Natural Resources Committee on March 21st, 2022

[Melody Lepine]

Because there's going to be an impact on our rights, our way of life, then most definitely I think seeking our consent.... We need to understand what impacts there are to our rights. We need to minimize those impacts, and if at all possible avoid those impacts. It's protected under our Constitution.

With any means where the government is going to make a decision that may impact those rights, then you must seek our consent so that we understand what those impacts are. Consent may be a variety of different things. It could include ways where we can work with you to address those impacts and where we are able to avoid those impacts altogether.

That's a long answer, but I think you get my point.

[Eric Melillo, Conservative, Kenora, ON]

I certainly appreciate that.

I know I don't have much time left, so I'll give it back to the chair.

[The Chair, Liberal, John Aldag]

Did you want Mr. Sey to weigh in?

[Eric Melillo, Conservative, Kenora, ON]

Oh, sorry, I didn't see the hand. Absolutely.

[Dr. Benjamin Sey, Manager, Environmental Affairs, Mikisew Cree First Nation]

Thank you, Mr. Chair.

I wanted to add that there's another factor that needs to be considered, which is future reclamation work and potential treatment of tailings going forward. Any cap has to factor those in, because those are in the interest of the people as well.

[The Chair, Liberal, John Aldag]

Perfect. Thank you for that.

We're going to move now to Ms. Jones for six minutes.

[Yvonne Jones, Liberal, Labrador, NL]

Thank you very much, Mr. Chair.

I'm speaking to you today from my riding in Labrador in eastern Canada. I'm coming to you from the unceded lands of the Inuit and the Innu people of Labrador.

I'd like to first of all thank you for your expertise and for the work that you do every day around this important topic of climate carbon reduction and emissions. Education of Canadians is very critical in the work we need to do together to move forward and to be able to transition from fossil fuel. I appreciate your expertise and testimony.

I'm going to start with Mr. Séguin.

When you presented today, you talked about five requirements that you felt should be implemented. We've been hearing testimony from witnesses relating to a possible cap on emissions and focusing on a decrease in emissions rather than a decrease in production. I'm wondering what your thoughts would be around this or if you would have some recommendations that you'd like to propose on those two things.

[Dr. Charles Séguin]

If what we're trying to achieve here is decreasing GHG emissions, then that's what the cap should be on. There are definite possibilities of decoupling production from emissions. It's not certain at this moment if these possibilities will be economic in the long term.

It's possible that at some point decreasing emissions will necessarily be decreasing production as well, but it would be better to leave that flexibility to the private sector to see whether they can manage the production with the cap on emissions rather than the cap on production. That relates to my comment on the accurate measurement of these emissions. If things are not well measured, then you might want to have a cap on something that's easier to measure and, of course, the production is easier to measure than the emissions.

[Yvonne Jones, Liberal, Labrador, NL]

My second question is for Mr. Rivers.

Over the last several meetings that we've held on this study, we've heard from witnesses for both direct carbon pricing and cap and trade as tools for possible options. In your opinion, what would be the most effective approach to an emissions cap on this particular sector and why would you think that way?

[Dr. Nicholas Rivers]

Thanks very much for your question.

I think you're right to point out that carbon pricing comes in different flavours. One flavour of carbon pricing is a carbon tax, and another flavour of carbon pricing is a cap and trade system, and another flavour of carbon pricing, which we currently have in place in Canada, is some sort of tradable performance standard. These are all quite similar. They all provide incentives to industry to reduce emissions based on the level of the carbon price.

I think there are fairly minimal differences between these systems. The main difference will be determined by the level of the carbon price in any of these systems.

My contention is that the existing carbon pricing system doesn't need to be replaced with another carbon pricing system implemented through cap and trade. We have the tools to mandate deproduction and generate deproduction in oil and gas and other sectors through the existing system of carbon pricing that's already in place. We don't need another type of system. I think there are relatively minimal differences between these systems.

[Yvonne Jones, Liberal, Labrador, NL]

Thank you very much.

I would also like to ask a question of Ms. Lepine. I know that in your area, not unlike a lot of communities I represent, many first nation areas across Canada are heavily dependent upon fossil fuels for electricity and many of the companies that are operating there are the same.

When we talk about implementing a cap or reducing the dependency on these fossil fuels, what recommendations would you have for the government in how we work with indigenous communities to do a full transition off fossil fuels? We know many of them are highly dependent upon that source right now.

[Melody Lepine]

We're actually one of them. All my family's homes in Fort Chipewyan are heated with diesel fuel. We also just last year announced the largest solar farm in northern Canada. It's those kinds of success stories that we need to see and, again, more support from the federal government to transition us into these renewables.

It was a great day when we opened the solar farm, but yes, are there other means? Is there geothermal?

I don't have all the answers, but we need to look at those sources, because I tell you, when our ice road is gone, we have no way to heat our homes. There's no way to truck in fuel, as well as other necessities in our community.

[Yvonne Jones, Liberal, Labrador, NL]

Thank you, Mr. Chair.

[The Chair, Liberal, John Aldag]

Thank you.

Unfortunately, Mr. Weaver, we're out of time in that round.

We're going to move now to Mr. Simard.

You have six minutes.

[Mario Simard, Bloc, Jonquière, QC]

Thank you very much, Mr. Chair.

I'd like to ask Mr. Pasquier a question.

In his opening remarks, he was fairly clear that he felt that carbon capture and storage strategies weren't the solution for the oil and gas sector. I don't know if he's aware, but the Minister of Environment and Climate Change announced that they wanted to end ineffective subsidies by 2023. He made it clear that these were ineffective measures.

I'd like to know if Mr. Pasquier feels that the support that the federal government would provide to set up CCUS is a form of ineffective subsidies.

[Louis-César Pasquier]

Thank you for the question.

To me, CCUS is not one of the technological solutions we can use for the transition. However, CCUS must not be a hindrance and make us deviate from our appetite for fossil fuels. We really have to differentiate between the two. Yes, we would need carbon capture and utilization technology to use CO₂ not as a waste but as a value‑added product. However, it would be better to invest money to help people make an energy transition than to give the industry the means to continue.

[Mario Simard, Bloc, Jonquière, QC]

Thank you very much.

I want to follow up on that with Dr. Séguin. In his presentation, he said something that struck me: He talked about reducing emissions at the lowest cost possible.

There are two major CCUS projects in Alberta that will cost $2.5 billion, and 57% of that will come from public funds.

The question I've been asking myself since this study began is whether carbon capture strategies are cost‑effective for the industry, or whether it will inevitably be public funds that will pay for these strategies.

[Dr. Charles Séguin]

Thank you for the question.

It's pretty hard to say at this point, because the costing has to be done over time. If these technologies were to become very effective in the future, then perhaps we would find that the amounts currently invested were not so high after all. However, we can't know. Governments haven't always been in the best position to determine the best technologies to develop for the future.

What's interesting about an explicit carbon price is that there is already an incentive to develop technologies through pricing. That's not always enough, but I think pricing should be the main channel to encourage technology development, rather than the subsidy, because it's pretty hard for the government to know which solution is better to subsidize.

[Mario Simard, Bloc, Jonquière, QC]

In short, the most effective tool we have is carbon pricing. Is that correct?

[Dr. Charles Séguin]

I agree with that.

[Mario Simard, Bloc, Jonquière, QC]

Great.

Mr. Pasquier, I'd like to hear your opinion on what I just said.

Technically speaking, if you look at the oil and gas industry as a whole, these are huge volumes. Based on your knowledge of carbon capture and storage, would this type of technology be suitable for large volumes?

[Louis-César Pasquier]

Yes, it would be possible and even advisable to use this technology for this type of industry. It must be understood that it's much easier to capture CO₂ right at the emission source than to chase after CO₂ that has been emitted and is moving through the air.

Indeed, from an investment standpoint, it's more attractive to invest in a plant where large volumes of CO₂ can be captured, as opposed to a plant that captures smaller volumes.

Just look at the current cost of capturing a tonne of CO₂. For CO₂ captured from ambient air, it's about $600 per tonne, whereas it's $50 to $100 for more concentrated emissions.

[Mario Simard, Bloc, Jonquière, QC]

I'd like to clarify one thing.

Mr. Pasquier and Mr. Séguin, do you feel that the oil and gas sector could self-regulate to reduce emissions without any financial support from the government in the form of subsidies or tax credits, or that instead it will need money from the public coffers?

Generally, the guiding principle in environmental matters is the polluter pays, not the polluter gets paid. What bothers me is that I get the impression in the Canadian strategy, the reverse logic is being applied.

I'd like to hear your thoughts on this.

[Louis-César Pasquier]

As Ms. Lepine mentioned, we also have remote communities. You can't just stop everything all at once.

To use my colleague's example, I'd say that we should move toward solutions that are easier to implement, at a lower cost, and leave no one behind.

Mr. Séguin, I will let you finish.

[Dr. Charles Séguin]

In the medium term, it's hard to predict the future. The government has to have emissions regulations, but it's not clear whether oil and gas development will continue in the future or be replaced in large part by other energy sources. Most likely, it will eventually be replaced for the most part, but we can't know to what extent that will happen.

Of course, it's in the industry's interest to get subsidies. I don't believe that should be the primary focus, but we have to recognize that some communities depend on these sectors. Pricing provides incentives to businesses and the things I mentioned are also taken into consideration.