Natural Resources Committee on Feb. 9th, 2022

[Caroline Brouillette]

I think you're correct that with these emissions from our exported fuels we don't have to account for them as per the rules of the Paris Agreement. However, that should not mean that we shouldn't care about these emissions, because they're important. The total emissions from our exported fuels are actually larger than all of the emissions happening on the territory of what is currently called Canada.

They're extremely important to consider. The cap should consider these emissions. In jargon, we call these scope 3 emissions.

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

Thank you so much for that.

I want to reference an article. I've been referencing articles today from the The New York Times and The Wall Street Journal. I want to go to Forbes magazine, another hotbed of non-radical environmentalism.

Madame Brouillette, I'd like to get your thoughts on this January 28, 2022 article. They say that big oil is now running the big tobacco playbook of shifting markets to the global south. They're saying that big oil is running the same play as big tobacco because big oil, like big tobacco, “has lost the scientific and public opinion battle in the West, and not for a lack of investment in disinformation and lobbying”. Big oil's “tobacco-inspired strategy” is to first double down on sales abroad; secondly, greenwash at home; and thirdly, give big buybacks for shareholders. Finally, “big oil will invest just enough in clean energy companies to deflect criticism—and ensure that none turn into real competitors”.

Do you think it is fair that Forbes is saying the oil sector in Canada is similar to the strategy of Philip Morris and Rothmans cigarettes in big tobacco?

[Caroline Brouillette]

It certainly is an interesting comparison. I'd like to point towards the narrative in Canada that what is good for the oil and gas industry is good for Canadian workers. A close examination of the facts shows otherwise.

When oil prices crash, oil companies slash production and thus jobs are reduced. Now we're seeing a record oil price, but we're not seeing new employment because in those circumstances companies increase shares and profits to shareholders and invest in new equipment for automation in existing projects rather than create more employment.

That's why it's essential that we plan a just transition.

[The Chair, Liberal, John Aldag]

Great. We're out of time on that.

We're going to go to Mr. Melillo for five minutes.

[Eric Melillo, Conservative, Kenora, ON]

Thank you very much, Mr. Chair.

I'd like to thank all the witnesses for joining us today and taking part in this important study.

Mr. McMillan, I'd like to go to you first.

I think you would agree with this and I'm curious to get your thoughts on it, but I don't want to put words in your mouth. In both of the previous panels we've had so far for this study, we heard that this cap should be a cap on emissions and not a cap on production, obviously to ensure that we're keeping our economy going and strong and providing good jobs.

I'd just like to get your thoughts on that.

[Tim McMillan]

Yes, I think if that is the important principle, it will then enable industry to work on technologies. It will ensure that we're working towards the outcome that enables the social benefits as well as the environmental.

[Eric Melillo, Conservative, Kenora, ON]

Thank you and I'll come back to you again.

I believe that in CAPP's submission to the Net-Zero Advisory Body, Patrick McDonald wrote that “pressure on the government to do more to reach net zero can result in innovative approaches being unintentionally undercut.”

I'm just wondering if you could provide a bit more context for what you mean by that.

[Tim McMillan]

Consistent with my comments earlier, if we take a very parochial view and limit investment or dissuade investment in Canadian resources, in Canadian technology development, and those investments go to Kazakhstan, Venezuela, Nigeria and Russia, we're going to have global increases in emissions, not decreases.

Being very thoughtful about our climate and energy policy will get us the ultimate outcome we're looking for.

[Eric Melillo, Conservative, Kenora, ON]

Thank you. I'll ask one more question to you, but anyone else can jump in as well. I'm curious to get everyone's thoughts on this.

Obviously there are a number of suggestions on how best to work with industry on this, whether it's in terms of investment or in terms of regulation and partnerships. I'm just curious. Can you expand a bit more on how you feel the government can best incentivize technological innovations with industries?

[Tim McMillan]

A study came out last year showing that the oil and gas sector invests I think it was between 50¢ and 75¢ of every dollar in research and development in Canada. Harnessing that, incentivizing institutions, incentivizing universities to partner with the private sector, not just oil and gas but all private sector, is something that the federal government can do.

It's always important to link the provinces in. Provinces are the main regulators for the energy sector and many of the other sectors in Canada. Tapping into their capacity to reach into civil society is going to be an important piece of that as well.

[Eric Melillo, Conservative, Kenora, ON]

Thank you.

Mr. Goodman, do you want to add anything?

[Tristan Goodman]

I'll just add that, in the short term, to get to your next set of real reductions, you're looking at CCUS across this country, you're looking at exporting natural gas, using article 6 under the Paris Agreement, and you're looking at further methane reductions, all of which actually the federal government is rightly pursuing right now and has some pretty smart policies in place to do that.

Longer term, you're obviously looking at incentivizing, in some way, hydrogen and other aspects associated with that.

Thank you.

[Eric Melillo, Conservative, Kenora, ON]

I have a bit of time left. Do any other witnesses want to comment on that question?

[Susannah Pierce]

I'll just make one final comment.

Focusing on where the demand is coming from, again, we are producers of energy. If customers can demand and if they have technologies to consume lower-carbon energy, hydrogen trucks as an example or sustainable aviation fuels that can be consumed by aircraft, that also will help. This is an end-to-end conversation. It is about supply. It is about demand. It is about distribution. It's looking across each part of that value chain to help accelerate the absorption of lower-carbon energy.

[Eric Melillo, Conservative, Kenora, ON]

I appreciate that.

Obviously I have a lot of questions, but unfortunately, I'm running out of time.

I thank all the witnesses for contributing today. I know your testimony is going to help us greatly as we move forward with this study.

Thank you.

[The Chair, Liberal, John Aldag]

Thank you.

Mr. Chahal, you have five minutes.

[George Chahal, Liberal, Calgary Skyview, AB]

Thank you, Mr. Chair; and I thank all the witnesses for joining us today.

I represent Calgary Skyview here in northeast Calgary. I'm thinking about all the workers in the industrial heartland, all the manufacturers in Nisku and Leduc, and the folks here in east Calgary. Top of mind for me is the transformation, of being a leader for Canada and Alberta for all things energy. The workers are top of mind and the focus for me.

Everybody had some great comments today, but I want to start with Mr. Scholz.

In your comments you touched on workers and unnecessary job losses and the risk of that. What else do you think the government can do, and how else do you think the government can support the energy transition and workers?

As you said, your organization has thousands of workers drilling and on service rigs. Can you shed some light on what you think the government should be doing to support workers in the energy transition?

[Mark A. Scholz]

Great. Mr. Chahal, thanks so much for that question.

I think one thing that needs to be pointed out is that the government can support the transition by supporting the energy sector, in particular the service sector, that's predominantly working in the oil and gas industry. I'll give you a couple of examples.

Today we are drilling for geothermal with current oil and gas drilling techniques and technology. We're drilling for lithium in southern Alberta. Lithium will go into creating supply chains for battery technology. We're drilling for helium—although not necessarily a pure energy source, it's certainly a diversified mix—using existing technology that we would deploy on a conventional oil and gas well. Finally, we're going to be at the forefront of carbon capture and storage, drilling most of the storage caverns that are going to be used by our customers to inject carbon dioxide.

Although these are new industries that are starting to form, they make up only about 5% of our overall operations today; 95% still are operations that exist in the oil and gas industry. The transition is coming. The issue is making sure that we do it in a very thoughtful way that allows us to pivot properly, without harming existing companies and businesses that are also going to be at the forefront, and using similar skill sets of workers who are going to be supporting these new industries.

[George Chahal, Liberal, Calgary Skyview, AB]

Thank you for that and for highlighting those specific opportunities.

Mr. Goodman, I appreciated the principles and policy framework conversation, as we're talking about an emissions cap for the oil and gas sector. That's what our focus is on here today. What's missing from the existing policy framework that we've discussed? What should we be doing to enhance the policy framework moving forward here in Canada?

[Tristan Goodman]

I appreciate that question. Thank you very much.

The reality is that a number of key frameworks for particularly the oil and gas business, from clean fuel standards to the carbon pricing environment to methane reductions, are driving behaviour and still remaining competitive, at this point in time, within our domestic and foreign exports. The fact of the matter and what I think needs to happen is that we need to make sure we understand how those systems are linking together, because they're all going to start to combine.

Again, the number one thing we're looking for here is predictability. What investors require, and what companies need to know, is that if they put money into this, there are opportunities that will remain in place for the x number of years that are being indicated. That's how a business works. No one puts money into something if they're not sure where that will end up.

The reality is that investors are also driving the conversation. As Susannah will know, investors are making some pretty significant demands that align with many of the provincial and federal policies. Again, it is about that predictability—understanding practically how you run those policies through effectively a calculator, to be honest.

Thank you.

[George Chahal, Liberal, Calgary Skyview, AB]

Thank you. I hope you make a submission to give us more ideas.

Ms. Pierce, since he alluded to you, I want to hear from you on technology and innovation. What are some of the cost-effective opportunities to reduce emissions? What opportunities are the lowest cost and lowest risk and the highest cost and highest risk? Where do you see the opportunities, and what should we avoid?

[Susannah Pierce]

It's a great question.

In terms of the lowest cost, it's obviously what you can do to avoid emissions. In other words, what can you do to make sure you're operating as efficiently as possible? That's one of the things that we in business constantly do. We look at where we are being inefficient, because that adds cost.

From a higher-cost perspective, I think it comes right down to what the cost is of an abatement opportunity, based on the carbon price and, as I think Tristan was saying, based on the uncertainty associated with that carbon price or any of the other existing regulations, because you're taking a risk. For a major project, for a project in which you're hoping to capture a lot of emissions, if you don't have confidence that the carbon price will be where it's at or that a clean fuels regulation will be able to generate the credits, you're taking on risk. You're taking on investor risk.

Investor risk is just like it is for you and me. We give money to a company and we hope on a return. We buy a house and we hope the investment in that house doesn't go down but stays equal or goes up. We have to be thoughtful about the investment decisions we make. Where there's uncertainty, there's risk.

Therefore, the way we can address some of these big opportunities to capture emissions, as an example, is by working with government, with existing regulations, and finding ways to reduce that risk by looking at things that could make that investment economic where it's not.

[George Chahal, Liberal, Calgary Skyview, AB]

Thank you.

[The Chair, Liberal, John Aldag]

Thank you. We're out of time.

We're going to now go to Mr. Warkentin, who will have five minutes.

[Chris Warkentin, Conservative, Grande Prairie—Mackenzie, AB]

Thank you very much, Chair.

I want to thank the witnesses for being here.

It's important that we remind ourselves, as politicians, that politicians around the world react the same way to the demands of their constituents. What we've seen over the last number of months, especially with the colder temperatures and the rest, is that our constituents are demanding reliable and affordable forms of energy.

We know that those who are negatively impacted by high costs when it comes to energy are those who are living in northern and rural communities and who, often, are vulnerable populations, as is the case in my constituency. Seniors, first nations and others have called my office, talking about the unbelievably high cost of their energy.

Politicians around the world are looking for reliable and affordable forms of energy. We've heard from some of my colleagues about their hope that there would be a cap on production here in Canada, so we have to answer a couple of questions.

The first one would be—and we have some evidence about what other countries are doing—if it's not oil and gas, what is it? From the evidence that some of you have testified about, I'd be interested in what your findings have been where countries are not able to get a reliable source of energy in the form of oil and gas. What are they turning to these days?

Tim McMillan, you can start out with that.