Natural Resources Committee on Feb. 2nd, 2022

[Jan Gorski]

Absolutely, we can meet the targets that we have in place for 2025 and 2030 using regulations.

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

Thank you for that.

I ask this because I come from a mining town. Five minutes from my house is the most beautiful lake you'll ever see. I go to it every day. It has been completely poisoned. It may be another hundred years before it's not poisoned, because it was once considered okay to just dump cyanide and mercury. We have regulations to stop that. I know the mining companies howled in outrage that they had to do it, but our waters and our lakes are protected.

I'll turn now to Mr. Cosbey in terms of the issue of subsidies, because the environment commissioner was very concerned that this program had been used as a fossil fuel subsidy. He said that in terms of getting to where we need to go, using programs that we cannot verify are actually going to get us there is putting us in the wrong direction.

What do you have to say in terms of this? We've been told that under the Liberal government there has been $100 billion in subsidies in the last five years to the oil and gas sector, and emissions have risen. Are we getting where we need to go by just giving more money without strings attached?

[Mario Simard, Bloc, Jonquière, QC]

I am sorry, Mr. Chair.

I don't want to cut off my colleague Mr. Angus when he is on a roll, but we have a little interpretation problem at the moment.

[The Chair, Liberal, John Aldag]

Thank you for raising that. I've stopped the clock. We'll just check with interpretation and get things back up and running.

[Mario Simard, Bloc, Jonquière, QC]

It is working again.

Thank you.

[The Chair, Liberal, John Aldag]

Mr. Angus, we'll go back to you.

[Aaron Cosbey]

In response to the honourable member's question, yes, subsidies to the oil and gas sector in general are taking us in the wrong direction. They are putting a foot on the accelerator as we head towards the cliff, instead of the brake.

On a more nuanced level, when we think about what that means in terms of the $100 billion that has been given out, it matters what the purpose of the subsidy was. In terms of judging the effectiveness, if it's a job creator, let's judge the effectiveness of job creation. However, if we're going to say—and this is at the heart of our principles—“Let's find a way to support sectors such that we are not increasing production, lowering production costs and making more viable an industry that we know doesn't have a future in Canada past 2030”, the more we support that sector, the more we risk stranding assets and the more we risk painfully dislocating workers and communities that are dependent on those sectors.

Subsidies that continue to make those sectors viable and increase production in those sectors are clearly taking us in the wrong direction.

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

Thank you.

I'm going to just close on that. To me, it is super important that we are investing in the energy-producing regions of our country, because again, coming from mining country, I have seen unjust transition and the brutalities. We have enormous expertise. We have enormous skill and we have enormous opportunity, yet it seems that if we're just going to be dumping money without accountability mechanisms and without real standards, we are leaving our workforce and our industries in a very difficult position, because the International Energy Agency talks about the threat of stranded assets if we don't start this transition.

Would you support investments where we could actually say, “We are going to work with the energy sector; we're going to work with the west and we're going to make sure that we create a new economy”?

[Aaron Cosbey]

Absolutely.

You see a whole raft of innovative activity in Alberta. For example, what they call “bitumen beyond combustion” is looking for markets for Alberta's natural resources, and expertise in finance and project management. It takes bitumen and converts it to something that doesn't involve burning it and doesn't involve climate change, by making it into carbon fibre or asphalt. You see the same kind of energy and innovation [Technical difficulty—Editor] in areas like geothermal energy, which is a renewable form of energy that involves many of the same technologies and skills.

That kind of investment is crucial, I think, if we're going to meet the target of getting to net zero. It's also crucial for diversifying the economies of oil-dependent and gas-dependent communities and regions, to create the kind of just transition that you rightly say we need.

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

Thank you.

[The Chair, Liberal, John Aldag]

Great, thank you.

We're now going to go into our second round, with five minutes for questions.

Up first, we have Mrs. Goodridge.

[Laila Goodridge, Conservative, Fort McMurray—Cold Lake, AB]

Thank you, Mr. Chair.

I'm very proud to be the member of Parliament for Fort McMurray—Cold Lake. As you are aware, it's an oil-producing region within our country.

I wanted to start out by asking Mr. Kitchin a question. As you are also based in Alberta—a little further south than I am—I'm wondering how familiar you are with the Alberta government's technology innovation and emissions reduction program, which is otherwise known as the TIER program.

[Patrick Kitchin]

Thank you.

I'm very familiar with that program.

[Laila Goodridge, Conservative, Fort McMurray—Cold Lake, AB]

All right. Fantastic.

It basically encourages innovation in reducing greenhouse gases. I was wondering if you could speak to where you see some of the best practices in that program and how you think the federal government could apply some of those best practices to its approach to greenhouse gas emissions and our industries.

[Patrick Kitchin]

Yes, there are numerous ways in which the TIER program is structured quite well. The federal government programs do follow a number of them quite similarly. TIER does provide standards for quantifying emissions and associated emission reductions for projects that participate in the credits and offset programs in place. Both the TIER program and the federal government emissions programs follow the World Resources Institute's GHG protocol as their overarching methodology for quantification.

[Laila Goodridge, Conservative, Fort McMurray—Cold Lake, AB]

Fantastic.

Do you think there are any strengths from the TIER program specifically that could be applied to future federal government programs to help find the innovation within our industries?

[Patrick Kitchin]

Yes, I do. The TIER program has been, I believe, instrumental in promoting the development of new technologies. The penalties paid by large emitters into that program have been redirected into targeted funding initiatives for the development of new technologies from all ranges of TRL levels. I believe we wouldn't be where we are today without the investment of those funds.

[Laila Goodridge, Conservative, Fort McMurray—Cold Lake, AB]

Thank you.

As someone who comes from Alberta, I know that often the story is that we are an oil-reliant area and we don't care about the environment. Coming from northern Alberta, I think a lot of people across Canada, unfortunately, have those same assumptions. As you were explaining some of the successes you guys have had with carbon capture and storage, it really highlighted the fact that there is a lot of innovation happening within this industry.

You highlighted earlier that this particular program helped you reach beyond current regulations in capturing methane emissions. I was wondering if you could explain a little bit further on that. I believe you were cut off as you were explaining that piece.

[Patrick Kitchin]

Absolutely.

The project that we executed to transport previously flared natural gas for processing and to the market [Technical difficulty—Editor] slightly above their emissions limit under the provincial methane regulations. The Saskatchewan provincial methane regulations are structured to focus on both venting and flaring, which is quite unique in this space. Alberta and federal methane regulations, and B.C.'s, focus specifically on venting.

Highrock Resources had extremely minimal venting. It was the flare volumes that were putting it slightly over the limit. Of the total estimated reductions, I believe, from the numbers I was able to see—and again, we only acquired this company a few months ago—roughly one quarter of the emission reductions would get the company within the provincial limits and the remainder would be attributable to the ERF funding.

[Laila Goodridge, Conservative, Fort McMurray—Cold Lake, AB]

That's wonderful.

Oh, there's the red card.

Thanks.

[The Chair, Liberal, John Aldag]

I'm sorry. That took you right to the end of it.

We'll go to Ms. Jones for her five minutes.

[Yvonne Jones, Liberal, Labrador, NL]

Thank you, Mr. Chair.

Hi, guests. Thank you for your presentations today. I found them very informative.

I come from eastern Canada. My riding is in Newfoundland and Labrador. It has an economy that is very highly dependent on natural resources. Like every other Canadian, we want to get to climate transition and we want to do it with minimal impact on jobs and the economy in our province, just like the people of Alberta and Saskatchewan. Therefore, I certainly understand where my colleagues are coming from.

As the minister said in his opening remarks, we must accelerate what we need to do to mitigate climate change. Of course, we know that goes beyond regulation and just the regulatory process. It also includes incentive-driven programs. It includes new technology and investments. It includes innovation. That's what I'm hearing from each of you today, and how this program in emissions reduction has helped you do some of that transition in your part of the country and the businesses you're in.

There were some really good recommendations in the report from the Commissioner of the Environment and Sustainable Development. I just wish they would have taken that report a step further and looked at the businesses that received the funding, the work you're doing and how it is having a broader impact on reducing methane in Canada but also creating a very innovative workforce and very technically skilled businesses in a field where we're going to be crying out for people as we continue to move through this transition.

I have many questions, but I'm going to try to narrow it down to this one, because I really believe ERF is a necessary program. While there's lots of room for improvement, it is incentives, not just regulations, that are going to help Canadians transition without harsh mitigation, and as a government, we have to be cognizant of that as well.

Mr. Kitchin, why don't I start with you? I was very interested in the fact that, as you said, even with the project you inherited when you bought out the company, Highrock Resources, you were still able to help landowners and 19 third party companies. You were able to support jobs of local residents that would have disappeared; not only that, you've reduced millions of tonnes of methane.

Why don't you tell me who these people are? How did you retain those jobs? How did you keep those 19 companies supported in this process? That's what I'm really interested in. Also, how much methane did you sequester under the program? Are we moving in the right direction here in the third phase? Is this a program that we could tweak to really help the oil and gas sector transition in a different way, building on skill and innovation and still being able to reduce methane?

[Patrick Kitchin]

Thank you.

There are a number of questions in there. I will do my best to answer all of them for you.

Yes, this was a $1.4-million project. Unfortunately, I don't have the information in front of me to know all of the different 19 service companies that we directly supported. For the $1.4 million and the portion that was supplemented by the ERF program, all that money flowed right through our company out to those service companies and landowners. None of that was used to pay for any salaries of Whitecap employees or bonuses or anything like that, and 100% of that went out to local communities, individuals and companies.

Overall, the project did eliminate an estimated 36,500 tonnes of emissions. We are measuring these reductions with custody-grade meters on the project so that we can accurately determine exactly what emissions were captured and reduced as a result of this program. We do have reporting obligations to Natural Resources Canada with this data so that, at the end of the 12 months, they can document exactly what the reduction was in comparison to what the estimate was.

[Yvonne Jones, Liberal, Labrador, NL]

Mr. Gorski, if there's time, I'd like to hear your response as well.

[The Chair, Liberal, John Aldag]

We're right at the end of the time.