Natural Resources Committee on Sept. 25th, 2024

[The Chair, Liberal, George Chahal]

I call this meeting to order.

Welcome to meeting number 106 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.

Today's meeting is taking place in a hybrid format. All witnesses have completed the required connection tests in advance of the meeting.

I would like to remind participants of the following points. Please wait until I recognize you by name before speaking. All comments should be addressed through the chair. Members, please raise your hand if you wish to speak, whether participating in person or via Zoom. The clerk and I will manage the speaking order as best we can. I'll be using two cards, one to give you a warning when you have 30 seconds left, and the other, the red card, when time's up. I will try not to interrupt you mid-sentence.

I'd like to welcome our witnesses who are with us today.

We have, from the Canada West Foundation, Dr. Colleen Collins, vice-president, by video conference; from Clean Energy Canada, Evan Pivnick, program manager, clean energy; from the David Suzuki Foundation, Stephen Thomas, clean energy manager; from Energy for a Secure Future, Shannon Joseph, chair; and from Environmental Defence Canada, Keith Brooks, programs director, by video conference.

You'll have up to five minutes for your opening remarks.

We will begin with Dr. Collins, from the Canada West Foundation.

The floor is yours.

[Dr. Colleen Collins, Vice-President, Canada West Foundation]

I'd like to thank the committee for inviting me to participate in your study today.

The Canada West Foundation is an independent, non-partisan public policy think tank that specifically focuses on matters that matter most to the west. We advance pragmatic policies based on research and convening. As well, we educate Canadians on these issues.

Your committee is tasked with the study of Canada's electricity system. This is no small undertaking, precisely because there is no Canadian electricity system. Our country has 10 provincial systems, and I'll focus on the west.

My first point is that electricity generation and intraprovincial transmission fall clearly within provincial jurisdiction, so it is quite interesting to participate in a study by a House of Commons committee on this topic.

Western provinces have raised serious concerns that unilateral federal action, through policies such as the Impact Assessment Act and the clean electricity regulations, runs afoul of the Constitution and, in the Impact Assessment Act decision, you'll recall that the Supreme Court pointedly reminded the federal government of provincial responsibility for electricity.

Electricity generation that is reliable, affordable and clean is the objective of every provincial government and system operator. However, because an issue is important across the nation, that does not mean that it is an issue of national concern to be unilaterally addressed by the federal government. Provinces are taking actions to achieve these goals in ways that are consistent with the diverse nature of their resource endowments, geography and system choices, and they are co-operating with their neighbours where it makes sense. In July 2023, the Canada West Foundation released a report that described the diverse electricity landscape across the west. It is available on our website: cwf.ca.

As a committee, I'm sure you will ask, what is the appropriate role for the federal government? Clearly, it is not to create uncertainty that limits investments in both emitting and non-emitting generation through clean electricity regulations that are unnecessary, unattainable, unaffordable and unconstitutional, as Alberta and Saskatchewan have demonstrated, or to create uncertainty through delayed implementation of promised investment tax credits and other uncertainties concerning carbon contracts for differences.

Electricity is a system. Actions on one part have implications for others, and those implications differ in different provinces. Policies that may benefit Canada on average can have very negative consequences in some provinces, as shown by research by the Canada West Foundation and—

[The Chair, Liberal, George Chahal]

Ms. Collins, I'll ask you to pause for just a second.

[Mario Simard, Bloc, Jonquière, QC]

We have a problem with the interpretation. I think Ms. Collins's connection is not good enough for the interpreters to do their jobs.

[The Chair, Liberal, George Chahal]

Ms. Collins, we'll get back to you in a moment.

I'm going to suspend for a moment, just to check with interpretation to make sure everything is okay. Just hold, and we'll be back in a moment.

We will suspend.

[The Chair, Liberal, George Chahal]

Ms. Collins, before you begin, your connection is a bit unstable. We will try to continue, but if it doesn't stabilize and we can't hear you, we may have to proceed to another speaker. However, we will advise accordingly.

I apologize. Please continue, and hopefully we can get through this without any further disruptions.

[Dr. Colleen Collins]

The Supreme Court determined that where federal and provincial responsibilities overlap, each order of government should stay in its own lane, related to its heads of power, and they should work together through co-operative federalism to achieve their goals. This doesn't only make constitutional sense. It also makes practical sense, especially for complex systems like electricity under very diverse conditions.

Regulations and funding programs that don't consider the realities on the ground will be counterproductive. There's much to be gained through true co-operation, but to be sure, consultation is not the same thing.

Second, if we consider interprovincial interties as an example of an area within federal jurisdiction, a map of electricity generation and emissions across the west suggests an obvious idea: Ship zero-emission hydroelectricity from the bookends of B.C. and Manitoba to Alberta and Saskatchewan. However, as your committee studies the system in more depth, you will find that B.C. and Manitoba simply don't have spare ongoing baseload electricity to send to Alberta and Saskatchewan.

In 2023, B.C. actually imported more electricity from the U.S. and Alberta than it exported. Even with Site C coming online at the end of the year, B.C. will soon face supply shortages. Manitoba is also facing somewhat similar situations due to the drought, and it, too, has issued a call for major new renewable generation. You will also discover that Alberta provided 92% of Canada's new renewable storage capacity in 2023. Since Alberta doesn't have its own major hydroelectricity resources or consistent supply from B.C., wind and solar have developed precisely because the resources exist and because there is natural gas to provide baseload power.

[The Chair, Liberal, George Chahal]

Ms. Collins, we are at time, so if you have a concluding sentence or two, I'd just ask you to wrap up, please.

[Dr. Colleen Collins]

As western provinces seek opportunities to increase reliability, affordability and sustainability, there is a role for the federal government to use its spending power in co-operation with the provinces to support emissions reductions that suit their individual conditions.

Thank you.

[The Chair, Liberal, George Chahal]

Thank you.

We'll now go to Keith Brooks from Environmental Defence Canada.

You have five minutes.

[Keith Brooks, Programs Director, Environmental Defence Canada]

Thank you, Chair and members of the committee.

I am Keith Brooks from Environmental Defence.

It's our view that it's absolutely essential to fully decarbonize Canada's electricity grid by 2035. A clean grid is the backbone of the energy transition. The pathway to a net-zero economy, simply put, is achieved by electrifying as many energy end uses as possible, fully decarbonizing the electricity grid, achieving all available conservation and efficiency, and then, finally, dealing with those hardest-to-abate sectors.

Electric vehicle adoption, cold climate heat pumps and electric arc furnaces are examples of the electrification of end uses, but these solutions only realize their full potential if we have a fully decarbonized grid.

A 100% clean and renewable grid is entirely achievable, especially in a country like Canada. Many countries have already accomplished this. Many more, including all of Canada's G7 allies, have committed to it, and few countries are in a better position than Canada to achieve it. We have abundant wind, water and solar resources. Canada's grid is already 84% non-emitting, and the federal government has a clear role to play in getting our nation the rest of the way there.

As usual, this can be accomplished through a targeted use of both carrots and sticks: that is, federal support for a more resilient and interconnected electricity grid, and robust federal clean electricity regulations to deliver on the Prime Minister's commitment to get Canada to a net-zero grid by 2035.

The good news is that renewable energy is the cheapest source of new electricity generation in the world. Wind power is the cheapest source of new electricity generation in much, if not all, of Canada today. Wind power projects have out-competed, and will continue to out-compete, new gas plants and nuclear power projects, hands-down.

Solar power prices have been dropping and are expected to continue to drop, dramatically, and solar is expected to be the cheapest source of new power in Canada within the next decade.

We already have well-developed hydro power resources across the country, and companies are looking to augment those by tapping tidal power and wave power to add to what is already a robust amount of renewable baseload.

The knock on renewables, of course—wind and solar in particular—is that they're intermittent. The sun doesn't always shine, and the wind doesn't always blow. Though this is true, energy storage technologies are evolving quickly alongside renewable energy and are firming up these intermittent resources at costs that are very reasonable.

For example, the province of Ontario recently completed the procurement of what they call “capacity resources”. These are resources that are not baseload, not expected to be generating all the time, but are there to add capacity when needed. The province opened up procurement to gas plants as well as battery energy storage systems, and the battery systems came in at 40% of the cost of the gas plant on a per megawatt basis. Yes, the gas plants can run a bit longer, but even if you doubled the capacity of the battery systems, they would still be cheaper than gas. Hydro power can also act to firm up wind and solar. Hydro plant operators can generate more or less electricity based on demand and based on what other renewable sources are contributing.

The federal government does have a role to play in adding further resiliency and reliability to the grid by taking action to ensure that provincial and territorial grids are connected into a national network.

This recommendation has been made by the Canadian Climate Institute, by the Canada electricity advisory council and, as noted, by bodies like the International Energy Agency, which recommended that the Government of Canada “work with the provinces and the electricity industry to facilitate greater east-west interconnectivity between Canada's electricity networks and greater integration of Canada's electricity markets more generally.” I would add that we would also want to see more integration with Canada's territories and the territorial grids.

The two main mechanisms to achieve this are for the federal government to use its convening power, and to fund projects that facilitate interconnection and that get the provinces to see themselves as part of a national grid and network. This need is clear, and the federal role has been clearly identified. We recommend the government get moving on this without further delay. I'll note that progress in Atlantic Canada on the maritime link suggests that the federal government has already taken this advice on board and is moving forward to implement it.

More is still needed, and perhaps especially to help prairie provinces that are presently overly reliant on fossil fuel generation. Alberta and Saskatchewan have some of the best wind and solar resources in Canada, but they would benefit from greater connectivity to other provinces and territories that have robust hydro power resources.

The other key piece of the puzzle, as noted above, is that with the guarantee of greater interprovincial and territorial connectivity and resilience, the government should bring forward strong clean electricity regulations. Countries around the world are building renewable power at an incredible pace, but here in Canada we're moving comparatively slowly due to the regulatory uncertainty at the federal level. We're still waiting for the final federal regulations, and in the meantime some provinces are going backwards by introducing policies that make building new renewable energy very challenging.

Thank you very much.

[The Chair, Liberal, George Chahal]

Thank you.

We'll now go to Evan Pivnick from Clean Energy Canada.

You have five minutes.

[Evan Pivnick, Program Manager, Clean Energy, Clean Energy Canada]

Good evening, Chair and members of the committee.

My name is Evan Pivnick. I am the clean energy program manager for Clean Energy Canada, a climate and energy think tank run out of Simon Fraser University.

I'm here to talk about Canada's clean electricity opportunities and the pivotal role this plays in enhancing our competitiveness, protecting affordability and ensuring the energy security of Canadians. The choices we make today about how we grow, modernize and decarbonize our electricity grid will profoundly impact our economic prosperity for decades to come.

Globally, the world is electrifying. Of the $3 trillion U.S. in expected global energy investment this year, $2 trillion will flow into clean energy technologies and infrastructure. The IEA expects that by 2050, in a net-zero scenario, electricity will be meeting more than half of the world's energy needs. It's not just electricity in general, but clean electricity specifically that countries are seeing as a strategic imperative. From hydro to nuclear and renewables backed by energy efficiency and energy storage, non-emitting technologies are increasingly the priority.

Across the world, fossil fuel demand for electricity has peaked in 95% of OECD countries and is now in decline. The share of electricity demand being met by renewables has been growing exponentially, expanding from roughly 20% in 2015 to an expected 38% by 2027. Even under existing policy, 80% of new power generation added globally by 2030 is expected to come from renewables.

While global climate policies certainly play a role in driving electrification, that's far from the only factor. The falling prices of key clean energy technologies, increasing demands for electricity from households and industry, and the rising importance of energy security in the face of global conflicts are all significant drivers.

Here at home, clean electricity presents opportunities for Canada that we should be moving quickly to embrace.

First, clean electricity offers Canada a major competitive advantage in a global economy that's increasingly preferring low-carbon goods and services. As ally countries like the EU and the U.S. consider moving forward with carbon border adjustments to keep out higher-carbon goods, and exports of clean energy rise in importance, our ability to power our economy with clean electricity will become an imperative. Choosing to delay the deployment of clean electricity is choosing to allow investment that could come to Canada to go elsewhere.

Second, clean electricity and the clean energy solutions that plug into it can improve household affordability. A recent report by Clean Energy Canada looked at Alberta and Ontario and found that, as of 2023, wind power was already able to produce electricity at lower cost than natural gas. Another study of ours, due out in the next few weeks, will show that deploying just a few clean energy solutions like EVs and heat pumps, powered by electricity, can help families across the country save hundreds of dollars a month on their energy bills. At a time when cost of living concerns dominate the national conversation, clean electricity can be an important part of that solution.

Finally, building out domestically produced clean electricity and electrifying our economy will enhance Canada's energy security. Global actions have an impact on the prices we pay here at home. Just last week, we saw global oil prices fall to a three-year low, in large part due to the surging EV adoption we're seeing in China. Enabling Canadian households and industries to plug into homegrown Canadian clean electricity enables them to benefit from predictable electricity prices that are regulated provincially, as opposed to being exposed to geopolitically driven fossil fuel price swings.

Canada has a significant head start, with a grid that is already more than 80% clean, but as laid out in the final report of the independent clean electricity advisory council, the twin challenges Canada must overcome are to decarbonize our electricity grid while simultaneously expanding it to meet the growing demand for electricity that we face.

There are many reasons for optimism that we can conquer these challenges. Over the last three years, nearly every province in the country has identified clean electricity as a key competitive advantage and has begun to take steps to decarbonize and grow their respective electricity grids. The problem isn't the direction; it's the speed at which we're moving. Here the federal government has a vital role to play in urgently capitalizing on our country's clean electricity opportunity.

Specifically, Clean Energy Canada recommends that the federal government drive ambition through setting clear targets and developing flexible regulations that address carbon pollution and help natural gas to be a resource of last resort; provide funding at the scale required to decarbonize our existing system and deploy new clean electricity resources needed to meet growing demand; and support the uptake of household clean energy technologies like EVs and heat pumps that help unlock cost savings and enhance our energy security.

The competitiveness of our economy, the affordability of electricity and the security of our energy supply depend on the federal government being an active partner. As others have said, the direction of change is inevitable, but the speed is up to us.

Thank you so much. I look forward to your questions.

[The Chair, Liberal, George Chahal]

Thank you.

I want to remind the witnesses that yellow is a 30-second warning and red is time's up. I just want to make sure that you don't stop early.

We'll go to Mr. Stephen Thomas from the David Suzuki Foundation.

You have five minutes. Go ahead.

[Stephen Thomas, Clean Energy Manager, David Suzuki Foundation]

Thank you.

First, I'd like to acknowledge the unceded Algonquin Anishinabe territory on which this conversation is taking place.

Of course, I would like to thank the chair, the vice-chairs and the members of the committee for their time on this important topic today.

My name is Stephen Thomas. I am the clean energy manager for the David Suzuki Foundation. The foundation has been a part of convening, active in research, and working on the issues of electricity and renewables for more than 30 years. We welcome the opportunity to contribute some of our more recent research and views to this committee's work on electricity.

Today we see an exciting opportunity before us in the shared work of upgrading Canada's electricity system to meet this moment in order to prepare for a competitive, secure energy future and to ensure affordable, reliable and clean electricity for Canadian households along the way. This moment requires that Canada be thoughtful and strategic in its approach to the electricity system, which is why we commend the work of this committee in exploring pathways, technologies, frameworks and approaches.

The challenge of meeting growing electricity demand and the changing nature of electricity production and consumption is considerable, and it's why we need a plan. However, the benefits are also considerable when it comes to the affordability of energy for everyone, better health outcomes for ourselves and our kids, economic competitiveness and security, opportunities for indigenous self-determination and energy sovereignty, and jobs and benefits for workers. Clean electricity has a lot to offer. However, along the way, we must ask important questions, such as who benefits and how we can maximize those benefits for families, communities and the indigenous nations on whose land this electricity transformation takes place.

We recognize and lift up that we are having this conversation as multiple crises are affecting Canadians, including the crisis of affordability and the climate crisis itself. The International Energy Agency, as already mentioned, has made it quite clear for years that if the world is to be on a path that avoids the worst impacts of climate change, this sort of work on decarbonizing electricity is what's needed for a developed country like Canada—in particular, the 2035 target for net-zero electricity. This is why Canada's allies—the United States, the United Kingdom, Japan, Italy, Austria, Belgium, France, Germany, Luxembourg, the Netherlands, Switzerland and more—have all committed to decarbonizing their electricity systems by 2035 or sooner.

This is also why we were pleased to see the federal government commit to the clean electricity regulations and to its G7 commitments on electricity. This target is feasible here in Canada, and we look forward to the real work of collaborating on pathways to achieve these goals. Canada has done important work like this before. Throughout 2016, 2017 and 2018, it developed and finalized federal regulations for the electricity sector to phase out coal-fired electricity by the year 2030. There were many tough conversations then, as there are now. Ultimately, workers, utilities, system operators, provinces and other stakeholders came together to deliver these pathways for affordable, reliable electricity without burning coal. Alberta is already meeting this target seven years early, and Nova Scotia is accelerating its pathway to phasing out coal, primarily as a cost-saving measure while the cost of fossil fuels spikes. Regulations and policy clarity were important then, as they are now.

I have a number of recommendations that we've provided to the committee in our brief. To summarize them in terms of topic, we feel this policy clarity with something like clean electricity regulations is important, as is the federal government's role and convening power when it comes to pulling together provinces, regulators, utilities and other stakeholders, increasing electricity system planning and collaboration, and finding aligned priorities and strategies for cross-jurisdiction transmission infrastructure. A plan for this convening should be considered in both this study and Natural Resources Canada's upcoming electricity strategy for Canada. In our recommendations, we also lift up the importance of this interprovincial transmission piece. There is a key role for the federal government to convene, help plan and fund.

Many of the remarks I'm making here to you all today have drawn on some of our more recent research and reports. Those, too, have been submitted. I'm happy to speak about those in detail here.

Thanks, again, for your time.

That's all.

[The Chair, Liberal, George Chahal]

Thank you.

We'll now go to Shannon Joseph from Energy for a Secure Future.

You have five minutes. The floor is yours.

[Shannon Joseph, Chair, Energy For A Secure Future]

Members of the committee, thank you for the opportunity to speak with you today.

Energy for a Secure Future is a civil society initiative with two objectives.

First, it seeks to advance a national conversation about Canada's role in the energy security of our allies around the world.

Second, it aims to learn from experience and research on energy system transformation in order to propose a path for Canada to reduce its emissions and preserve prosperity.

In our 2024 report, “Getting Canada’s Energy Future Right: A Consumer Lens on Energy in Canada”, author Michael Cleland examined stationary end use energy in Canada between 2005 and 2022. He also looked at the Canada Energy Regulator's 2023 net-zero scenario and implications for Canada's electricity system and end use energy nationally. I'd like to highlight a few considerations.

First, it is important to have a framework for evaluating the merits of different energy policies and to guide decision-making. Our report suggests the following framework. It has to deliver on energy fundamentals: affordability, reliability, safety, security and resilience. It must have social acceptability—this is a country where Ontario gets 60% of its electricity from nuclear power, whereas in another province, British Columbia, nuclear power generation was banned by legislation in 2010. Finally, the system has to deliver on our environmental goals.

Solving these three together is a challenge, but I would suggest that the shaky support for many climate policies in the country reflects the fact that many of the policies were developed without adequate attention to energy fundamentals, which always reassert themselves.

A second consideration needs to be on the current energy mix in Canada. Today, electricity provides 22% of stationary end use energy. If you include transportation, then it's less than 20%. We're talking about replacing 70% to 80% of the energy currently used in Canada with the CER's combination of new electricity, new fuels and the elimination of about 15% of demand. This is not a fast or low-cost proposition, especially in a country that has taken over 10 years to build a one-gigawatt Site C dam.

A final consideration is how energy is used and the possibilities for substitution.

In Canada, 67% of end use energy is industrial. This includes manufacturing, agriculture, mining, etc. In some provinces, like Alberta, industrial energy use represents 80% of stationary energy end use. Industry's use of energy is what creates jobs, drives our international trade and underpins our quality of life.

Today, the majority of this industrial energy is not electricity—it is refined petroleum products and natural gas. These energy choices are driven by the nature of the industrial activity. Even in the CER's net-zero scenario, natural gas and refined petroleum products still make up a larger share of industrial energy use than electricity. It is worth noting that the increased electricity use and the use of emerging fuels envisioned in that scenario is energy that currently does not exist.

When one examines what the CER proposes for changes to all end use energy in Canada, combined with our other national goals of population growth, re-shoring of manufacturing and becoming a player in AI, then we are talking about the doubling or tripling of our current electricity system and related infrastructure. While this may be theoretically possible to do in 25 years—assuming we overcome issues around availability of skilled labour, material supply chains and regulatory approvals on the required scale—“Who pays?” remains the big question. Both households and businesses will have a limit to their ability to pay. We don't have a lot of good answers on this.

We have a couple of recommendations. Number one, solve for the trilemma. As political decision-makers, you need to answer to the public for energy fundamentals, the acceptability issues and the environment. Number two, start by producing more electricity. We don't have enough electricity today. In 2023, as was mentioned, B.C. was about two Site C dams short. In Quebec, in winter, Hydro-Québec reported that they are about three Site C dams short.

Before we ban natural gas home heating or the internal combustion engine, let's make more power available, see what it takes to do that, see how those costs are absorbed and then keep going.

Finally, the issue is emissions, so let's focus on emissions. We have a lot of gas infrastructure in Canada, and we have pore space for carbon capture. Leveraging existing assets will bend the cost curve and buy us time to build those new systems while preserving energy security and affordability.

Thank you so much.

[The Chair, Liberal, George Chahal]

Thank you.

We'll now proceed to our first round of questions. We'll start with Mr. Dreeshen for six minutes.

Mr. Dreeshen, the floor is yours.

[Earl Dreeshen, Conservative, Red Deer—Mountain View, AB]

Thank you very much, Mr. Chair.

Thank you to all of the witnesses.

First, I'd like to talk to Ms. Collins, with the Canada West Foundation.

There was a discussion, as you indicated, on resource determination and the diverse electricity landscape. These are provincial regulations and provincial resources. Of course, we have the issue of the federal government encroaching in that area. You talked about some of the things that happened as far as the Supreme Court is concerned. I wonder if you could start with that, and then I'll have some other questions.

[Dr. Colleen Collins]

Certainly. Thank you.

[The Chair, Liberal, George Chahal]

Ms. Collins, can you turn your camera on, please, for interpretation?

Thank you.

[Dr. Colleen Collins]

Thank you for the question.

My point is that you have to start from the point of the constitutional positions on the role of electricity in this country being provincial jurisdiction. Unless we're prepared to change the Constitution here—and I think we might have other areas where we might start—we start there.

The second thing is—

[The Chair, Liberal, George Chahal]

Ms. Collins, I'm sorry. We're having challenges with your connection. The interpreters are having a hard time being able to interpret with the breakup.

[Earl Dreeshen, Conservative, Red Deer—Mountain View, AB]

I'll move on.

[The Chair, Liberal, George Chahal]

I've paused your time, Mr. Dreeshen.

What we will do, Ms. Collins, is have you provide a brief to the committee on anything you may have missed today so that we can continue with the meeting.

I'll go back to Mr. Dreeshen. The floor is yours.