Natural Resources Committee on April 6th, 2022

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

Thank you. That's helpful.

I will turn to Mr. Hargrove for a question.

We've also been talking a lot about the International Energy Agency and what changes they're looking at due to the Russian invasion in Ukraine. I believe they issued a 10-point plan.

Have you had a chance to review the 10-point plan from the IEA?

[Glenn Hargrove]

I have seen the 10-point plan, yes.

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

When you look at it, do you have a sense, from what you've reviewed from the IEA generally over the past month, since the Russian invasion, that there's also a focus towards moving Europe to renewables and other forms of energy other than Russian oil?

[Glenn Hargrove]

Yes. The work with the IEA, particularly on moving Europe away from reliance on Russian imports, looks at not only diversifying the immediate supply but also at the long-term transition to renewables, and also demand restraint measures and those sorts of things as well. The IEA takes a holistic approach, and I think that's consistent with what the European Union and member countries are looking at as well.

As Minister Wilkinson stated, there is obviously a very acute energy security issue in Europe, and that is not to be downplayed. I would also say that they are looking at these twin crises and how they can not only meet their current energy needs, but also looking at how to transition toward a lower-carbon energy future.

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

An interesting quote that came out of that, I think by the Irish minister responsible for energy—I don't know their proper title—was something like “No country can hold the wind or the sun hostage”, when talking about energy security and looking to forms other than oil and gas.

I'm running out of time, so quickly, you mentioned that the European Union is consistently looking towards renewables as a mid-term and long-term.... Do you have anything you can add about that?

[Glenn Hargrove]

Yes. The Prime Minister also announced a Canada-EU energy security working group to look at the immediate energy needs and the medium- to long-term energy needs, and to look at a holistic view around energy security. We have had initial conversations under that working group and have been talking about things like LNG and the pathway to a hydrogen economy as well.

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

I just got a red card and that means our time is up. Thank you very much.

[Glenn Hargrove]

Thank you.

[The Chair, Liberal, John Aldag]

Thank you.

Mr. Simard, before you start, I've discussed with the clerk—we've done this with Mr. Maguire—that if you could get us any questions you have for Environment and Climate Change, we will send them to the department and get a response. Then, if you have a follow-up, we can do that as well to try to get any of that testimony and the invitations there for all sides, if that helps with the situation today.

[Mario Simard, Bloc, Jonquière, QC]

In my opinion, this is not the spirit of the committee. We meet in committee to question people. If it were just a matter of sending questions in writing, we wouldn't need the committees. I'm just pointing out that I may be tabling a motion later on to call Mr. Moffet back in, especially given the circumstances of what was just announced about the Bay du Nord project.

And I won't hide from you that it irritates me somewhat to see a deputy minister who is no more prepared than that and who finds himself unable to appear because his equipment is broken. Frankly, it is not very serious. In my former life, I was a university teacher, and this reminds me of a student who says that he cannot hand in his work because his dog ate it. That's not very serious.

I'll put it to you this way. I hope it will not be taken away from my six minutes of speaking time.

[The Chair, Liberal, John Aldag]

I'll start your time now.

[Mario Simard, Bloc, Jonquière, QC]

We heard from many witnesses that capping emissions through carbon sequestration and capture may be effective, but only for certain industries. These include cement plants and other industrial processes that pollute. This, they argue, is not necessarily the case for oil.

Today we learn that the Bay du Nord project will potentially release 430 megatonnes of CO₂ into the atmosphere. I can't believe that the department, before the Liberals introduced the 2030 Emissions Reduction Plan, didn't calculate that.

Is there anyone in the Department of Natural Resources who was aware of what was coming and did calculations on what the Bay du Nord project could represent if they tried to cap emissions?

[Glenn Hargrove]

Perhaps I can provide a short response, but again this question would be best directed toward Environment and Climate Change Canada.

What I would say more generally, rather than specifically, about the Bay du Nord project is that when the emissions reduction plan was developed, part of the process there was to look at the Canada Energy Regulator scenario forecasts for production. That would take into account expectations about future project development and those sorts of things. A number of measures and technologies are then modelled—policy instruments, those sorts of things—along with the impact that those would have on emissions and production.

While I can't speak specifically to the Bay du Nord project itself, I would say that type of modelling takes into account expectations about future production growth and the role of policy and technologies in the reduction of emissions in the industry.

[Mario Simard, Bloc, Jonquière, QC]

In my opinion, one thing that we managed to demonstrate during the study we conducted is that low-carbon oil is not profitable. People in the oil and gas sector won't go into it without state support. That's pretty clear. The oil companies did not want to answer the questions we asked them on this subject, but several witnesses from the environmental community came to tell us that it was not profitable for them. This is evidenced by the fact that the two major carbon sequestration projects in Alberta, worth $2.5 billion, are 57% publicly funded.

Tomorrow, we're going to see a tax credit for carbon capture in the budget. It seems to me that a project like Bay du Nord is going to blow the federal government's financial support for the oil and gas industry right out of the water.

Has the Department of Natural Resources factored that into its calculations?

[Glenn Hargrove]

To make sure I understand the question, what you're asking about is the impact on the requirement for public support of the Bay du Nord project as it relates to emissions production.

[Mario Simard, Bloc, Jonquière, QC]

I will clarify my question.

We are looking at capping emissions, and one of the strategies for capping them is carbon sequestration and capture. We know that there will be a tax credit in the budget for that. If you want to cap it and increase production, I guess you have to do more carbon sequestration and capture. Therefore, the value of the tax credit should be much higher than you anticipated, not knowing that the Bay du Nord project was going to happen.

Has the ministry done this type of calculation?

[Glenn Hargrove]

The Department of Finance is responsible for the investment tax credit around CCUS. As you indicated, the intention is to announce the details of that. I do not have the details of what will be in the budget with respect to the investment tax credit.

[Mario Simard, Bloc, Jonquière, QC]

I know that Mr. Guilbeault has announced his intention to end inefficient subsidies to the oil and gas sector. I assume that is also part of your thinking.

Do you consider supporting carbon sequestration and capture strategies to be an effective form of subsidy?

[Glenn Hargrove]

I believe that CCUS is a critical tool for reaching our climate objectives. That's in line with statements by the International Energy Agency, the IPCC and the International Renewable Energy Agency as well. It's part of all net-zero scenarios going forward.

[The Chair, Liberal, John Aldag]

Thank you.

[Mario Simard, Bloc, Jonquière, QC]

Thank you.

[The Chair, Liberal, John Aldag]

Mr. Angus, it's over to you for your final six minutes.

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

Thank you.

Thank you, Madame De Silva, for being here. I have been reading your Canada Energy Regulator reports with great interest and trying to figure out how you come to your analysis.

When you're looking at future trends, you would take into account the rising price of the carbon tax year by year as you look at what production levels may go to. Would that be how you would do it? Would that be part of it?

[Gitane De Silva]

I will ask Monsieur Charlebois to answer in more detail, but the way the projections and the modelling work is that we look at existing policies and legislation, the things that have already passed and are on the books. If you would like the specifics, I could speak to what was included.

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

No, thank you. I wanted to know that, because one of the things we're told all the time by this government is that putting a price on carbon is the most effective way to change behaviour, but if it's still very profitable to increase production, and that's factored in, that's of interest.

When I asked Mr. Guilbeault about the news that a major new oil project, the Bay du Nord, is coming on stream, he told the committee that part of the analysis they worked on was the Canada Energy Regulator's latest scenarios that are looking toward a million-barrel-a-day increase.

When you look at the environment plan put out by Mr. Guilbeault, does that contradict the work and predictions that you have made, or would you say that they are complementary?