Natural Resources Committee on March 28th, 2022

[Dale Swampy]

A productions cap would go across the field and basically ruin a lot of economies in the west. An emissions cap will allow us to develop sustainable oil production, and that means using carbon capture, utilization and storage facilities to offset the emissions that are used to produce things like we're trying to produce right now. We've done a gas to hydrogen project, creating blue energy with carbon capture and utility storage, supported by and owned by 14 first nations. Here in Canada, we have a CCS program going up north. We have the net-zero gas to blue hydrogen program in Edmonton, supported by northern first nations. We have several other programs that talk about sustainable communities, and that's what we're trying to do, get our communities to become sustainable. That means producing our own power and managing our own water purification, our own waste-water systems and our own solid waste systems. We can't do that if we don't have access to a healthy economy, and that healthy economy is dependent on oil production. Production is huge in our country.

When you talk about things increasing, the hockey stick graph that you see all the time is not the only hockey stick graph. There's a hockey stick graph on population. When I was young, when we first got involved in the oil and gas industry back in the 1980s, there were only three billion people on the surface of the planet. Now there are almost eight billion. There's a hockey stick that should be considered, and stop picking on the oil and gas industry. Start working on something sustainable in terms of solutions; then we'll get somewhere.

[The Chair, Liberal, John Aldag]

I'm sorry to jump in here, but that's the end of the six minutes.

Now we're going to go to Ms. Dabrusin for her six minutes.

[Julie Dabrusin, Liberal, Toronto—Danforth, ON]

Thank you.

I was hoping to begin with West Coast legal, because I believe they had started talking a bit about structure. I was interested in having some more of their thoughts, because we've heard from witnesses with some varied ideas about how to properly structure what we would want to do to reduce emissions from oil and gas.

Could I get your thoughts? Starting on the larger frame, we heard witnesses suggest that we should just stick with existing tools like the price on carbon pollution, and others have suggested we should have a separate cap that we put in place. I was wondering if you had thoughts about those two options as to the most effective tools.

[Andrew Gage]

I certainly have thoughts. Here's the one answer. The fact is, you're hearing conflicting views on that because there are pros and cons to both of those approaches. That's why we've tended to focus in the submissions we've sent to this Climate Action Network Canada on the fundamental principles that need to underscore either approach.

Clearly the commitment made by the Prime Minister was to a cap, and it's difficult to see that the commitment could actually be achieved through a pricing mechanism, but this has clear advantages in terms of already being an existing mechanism in place that could perhaps be ramped up more easily, more quickly.

We've deliberately not made a final recommendation on that. There are a lot of complicated pros and cons in play with either proposal.

[Julie Dabrusin, Liberal, Toronto—Danforth, ON]

Because I have only a few more minutes left, what are the pros and cons that you have with going with the cap?

[Andrew Gage]

With the hard cap, primarily the time involved in putting the legislation in place or the system in place would be a major con.

A pro is that, you know, the oil and gas industry has a history of being treated perhaps differently, more lightly, than the rest of the industry. I know they're complaining now that they're being singled out, but the fact is they've generally been given a lot of “get out of emissions reductions free” passes along the way.

Knowing that we will achieve a certain level of reduction from the industry when it is so important that we actually get this industry under control, which is behind us and missing a lot of Canada's targets to date, would be a significant advantage.

[Julie Dabrusin, Liberal, Toronto—Danforth, ON]

If we were going with the cap route, which is what the commitment was—a cap on emissions—do you have any thoughts on how that would be structured? We've also heard some different thoughts about cap and trade, or going through other regulatory mechanisms.

[Andrew Gage]

A cap and trade seems like a very well-established route. Quebec is currently part of a cap and trade system, although economy-wide rather than for a particular industry. We have other examples where that has been done historically, and is still being done.

Again, without necessarily endorsing that as the most appropriate, that is certainly where my mind goes in terms of how you would deliver a cap system.

[Julie Dabrusin, Liberal, Toronto—Danforth, ON]

If I can go to the Clean Fuel Standard Advocates witnesses, you talked about clean fuel standards quite a bit. I note there's also a commitment that 100% of new vehicles sold by 2035 will be zero-emission vehicles. On that, I was wondering if you had thoughts about the best structure for a cap.

Should we be going, as some people have suggested, with just increasing the price on carbon pollution, or would you suggest that a cap on carbon emissions would be better?

[Ian Thomson]

We have not addressed that question specifically. We made a submission to the net-zero advisory body in general support for a cap. Our position is to ensure that the design of a proposed cap would align with the design of the clean fuel standard, and that they not duplicate each other's signals.

We also note that a lot of work has been done during the last five years to develop the clean fuel standard relative to how you could account for additionality, and so on, in a cap. That might be work that could be repurposed for the purposes of a proposed cap.

[Julie Dabrusin, Liberal, Toronto—Danforth, ON]

I'm going to jump quickly to the West Coast Environmental Law Association.

I've been asking a bit about the border carbon adjustment and its role if we're putting in place an oil and gas cap on emissions.

Do you have any thoughts about that, and what should we be doing about border carbon adjustments?

[Andrew Gage]

One of the recommendations that the Climate Action Network groups have made is simply that we should actually be looking not just at the upstream emissions associated with the oil and gas industry but also downstream emissions, where those are not currently captured by the carbon price.

That may mean we should be regulating the export of oil and gas and/or applying a price at that stage, so that's certainly something we would support.

[Julie Dabrusin, Liberal, Toronto—Danforth, ON]

That's all my time. Thank you.

[The Chair, Liberal, John Aldag]

Thank you, Ms. Dabrusin.

Mr. Simard, you have the floor for six minutes.

[Mario Simard, Bloc, Jonquière, QC]

Thank you.

I have a few questions for Ms. Adkin.

In your presentation, you said that the wealth created by the oil and gas sector was neither sustainably nor equitably shared, and that it didn't allow for the funding of public services.

I'd like you to elaborate on your ideas about this topic.

[Dr. Laurie Adkin]

What has happened in Alberta is that a very weak royalty regime over time has not captured a very large portion of the rent from the industry.

In addition to that, we have been subject to the very radical fluctuations in the global price for Alberta's products, exported synthetic crude oil and bitumen. This means we have very little control over revenue, when we have up to 30% of our budget coming from oil and gas royalties.

There are a combination of factors. There's an amount of rent that's not been captured. There's the way it was not saved, and then there's the insecurity and instability of that revenue, which means that we've had a lot of trouble, when oil prices fall, in actually funding our public services at the levels that are needed.

[Mario Simard, Bloc, Jonquière, QC]

Thank you for your response.

You also said, with respect to the transition, that the obstacles are political. You said that a radical reform of the economy is needed.

I don't want to put words in your mouth. However, I believe that, in our political processes, the oil lobbies are much stronger than the environmental social movements. This creates a type of imbalance. In our political decision‑making processes, the oil companies' point of view plays a much more dominant and significant role than the environmentalists' perspective. Do you agree?

[Dr. Laurie Adkin]

Yes. I've been studying the formation of climate policy in Canada since about 2002. If you look at how climate policy has been made in Alberta and British Columbia and at the federal level, you can see the very heavy influence of the oil and gas sector. Lobby organizations, industry associations and the sphere of think tanks and so on are influencing the outcome of the policy. They're very much a privileged stakeholder. They have insider status with government ministries, so they are very close in the design of regulations and in determining the bottom lines of things like carbon pricing.

[Mario Simard, Bloc, Jonquière, QC]

You concluded by saying that new political institutions must be developed.

What did you mean by that?

[Dr. Laurie Adkin]

Thank you for giving me an opportunity to answer that question.

One of the problems we see is that, in order to counter this very powerful influence of fossil fuel industry and big business associations, we need to have a very mobilized public that understands what's really at stake here, what the urgency of this climate crisis is and what the implications of it are. Any government that's going to take significant action to deal with a climate crisis is going to need public support. It's going to need a well-educated citizenry that, again, understands what's at stake and what the options are on the table before us. We need to have the opportunity to review all of the options and not just a selected few that filter down to us through already privileged interests.

One of the ways we can think about doing this, for example, is to create regional citizens' assemblies, and these assemblies could also look at different sectoral aspects of a broader, comprehensive plan for a green transition. This would give the government an opportunity to get recommendations from well-informed citizens who've had an opportunity to listen to the experts, understand the science, understand the options available. It could then move forward to say, “Look, we've consulted citizens; we've had a democratic process; we have this kind of feedback.”

This process, obviously, has to be broader than citizen assemblies, because we have to get provincial governments to the table to agree on the principles for allocating responsibility for the reduction of greenhouse gas emissions and the redistribution of the revenue that's going to have to accompany this to make sure that various regions of the country are not left out.

Finally, we need to include first nations and Métis people in these consultation processes in a different way, on a nation-to-nation basis. This is a process that could become permanent—

[Mario Simard, Bloc, Jonquière, QC]

I'm sorry, Ms. Adkin, but I don't have much time. Thank you for your detailed response.

I have a quick question for Mr. Gage.

Mr. Gage, you spoke about capping production. I understand that this is difficult from a constitutional perspective, since the issue falls under provincial jurisdiction. However, wouldn't one solution be to end financial support for the oil and gas sector?

I'd like to hear your thoughts on this.

[Andrew Gage]

I think our focus has been on what needs to be done to get a stable climate. There would probably be significant impacts but, by signalling it in terms of caps going forward, whether it's through production caps or emissions caps, you're providing some certainty to the industry and their investors so that they can plan for what needs to be done and the transition that needs to occur.

[The Chair, Liberal, John Aldag]

We're out of time there.

Now we're going to jump to Mr. Angus, and he gets his full six minutes.

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

Thank you, Mr. Chair.

Mr. Gage, I'd like to begin with you.

One of the premises that we're being told to believe here at our committee is that we can continue to increase production, but don't worry, we'll somehow cap emissions, and all these things will somehow make sense.

Last week, the government announced a 300,000 barrel a day increase in oil. The Canadian energy regulators are planning for an increase of 1.2 million barrels a day, based on Canada's plans. Do you think that there's any chance we're going to meet our 2030 targets if those are the kinds of increases we're doing?

[Andrew Gage]

As I mentioned in my presentation, historically, I don't think there are any examples of countries that have dramatically reduced their greenhouse gas emissions while also dramatically increasing their production of oil, gas or coal. If Canada were to do that, it would be the first.

They generally rely on technological solutions like carbon capture, utilization and storage, which, for the most part, has historically increased emissions. It has not resulted in decreased emissions, but it does hold out that promise. Another solution would be negative emissions technologies, whereby we're sucking carbon dioxide out of the atmosphere and then storing it somewhere.

All of these technologies are, I think, technologies that at some level have a role in addressing the climate crisis, but the scientists who have told us what net zero means have been very clear that that role is limited. It's not the solution that allows us to have our cake and eat it too; it is one tool in a tool box that has to include reductions in production.