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.
Bloc
Mario Simard Bloc Jonquière, QC
In order for those initiatives to be profitable, there would have to be substantial charges for carbon emissions.
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
That is my understanding in general, but...
Bloc
Mario Simard Bloc Jonquière, QC
That is your understanding of what is done elsewhere in the world, is that right?
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
Yes.
Mario Simard Bloc Jonquière, QC
There is a question I have wondered about for a long time: is low-carbon oil profitable?
The committee has been presented with various initiatives and told that Canadian oil is one of the most ethical in the world, in spite of the fact that the oil sands probably have the highest greenhouse gas footprint.
Can a company start producing low-carbon oil without government assistance?
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
It depends on several factors, the main one being the price of oil on world markets. That question is probably more hypothetical than the questions I am normally comfortable answering.
Bloc
Mario Simard Bloc Jonquière, QC
I understand.
Mr. Gunton, do you think low-carbon oil production is profitable, or does it necessarily require government assistance?
Professor and Founding Director, Resource and Environmental Planning Program, Simon Fraser University, As an Individual
Oil demand is declining worldwide. It's a declining industry according to the IEA. We're one of the highest-cost producers in the world. If you wanted to continue expanding oil production, you'd have to provide subsidies, but that would impose a cost on the economy. You'd probably be better off investing in growth sectors as opposed to a declining sector.
Liberal
NDP
Charlie Angus NDP Timmins—James Bay, ON
Thank you.
Mr. Giroux, when the Parliamentary Budget Officer comes out with a report, it's usually widely read. I noticed that the people from the Canada Development Investment Corporation who are in charge of the cost hadn't bothered to read your report. I'm not suggesting they should, but I would think that if they were paying attention to taxpayers' dollars, a report that says Trans Mountain no longer continues to be a profitable undertaking would be something that a person spending the money would be ready to rebut or would have studied.
Do you stand by your conclusion that Trans Mountain is no longer a profitable undertaking?
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
Yes. I haven't seen any substantial changes in economic conditions to require us to change that position.
NDP
Charlie Angus NDP Timmins—James Bay, ON
I look at what you've added: the present value, the cash flow of $3.9 billion and the original purchase price of $4.4 billion. That gives you a net value of $600 million. What I don't see in there is the long-term impact of subsidizing tolls. Mr. Gunton said that those subsidies would be in the order of $10.6 billion, which Canadian taxpayers would have to pay shippers over the course of this pipeline because there is no way they're going to make their money back. We have to subsidize tolls because they cost too much for the shippers.
Do you think the loss to taxpayers is actually higher than $600 million?
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
It depends, obviously, on what happens after the contracts in place expire. We have assumed that the same type of arrangements will continue after the initial 15- to 20-year period, but we could be in a different position in 15 or 20 years. In that case, the valuation could significantly change.
NDP
Charlie Angus NDP Timmins—James Bay, ON
The prediction is that we're going to sell this pipeline to some other entity, but without subsidies, what entity would take it? Would it be fair for the taxpayer to say that if we sell it, we sell it at what it costs, and that we should not be carrying ongoing subsidies to a third party to cover the cost of shipping for very profitable oil companies?
Parliamentary Budget Officer, Office of the Parliamentary Budget Officer
I think this can be sold without subsidizing future usage of the pipeline, but that would probably mean selling it at a loss. That's the sense of what we say in our report.
Liberal
The Chair Liberal John Aldag
Thank you.
We're going to move now to Mr. Patzer, who has five minutes.
Conservative
Jeremy Patzer Conservative Cypress Hills—Grasslands, SK
Thank you very much, Mr. Chair.
Thanks, everybody, for coming today.
Mr. Brooks, I'm going to start with you. If a company were a net-negative emitter, is that a good thing?
Conservative
Jeremy Patzer Conservative Cypress Hills—Grasslands, SK
Would it matter which section or segment of the economy it came from?
Programs Director, Environmental Defence Canada
If it was net-negative, I suppose not, although for the fossil fuel sector we are talking about emissions that come from the production of fossil fuels. What's important to understand is that a lot of emissions come from the use and combustion of fossil fuels. Even if we did have net-zero oil and gas production, the selling and combustion of the oil and gas is still going to contribute to climate change, so I don't think that sector can ever actually be net zero.
Conservative
Jeremy Patzer Conservative Cypress Hills—Grasslands, SK
If we're looking at the production side, though, there's already a company that's largely net-negative in Saskatchewan. There is another one in Alberta that's net-negative. The one in Alberta is net-negative at stages one, two and three, which is not just the production side but also the usage side. Again, does it matter what sector is doing it?
What I'm trying to get at here is, if the goal is ultimately emissions reduction and these companies are doing it to the point where they are actually net-negative, is that a good thing or is that not allowed?
Programs Director, Environmental Defence Canada
If it were possible, it would be a good thing, but fossil fuels are hydrocarbons, and when they are burned, we're using the hydrogen and we're releasing the carbon. It combines with oxygen and becomes carbon dioxide.
Combustion of fossil fuels is responsible for 80% or more of the emissions that have caused climate change to date. You can't really get net-zero oil and gas production. I'm not familiar with the specific companies you are referring to, but I don't think it's possible. It's certainly not for scope 3 emissions, and I don't know of any cases, in fact, in which we're actually at zero on the production side either.