Natural Resources Committee on June 13th, 2024

[The Chair, Liberal, George Chahal]

I call this meeting to order.

Welcome to meeting 101 of the House of Commons Standing Committee on Natural Resources. Pursuant to Standing Order 108(2) and the motion adopted by the committee on Tuesday, November 29, 2022, the committee is resuming its study of Canada's electricity grid and network.

Since today's meeting is taking place in a hybrid format, I will make a few comments for the benefit of all.

Before we begin, I ask all members and other in-person participants to consult the cards on the table for guidelines to prevent audio feedback incidents. Please take note of the following preventive measures in place to protect the health and safety of all participants, including the interpreters. Use only an approved black earpiece. The former grey earpieces must no longer be used. Keep your earpiece away from all microphones at all times. When you are not using your earpiece, place it face down on the sticker placed on the table for this purpose. Thank you for your co-operation.

As a Zoom reminder, please wait until I recognize you by name before speaking. I remind you that all comments should be addressed through the chair. Additionally, screenshots or taking photos of your screen is not permitted. In accordance with the committee's routine motion concerning connection tests for the witnesses, I inform the committee that all witnesses have completed the required connection test in advance of this meeting.

I now welcome our witnesses with us today. From Capital Power—

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

I have a point of order.

[The Chair, Liberal, George Chahal]

Yes, Mr. Angus, go ahead on a point of order.

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

Thank you.

I'm sorry. I don't want to interrupt our witnesses, but I just want to get clarity on the witnesses that we have for TMX for the next meeting. I understand that some of the witnesses aren't coming. Can you confirm whether or not they're unable to meet because it's a short deadline or because they do not want to come to our committee?

[The Chair, Liberal, George Chahal]

Thank you, Mr. Angus—I'll go to you right after, Monsieur Simard—and I just ask you to hold for a second.

From what the clerk advised me, Mr. Angus, they indicated they would like to come, but at a future date. Because of the short notice they are unable to make the meeting on Monday. That answers....

Monsieur Simard, go ahead on a point of order.

[Mario Simard, Bloc, Jonquière, QC]

To follow up on what Mr. Angus said, our motion stated that we would invite the Parliamentary Budget Officer for next Thursday, June 20. However, we may not be sitting next Thursday, which would mean that we would not see him before September.

I want the committee to officially request that the PBO prepare an update to the document he tabled on Trans Mountain and that he send it to us before his appearance, likely to be in September. We weren't at $34 billion at the time he tabled his document. He should be able to prepare the update before his appearance.

[The Chair, Liberal, George Chahal]

Thank you, Monsieur Simard.

I don't see any objections to having updated information from them for the meeting that may take place sometime in the future. You referenced possibly in September; that's something we can do, unless anybody has an objection. I'm looking across and I don't see any objections to getting updated information at the appropriate time.

(Motion agreed to [See Minutes of Proceedings])

I go back to you, Mr. Angus.

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

Yes. There may be a small problem, as I'm not getting interpretation.

[The Chair, Liberal, George Chahal]

Mr. Angus, I heard Monsieur Simard through the interpretation. I believe Mr. Steinley has also indicated the same. You might be on the wrong channel.

Were you clear with my response that was given to Monsieur Simard's question? I think so. Everybody's clear with what I stated?

Okay. We're good. There are no objections to proceeding.

Thank you to the witnesses for being patient.

We'll now proceed with the witnesses for today.

We have, from Capital Power, May Wong, senior vice-president, strategy, planning and sustainability, by video conference, and Daniel Jurijew, vice-president, regulatory, siting and stakeholder engagement, by video conference.

From Geothermal Canada, we have Catherine Hickson, president, by video conference; from Greengate Power Corporation, Dan Balaban, chief executive officer, by video conference; and from Western Copper and Gold, Paul West-Sells, president, by video conference.

You have up to five minutes for opening remarks. After that, we will proceed with the round of questions. I will be using two cards: a yellow to give you a warning of 30 seconds, and a red that your time is up. I'll try not to cut you off in mid-sentence, but I ask you to wrap up if you do see a red card. Thank you so much.

We'll now begin with Ms. May Wong from Capital Power for her opening five-minute statement.

[May Wong, Senior Vice-President, Strategy, Planning and Sustainability, Capital Power]

Good afternoon, chair, ladies and gentlemen and honourable members of the Standing Committee on Natural Resources.

My name is May Wong. I'm the senior vice-president of strategy, planning and sustainability for Capital Power. I'm joined by Daniel Jurijew, our VP of regulatory, siting and stakeholder engagements for SMRs. Capital Power appreciates the opportunity to appear before you and provide our perspective on Canada's electricity grid and network.

We are a North American power producer headquartered in Edmonton, Alberta. We currently operate over 9.2 gigawatts of capacity at 32 facilities across Canada and the U.S. Roughly half of this capacity is in Canada, where we operate facilities in Alberta, Ontario and B.C. and employ more than 700 people.

We have invested and continue to invest in a range of technologies to provide reliable, affordable and clean power solutions to customers. These include our $1.35-billion Genesee re-powering project in Alberta that is nearing completion and that has enabled us and Alberta to be off coal. We are also investing in efficient natural gas and batteries in Ontario and pursuing renewable energy developments across North America. We have established a goal of achieving net zero by 2045 and continue to actively explore and assess technologies such as CCS and SMRs. We're committed to meaningful engagement with indigenous communities and pursuing opportunities for economic participation in our existing and future developments.

The focus of our remarks today will be to highlight what we believe are key considerations in developing the framework necessary to attract and sustain the scale of investment in generation capacity to meet expected load growth and achieve decarbonization for our grids and to ensure continued reliability and affordability. We would note at the outset that the central themes of our remarks—reliability, affordability and respect for regional differences—also feature prominently in the Canada electricity advisory council's final report that was released this week.

Every province and territory is unique in the way it has structured its operation, oversight, planning and participation across the different components of the electricity systems. There are two aspects of particular importance.

First, differences in natural resources across provinces have driven differences in the supply mix to meet provincial demand and support affordable and competitive rates. They also present different opportunities and challenges for provinces' pathways to decarbonization.

Second, provincial systems vary in terms of how decisions are made regarding the timing and types of generation additions or retirements and how the costs and risks of generation investment decisions are allocated. This is a fundamental distinction between Alberta's system and systems in other provinces. Generation investments are made by a range of parties on an at-risk basis with no guarantee of a return on investment or backstop recovery by ratepayers.

These differences and circumstances in the regions need to be recognized and respected as part of any review or path forward for Canada's electricity system. They also highlight the need for collaboration among governments, industry, indigenous communities and other stakeholders to consider policies to advance decarbonization while ensuring that reliable and affordable objectives in each province are maintained.

The impressive volume and speed of renewable additions in the last few years have created challenges for system operators. This energy transition period highlights the importance of having a reliable source of power that can provide firm and dispatchable capacity over extended periods. This is why the combination of flexible generation technologies, such as natural gas and energy storage, will continue to be critical in supporting our grid's reliability, as levels of renewable penetration continue to increase until technologies such as long-duration storage, CCS and SMRs can be deployed at scale.

We are now moving beyond energy transition into energy expansion as demand from data centres, electric vehicles and broader electrification will drive even higher growth of demand. The need for additional reliable baseload and dispatchable capacity at all times and all hours will become even more critical.

To meet longer-term decarbonization objectives, a full portfolio of decarbonization technologies will be needed. The components that we need for our approach include policy and regulatory frameworks to enable and accelerate development and deployment of newer technologies, provide clarity and certainty regarding future carbon pricing at the industrial level, appropriate support to mitigate cost challenges and support for the network infrastructure required.

Projects in Canada will be competing with projects around the world; therefore, we need to provide timely resolution and clarity for policy frameworks to provide the confidence and certainty to move forward.

This concludes my opening remarks. I look forward to any questions that honourable committee members may have.

[The Chair, Liberal, George Chahal]

Thank you for your opening statement.

We will now go to Geothermal Canada.

Ms. Catherine Hickson, you have five minutes.

[Catherine Hickson, President, Geothermal Canada]

Good afternoon, everyone. Thank you very much for the opportunity to speak to you today.

I think what I bring to this table is not so much something specific about transmission but kind of the forgotten resource, which is the deep geothermal heat beneath our feet.

Geothermal Canada was formed in 1974. This is our 50th year. Canadians have been active globally in geothermal energy, but not in Canada. Why? There are a number of reasons, but what I want to bring to the table today is really what geothermal energy is.

It covers a spectrum of technologies. That spectrum of technologies starts with ground base. This is shallow geothermal. These are heat pumps. Often you will hear somebody say, “I have geothermal.” It is most likely that they in fact have a ground-based or geo-exchange system.

We move to conventional geothermal, which is a deep extraction of brines naturally occurring in the subsurface and extracting that energy from them to produce power or thermal energy.

There's a lot of research and development today around what are called advanced systems or engineered systems. In fact, the American government has invested approximately $300 million in the last two years in the advancement of engineered geothermal systems.

As a note, there are over 16,000 megawatts of geothermal power installed globally. That doesn't sound like very much, but we have to remember that geothermal is baseload—it is firm and dispatchable—and that 16,000 megawatts is equivalent to 5.5 billion megawatt-hours annually.

I want to make 10 points about geothermal. It can help in Canada's decarbonization. It can provide baseload electricity as well as thermal energy. I want to stress that these facilities do not require battery backup or storage. They are grid stable and are able to provide dispatchable power on a 24-7 basis.

They provide a heat option for northern communities and allow for decarbonization without reverting to heat produced by electrical means. They provide a potential energy source for off-grid communities—indigenous, remote and rural—as well as rural industry, like mining operations.

Geothermal energy systems can be used as part of a hybrid system when combined with waste heat recovery and other forms of renewable energy, such as solar and wind, and can help reduce the dependence of remote, rural or indigenous communities on hydrocarbons.

Conventional deep geothermal facilities are carbon neutral. Work that I and my colleagues have been doing with the University of Alberta has shown that we can actually do carbon sequestration, so we can take a geothermal project and make it not just carbon neutral but carbon negative by sequestering carbon that other emitters are producing.

Although conventional geothermal has a high CapEx, it has a very low OpEx, and it is deployable in many parts of Canada. Unconventional or new generation geothermal, such as these advanced and engineered systems, will potentially have a higher cost, but these systems are under development, and as I've already said, the American government has invested more than $300 million in EGS, engineered geothermal systems.

Geothermal can support food stability by producing locally grown food. With additional research and testing, a small portion of the existing drilled wells, particularly the deep wells that have what's called a high water cut, have some potential to be, in fact, repurposed to produce an energy stream, either as thermal or as electrical energy.

Exploration and development of geothermal energy uses Canadian technology. This is something that we know how to do. We know how to drill and we know how to explore the deep subsurface. In fact, the reason that Geothermal Canada has been around since 1974 is that Canadian expertise and technology have been deployed and been used globally —but not here in Canada.

Thank you.

[The Chair, Liberal, George Chahal]

Thank you, Ms. Hickson, for your opening remarks.

We'll now go to Mr. Dan Balaban from Greengate Power Corporation. You have five minutes.

[Dan Balaban, Chief Executive Officer, Greengate Power Corporation]

Good afternoon. Thank you for the invitation to present to the committee today.

I'm the co-founder and CEO of Greengate Power. Greengate is a renewable energy development company based in Calgary, Alberta, which has been behind some of the largest renewable energy projects in Canadian history.

For background, though, perhaps I could share a bit of my professional story.

I graduated with with a computer science degree from the University of Toronto. I started my career in technology consulting, helping companies apply Internet-based technology to solve business problems.

In my mid-twenties I left consulting to start my own software company, which was an Internet-based software solution for oil and gas. We successfully commercialized the software, and eventually it became an industry-leading solution.

Amongst the many capabilities of the software was helping oil and gas companies track and report their greenhouse gas emissions during a time when greenhouse gas emissions were not nearly the issue that they are today. This gave me early insight into the looming environmental challenges I could see the energy industry facing.

I had a successful exit from that company at the age of 30, and I knew the next business I wanted to start would be something that would leave a lasting positive environmental impact.

With no prior experience in power, I started Greengate with my brother Jordan, with our own capital, more than 17 years ago. The goal was simple: to prove that large-scale renewable energy projects could work in Alberta, the heart of oil country. How hard could that be?

Yet Greengate has successfully developed over $2 billion of operating renewable energy projects in Alberta. representing about one-third of all the renewables in the province today. These projects produce enough energy to power more than half a million homes.

This includes several of the largest wind projects in the country and the largest solar project in Canadian history, a nearly $1-billion project called Travers Solar.

The projects we developed have secured power purchase agreements with Amazon and Microsoft. Multi-billion-dollar data centre investments are now planned in the province, proving that a clean grid and new economic development opportunities go hand in hand.

For the last five years Alberta has been the leading destination for renewables investment in Canada and one of the top such destinations in North America. We have certainly proven what is possible, and demonstrated to the world that Canada can lead in oil and gas and renewables.

Unfortunately, energy in Canada has become highly politicized and polarized, with different political forces taking on high-profile opposing stances. This was recently demonstrated by Alberta's decision to impose a seven-month moratorium on new renewables projects in the province. This sent a profoundly negative signal throughout the industry. It was recently lifted, but the new rules and uncertainty coming out of the moratorium have put the future of the booming renewables industry in the province at risk.

On one side we have the federal government, which is pushing the provinces, including my home province of Alberta, towards a very ambitious target of a net-zero grid by 2035. On the other hand, we have our provincial government, which is pushing back very hard against that target, with the renewables industry caught in the crossfire. We need to be working on solutions that will be providing us with the clean, affordable and reliable energy we need to meet our future needs. The fight does not serve us.

The world is going through an energy transition, moving from molecules to clean electrons as our primary source of energy. However, this transition will take time, and for the time being we need all forms of energy to meet our quickly growing energy demands. The demand for electricity in particular is expected to increase rapidly, not only due to our growing population, but also due to the electrification of transportation and industry, as well as the rising demands from data centres and AI.

As we move towards a net-zero future, it is important to recognize the opportunities and challenges ahead. We have the triangle of clean, affordable and reliable. Given the current state of technology, we can have two out of three corners covered, but having all three corners covered remains elusive.

This is why incentives such as the federal investment tax credit and the smart renewables and electrification pathways program are so vital in ensuring that industry can attract the necessary capital to build up the energy infrastructure of the future. This includes technology such as renewables, energy storage and carbon capture.

Now is the time to move past polarization, take on the challenge and seize the opportunity ahead for all Canadians.

Again, thank you for the invitation. I look forward to a productive discussion.

[The Chair, Liberal, George Chahal]

Thank you, Mr. Balaban, for your opening remarks.

We'll go to Western Copper and Gold and Mr. Paul West-Sells.

You have five minutes. The floor is yours, sir.

[Paul West-Sells, President, Western Copper and Gold]

Thank you.

Good afternoon, Mr. Chair and members of the committee. Thank you for the invitation and honour of speaking today.

My name is Paul West-Sells. I'm the president of Western Copper and Gold.

Our flagship project, the Casino project, is one of Canada's largest and most significant critical mineral projects and is located in Yukon. I'm here to discuss the significant role our project plays in supporting the transition to a green economy and the development of a resilient and modern electricity grid.

Over its life, the Casino project mine is estimated to contribute $44.3 billion to Canada's GDP, create over 132,000 full-time equivalent jobs and contribute $11.2 billion in taxes and royalties to various levels of government.

The Casino project will be a key contributor to Canada's supply of critical minerals essential for the key energy transition. With an anticipated lifespan of 27 years and the potential to extend for decades beyond that, the project is expected to produce substantial quantities of copper and molybdenum along with gold and silver. As you know, these minerals are crucial for the development of renewable energy technologies such as wind turbines, solar panels and electric vehicles, aligning with Canada's goals for a more sustainable electricity grid.

As the biggest mining development in the Yukon territory, we're committed to ensuring that the Casino project becomes a model of green copper production. To achieve this, we need access to a stable, reliable green power connection. This is why Western has been such a proponent of the B.C.-Yukon grid interconnect.

Simply put, the Yukon is running out of power. Every year, as the population grows, the territory is forced to tack on more diesel generators to meet increasing demand. In the winter, they just can't keep up. The B.C.-Yukon grid interconnect not only represents a source of green power but also would bring reliability to the Yukon grid. The interconnect opens the opportunity for our project and for others to run on a reliable power source. It would strengthen our northern sovereignty and unlock future prosperity for our northern communities.

The Government of Yukon has already put in an application to begin doing the exploratory work on the grid interconnect through the critical minerals infrastructure fund. This would mean beginning work on the planning, site and route selections and continuing engagement with indigenous communities in B.C. and the territory. We understand that any project of this size will take time, but in every year that we wait, the costs and the demand for transmission grow higher. We need to start making tangible first steps towards making this project a reality.

As it stands right now, because of the size of our project and the nature of Yukon's grid, the Casino project is forecast to spend $1.8 billion on the carbon tax over the life of the mine. That's because to power the mine, we need to build and operate our own LNG power plant. In other parts of Canada, we would be able to connect to grid power, but development of the electrical grid in Yukon has not kept up with demand, and it is not equipped to power the next wave of critical minerals projects, such as our Casino project. We believe that if we are paying into the carbon tax, the money should go towards projects that strengthen energy security for Yukoners.

Canada's electricity grid and sector are a competitive advantage in the 21st century. As the nation transitions to green energy sources, projects like ours play a crucial role. Copper from the Casino project will support the modernization of grid infrastructure. We will be a reliable, ethical and sustainable source of critical minerals for manufacturers who use our critical minerals in transmission equipment, generators and batteries. Canadian critical minerals are essential in friendshoring our domestic industry, ensuring that Canada and its allies have access to the resources we need.

The financial barriers to reaching net-zero electricity by 2035 are significant. We recognize that. Our project contributes to this transition by attracting private sector investment. The Casino project's economic benefits, including job creation and regional development, are a generational opportunity for the Yukon and for the country. Canada's commitment to decarbonizing its electricity grid by 2035 and achieving a net-zero economy by 2050 is a challenging yet necessary path. Our project exemplifies how private sector initiatives can support national decarbonization efforts, contributing to cleaner electricity and a reduced carbon footprint.

Western Copper and Gold is proud to be at the forefront of supporting Canada's transition to a green economy through the Casino project. We are committed to contributing positively to the nation's electricity infrastructure, environmental goals and indigenous engagement strategies. Our role in providing critical minerals, supporting grid modernization and fostering economic growth positions us as a key player in Canada's sustainable future.

Thank you for the opportunity to share our vision and our commitment. I look forward to your questions.

[The Chair, Liberal, George Chahal]

Thank you, Mr. West-Sells, for your opening remarks.

Now we will proceed to our first round of questioning.

We will begin with Mr. Patzer. You have six minutes.

[Jeremy Patzer, Conservative, Cypress Hills—Grasslands, SK]

Thank you very much, Chair.

Thank you to the witnesses.

I'll start with Western Copper and Gold.

When did you guys start the initial process for the Casino project?

[Paul West-Sells]

Do you mean start the process to get the project regulated, or start the process to...?

The Yukon government has started the process to look towards a grid intertie between British Columbia and the Yukon.

[Jeremy Patzer, Conservative, Cypress Hills—Grasslands, SK]

For the mine you're talking about building, you're still in some of the permitting stage, doing feasibility studies and all of that. Am I right?

[Paul West-Sells]

The project has a completed feasibility study from 2022. We're currently in the first stages of the regulatory process. In the Yukon, that's called the YESAB process. It's anticipated that it'll take approximately four years from today to get through that process, and there are another three years of construction.

This is an early-2030 project.

[Jeremy Patzer, Conservative, Cypress Hills—Grasslands, SK]

When it comes to all of the applications, when were the first ones submitted for your feasibility study and YESAB? When did permitting start?

[Paul West-Sells]

There have been a couple of fits and starts, but this current application, with the current design from 2022.... The establishment of the guidelines kicked off at the beginning of 2023. Those were reviewed. It went back and forth. The final guidelines were issued in September 2023.

Essentially, it's now back to us to put together the application, which we will be doing over the next year.

[Jeremy Patzer, Conservative, Cypress Hills—Grasslands, SK]

We're trying to get to a net-zero grid by 2035. This project will not be producing until close to that date. What does that do for the target the government set of trying to hit net zero by 2035?

[Paul West-Sells]

We're moving the project forward. We're looking at liquefied natural gas as our power source, because it's the only option available to us. We would love for it to not be liquefied natural gas. We would love for it to be green power producing green copper.

We will continue to advance our project through the regulatory process. We're hopeful that by the time we get through that process, the concept of a grid intertie is sufficiently advanced that we can connect to that or, at worst, delay the start of the project for a couple of years in order to connect to that green power.