Natural Resources Committee on Sept. 22nd, 2022

[Greg McLean, Conservative, Calgary Centre, AB]

Am I just being added to the list now? I had my hand up for at least 15 minutes.

[The Chair, Liberal, John Aldag]

At the same time, Mr. Genuis and Mr. Sorbara had their hands up in the room. Yours went up, I noticed, after that, so you're after Mr. Sorbara.

[Greg McLean, Conservative, Calgary Centre, AB]

Can you check the timing of when my hand went up on the screen? I'm sure you can do it electronically. Can you just take a quick look?

[The Chair, Liberal, John Aldag]

We'll look.

I'm going to give the floor back to Mr. Bragdon. I'll work with the clerk, but I will be making a ruling on the speaking order, and that's what we'll be going with. That can be challenged, but you are on the list, and we will confirm the order to the best of our ability. I will be announcing the order when Mr. Bragdon is done, and then we'll move forward from there.

Mr. Bragdon, can you please continue?

[Richard Bragdon, Conservative, Tobique—Mactaquac, NB]

Thank you, Mr. Chair.

We were at "Implications for the Economy and Energy Security”:

Signalling a transition away from oil and gas without any affordable and reliable alternatives for transportation or heating homes is impractical, with significant economic ramifications for the entire country. The federal Just Transition initiative is taking place as oil, gas and electricity prices have jumped to record highs not seen in years, while Canadians are struggling with spiking inflation. This energy crunch is squeezing households and companies alike, posing risks to livelihoods. The increase in natural gas prices has also prompted jurisdictions in the United States, Europe and Asia to switch from natural gas electricity generation to coal, driving up global emissions, particularly as European countries reduce their reliance on Russian energy.

Recent geopolitical events have highlighted long-term global and North American energy security issues, as well as Canada's unique position as a democratic and reliable global energy player with high environmental standards. Alberta oil and gas can reduce Canadian, American and European dependence on imported crude oil and natural gas from countries with low environmental standards or dictatorial regimes committing human rights abuses. However, unless the federal government addresses the constraints and hurdles that impede market access, Alberta will be unable to fulfill its potential to contribute to global energy security. The federal government can play a strong role in supporting energy infrastructure within Canada and advocate for Alberta energy as the responsible solution to energy needs worldwide.

The current energy crunch may be the first of many on the way to a lower-carbon economy. Recent price increases have played out against the backdrop of a multi-year global decline in investments in hydrocarbon production. Declining investment has made global supply more vulnerable to the kinds of exceptional circumstances we are seeing today. As the world moves to lower carbon economies, prematurely choking off investment in hydrocarbons could pave the way for future price shocks.

The Just Transition initiative is counterproductive to Canada's domestic and international policy objectives. To investors and stakeholders, it signals a declining oil and gas industry and an uncertain investment environment. To allies, it indicates that Canada may no longer be the reliable supplier they know and trust. They may have to source oil and gas from sanctioned suppliers or state actors with lower environmental standards.

Furthermore, the initiative fuels speculation that the federal government is actively trying to phase out oil and gas in the same way as it announced a coal phase-out in electricity generation in 2018.

There are no current alternatives that can sufficiently bridge the gap. A reduced role for Canada in oil and gas development would result in a larger role for oil and gas producers in unstable regions or with despotic regimes. Not only does this further heighten the risk of future energy crises, but it also moves Canadian jobs and capital offshore.

To help achieve climate ambitions and emission reductions, the federal government needs to remove regulatory bottlenecks, approve new energy corridors, and support this critical industry while it simultaneously works to reduce emissions.

Next is “Canada's Prosperity is tied to the Vitality of Alberta's Oil and Gas Sector”.

The oil and gas sector's significant economic contributions underpin the quality of life and services all Canadians have enjoyed for decades. Canada exported nearly $126 billion worth of energy products to the rest of the world, representing more than 20 per cent of the value of all goods exported from Canada in 2019. In other years, such as 2008 and 2014, this reached over 27 per cent, indicative of the vital role that energy production and exports play in Canada's economy in this post-pandemic recovery.

Oil and gas sector salaries are higher than the Canadian average, which translates to strong business and community support across the country. In 2019, the sector directly employed more than 282,000 Canadians and indirectly supported over 550,500 jobs, with 138,372 of them located in Alberta. Signalling a move away from this type of employment, without equivalent replacement positions, threatens the national economy, and the livelihoods of hundreds of thousands of workers across the country at a time when good jobs are needed the most.

The energy sources and associated energy jobs of the future will be in new fuel opportunities such as hydrogen. Canada risks missing out on being a leader in these opportunities if the federal government prematurely shuts down the oil and gas sector. Opportunities in emerging sectors are not only dependent on our resources, expertise and technology, but also on the revenue from Alberta's oil and gas sector. Revenue generated by this sector has enabled economic diversification in Alberta, spurring technological innovation and investment attraction across many sectors. A strong oil and gas industry supports the development of technologies and human capital that leverages the growth and development of alternative energy and emerging non-energy sectors. Oil and gas development has been essential for driving activity in a number of other industries, including construction and manufacturing, which benefits communities across Alberta and Canada.

The energy sector is also a significant source of government revenues. Government revenues collected from the oil and gas industry averaged $14 billion over the last five years, including $11 billion from upstream oil and gas extraction and its supported activities. In 2018 government revenues from the energy sector reached $17.9 billion. In addition, the energy sector's share of total taxes paid by all industries averaged 7.4 per cent between 2014 and 2018, and brought in over 10 per cent of all operating revenues earned by governments in Canada. These revenues fund important federal and provincial priorities, including the development of clean technologies, fuels, and projects that are critical to Canada's emissions reduction.

Finally, capital expenditures in Canada's energy sector stood at $72 billion in 2019, accounting for more than a quarter of total business sector investment. Oil and gas extraction was the largest contributor at $33.9 billion, followed by electric power generation and transmission at $22.2 billion. The stock of foreign direct investment (FDI) in mining, oil and gas extraction sector stood at nearly $198 billion in 2019, making up close to 20 per cent of Canada's total stock of FDI. Investment attraction in the oil and gas sector will continue to be crucial as Canada moves forward with economic recovery. Improving investor confidence in Canada as an attractive place to do business with a solid and predictable regulatory regime will be critical for the country's future prosperity.

Alberta is focused on continuing to build an attractive investment environment. On this front, the federal government should prioritize working with Alberta rather than launching initiatives that undermine investor confidence and drive investment from the country to our competitors.

Next is “Canada's oil and gas industry funds and supports clean tech: an essential in the fight against climate change”.

In forecasts of future world energy consumption, oil and gas will continue to dominate the supply mix for decades, even in lower-carbon futures. According to the International Energy Agency's “2021 World Energy Outlook”, oil and natural gas is projected to account for more than half of the world energy supply through 2050. The International Energy Agency's Sustainable Development Scenario — which aligns with the Paris Agreement — predicts global demand at 66 million barrels/day in 2040 (compared to 98 million barrels/day in 2019). In this scenario, approximately US$6.9 trillion would be needed to offset declines from existing oil and gas fields worldwide to 2030, and an additional US$4.6 trillion would be required to 2040.

Further, the current geo-political realities should highlight that the need for energy should be responded to by democratic energy suppliers who seek to achieve responsible climate action. The alternative is to seek to be beholden to autocrats and non-democratic providers of energy. Proceeding with the just transition would be tone deaf at best and underline Canada's fall from a responsible, reliable world participant at worst.

Against the backdrop of strong global demand for oil and gas, Canada is well-positioned to meet demand as one of the most credible and responsible global suppliers of energy products. Alberta continues to develop its resources under stringent environmental standards while continually reducing emissions per barrel. In fact, Alberta was the first jurisdiction in North America to place a price on carbon for all large emitters across all sectors, and the first regional government in North America to commit to a methane emissions reduction target for the oil and gas sector.

The province has also invested billions in technologies that reduce emissions, such as CCUS. In addition to carbon emissions, the province has made tremendous progress on other issues, from water reduction policies to Indigenous participation in resource development. Alberta will continue to build on its progress by further expanding environmental, social and governance (ESG) policies, identifying areas of performance and potential investment.

Based on third-party assessments, Canada tops global ESG scores across the full spectrum of factors, from environmental policy to social progress/welfare, political stability, regulatory oversight, and corporate governance. In 2018, the oil and gas extraction industry in Canada spent $3.6 billion on environmental protection. This exceeded all other industries by a significant margin and represented 37 per cent of total environmental protection spending by businesses in Canada. The largest portion of industry investment went toward wastewater management, followed by protection and remediation of soil and water, and air pollution management. Given that most oil and gas extraction businesses are in Alberta, the province contributed the largest share of national spending at 39 per cent.

Canada's oil and gas industry is committed to being part of the solution on emissions reductions. For example, the Oil Sands Pathways to Net-Zero Alliance — which accounts for 95 per cent of oil sands production in Canada — has committed to net-zero by 2050. Canada's oil and natural gas companies are also spending more on clean technology than all other industries in Canada combined, accounting for 75 per cent of clean tech spending in Canada. The industry is achieving real results: Alberta's oil sands producers have reduced emissions per barrel by 36 per cent since 2000 (22% over the past decade), and leading producers are on track for another 16-to-23 per cent reduction over the next 10 years.

Producers in the oil and gas sector are the key funders of the clean technology that will be essential for meeting emissions reductions goals in Canada. There will be no clean tech to enable the transition without investments from a healthy oil and gas industry, as governments simply cannot fund the transition alone. Resource-rich provinces are diversifying into new, low-carbon energy opportunities — such as hydrogen, geothermal and small modular reactors — thanks to the strength and innovation of Canada's oil and gas sector. The resources and skills of the industry play a vital role in helping to tackle emissions from some of the hardest-to-abate sectors, including the development of CCUS, low-carbon hydrogen, and biofuels. Scaling up these technologies and bringing down their cost will require large-scale engineering and project management capabilities — qualities that are a good match to those of large oil and gas companies.

Furthermore, Canadian resources can play a key role in helping to reduce global emissions while meeting rising demand for energy in places like China and India. Canadian liquefied natural gas (LNG) is well-positioned to displace coal in the growing Asian market, thanks to an abundant resource base in Western Canada and shorter shipping routes compared to the Gulf Coast. The LNG Canada project on Canada's west coast, for example, is expected to provide enough energy to displace between 20 and 40 coal-fired power plants in Asia, reducing global greenhouse gas emissions by 60 to 90 million tonnes of carbon dioxide each year. Given the emergent need in Europe, more work could also be done to explore moving LNG via the Port of Churchill.

Ultimately, governments and industry must agree that the shared goal is to reduce emissions, not pick winners and losers. Alberta and other provinces are working with their industries to improve Canada's environmental performance. Alberta needs the federal government to work with provinces, not against them. This means helping Canada's oil and gas sector thrive in a lower-carbon future via supports for emissions reductions that align with federal climate ambitions (like CCUS and low-carbon hydrogen) or for alternate hydrocarbon uses (such as plastics or carbon fibres), instead of planning for the sector's demise at immense cost to the country. It is essential that the federal government works with Alberta to develop a coordinated messaging that demonstrates our shared commitment to emissions reductions, cleaner energy, and responsible energy development, and positions Canada as the optimal solution to global energy needs.

Next is "Conclusion".

Alberta is in an excellent position to be a global leader in a lower-carbon energy future by meeting global security needs for sustainable and stable energy, while sharing our technological innovations that will make real reductions in global greenhouse gas emissions. Alberta urges the federal government to end the Just Transition initiative for oil and gas workers and acknowledge the role that the sector plays in supporting the Canadian economy — and can play in providing responsible energy the world desperately needs. Instead, the federal government should focus on collaborating and funding efforts to reduce emissions and diversify the energy mix.

Strong economic recovery and growth start with the recognition of the need to stand up for the oil and gas sector given its ability to create jobs, generate revenues, and grow the economy. Accordingly, the focus should be on helping the sector thrive in a lower-carbon economy and working with Alberta to meet growing demand for affordable and responsibly produced energy, instead of planning for the sector's demise.

Canada has the opportunity to play a real leadership role in the global challenge before us — to end the power and the threats that despotic regimes hold over the world because global need for their energy supply. Canada must not continue to sideline itself on the world economic and energy stage when we have the resources to play a determining role in a safer world where all can access the energy they need.

Working together with Alberta, we propose that Canada take up the challenge of providing the world with sustainable, affordable, and secure energy.

Sincerely,

Sonya Savage

Minister

That was copied to several of you.

[The Chair, Liberal, John Aldag]

Thank you for sharing that. It is unfortunate that Minister Savage wasn't able to accept our invitation.

[Richard Bragdon, Conservative, Tobique—Mactaquac, NB]

With regard to this, Mr. Chair, it's so important that the provinces and first ministers who desire to be heard are heard in a study such as this, which has such ramifications and potential.

The strength of our Confederation is the effective work between the federal and provincial governments. A committee of this nature is going to have some major ramifications. The outcomes of this study could find their way into various sources of legislation.

It could have massive ramifications for provincial governments that are going to bear a disproportionate weight of the responsibility of implementation. They need to be heard from; they should be heard from; and they should be welcomed here at this committee, whether they're from Alberta, Saskatchewan, New Brunswick or Newfoundland. We want to make sure that whatever their province may be, they have a voice at this table and they know that when this committee is doing its work, it's valuing their perspectives.

Yes, we need to hear from all sectors, and we have been hearing from them, but I think our provinces and especially our first ministers and those responsible for carrying out a lot of the implementation of whatever recommendations find their way into legislation have their voices heard at this committee.

It's of paramount importance that we consider this. I ask that you support this motion and make every effort to ensure that we are able to hear from the governments of those provinces, whether it be the premiers or ministers of natural resources, so that they are able to have a voice at this committee and so that those voices are given consideration when it comes to the findings of this study. It's absolutely important.

If we go back to our founding.... I'll quote our first prime minister, John A. Macdonald, who said:

It is our desire to do so. I hope that we will be enabled to work out a constitution that will have a strong central Government, able to offer a powerful resistance to any foe whatever, and at the same time will preserve for each Province its own identity – and will protect every local ambition; and if we cannot do this we shall not be able to carry out the object we have now in view.

Our first prime minister understood the absolute importance of making sure that there's adequate consideration for our provinces and their perspectives and the burden they're going to have to bear. When we have representatives from those provincial governments reaching out to us as members of this committee, saying, “We want our voices heard”, I feel it is part of our responsibility to make sure that their voices get heard and that we bring their concerns forward—

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

I have a point of order.

[Richard Bragdon, Conservative, Tobique—Mactaquac, NB]

—and that we have this come to this table here.

[The Chair, Liberal, John Aldag]

I recognize the point of order.

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

On a point of order, now that we've diverted to talking about the history of John A. Macdonald rather than our study, it is worth pointing out that the Conservatives are deliberately obstructing the voice of indigenous leadership from being able to speak.

[The Chair, Liberal, John Aldag]

That's not a point of order.

I will invite Mr. Bragdon to perhaps continue with or even conclude his comments on his motion.

[Richard Bragdon, Conservative, Tobique—Mactaquac, NB]

What we have here, Mr. Chair, is that we are moving to make sure that voices are being heard at this table. We absolutely value the voices of our indigenous communities and indigenous leaders who spoke, but I would like to also submit that we have seen first-hand in this committee that when indigenous representation was made at this committee, some of their voices were disrespected by other members of this committee. That was totally inappropriate.

When we talk about having indigenous voices heard, we want to make sure that all indigenous voices are heard and respected, not just those that align with one particular ideology or perspective. All voices and perspectives of indigenous peoples are welcome at this committee and need to be heard and respected, but the voices of our first ministers also need to be heard and respected. The voices of our provinces and provincial governments need to be heard and respected. The weight of the decisions or the recommendations that get put into legislation as a result of the work of this committee is going to fall on them disproportionately. They have concerns. They want those concerns to be expressed. They want to be able to have their voices heard. I believe we as a committee have a responsibility to ensure that those voices are heard at this table.

Mr. Chair, I really appreciate the ability and the opportunity to bring this motion forward. I thank you for that. I appreciate your effort. I get along with you very well. I respect you as an individual. I just really feel like we're missing a major opportunity by not hearing from our provinces on a study of such consequence. We need to make sure that their voices are here at this table. It is key to national unity.

We're hearing from our people—every one of us here at this table is hearing from our constituents from across the country—that their cost of living is going up. They're seeing energy prices soar. They want to make sure their representatives on these committees are bringing those concerns forward. Those who are hearing that every day are also our provincial governments. They have people who are worried about their livelihoods and their future employment, or whether they'll have to move or relocate as a result of any kind of transition that comes into place. If we don't take into adequate consideration those perspectives, those fears, those sincere concerns, then we have not done our full job as a committee.

That's why I moved this motion here today. I ask my fellow committee members to give this due consideration and make sure that we have adequate representation from the first ministers and provinces that want to speak before this committee. I think all of us would want to hear from the provinces that want to make sure their voices are heard here, so I trust that we'll have good support for this motion going through.

Thank you, Mr. Chair.

[The Chair, Liberal, John Aldag]

Thank you so much, Mr. Bragdon, for a very thorough motion and explanation in support of it.

I want to go to the question Mr. McLean had with regard to the speaking order. As I had noted when Mr. Bragdon made his motion, both Mr. Genuis and Mr. Sorbara had their hands up. I was working with the clerk to try to figure out who was who.

The speaking order we have put in place, as it was tight, was Mr. Genuis, Mr. Sorbara, Mr. McLean and Mr. Angus.

[Francesco Sorbara, Liberal, Vaughan—Woodbridge, ON]

Chair, I would like to challenge the chair on the speaking order list, please.

[The Chair, Liberal, John Aldag]

Okay.

This would be a challenge that....

[Francesco Sorbara, Liberal, Vaughan—Woodbridge, ON]

The challenge is that I had put my hand up before Mr. Genuis.

[The Chair, Liberal, John Aldag]

You're suggesting you're first.

I put Mr. McLean—

[Greg McLean, Conservative, Calgary Centre, AB]

Chair, I think he's saying that I should go first. Is Francesco saying that I should go first?

[The Chair, Liberal, John Aldag]

No, that's not what I'm—

[Francesco Sorbara, Liberal, Vaughan—Woodbridge, ON]

No, Greg, I'm not saying that—

[Garnett Genuis, Conservative, Sherwood Park—Fort Saskatchewan, AB]

On a point of order, Mr. Chair, I think the rules prescribe that it is who catches the eye of the chair. Mr. Sorbara is not trying to make a challenge on the basis of rules; he's trying to make a challenge to something that the rules prescribe as being a matter of the eye of the chair. I don't think you can challenge that, Mr. Chair. I think it's—

[The Chair, Liberal, John Aldag]

Mr. Genuis, I'm going to actually have to correct you on that, based on the very first meeting. Within the first five minutes of my taking this chair, the Conservatives and the NDP challenged me on my speaking order, my very first speaking order, and so I'm going to—

[Garnett Genuis, Conservative, Sherwood Park—Fort Saskatchewan, AB]

Mr. Chair, I'm challenging your ruling on that.

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

It certainly was the Conservatives who did challenge you on the chair. I remember that it was the Conservatives, and then I felt that I had to be fair—