Natural Resources Committee on Nov. 4th, 2024

[Greg Reade]

I don't have a comment on that.

[Adam Chambers, Conservative, Simcoe North, ON]

I know you interface with the folks at CDEV very frequently. I think it would be nice to let them know that there are a lot of people looking at the valuation. Obviously, you understand and have mentioned that it's been highly scrutinized. If there is a surprise valuation, there will absolutely be accountability for that. Somebody will have to answer for why the government is holding an asset on its balance sheet for a longer period of time. External individuals have questioned the valuation of the government holding this asset on its balance sheet. It would be a very unfortunate circumstance for taxpayers and the integrity of our entire public accounting system if there is a surprise writedown in the future.

I'll leave that there, if that's okay.

I couldn't help but notice that the minister referenced the market analysis. I believe she said, “If you look at market analysis”, we are very confident that we'll get repaid.

I guess my question would be, could you share that market analysis with the committee?

[Greg Reade]

You know, we have publicly available sources that have been cited even at this committee. There have been, you know, news articles. The fact is that, to date, we've been very focused with Trans Mountain on starting the operations of the pipeline. As I think you heard from Mr. Maki, there are a few uncertainties—

[Adam Chambers, Conservative, Simcoe North, ON]

That's fair enough. I'm going to run out of time here, so I guess the question is.... The minister referenced a market analysis that she's seen. I'm asking if you could provide that market analysis that she was relying on to the committee—both public and private information that has flowed to the minister's office in a briefing note.

[Greg Reade]

We can follow up.

[Adam Chambers, Conservative, Simcoe North, ON]

You can pretend that it's a freedom of information request, and you can redact whatever you like, but that would be very helpful if the minister is going to reference those materials.

My second and final question would be this: Is there an economic impact statement about jobs that might be lost with respect to the announcement today on the emissions cap?

[Greg Reade]

I might ask my colleagues.

[Jeff Labonté, Associate Deputy Minister, Department of Natural Resources]

The proposed emissions cap, I think, is going to be announced later today, according to the media aspects—

[Adam Chambers, Conservative, Simcoe North, ON]

I'm just asking if you've done an economic impact analysis.

[Jeff Labonté]

You'd have to ask Environment and Climate Change Canada.

[Adam Chambers, Conservative, Simcoe North, ON]

Finance isn't interested in the economic—

[The Chair, Liberal, George Chahal]

We are at the end of the time for this round. Thank you. I hope we can pick that up later.

We will now go to Ms. Lapointe for six minutes.

Go ahead.

[Viviane LaPointe, Liberal, Sudbury, ON]

Thank you, Mr. Chair.

Mr. Reade, when we had the CEO of TMC here, he talked about being both a disciplined buyer and a disciplined seller. From your perspective, what do you think this means?

[Greg Reade]

There are a number of uncertainties facing the pipeline right now that, with a bit of time, will start to become more and more certain. As we know, evaluation of an asset like this involves a number of criteria for which a buyer will want more and more certainty and for which they'll be willing to pay more.

In particular, I would cite the tolls process that's under way at the CER; that will underpin the revenue stream that will come from this asset. More certainty around that will come with the conclusion of that process. I think that's a really important piece.

The track record of the pipeline—and it's been good so far—is important for a potential buyer to see some operations, over a period of time, that have occurred. The uptake on the spot capacity—the 20-year contracts of up to 80% of the capacity—are highly valued and certain for 20 years. However, to see how much above that is filled in the pipeline will also allow someone who might be interested in acquiring the pipeline to understand better what the value could be.

I think Mr. Maki is thinking of those factors and that, with a certain amount of time, that will become more certain and allow us to better understand the high value of the pipeline.

[Viviane LaPointe, Liberal, Sudbury, ON]

You mentioned that the CER will be reviewing this project. Can you give us a sense of when this will occur, the process around it and the parameters?

[Greg Reade]

Do you mean around the tolls process? Sure.

The CER does have available the projected timeline, but where we're at is.... There's a process to determine the interim tolls. There are a couple of milestones that are coming up with exchanging information. It's been going on for about a year now. In May, there will be a hearing that will be the culmination of the evidence that has been provided by the shippers, the users of the pipeline, and Trans Mountain's information back. In May, there could be, as an outcome of that process, a decision on interim tolls, or that would follow a month or two later. Then we would expect to very quickly move into establishing final tolls. That, then, really is a matter of the final auditing of the costs of the project because part of the toll methodology involves the cost of the pipeline. Parties would agree, and the CER would adjudicate that all the costs have been properly classified.

Does that answer your question?

[Viviane LaPointe, Liberal, Sudbury, ON]

Yes, it does. Thank you.

Mr. Labonté, the Minister of Natural Resources has talked about an indigenous advisory monitoring committee. Can you speak to what this is and what the role of this committee will be?

[Jeff Labonté]

Certainly.

There is an indigenous advisory and monitoring committee for the pipeline. Its inception was when the pipeline was first approved. That committee is composed of federal officials, indigenous communities throughout the pipeline route, and the CER. It focused its attention at first on reviewing the conditions that were set for the project to proceed. Then it focused on the monitoring of the operations of the existing pipeline because there was an existing pipeline; it was being twinned. Then it focused on the construction activities related to it.

Within the indigenous advisory and monitoring committee, there are subgroups related to, for example, marine shipping, emergency response, community engagement, and safety of the operations. There are different groupings of federal regulators and indigenous communities working together to kind of examine how the CER is looking at the pipeline, how the conditions are being met and when those are presented.

When the pipeline was approved, it had a set of conditions that had to be approved before it could actually proceed with construction and then, eventually, move forward with the opening.

That monitoring committee has now been in place, I believe, since 2017—so, for about six years. It was recently renewed in the budget so that it could continue its activities over the next number of years as the pipeline moves to operation.

[Viviane LaPointe, Liberal, Sudbury, ON]

This project is often spoken about in the context of energy transition. How is Natural Resources Canada supporting the energy transition in the form of renewable energy?

[Jeff Labonté]

With the department's work on energy, we work in a number of different ways. We have, for example, scientific laboratories and science and experts who are working on new technology to reduce environmental impacts, to reduce emissions, to decarbonize different parts of the existing energy system, as we know it, that's fossil fuel based. As well, we have people working on renewable energy and new renewable energy technologies, for example carbon management around carbon removal and carbon capture use and storage, along with programming to focus on transitioning to more renewable energy forms for electricity generation, as well as the work that happens with different provincial jurisdictions, whether it's in the electricity sector or in the oil and gas sector.

We work in a number of different ways. Sometimes it's through science and research. At other times it's through programmatic work, where we're sponsoring or providing funding to jump-start something to happen more quickly. At other times, moreover, we are working with communities that are actually consuming the energy for their own reasons, whether they be indigenous communities or much broader communities around electricity generation with provincial utilities, for example, or in the case of Alberta and Ontario—which have partly regulated markets—with private sector partners.

[The Chair, Liberal, George Chahal]

Thank you.

We'll now go to Mr. Simard for six minutes.

[Mario Simard, Bloc, Jonquière, QC]

This question is for all of the witnesses.

I pointed out earlier to Ms. Freeland that she had said in 2022 that there would no additional public funding for the Trans Mountain pipeline. I also said that in 2022, the project cost was $21 billion, while it is now $34 billion.

Has there been any further public investment since then?

[Anne David, Director, Corporate Finance and Asset Management, Economic Development and Corporate Finance Branch, Department of Finance]

Thank you very much for the question.

As you said, the finance minister announced in 2022 that there would be no further public funding for the pipeline and that the project would be completed using money from capital markets. Since then, Trans Mountain Corporation has set up a line of credit with the big banks in Canada and the United States. That capital market line of credit is funded by the banks, and Trans Mountain is the borrower.

[Mario Simard, Bloc, Jonquière, QC]

I will ask you the same thing I asked Mark Maki, from Trans Mountain: Can you provide the committee with a document indicating the company's current financial structure, how the public funds have been invested, and what has been funded through the markets?

[Anne David]

Yes, we can do that.

I want to point out that it is publicly available in the annual reports that Trans Mountain tables in Parliament, and in the summary of its business plan, which is submitted every year to the Canada Development Investment Corporation. In addition, the Export and Development Canada website indicates all the funding it has provided to Trans Mountain.