Natural Resources Committee on Feb. 14th, 2022

[Michelle Rempel, Conservative, Calgary Nose Hill, AB]

Thank you, Mr. Chair.

Perhaps I will start with Clean Prosperity, with Mr. Bernstein.

What does your organization think about a more sector-by-sector approach to reductions rather than focusing almost solely on capping the energy sector?

Is there any reason we couldn't be looking at caps on other major emitting sectors such as concrete concurrently with a cap on the energy sector?

[Michael Bernstein]

I think you should be thinking economy-wide and thinking about how we get the most reductions at the lowest cost. That's one of the key reasons we think the best approach to this cap is actually to think about how to strengthen the industrial pricing system as a whole, which would get you reductions in oil and gas and of course in other sectors, and would allow them to trade with each other so that costs are as low as possible.

[Michelle Rempel, Conservative, Calgary Nose Hill, AB]

Has your organization looked at any of the issues surrounding carbon leakage, and if so, do you think those could be overcome by looking at a more economy-wide approach as opposed to looking at simply the energy sector?

[Michael Bernstein]

I think carbon leakage could certainly be addressed in a significant way through a policy like border carbon adjustments. It's not going to be easy since this is a very complex task ahead of us, but we need to protect the competitiveness of our industries. It makes no sense to penalize our industries and make them uncompetitive on the global stage.

I would posit to you that we should be thinking about these things as happening concurrently. As we strengthen something like the pricing system, we have to have competitiveness protection.

[Michelle Rempel, Conservative, Calgary Nose Hill, AB]

Thank you.

To the Canadian Institute for Climate Choices, I read your report “Sink or Swim”, and I notice that the Montreal Economic Institute had some issues with it. For example, you assert that hydrocarbon demand is collapsing when most models show that demand is not collapsing. Do you want to respond to that?

[Dale Beugin]

The IEA has projections out that show significant decline in demand for oil and gas. The NGFS, the group of central banks, has scenarios that show declining demand. None of these are certain, but prudent managers in either the public sector or the private sector should be taking those risks seriously and should be considering the returns and what those possibilities mean for the returns on public investment, absolutely.

[Michelle Rempel, Conservative, Calgary Nose Hill, AB]

That's what I thought.

As part of its clean energy platform, Europe has looked to nuclear energy as well as to natural gas. Is this something you believe Canada should be following?

[Dale Beugin]

We have new work coming out this spring on electricity and providing clean electricity, and we have considered some of those questions and looked at the safe bets and wild cards in the electricity sector.

Clearly, we need more, cleaner and more flexible electricity and we need lots of solutions to be on the table.

[Michelle Rempel, Conservative, Calgary Nose Hill, AB]

I didn't hear a “yes” or a “no”. Do you think that nuclear and natural gas, which Europe is looking at, should be part of Canada's approach to decarbonization?

[Dale Beugin]

I would say that technology shouldn't be picking winners. It shouldn't be picking individual technologies. That's for the market to decide. Policy should be as agnostic as possible on technologies.

[Michelle Rempel, Conservative, Calgary Nose Hill, AB]

Okay, so there is no firm position on nuclear and natural gas from your—

[Dale Beugin]

If it's natural gas, it needs carbon capture and storage. If it's nuclear, it needs to be low cost.

[Michelle Rempel, Conservative, Calgary Nose Hill, AB]

Thank you.

What data did you use in your report “Sink or Swim” to assert that hydrocarbon demand is declining?

[Dale Beugin]

There were scenarios from the NGFS—the network of central banks—with their projections, as well as analysis from a consulting company in the U.K. called Vivid Economics, which has since been purchased by McKinsey.

[Michelle Rempel, Conservative, Calgary Nose Hill, AB]

Okay. That's interesting.

To Clean Energy Canada, I think it's important that we recognize the importance of clean tech and innovations in energy.

Would you say that currently the infrastructure we need to totally transition away from fossil fuels is not in place in Canada, including for substitute goods?

[Merran Smith]

That's correct. It's not in place.

[Michelle Rempel, Conservative, Calgary Nose Hill, AB]

Okay.

Given the imperative to get that done, what are two or three recommendations in terms of substitute goods that would be most impactful to both prevent economic decline and consumer price increases and to achieve meaningful carbon reductions?

[Merran Smith]

In electricity we probably need to roughly double the size of the grid in Canada to meet our net zero, and there is lots of opportunity for jobs and creation there.

In terms of hydrogen and the opportunities for hydrogen, in particular green hydrogen, to be an energy source, infrastructure needs to be put in place so that it can help the trucking industry, for example. If we were to be using non-electrified zero-emission buses, those would require hydrogen, so that would be another set of infrastructure that would need to be put in place.

Lastly, I would say that the government can actually do a lot around this, around incentivizing using things like buy clean for that infrastructure and setting carbon thresholds. You mentioned cement earlier. For products like cement or steel, you can put a carbon threshold on the cement and use your infrastructure dollars to purchase low-carbon steel and low-carbon cement. There are really four basic building materials used for roads, bridges, hospitals and schools. There is cement, steel, aluminum and wood. You can put a carbon threshold on those, and that market incentive can drive decarbonization in those sectors.

[Michelle Rempel, Conservative, Calgary Nose Hill, AB]

Thank you.

[The Chair, Liberal, John Aldag]

Perfect.

We're out of time. We'll go over to Mr. Maloney who will have five minutes.

[James Maloney, Liberal, Etobicoke—Lakeshore, ON]

Thank you, Mr. Chair.

Thank you to all of the witnesses. This has been a very interesting and enlightening discussion.

Since I'm following Ms. Rempel, I should probably wish her a happy birthday on behalf of all of the committee members.

And of course—

[Michelle Rempel, Conservative, Calgary Nose Hill, AB]

I have a point of order, Mr. Chair. It's fake news.

[James Maloney, Liberal, Etobicoke—Lakeshore, ON]

Stop the clock though, please.

I didn't put a number on it.

[Michelle Rempel, Conservative, Calgary Nose Hill, AB]

For the record, I'm 29, Mr. Chair.

I just look like I'm 57, so there you go.

[James Maloney, Liberal, Etobicoke—Lakeshore, ON]

And of course, Happy Valentine's Day to everybody.

We have lots to talk about.

Mr. Klein, I'm going to start with you. I think I heard you say—and you can correct me if I'm mistaken—in answer to Mr. Angus, that real leadership means getting world agreements on tackling production. Is that what you said, or something to that effect? I'm not quoting you verbatim.