Evidence of meeting #43 for Natural Resources in the 44th Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was billion.
A video is available from Parliament.
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
No, unfortunately, because we would have to consider all direct and indirect assistance, and we have not done a study of that.
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
Not yet.
Liberal
The Chair Liberal John Aldag
Thank you.
We're now going to Mr. Angus.
Mr. Angus, you'll have six minutes.
NDP
Charlie Angus NDP Timmins—James Bay, ON
Thank you, Mr. Chair.
Under this Prime Minister, Canada has missed every single environmental promise and target it has made.
At COP26, the Prime Minister and Mr. Guilbeault made two big promises. One was the emissions cap, and we haven't seen anything more about that. The second was the Glasgow statement, the landmark agreement to stop providing public financing for fossil fuels by the end of 2022.
Mr. Brooks, you claim that Canada is the largest financier of fossil fuels—more than China, the United States, the U.K. and Germany. Could you tell us what those subsidies are under this government, this year?
Programs Director, Environmental Defence Canada
The subsidies we tracked don't include any tax relief or the environmental costs of climate change. For example, the almost $19 billion we tracked for 2022 includes $12 billion for Trans Mountain directly, $10 billion of which is a loan guarantee and $2 billion of which is preferential financing.
Export Development Canada recently updated the statistics on their website. They're readily available; you can look. The government has given direct support to the oil and gas sector to the tune of $5.96 billion in 2022. They don't break down the details of what that support looks like.
NDP
Charlie Angus NDP Timmins—James Bay, ON
Thank you for that.
Ms. Freeland, the Deputy Prime Minister, has stated that carbon capture investments are essential, if Canada is going to meet its climate targets, because this is about emissions. However, Mr. Brooks, you say the government is using carbon capture tax money to increase oil production. Can you explain?
Programs Director, Environmental Defence Canada
Well, 70% of the investment in carbon capture made by Canada to date has gone towards enhanced oil recovery. That's resulted in more emissions rather than fewer.
I would note that the carbon capture tax credit actually excludes enhanced oil recovery, and we're happy to see that. Nonetheless, carbon capture, utilization and storage is very inefficient and ineffective, and it will not get us to net zero. There is no carbon capture happening anywhere at scale, and certainly not at capture rates approaching anywhere near 100%, which is what we require, of course, to get to zero.
NDP
Charlie Angus NDP Timmins—James Bay, ON
Mr. Gunton, I want to turn to you on the issue of tolls.
The cost overruns of TMX are so extraordinary that there is no business case, because there is no shipper on the planet that will pay the tolls required. The toll is somewhere in the nature of 80%.
That's an extraordinary free gift and subsidy to big oil, don't you think?
Professor and Founding Director, Resource and Environmental Planning Program, Simon Fraser University, As an Individual
Yes, that is certainly correct. The tolls, as I said, were set on the basis of the $7.4-billion capital cost, not for the $21.4 billion we're currently spending. The tolls that will be charged to oil shippers are at roughly a 50% discount of what the economic tolls should be.
You could certainly increase tolls and still make it competitive for shippers, because you could use, as a benchmark, the tolls being charged on shipping to the U.S. gulf coast and other places as indicators. That would allow for a significant increase in tolls to recover some of the public financing.
NDP
Charlie Angus NDP Timmins—James Bay, ON
I ask this because of one thing Mr. Guilbeault stated: The reason we need TMX is that we're going to make all this profit from it, and that money could be used to help support clean energy, which always struck me as drinking your way to sobriety.
If the tolls of the Canada Energy Regulator are kept in place, there will be no profit from this. Is that correct? This will be the taxpayers' ongoing subsidy of every single barrel shipped, to the tune of 80%, unless we renegotiate and say they have to be shipped on an actual cost basis. Would you say this is what we need in order to get any money back from this boondoggle?
Professor and Founding Director, Resource and Environmental Planning Program, Simon Fraser University, As an Individual
You should definitely increase the tolls. Right now, as I said, there's a subsidy of about 50% on the toll for each barrel of oil shipped. If you increase the tolls, you still won't generate money for other activities. You will simply be reducing the losses on the $21.4-billion investments. That's obviously a useful thing to do and certainly should be pursued.
NDP
Charlie Angus NDP Timmins—James Bay, ON
I am interested in this because when I look at what the International Energy Agency states about projected oil projects and development in the coming years, oil and gas production will drop by 75% by 2050. The Canada Energy Regulator sees that Canada will continue to produce the same amount in 2050 that it's producing now, and we see a major investment in subsidizing that production and promoting it through Export Development Canada's massive export markets, even though the IEA says this market is going to disappear.
Are Canadians being set up for seriously stranded assets from this heavy subsidizing of the oil and gas sector as the market changes?
Professor and Founding Director, Resource and Environmental Planning Program, Simon Fraser University, As an Individual
Yes, you're absolutely right.
The International Energy Agency's most recent report forecasts to achieve net zero...an 80% reduction by 2050. Even under different scenarios, oil production demand peaks around 2025. If we continue to expand the oil and gas sector, we will be creating stranded assets. That money could be better used for other investments in transitioning to different growth sectors.
Liberal
The Chair Liberal John Aldag
Thank you.
We're now going into a slightly shorter round.
First up, for five minutes, I have Mr. Falk, followed by Mr. Chahal.
Conservative
Ted Falk Conservative Provencher, MB
Thank you, Mr. Chair.
Thank you to all our witnesses this morning for the information you're providing to the committee.
I'd like to begin my questions with Mr. Giroux. Thank you for attending committee. I appreciate that.
There's a lot of discussion about TMX, so I'm going to follow that up a bit. It has been noted that the original projected cost of the project was $7 billion, and that has risen to $21 billion. Do we have a reason for that 300% increase in cost?
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
I understand this is due to delays in construction. Beyond that, I think the question would probably be better answered by the Trans Mountain pipeline owner, Trans Mountain Corporation, which is being held by CDEV under the responsibility of the Department of Finance.
Conservative
Ted Falk Conservative Provencher, MB
We hear the costs have gone up, but we never hear any rationale for those costs, other than that it has been delayed. However, even if it's simply a matter of delay, delay is time, and that's interest on money.
There has also been some discussion about subsidies to the oil and gas industry, in particular to TMX. This year, $10 billion of the $12-billion commitment to support TMX is by way of a loan guarantee.
Based on your analysis, do you expect that loan guarantee to be realized?
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
A loan guarantee is not necessarily an expense. To my knowledge, the government has not written it off as a liability per se, as a loss. Therefore, the government probably fully expects it to be repaid. I don't disagree with that assessment. I don't think the loan guarantee to the tune of $10 billion will mean a disbursement of that amount by the Government of Canada.
Conservative
Ted Falk Conservative Provencher, MB
Okay.
About $12 billion in debt has been incurred for TMX. Who holds that debt?
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
I don't know the precise details. It has been incurred by a combination of the Trans Mountain Corporation itself and CDEV, but I'd have to get back to you on who holds the debt.
Conservative
Ted Falk Conservative Provencher, MB
I'd be very interested in that. I'm also very curious about whether they're paying commercial interest rates or the sovereign rate on that debt. If you could get back to the committee with that information, it would be useful.
You answered the other question I had about the anticipated repayment of a loan and whether or not, for a guarantee provided, that's a subsidy or just support. I think there's a significant distinction between the two, and I'm glad you recognize that.
You also mentioned fair market value. Have you done an assessment of the fair market value of TMX from a revenue perspective?
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
Yes, we looked at the expected flows of income from the Trans Mountain pipeline based on current tolling arrangements and the assumption that after the first 15 to 20 years, the same fee structure will apply. Things could change, obviously, but we have to make assumptions to come up with numbers over the expected lifetime of the Trans Mountain pipeline.
I'd also like to point out that—
