Natural Resources Committee on Jan. 31st, 2022

[Pierre-Olivier Pineau]

Thank you for your question, Mr. Simard.

In general, I fully agree with your analysis. The federal government and several provincial governments are very quick to provide subsidies to develop and support various industries.

What you're saying about the oil industry is true, in my opinion. However, it's also true for the electric vehicle industry. The governments like to give money so that Canadians buy more goods, whereas the fight against climate change shows that we shouldn't put more vehicles on the road, but fewer, and that we should consume fewer material goods to reduce our carbon and environmental footprints.

In general, I fully agree that the governments aren't using the right measures to guide us towards these reductions. The reason is that it's hard to convey the message that we need to consume fewer material goods and less energy. It's hard to convey, on a political level, that a change in behaviour is needed.

We often tend to point fingers at the industries when we want to address climate change. These industries certainly have lobbies and don't always take the best steps to combat climate change. However, ultimately, the consumers are the ones who overconsume. We must send the message that our consumption must be reduced to work towards a climate that's less damaged than we fear.

[Mario Simard, Bloc, Jonquière, QC]

Thank you.

[Julia Levin]

I would agree that the government has realized that it can't get away with giving subsidies to the sector the way it has for decades. Now it is using the promise of either job creation or environmental outcomes to disguise the same subsidies as something new. If job creation were the goal, then it would have been a critical criterion for receiving the funding. That wasn't the case, and the oil and gas companies.... The price of oil fell for a month and then quickly picked up, way before any funds were distributed from this program.

The reason this fund is so problematic is that pattern of oil and gas lobbying for weak regulations, and then getting the government to pay the difference. The bottom line for them is more profit and fewer costs.

I have a last, quick point. It is critical that we tackle the oil and gas sector. It is Canada's largest and fastest-growing source of emissions, both in methane and other greenhouse gas emissions. It's not just about reducing the consumption side, because we know that Canada is one of the world's largest export nations in terms of fossil fuels, and those emissions, which we don't count in our domestic accounting systems, are even larger than our domestic emissions. In 2019, our exported fossil fuels created 954 megatonnes of greenhouse gases, which is way more than our domestic emissions. That's why tackling this is so critical.

[Mario Simard, Bloc, Jonquière, QC]

Thank you very much, Ms. Levin.

Unfortunately for you, Mr. Pineau, your non-verbal language is quite evocative. When it came to hydrogen, I saw you nodding your head.

Not so long ago, we studied the issue of hydrogen in committee, and what we were told was that it is far from clear that carbon capture strategies for hydrogen, which is called blue hydrogen, are effective. Also, the costs associated with it could be very high. I've always thought that it might be more expensive now to produce hydrogen from biomass than from hydro. However, you also have to calculate the cost of these carbon capture strategies.

I would like to hear from you on that, Mr. Pineau, and perhaps you too, Mr. Lakeman, if there is any time left afterwards.

[Pierre-Olivier Pineau]

I must confess that I don't understand why we are talking about hydrogen here when we talk about this program.

I think you're absolutely right: the premise of blue hydrogen relies on CO2 capture, which is still very expensive and commercially unproven. There have been big failures in Saskatchewan or cost overruns, so it's very hard to see much future for hydrogen on a large scale.

[The Chair, Liberal, John Aldag]

Thanks, everyone.

Now we'll go to Mr. Angus for his first six minutes.

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

Thank you to the witnesses. This has been a fascinating discussion.

For me, the issue we're discussing today is whether or not a government investment program worked. Did it meet its objectives? We have a climate catastrophe facing us. We also have a serious need to retool our economy, so government investments and spending have to be accountable.

Mr. Lakeman, I want to start with you, because I come from a resource region. I've seen unjust transitions and what a social and economic catastrophe it is. We have a moment of choosing to diversify. We have a moment, and it's a short window, of making investments to get us onto a better path.

What role do you think Edmonton can play, being that it is an energy sector and you have expertise? Should we be looking at diversifying the investments we're making right now, so that we're talking about the clean, renewable energy economy and using that expertise to diversify our economy in such a way that we're going to move forward as a nation and not be left behind?

[Brent Lakeman]

There is an opportunity for a place like Edmonton, as one of the first hydrogen hubs. It's a bit of an epicentre for that. As we look at the workforce in our region that can make a transition towards some of those hydrogen jobs of the future, there's a tremendous story there, but it does require a concerted effort.

How do we start to look at both the production of hydrogen and, more importantly, the use of hydrogen and some of the jobs associated with that? How can we pivot the professionals we have today, whether it's in engineering, construction or other parts of the workforce that could support the hydrogen economy, including new opportunities as well? We think about just using hydrogen, but it may also create some new industries in our regions that could be somewhat different from the industries of the past.

There is an incredible transition here, potentially. There's a workforce that is skilled, but we need to prioritize what the gaps are in that workforce, and how we can understand what the opportunities will look like over the next five to 10 years. It requires a more strategic approach than we've been taking in the past.

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

Thank you. I really look forward to going to Edmonton again. I have family from there. I played many great gigs there over the years. I'm not going to talk about my music right now, but as soon as omicron is down I want to get back there.

We're looking at how we can invest in the region. We're also looking at how things shouldn't be invested.

Madame Levin, Monsieur Guilbeault made a dramatic statement recently that, I don't know, he was going to do something in 18 months. It wasn't clear whether he was going to shut down the oil and gas sector entirely. I think he meant he was going to end fossil fuel subsidies.

Canadians are expecting dramatic action, yet we see from this methane plan, even as my Liberal colleague from Calgary said, that it was there to help out the oil industry. It was a financial incentive to the oil industry. On methane, hey, if they got it, okay, but they didn't even check to see whether they were meeting their target.

What do you think it says, when we have a climate catastrophe looming, that we're just taking money that should have been used for greenhouse gas, for addressing that crisis, and giving it to big oil with no checks and balances?

[Julia Levin]

When you're in a hole, you stop digging. Giving out fossil fuel subsidies is the exact opposite. It is literally pouring fuel on the fire.

This is the trend that has been going on. This is the most subsidized sector of the Canadian economy. It has received enormous amounts of public funding over the years. It needs to stop, and Canadians clearly expect the government to follow through on the commitment to end fossil fuel subsidies.

This was a commitment that was made, for the first time, in 2009. It's not a new commitment. We are years behind schedule. We are expecting a peer review with Argentina to come out this year. That's three years behind schedule.

However, the real issue is that the government is trying to get away with a bait and switch, if you will, whereby it's trying to dress fossil fuel subsidies up as something new, as emissions reduction, whether it be through the emissions reduction fund or whether it be through funding for carbon capture and storage, when we really need to be talking about the best way to address the climate crisis, which is to tackle the production of oil and gas. That includes ensuring we're not locking ourselves into hydrogen strategies that are based on fossil fuels, which will make the problem of methane much worse going forward.

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

Again, as my Liberal colleague from Calgary said, hey, there was value for money because it was a financial incentive to the industry.

You know, there was a pandemic. During the pandemic, Shell met with the Prime Minister's office six times. They had a direct meeting with the Prime Minister. The heads of big oil met almost 100 times with either Minister Guilbeault or Minister Wilkinson and their staff. Even the Prime Minister set up a special committee for oil and gas. I bet they had their names on the backs of the chairs. They got $18 billion in subsidies in the first year of the pandemic.

They're not making PPE. These aren't ICUs. This is an industry that now, we're being told, is awash in money.

Can you break down an analysis of just how much free money was being given out to big oil?

[Julia Levin]

As you said, in 2020 the government provided $18 billion to the fossil fuels sector; $13 billion of that was public financing through Export Development Canada. That's really “make it or break it” financing that oil and gas companies rely on in order to get big projects built.

Bloomberg New Energy Finance has estimated that governments in Canada provided $100 billion over five years to oil and gas companies.

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

Wow. Thank you very much.

[The Chair, Liberal, John Aldag]

That's great. Thanks.

We'll move on to our next round, starting with Mr. Maguire for five minutes.

[Larry Maguire, Conservative, Brandon—Souris, MB]

I want to just ask Mr. Lakeman a couple of questions.

I've spent a lifetime looking at trying to improve the export products that we have in our country. You've alluded to that. I've long believed Canadian natural resource companies have that potential to develop, manufacture and sell their equipment in other countries to reduce emissions.

You did mention a few projects, but can you outline some initiatives, some innovations particularly, that are current being developed right here in Canada? I know you talked about growing Edmonton. We also need to grow Canada. We have the ability in our universities and the technology in the companies to be able to make these products.

You mentioned exports to Japan and South Korea particularly. Can you expand on that for me?

[Brent Lakeman]

Sure. Maybe I'll start with the export side of it.

We know that some of the international markets that don't have the ability to pursue renewable electricity to the same extent as others are looking at hydrogen and ammonia for, let's say, power generation. Japan has been very explicit about that. The Japanese have been targeting certain countries, Canada being one of them, that they feel have an opportunity to supply them with that energy resource, whether it's in the form of hydrogen or ammonia. However, they're also very clear to say, “We're certainly looking for you, Canada, to work together on that to get your product to market.”

That represents one of the challenges. We can produce at very low cost and we can do it in a low-carbon manner as well, but it's also, as I mentioned, the challenge of moving it to the market and how we do that in a coordinated fashion.

On innovation, a wide range of innovations are going on in western Canada, whether it's carbon capture technology and some of the work going on.... I just came back from a couple of trade conferences in the Middle East and it's clear that we are significantly ahead in areas such as carbon capture and storage, with projects that have been going on for over six years now and storing over one million tonnes per year per project. The world is looking at us.

There are many other areas as well, next-generation production technologies that we're supporting here through some of the funding mechanisms provincially and federally that are looking to actually scale it up right in our backyard. We have the right attributes, the talent and the economic conditions for that. Then there are projects through which we can actually use hydrogen in different manners. We have a blending project starting that will be led by ATCO very soon—later this year or early next year—to inject a certain amount of hydrogen. The world will be watching those projects as well, and our experts who can understand the performance of these technologies in terms of, for example, what some of the metallurgical issues are around blending hydrogen and natural gas.

We have expertise; we have the pilot projects, and again, the world seems to be watching us very closely right now.

[Larry Maguire, Conservative, Brandon—Souris, MB]

What other recommendations would you suggest for any of the programs, both to reduce emissions and to derive good value for taxpayers?

[Brent Lakeman]

It comes back to that: a strategic, more holistic approach, looking at the production but also the use, and where we can make the biggest difference most quickly.

Hydrogen is important from the net-zero perspective, and we need to move quickly. We don't have the luxury of waiting 20 years for perfect conditions.

We can scale quickly. Again, we can provide some lessons learned for other parts of Canada and other parts of the world, so how do we strategically do that?

[Larry Maguire, Conservative, Brandon—Souris, MB]

There clearly is an appetite, in the companies that I've spoken to in the oil and gas sector, to reduce their emissions. You have alluded to the situation in the Middle East, that we are leaders in that area.

There are other sectors that could do that as well. The cement industry is one. No pun intended, but should we have a concrete plan for the cement industry to receive support for reducing emissions?

[Brent Lakeman]

Sure. We're seeing projects in Edmonton: Inland Cement working with others on carbon capture within their processes, and Lafarge as well. There are a number of interesting projects, pilot projects, moving ahead. They're part of that conversation.

Hydrogen is important for those sectors that are very difficult to electrify or that can't go completely renewable. That can be steel manufacturing. That can be cement or other uses of large amounts of heat for industrial purposes.

[Larry Maguire, Conservative, Brandon—Souris, MB]

That's some kind of an educational program that we need in those areas to be able to expand some of those projects.

Considering your background in environmental monitoring, what else could you propose as alternative ways to measure these fugitive emissions?

[Brent Lakeman]

There are a large number of different technologies out there for monitoring fugitive emissions, from satellite measurements to ground-based measurements. To be honest, significant amounts of work have been going on over the past decade in methane emissions monitoring.

It's taking a close look at all those technologies and some of the more low-cost ways to do it, as well, over large areas.

[The Chair, Liberal, John Aldag]

I'm going to jump in. We're out of time. We're tight to get to 5:30 p.m.

I'll go now to Ms. Lapointe for her five minutes of questioning.

[Viviane LaPointe, Liberal, Sudbury, ON]

Thank you, Mr. Chair.

I want to thank all the witnesses who are here this evening.

I greatly appreciate your sharing your knowledge and your expertise with us.

My first question is for Mr. Lakeman.

You talked earlier about innovation. To achieve any zero-carbon targets will require innovation from all our industry leaders and partners. The same can be said of government. We know the Government of Canada has an ambitious climate plan. Accordingly, the current policy framework will need some innovative thinking and approaches as well.

Toward that end, in looking at new ways to develop effective policy, what changes could the government make to do this?

[Brent Lakeman]

Again, we need to look at some of the opportunities we have across the country that may be somewhat unique and different. How do we take maybe more of a clustered approach? How do we pursue that opportunity in, let's say, the Edmonton region? How do we pursue a similar opportunity in Toronto, Hamilton and those areas, focused on the uniqueness of those areas and how we can scale up quickly? I'll keep coming back to that. It may require a different approach than having a bucket of incentive programs and sprinkling them across the country, instead looking at where we can achieve the biggest impact quickly. I keep coming back to scaling and scaling up quickly, because that's the need here.

I've been focused on climate change policies over the last 20 or 30 years, and I think sometimes that need for quick action and the opportunity we have available are missed. It does require a very focused effort, maybe regionally and geographically as well, but one involving all orders of government working closely together. We have a hydrogen hub that involves the mayors from our region, which is one-third the size of Alberta economically. There's an opportunity to really pull together a coalition of governments to pursue that strategic approach.