Natural Resources Committee on March 2nd, 2022

[Viviane LaPointe, Liberal, Sudbury, ON]

As you develop the critical minerals strategy in your role as minister, what would you identify as a successful outcome of that strategy?

[Jonathan Wilkinson, Liberal, North Vancouver, BC]

I think a successful outcome is a very clear and transparent strategy that includes engagement with the provinces and territories, which are also very interested. Almost every one of them is developing their own strategy, but it has to be actionable. It has to be something that is going to allow us to move.

Let me take just one example. If we want to supply nickel sulphate in the context of battery production in Canada for the vehicles that are going to be utilized in Canada, we need probably four or five processing facilities in this country that don't exist today. There is a lot of work that needs to be done in order to enable the work that we're doing on many other files in the climate area.

I think it has to be actionable, and ideally it is very much collaborative with provinces and territories, with industry and with labour, and very much with indigenous communities.

[Viviane LaPointe, Liberal, Sudbury, ON]

Thank you.

[The Chair, Liberal, John Aldag]

I apologize, but that's the end of the six minutes. We're going to keep moving on.

We'll go over to you, Monsieur Simard, for your six minutes.

[Mario Simard, Bloc, Jonquière, QC]

Thank you, Mr. Chair.

Thank you for joining us, Minister Wilkinson.

I seriously doubt that oil production emissions can be lowered solely with the industry's financial resources. I think that this requires strong government support. I'll provide the example of the two major carbon capture projects in Alberta. In total, 57% of the costs are covered by the Alberta government and the federal government. I'm saying this because, in the breakdown of expenditures document provided, the largest grants and contributions amount, $91 million, consists of funding to advance clean fuels markets and carbon capture strategies. That's the lion's share.

During question period, the Prime Minister does something that I appreciate. It's just one thing, and it's when he refers to science. The science and the people who appeared before the committee said that all these carbon capture strategies, the data on the topic, mostly came from people with close ties to the industry. When we look at external sources, the scientific data shows that this isn't only unprofitable, but also undesirable.

Lastly, isn't this $91 million being invested to make Alberta happy, despite the fact that it won't affect the environment or the energy transition?

[Jonathan Wilkinson, Liberal, North Vancouver, BC]

I disagree.

First, two‑thirds of this spending concerns hydrogen and biofuels. Only one‑third involves carbon capture.

Many scientists and agencies, including the International Energy Agency, say that carbon capture is a key tool for reaching the net‑zero emissions target by 2050. It isn't a climate plan, but a very important tool, not just for the oil sector, but also for cement, fertilizer and some other sectors where greenhouse gases are difficult to reduce.

[Mario Simard, Bloc, Jonquière, QC]

Since I'm generous, I already told you a bit about what I would be discussing before the meeting started.

The Minister of the Environment said that, by 2023, we'll see an end to ineffective subsidies. I'm still wondering about what constitutes an effective subsidy in terms of oil. However, one helpful indicator is the energy return rate. This rate shows that blue hydrogen has an index of four. If we take the hydroelectricity products, meaning what we invest compared to what we receive in terms of energy, we have an index of 100. To me, that's a fairly big step.

On that note, do you find that your hydrogen strategy, which doesn't clearly set a carbon target, is an example of effective subsidies?

[Jonathan Wilkinson, Liberal, North Vancouver, BC]

As we discussed, I agree with some of what you said.

I think that it's critical to measure the carbon in the fuels produced. Of course, I don't like the use of “green” and “blue” and other colours. I think that we must measure the carbon in the fuels. We're working on that now, so that we can have this measurement in the future.

As I said, the ineffective subsidies speed up fossil fuel production and exploration. We've promised to eliminate these subsidies by 2023.

[Mario Simard, Bloc, Jonquière, QC]

That's what I wanted to hear.

I gather that you'll agree that the rhetoric about reducing greenhouse gas emissions without reducing production doesn't hold water. You can't just say that you'll reduce emissions. You must also reduce production.

Do you agree?

[Jonathan Wilkinson, Liberal, North Vancouver, BC]

No. The atmosphere absorbs greenhouse gas emissions. We must work to reduce these emissions.

In the future, zero‑emission vehicles will be rolled out. However, it will be decades before we see a reduction in the use of oil. The current priority is to reduce greenhouse gas emissions, because this is what causes climate change. We need to address this issue.

[Mario Simard, Bloc, Jonquière, QC]

Thank you.

[The Chair, Liberal, John Aldag]

We're out of time there.

Mr. Angus, let's get your six minutes started.

[Charlie Angus, NDP, Timmins—James Bay, ON]

Thank you, Mr. Chair.

Thank you so much, Mr. Minister, for joining us.

One of the more dramatic statements at COP26 was the Prime Minister's promise of an emissions cap. Where is it? When does it start?

[Jonathan Wilkinson, Liberal, North Vancouver, BC]

Thank you for the question. The emissions cap is something on which we said we would consult with provinces and territories, with industry and with labour, and that is something that is ongoing. We intend to bring that forward during the course of this coming year, but we have promised consultations and we intend to honour that promise.

[Charlie Angus, NDP, Timmins—James Bay, ON]

There's an Alberta cap, which would allow for about a 30% increase in production. Is that where you're going or are you going to go where, it was said in 2019, we needed to go, with a dramatic ratcheting up?

[Jonathan Wilkinson, Liberal, North Vancouver, BC]

I'm not going to get ahead of myself, but what we have said is that it will be capped at levels that reflect current production. It is not the same cap as Rachel Notley's cap, which is significantly higher.

[Charlie Angus, NDP, Timmins—James Bay, ON]

The Canadian Energy Regulator tells us they're expecting an increase of at least a million barrels a year by 2030 and that in 2050, we'll have basically the same production we have today. That's the federal regulator. The Canadian Association of Petroleum Producers came here and told us their plan is to vastly increase production.

How does your cap work if the regulator and the industry are planning to increase production?

[Jonathan Wilkinson, Liberal, North Vancouver, BC]

I would say a couple of things. The first, as I said to Mr. Simard, is that the focus for us is on emissions. It's on reducing emissions in line with what we have committed to do, which is by 40% to 45% by 2030 and to net zero by 2050. That is the primary focus for us.

As for the Canada Energy Regulator, what I have asked them to do, as I think you probably know, is to provide us a scenario that is in line with 1.5°C in the same way that the International Energy Agency has done that, and I expect them to bring that forward this year.

[Charlie Angus, NDP, Timmins—James Bay, ON]

Will your cap get us to or keep us at 1.5°C? They're talking about major increases in production. I guess the thing I find hard to believe, which I'm being told as we sit around this committee table, is that production and emissions have nothing in common, whereas I think that is just a fallacy of logic. If you're bringing in an emissions cap, are you targeting production?

[Jonathan Wilkinson, Liberal, North Vancouver, BC]

The CER assessment did not include, for example, all of the commitments that were made at this year's COP. Of course everybody knows that we have to accelerate the work that is being done not just in Canada but around the world. That includes the deployment of zero-emission technology for vehicles, which will affect the demand for oil. It goes across all sectors. That needs to be built into the work that the CER is doing.

[Charlie Angus, NDP, Timmins—James Bay, ON]

Okay. One of the other things that came out of COP was that Minister Guilbeault used the term “weasel words” for fossil fuel subsidies and said those would be ended in 18 months. Are you planning on keeping that as a standard?

[Jonathan Wilkinson, Liberal, North Vancouver, BC]

We have made a commitment to eliminate inefficient fossil fuel subsidies by the end of 2023. I would say that's two years in advance of the rest of the G20, and we will be the first country to do so.

[Charlie Angus, NDP, Timmins—James Bay, ON]

The Canadian Association of Petroleum Producers said that they wanted $75 billion. These guys aren't shy. They have met with your government 6,800 times. They're pretty comfortable with you guys. I'm surprised they're not sitting here. They want $75 billion to implement carbon capture technology and they want the public to pay for 75% of that. If you're going to be using carbon capture technology to reduce our usage, will there be a clear statement that it can't be used to increase oil production?

[Jonathan Wilkinson, Liberal, North Vancouver, BC]

As I said in response to the Conservative member's question, the investment tax credit, which is, I think, probably what they were largely referring to, is something that is being driven and developed by the Department of Finance. What I will tell you is that we are very focused on ensuring that we are aiming measures at reducing emissions. That is true for CCUS in the oil and gas space, but it's also true for the investments in electric car technology in the steel manufacturing space.

[Charlie Angus, NDP, Timmins—James Bay, ON]

I get that. It's just that the Canadian Association of Petroleum Producers isn't asking for cement; they're saying they want $75 billion of taxpayers' money.

My question is based on the letter of the 400 scientists who have written to you. They said that this will be used to vastly increase production. Are we going to be getting a guarantee—or are these going to be the “weasel words” that our environment minister warned us about—that if we are capturing carbon across all sectors that this will not be used to enhance production in the oil sector?