Natural Resources Committee on Feb. 14th, 2022

[Julie Dabrusin, Liberal, Toronto—Danforth, ON]

I have very little time left, but my question is whether there is a way to establish a cap-and-trade system with the speed we would need in order to meet the standards that we need on our emissions reductions.

[Dale Beugin]

The output-based pricing system represents a starting point, even for a cap-and-trade system. It wouldn't be starting from scratch. There is a possibility to transition the existing system to that sector-level cap system. That would be a way to accelerate that process.

[Julie Dabrusin, Liberal, Toronto—Danforth, ON]

Perfect. Thank you.

I think I only have 15 seconds left, so I'm going to leave it at that.

[The Chair, Liberal, John Aldag]

Perfect. Thank you.

Let's move to Monsieur Simard. You have six minutes.

[Mario Simard, Bloc, Jonquière, QC]

Thank you, Mr. Chair.

I have a quick question for Dr. Petrunic.

In your opening statement, you brought up the need to think about programming that bridges the price gap between renewable hydrogen and diesel.

When you refer to renewable hydrogen, do you mean green or blue hydrogen?

[Dr. Josipa Petrunic]

I'm talking about green hydrogen.

[Mario Simard, Bloc, Jonquière, QC]

All right. Thank you.

In order to reduce our carbon footprint, do you think it makes more sense to invest in a program that closes the price gap, as you recommend, rather than focusing on lowering oil sector emissions?

Would that have a bigger environmental impact?

[Dr. Josipa Petrunic]

Thank you for your question.

I'm going to answer in English, because it's easier for me.

The basic answer to the question is, should we be investing in a price point parity program to bring diesel into price point parity with green hydrogen? Yes, that's for sure. In the short term, for public sector fleets, absolutely.

Should we do it in lieu of also focusing on a greenhouse gas emissions reduction in the oil and gas sector? No. I would say that, in the interest of Canada and the globe, we have to do both. It's not a zero-sum game. I would argue both happen hand in hand for many of the reasons that many of my colleagues here on the line articulated.

Industries overlap quite substantially. The labour industry overlaps within these technology and energy sectors. Both of them are critical to greenhouse gas emission reductions.

[Mario Simard, Bloc, Jonquière, QC]

Thank you.

I ask because I'm trying to figure out what would constitute an efficient subsidy. What is the definition of an efficient subsidy? The Minister of Environment and Climate Change announced that he planned to put an end to inefficient subsidies. To my mind, an efficient subsidy is one that leads to the reduction of greenhouse gas emissions. I don't see how a subsidy can be efficient if it increases production.

Would you agree with me on that point?

I'd like to hear from Mr. Klein as well.

[Seth Klein]

I'm sorry. I need you to repeat the question.

[Mario Simard, Bloc, Jonquière, QC]

I'm curious as to the definition of an efficient subsidy. The Minister of Environment and Climate Change said that he planned to put an end to inefficient subsidies. What constitutes an efficient subsidy in the oil and gas sector?

The reason I ask is that Dr. Petrunic recommended a program aimed at closing the price gap between diesel and renewable hydrogen. Could such a program be seen as an efficient subsidy?

[Seth Klein]

Is that for me?

[Mario Simard, Bloc, Jonquière, QC]

Yes.

[Seth Klein]

Thank you, Mr. Simard.

Like you, I am quite wary when I hear those qualifiers about effective subsidies and so on.

I was attempting to say that the era of providing subsidies directly to the oil and gas sector should come to an end. Many of these projects simply become uneconomic in the absence of subsidies. Where our direct support should be going is both to those alternatives and to the workers and communities facing the need to transition. That's where public resources should actually be going.

I am wary in general that we seem stuck in an approach that is trying to incentivize our way to victory on the climate emergency. It hasn't worked. I don't think it is going to work. We encourage change. We incentivize change. We give credits. We give rebates. We send price signals. That's not an emergency.

It is helpful that we are now talking about an actual cap—

[Mario Simard, Bloc, Jonquière, QC]

Thank you, Mr. Klein.

I may come back to Dr. Petrunic later.

I'm going to be quick because I'd like to hear what Mr. Beugin has to say.

Mr. Beugin, in your opening statement, you talked about safe bets and wild cards in relation to the oil and gas sector.

Without the financial support of the government, can the industry alone leverage safe bets and wild cards to reduce its carbon footprint?

[Dale Beugin]

Thank you for your question.

The question of support for wild cards depends on the benefits that they can bring to society. The point isn't to provide support to an individual firm or an individual technology, but to make it easier to get to net zero. That means it's all about making those technologies cheaper and easier to deploy over time.

That matters most for the technologies that can make a big difference. Some of those do exist in the oil and gas sector, such as carbon capture, utilization and storage. The question then becomes how to target those subsidies as best as possible to get value for money while also ensuring that those investments are consistent with the long-term transition, both domestically and internationally.

[Mario Simard, Bloc, Jonquière, QC]

Thank you.

[The Chair, Liberal, John Aldag]

That's the end of the time there.

We're going to go right over to Mr. Angus, who will have his first six minutes.

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

Thank you all so much.

This is so important because we are talking about the future of the planet. When I talk with my daughter and her young friends, they don't really have much trust that there is a sustainable future. When I look at the actions of Canada and our government over the last number of years, they have good reason to be concerned.

The Prime Minister went to Paris in 2016 and said Canada was back on the international stage. People believed him, yet the environment commissioner says we've become the outlier of the G7 and we have failed on every single target.

When he went to COP26, he announced the emissions cap, but we learned the other day that the first announcement of the emissions cap to the Net-Zero Advisory committee was on the very day he was making the announcement.

Mr. Klein, I'd like to ask you this. The Prime Minister is committed to this emissions cap, yet Canada's energy regulator is boasting an increase of at least one million to 1.2 million barrels per day in the coming years while the rest of the world is supposed to flatline or decrease production. Our government agency is predicting huge increases. How do we square that?

[Seth Klein]

It can't be squared. I was heartened that the minister seemed to push back a little bit on that report to say that we need our own regulator to be giving us pathways that align with where the science says we actually need to go. We haven't had that yet.

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

We met with the Association of Petroleum Producers, which has enormous access to the environment minister and the Minister of Natural Resources. I would think they must be speaking every 15 minutes, judging by the lobbying registry. They didn't seem to be all that thrown by the talk of an emissions cap. In fact, they said their solution to the climate crisis was to increase production for offshore needs.

Is that possible to do and sustain the planet?

[Seth Klein]

I don't think it is. I watched that testimony, too, and heard the representative from CAPP effectively saying that he wants to see our production increase.

In many respects, I think our governments are caught in a bit of a prisoner's dilemma. Everyone purportedly wants to do the right thing, and they're afraid that if they actually start to tackle production, somebody else will consume that space. It's a legitimate concern, I guess, but real leadership in the face of that would be, on the international stage, actually pushing for treaties that tackle production.

We would follow the lead of the Province of Quebec and join the global alliance, the Beyond Oil & Gas Alliance. We would join efforts for an international fossil fuel non-proliferation treaty. That would be how we would signal that we're actually approaching both the demand and the supply sides of this emergency.

Instead, listening to your previous testimony—not today, but on other days—and sticking with this prisoner's dilemma idea, it almost feels like mob bosses cajoling their goodfellas to not co-operate. We need to be taking this in a different direction.

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

I think what concerns me is that we get presented here at natural resources with “we're all partners” and “we're all in this together”, as my Liberal friends say, and yet it seems as though we're being told here that we can drink our way to sobriety.

On the question of emissions versus production, I asked the net-zero advisory panel—and these are the people advising the minister—how is it possible that we can be talking about a one-million-barrel-a-day increase while claiming we're going to do massive reductions?

The net-zero advisory panel seems to think the question of emissions versus production is an artificial question. How can it be an artificial question when we have never ever shown any capacity to lower the emissions as we're increasing production?

[Seth Klein]

Yes, and those emissions have gone up, as we've said.

I also found that testimony somewhat frustrating. That's why, in my testimony earlier, I was saying that within the authority of the federal government we effectively do need to be speaking about production.

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

I want to get to that, because we're not talking about production to lower gas prices in Canada. We're talking about a massive increase in production to sell overseas, and that becomes much more possible through the Trans Mountain pipeline, which Canadians...I don't know, did we spend $15 billion, $18 billion...? This is public money that allows the export offshore. We've been told time and time again.... I think Professor Jaccard told us that it was not scientific to count emissions when we burn bitumen in China, that it just doesn't make sense.

The fact is that our emissions from offshore are more than all the emissions in Canada today. What role does the TMX pipeline play—which this government is committed to—in ensuring that this industry will continue to increase production because they can move it offshore and it won't be counted on the GHG emissions ledger sheet?