Evidence of meeting #108 for Natural Resources in the 44th Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was energy.
A video is available from Parliament.
Conservative
Ted Falk Conservative Provencher, MB
I have a final question, but could you provide that to our committee, please?
Director, Energy, Natural Resources and Environment, Macdonald-Laurier Institute
I'd be happy to.
Conservative
Ted Falk Conservative Provencher, MB
My final question is this: When you look at the clean energy regulations, what do you see is the biggest impediment to further developing our energy sector?
Director, Energy, Natural Resources and Environment, Macdonald-Laurier Institute
Again, I defer to the electricity industry on this. This is what they are saying in their brief, and I'm sure some of your other witnesses.... It causes a lot of uncertainty. It's imposing unrealistic expectations, especially in parts of the country where the strengths, historically, have been in coal and natural gas, where they don't have great hydro resources. Nuclear is still expensive. We're probably a decade away from really applying nuclear in those provinces. It's just having to be reasonable with the timeline it takes and the logistics it takes to actually build out generation to the scale that we're talking about.
Liberal
Liberal
Julie Dabrusin Liberal Toronto—Danforth, ON
I have a few questions.
I was really interested in some of the conversation about industry, because we're hearing two different things today. One is from the Macdonald-Laurier Institute, which says that if we move towards a cleaner grid with the clean electricity regulations, we're going to push away industry, but I've also heard from the three people here at the table that, actually, this could attract industry and industry is looking for places to invest where there's a clean grid.
I'll start with Mr. MacDougall and then go to the rest of the witnesses. How do you counter the comments being made that, if you move to a clean grid in Canada, you're actually pushing away industry?
Program Director, Electricity, The Pembina Institute
That's a great question and a challenging one.
Part of it comes down to cost assumptions around what's going to impact electricity costs and what's going to be.... For example, we're hearing today about potentially very high costs for wind and solar. I'm very curious to look into the Macdonald-Laurier Institute's numbers from Edgardo to try to understand why they're so different from what we're seeing in other costs from different grids throughout the United States, for example.
Published costs for energy from wind and solar generation are generally a lot lower than other sources of generation, including when compared with gas. There are always ranges of costs, but those ranges, as far as I've seen, are generally lower than the other options. I think maybe there are some math differences to try to understand here.
Also, we're seeing in some of the announcements of a lot of industry investments, especially in Ontario and Quebec lately, that the fact that the provinces have very clean grids was pivotal in some of those investment decisions. I think that's another point that needs an underline.
Liberal
Vice President, The Transition Accelerator
I'll reiterate what I highlighted in my opening remarks.
What we also need to understand is that companies are looking for clean electricity given the commitments they've made. Most importantly, as was highlighted earlier, they are looking for reliable and competitive electricity. I think that when we're looking at VW, Umicore and Northvolt, they've all had commitments to their shareholders and corporate commitments in terms of where they want to clean up and fully decarbonize their operations. Ultimately, they're still going to have to answer to shareholders in terms of the costs of electricity that they're going to be paying.
It's really making sure that we're all able to stay competitive by attracting investments for those companies that are looking for clean electricity while also ensuring that we're providing electricity at a cost that is competitive relative to other jurisdictions. In this world of investment attraction, the cost of energy, and electricity more specifically, is going to be critical.
We are seeing this trend, but it's really not just one or the other. Combining both cost and cleanliness is really the challenge. We need to ensure the pathways we're on can help find that right balance.
Liberal
Julie Dabrusin Liberal Toronto—Danforth, ON
Next, I will go to the Canadian Climate Institute.
I understand from the report you recently released, if I read it correctly, that most of our emission reductions in Canada are due to our cleaner grid and a move away from coal-fired electricity. What do you have to say about industry?
If I can tie in one last piece for you, we've been seeing a lot of comments on what the federal government can do to encourage a clean grid. Are the provinces doing enough to get us there and to attract this industrial investment?
October 7th, 2024 / 12:05 p.m.
Senior Research Director, Canadian Climate Institute
It's correct that we found in our research—and this is available on the public record in emissions inventories—that the electricity sector has led in terms of emissions reductions, reducing by almost two-thirds since 2005. That's a huge success story, and most of it, if not almost all of it, is due to the transition from coal to gas, so it's great that we've been able to make a lot of headway.
As we look further out, we should remind ourselves, as we imagine what it would mean to use less gas, that many voices were similarly concerned about what a transition from coal to gas would mean for reliability and costs. I don't want to equate the two transitions—they are different from one another—but there's always some hesitance and understandable and appropriate reluctance when we want to do a transition in a sector as vital as electricity.
As we think about what it means to use less gas and to attract investment, I think we should remind ourselves that it's about unlocking the low costs of renewable power. I agree with Mr. MacDougall: Most of the research I've seen says it is the lowest source of new power, but there's also the cost of integrating that into the grid.
For grids with low shares of renewable electricity, the integration challenges aren't that large. As those penetration rates rise, you get more and more renewables and you need to start thinking about things like, “Do you have non-emitting dispatchable generation?” Well, if you're lucky enough to have hydro, great, that's your source. If it's gas, well, some amount of continued use of that is allowed under the clean electricity regulations. However, there are other ways to match and offset the variability of renewables, whether that's batteries, greater interconnection with other jurisdictions or emerging solutions like demand-side solutions.
I agree with the witnesses beside me that it can be hard to parse what motivated an investment decision from a big global company, from an industrial player, but certainly there's enough anecdotal evidence that clean electricity is motivating it. We can even look to Alberta, which is seeing interest in its jurisdiction because of the ability that companies have there to procure renewable power directly from providers. That doesn't exist in every province, but you find it there. That's one reason they're seeing interest.
Liberal
Bloc
Mario Simard Bloc Jonquière, QC
Thank you, Mr. Chair.
Gentlemen, I will ask all three of you the same question.
Canada is in a situation where if it wants to attract companies that have heavy industrial production, it needs to offer them clean energy at a low cost. I get the impression that is what all these economic players are looking for.
In your opinion, what solutions are available to us? You talked about solar energy and wind energy, which supposedly would cost a bit more. However, if we stick with traditional energy, in other words, gas, with carbon capture and storage strategies, will the cost not be just as high or higher?
Is that truly what the large companies are looking for, the ones that are outsourcing their activities in Europe?
I would like your observations on this.
Program Director, Electricity, The Pembina Institute
I'm going to break my answer into two parts. One is on the generation side and the other part is on the modernizing-the-grid side of things. I think both of these things will be part of the solution.
On the generation side, yes, carbon capture and sequestration on gas-fired generation is a smart move and, where it makes sense and it's justified by companies to go forward, I think it's a good add.
Like I said in my opening remarks, Canada has 13 very different grids. They're all complex in their own ways. Some of them are going to need a certain amount of gas online for, probably, a good long time. It will be used less, but it will be more important to provide reliability services to those grids as the investment continues to put on a lot of wind and solar. Then, the grids are going to need to modernize to be a lot more flexible and co-operate a lot better across borders.
Vice President, The Transition Accelerator
I think we need to have all of the above options, depending on the jurisdiction. With carbon capture, SMRs and hydrogen, even for peaking plants we don't really have the luxury of completely ruling out any option, but the level of investment that we have in these options should be proportional to their contributions.
Bloc
Liberal
The Chair Liberal George Chahal
We are over time. Maybe on the next round we can get him to answer.
Thank you.
We'll go to Mr. Angus for two and a half minutes.
NDP
Charlie Angus NDP Timmins—James Bay, ON
Thank you.
I'd like to ask Professor Hoicka a straightforward question.
Since the Trudeau government signed its legally binding obligations at Paris, oil production has increased 25%. Now with TMX, we're going to see a much bigger increase, despite our global commitments. What we're told is that carbon capture will somehow make it possible to continually increase fossil fuel production, while decreasing emissions. It's the “drinking your way to sobriety” approach that the Liberals have taken.
Professor, you were one of the key signatories to a letter signed by 400 scientists and experts calling on Deputy Prime Minister Chrystia Freeland not to give huge subsidies to big oil industry for carbon capture because you said it was a failed technology. Can you explain what your concerns are?
Associate Professor, Canada Research Chair in Urban Planning for Climate Change, University of Victoria, As an Individual
Yes, absolutely.
We always have to look at technologies within the portfolio that they operate in. Carbon capture, utilization and storage, at this stage, has not been proven to work particularly well in most of the projects it has been seen in. We cited a study in the United States that was to that effect.
On the other hand, we have a lot of technologies, which the other witnesses have already spoken about, that are available. They're on the market, they're cheaper and they can be built fairly quickly. When we think of our portfolio of options, we have to look at market readiness. Carbon capture, utilization and storage just isn't there.
NDP
Charlie Angus NDP Timmins—James Bay, ON
I just look at the emissions coming out of the oil industry. If they actually were good corporate citizens and they were really concerned about not burning the planet, they could have put some of that money in...and they haven't.
We haven't seen emissions decrease. Canada is the only G7 country where GHG emissions from the energy sector continue to rise. Is that not correct?
Associate Professor, Canada Research Chair in Urban Planning for Climate Change, University of Victoria, As an Individual
I have not looked at the latest numbers. The last time I checked, we had plateaued. I think we also need to be taking into account exports of fossil fuels and the fact those will be burned and used potentially, or probably not, with carbon capture, utilization and storage.
We need to really consider the economic risks of continuing with that path of exports.
Liberal
Conservative
Earl Dreeshen Conservative Red Deer—Mountain View, AB
Thank you very much, Mr. Chair.
We're certainly hearing some interesting commentary.
The last witness spoke of exports of fossil fuels. They are going to be burned, but we'll have some other country do it rather than Canada, where Canada has probably the greatest ability to capture greenhouse gases and certainly cares about doing that. Just pushing the production to some other country doesn't make a lot of sense to me.
There was also a comment earlier about pushing away industry in Canada. It's not solely based on energy costs. It has a lot to do with productivity, resource development, consistency and so on. There are a lot of different factors, so I don't think that we should look at that.
The other thing that was mentioned was wind and solar and the moratorium that had taken place in Alberta. The point there was to look at land use and the management of it. For someone who sees the solar panels and sees the windmills.... I can look at an oil and gas site, and it would fit in this little circle that we have here. We're trying to make a comparison of the actual impacts that we have.
I'll get to a question in a moment.
One thing we never seem to talk about is measuring the energy requirements that are there from the first shovel you use to dig up a project when you're going to start building it, all the way through until the very end when you have to decommission it and send the product you have...and put it away. We all seem to say that this is how much energy we're going to get from this while it's working. No one ever seems to come up with the other side of it to make the measurement accurate. That's a major concern I have.
It's great that we talk about the fact that Canada has all of these fantastic mineral deposits and so on, but the other part is that it takes us so long to get anything done. I don't know how we think that all of a sudden environmental groups are just going to sit back and say, “You go for it because we need to have this”.
Dr. Exner-Pirot, could you speak a bit about the risk we have as we depend on Chinese supply chains? Is there a way our governments and utilities can prioritize those things we do have?
That's the concern I have. We're saying we would sooner get it someplace else and that, if there are going to be problems with Chinese production and bringing that in, we'll come up with a different plan. I'd like to know where that plan is going to come from.
I'll turn to Dr. Exner-Pirot, first of all, please.
Director, Energy, Natural Resources and Environment, Macdonald-Laurier Institute
I think there's general consensus. It's certainly not an outsider, rogue opinion that China dominates much of the supply chain for many renewables, from critical minerals to the development, the processing and the manufacturing of wind turbines, solar panels, EVs and batteries.
China calls that their new trio. It's been a very strategic endeavour by them to dominate global supply chains in those aspects, and now we are seeing that they have oversupply and they are dumping. The Canadian government has taken efforts to punish those or to deter those through tariffs, and so has the United States. This week the European Union has also done so, so it is very well recognized that this is an issue.
Canada is also rich in critical minerals, but we don't process hardly any of the critical minerals that we do process and, in terms of the ones that are useful for the energy transition like copper, nickel, graphite and cobalt, those are mostly down by double digits. Copper production in Canada since 2012 is down by 9%. Cobalt and nickel are down by almost 40%, so we are not producing the minerals for ourselves. We are not processing them here either, so we are dependent on China. Even where there are tariffs, and even where you might get them from other Asian countries like Vietnam or Indonesia, there's still a supply chain behind that where a lot of the components come from China.
In terms of thinking of North American energy independence, we are very interdependent with the United States with our grids, our pipelines, our refineries—all of our systems. We really should be looking, and we are looking. People are very much concerned in Washington and elsewhere about making sure that we are independent here and that we don't need the shipping. Also, if there was a war in south China, that would obviously impact their ability to ship product from China, not to mention the sanctions that would probably have to be imposed.
Here we have natural gas. We have everything we need for nuclear. We still have that great hydroelectricity as a backbone, so we could use those strengths to build up our energy system and maintain that energy independence. We saw with Europe what happens when you are energy dependent and you're dependent on your adversary.