We see several ways to get there.

I don't know if you want to add anything, Ms. Johnson.

Do you want to add something on the engagement process?

[Mollie Johnson, Assistant Deputy Minister, Low Carbon Energy Sector, Department of Natural Resources]

When we're looking at the difference between all the colours, there's an opportunity to think about how it's being produced, but the most important thing is looking at emissions intensity. We're constantly working toward lower emissions, and looking at how we're producing hydrogen. We continue to seek out market opportunities. We want to be focused on what we can do here in Canada. That's what we'll be looking at in the hydrogen strategy.

When we think about what other jurisdictions and other countries are doing, even those jurisdictions that are going to be focused, or have put a premium on green hydrogen, we still recognize that looking at blue hydrogen is something we're going to have to do in the near term as we're moving forward.

[The Vice-Chair, Conservative, Greg McLean]

Thank you.

That's the end of the questions for Mr. Simard.

Our last questioner for the day is Richard Cannings, member of Parliament, for six minutes please.

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

Thank you for being here today.

Just listening to Mr. Zimmer and his line of questioning on natural gas made me decide to go in that direction. When I was last in Mr. Zimmer's riding in Prince George, I was at a natural resources meeting where the local experts in those projects up there said that they needed a price of $6, I think, for natural gas for those LNG projects to be financially viable. Right now, the price is less than half of that. I think the best projections for the next 10 years are that it may go up to $4. I also have talked to experts in natural resource economy and trade to Eurasia. They say the China market for natural gas is declining. That's one concern I have about those things.

A couple of years ago, I was down in Argentina at a G20 meeting with Minister Carr when he was Minister of Natural Resources. He was talking about the need to export our natural gas and get credit for that shift from coal to natural gas. He said that we want to do this with China, and the Chinese minister got up and said, “We are moving directly from coal to renewables.” You could take that with a grain of salt, but I just wanted to get a reply from the department about natural gas and how the future looks for Canadian exports abroad, considering these very low prices and changing markets.

[Jean-François Tremblay]

If we had had a discussion 15 years ago, we would have talked about a completely different picture. As you remember, before there was shale gas and shale oil. This is a sector that is evolving quite quickly.

I think there's still a market for the LNG; that's for sure. That's what we're hearing. We get comments and questions from Asia, and it continues to be a big interest.

We're also getting a lot of interest in hydrogen, as was mentioned, on using gas to transform to hydrogen. I don't necessarily think the market is down. If you look at, as was mentioned before, the CER and what it say in its report, it also includes a significant portion of fossil energy that will be part of our mix in 2050. That would be the case in other countries, so there is a market for the energy. As was mentioned, however, if we want to get access to those markets, we're going to have to have the best in class, and as you know, that's what's happening with the big LNG projects in British Columbia.

If you want, I can turn to Glenn, who's the ADM on energy, if he wants to add something.

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

Okay, quickly. I have another natural gas question I'd like to get into.

[Glenn Hargrove, Assistant Deputy Minister, Strategic Petroleum Policy and Investment Office, Department of Natural Resources]

Thank you, Deputy, and thank you, Mr. Cannings.

I guess I would just add that we certainly see a lot of continued enthusiasm for LNG. I recently participated in a Canada-Japan energy forum where LNG was top of mind. I think we can look at the LNG Canada project, which is the biggest private-sector investment in Canadian history. I think we can see that there is continued interest in and enthusiasm for LNG and export to the Asian market. I'll leave it there.

Thank you.

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

It was the LNG Canada people who told me they needed $6 to make it profitable.

I just want to ask more about domestic LNG, specifically renewable natural gas. We have a project starting in my riding using forestry waste to make renewable natural gas. They're looking to the federal government for some supports for that. We're getting some headwinds over the federal government not counting that as climate friendly. It is a fossil fuel, so it was not considered for a lot of funding.

I'm just wondering if there's an exception possible for renewable natural gas that is taking forestry waste that otherwise would just be burned.

[Jean-François Tremblay]

It's hard for me to assess a project without seeing the details of it. I'm not in a position to answer it. If you want to send us the project, we would be pleased to look at it.

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

I guess my question was whether there is some blanket.... There's a lot of funding out there for projects that will get us to net zero, but some of these envelopes of funding seem to exclude natural gas because it's a fossil fuel.

[Jean-François Tremblay]

I would not say that they exclude natural gas, because, as I mentioned before, we continue to support the natural gas industry and support the export of natural gas. We also just approved projects like the NGTL where natural gas will be used to get off coal.

As we mentioned also, on the hydrogen side, there is the possibility of using natural gas to produce hydrogen, especially if you combine that with carbon capture, for example.

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

Thank you very much. I appreciate it.

[The Vice-Chair, Conservative, Greg McLean]

Is there anything else today? I think that's probably all we're going to get in as far as the timing on the round today.

[Bryan May, Liberal, Cambridge, ON]

On a point of order, I want to thank you for stepping into the chair's role today and handling yourself very well on a day that came with a number of technical challenges.

On a very important point of order, I want to wish everybody a very merry Christmas and an incredibly happy new year.