Natural Resources Committee on Feb. 14th, 2022

[The Chair, Liberal, John Aldag]

I call this meeting to order.

Welcome to meeting number seven of the House of Commons Standing Committee on Natural Resources.

Pursuant to Standing Order 108(2), the committee is continuing its study of a greenhouse gas emissions cap for the oil and gas sector. Today is our second day of eight meetings with witnesses for this study.

Today's meeting is taking place in a hybrid format, pursuant to the House order of November 25, 2021. Members are attending in person in the room or remotely using the Zoom application. Please note that the webcast will always show the person speaking, rather than the entire committee.

I'd like to take this opportunity to remind all participants that taking screenshots or photos of your screen is not permitted now that we're in session. Today's proceedings will be televised and also made available via the House of Commons website.

We are all familiar with the health and safety information, having gone through it in six previous meetings.

I will go into some detail for our witnesses, most of whom are joining us for the first time.

To ensure an orderly meeting, I'd like to outline a few quick rules to follow.

Interpretation services are available for this meeting. You have the choice, at the bottom of your screen, of floor, English or French. Members and witnesses may speak in the official language of their choice.

We also ask our witnesses to not speak too quickly. You don't have to be really slow, but just try not to go really fast. This allows the interpreters to keep up and do their job properly. We also ask you not to speak over each other, because that also makes it impossible for the interpreters to deal with simultaneous conversations going on, so be respectful of that.

For anyone in the room, raise your hands. For anybody onscreen, use the “raise hand” function. The clerk and I will do our best to try to figure out the order we're going in.

Before speaking, please wait until I recognize you by name. If you are on Zoom, please click on the microphone to unmute yourself. For members in the room, we'll control the microphones here. When you're not speaking, your microphone should be on mute.

I remind you that all comments by members and witnesses should be addressed through the chair.

This is a study of greenhouse gas emissions for the oil and gas sector.

We have several panels with us today. Thank you for making the time to join us.

We're going to give each of you five minutes for an opening statement. I use a timing system. There will be a yellow card when you have 30 seconds left, and when the time you're given is up, I'll use a red card. This will be the case when we do the interactions, as well. Don't stop mid-sentence, but wrap up your thought, and then we can move on to the next person.

We're going to try to end the panel today by about 5:15 p.m. We have brief, in camera committee business to attend to at the end of the meeting, so—for the witnesses—we will be adjourning slightly before we scheduled you. However, I think we'll still have a very good discussion for the time we have together today.

If I get anyone's name wrong, please correct it when you introduce yourself. I apologize if I do get it wrong. We have on our panel, from the Canadian Urban Transit Research and Innovation Consortium, Josipa Petrunic, president and chief executive officer; from the Canadian Institute for Climate Choices, Dale Beugin, vice-president, research and analysis; from Clean Energy Canada, Merran Smith, executive director; from Clean Prosperity, Michael Bernstein, executive director; from Climate Emergency Unit, Seth Klein, team lead; and from the Pembina Institute, we welcome back Jan Gorski, director, oil and gas, and Chris Severson-Baker, regional director, Alberta.

For our committee members, we do try to balance off the witnesses being put forward from each of the parties. Sometimes, due to scheduling, we can't have a complete balance, but we're going through all 52 names of organizations that were put forward. We've had some additional ones come in. I'll try to do my best to have balance. It's not always possible, but we will get to everybody.

With that, Ms. Petrunic, please proceed with your opening statement.

[Dr. Josipa Petrunic, President and Chief Executive Officer, Canadian Urban Transit Research and Innovation Consortium]

Thank you very much to the committee, and thank you for the opportunity to appear before the Standing Committee on Natural Resources.

My name is Josipa Petrunic. I am the president and CEO of the Canadian Urban Transit Research and Innovation Consortium, CUTRIC.

CUTRIC is a technology innovation consortium. All we do is design, develop and launch electric bus, fuel cell bus and autonomous electrical technology projects.

This committee's focus is on energy-oriented natural resources. Those are supplies that Canada is rich in. We all know that. From our perspective at CUTRIC, Canada's natural resources include electrons produced from renewable hydro power, solar and wind and non-emitting sources such as nuclear and renewable natural gas, all of which are extremely strategically important in a globalized world.

Just as bitumen was impossible as a market fuel in the 1960s and 1970s until the federal and provincial governments invested heavily, alongside industry and technology innovation, in the development of technologies like SAGD—steam-assisted gravitational drainage—that help us today to extract thick petroleum supplies from the previously inaccessible depths of the earth, so too will renewable electricity and renewable hydrogen benefit from ongoing and upcoming public investments in innovation and technology.

In my remarks today, I'm going to make two recommendations. Both of them are based on the fundamental position that energy is energy. Whether energy is produced and carried in the form of a hydrocarbon molecule, an electron or a hydrogen atom, energy is energy. If, as Canadians, we want to stay an energy superpower of the future in the 21st century, then we do believe that the federal government has two critical roles: One is as a convenor and one is as an investor in the energy supply sector of the future.

The first recommendation I'd put forward is that Natural Resources Canada in particular should be playing a national convenor role between all provincial and territorial ministries of energy. Over the past six years at CUTRIC, we've led a national power providers working group, which brings together utilities in the nation looking to see how they can become power providers of the future.

We published a major national report last year on this very issue. We discovered a few really important things.

First off, we have some really important critical first movers: BC Hydro, Manitoba Hydro, Hydro-Québec and Nova Scotia Power. These are vertically integrated utilities that help to develop new commodity and demand pricing mechanisms for electrical energy supplies that directly address transportation pollution and greenhouse gas emissions—in particular, in the transition out of oil and gas as our prime fossil fuel transportation mode.

These energy producers in particular struggle with some of the regulatory frameworks they work within. What we've discovered is that BC Hydro is a first mover in the country. It certainly has the kinds of programs that others are going to want to copy. BC Hydro has created both an overnight and a demand charge rate, both of which are specifically designed to support the electrification of buses in Vancouver and across British Columbia.

These regulatory innovations should be shared with all 10 ministers of energy across the country and territorial energy leaders in the north, but in our current Confederation, electricity is a provincial jurisdiction. It's not the job of British Columbia to convince Saskatchewan, Ontario or Nova Scotia to follow its lead, but it is the job of Natural Resources Canada to do so in a convenor role, to helpfully convene and coordinate the sharing of these best practices, along with provincial electricity jurisdictions, in the pursuit of low-carbon fuel production.

My second recommendation to the committee today is focused on innovation investments in hydrogen. Natural Resources has expanded and can expand further a suite of innovation programs to assist in price point reduction for public fleets like transit that will use renewable hydrogen over the next five years.

We know that over the past decades we have invested heavily in innovation in the oil and gas sector; I mentioned SAGD technology as a great example. Similar kinds of investments are going to be required in ensuring that the price point for green and renewable hydrogen drops to diesel price parity over the next five to seven years. It is possible, but currently, renewable hydrogen at small volumes of under 1,000 kilograms per day, which supports about 30 fuel cell electric buses, is about four times the price of non-renewable diesel.

It's not surprising, since diesel benefits from a pre-existing massive and well-established distribution supply chain and millions of kilograms of demand per day, but if we are keen to ensure green hydrogen can compete over the long term and keen to position Canada as an energy superpower of the future, then most certainly there is a role for Natural Resources to engage in the subsidization of the price of renewable hydrogen—for public fleets specifically—in Canada over the next five years. This is going to help us overcome the gap in price between renewable hydrogen and diesel for public fleets, creating a marketplace that will naturally accommodate for-profit freight operators in the future and ensuring that diesel and renewable hydrogen price hit parity by 2030 in a liberal, globalized market economy.

In closing, Natural Resources Canada has played a pivotal role in innovating the oil and gas sector in the past and still does today. That's why we're an energy superpower, but the same kinds of investments are now needed in the energy industry of the future, in the interests of all Canadians.

Thank you for your time. I'm happy to answer any questions.

[The Chair, Liberal, John Aldag]

Thank you for your opening comments.

We will now go to the Canadian Institute for Climate Choices, and Dale Beugin. I'd ask to keep it nice and relaxed. The interpreters kept up, but we don't want to make them work so hard in keeping up for the entire meeting. They'll go home with a big headache.

Please cover as much as you can in five minutes, and then we'll have lots of time for discussion afterward.

Thank you.

[Dale Beugin, Vice-President, Research and Analysis, Canadian Institute for Climate Choices]

Thanks so much for inviting me to speak today.

Should the government adopt an emissions cap for the oil and gas sector, our research suggests that a well-designed policy would be consistent with an economically prosperous pathway to net zero for Canada.

I would like to make three points today, drawing on our research.

First, a new zero pathway for the oil and gas sector is feasible. The institute's research shows that Canada can achieve net zero while maintaining economic growth. These pathways rely on two kinds of solutions.

Safe bets are already commercially available and scalable. In oil and gas, safe-bet solutions include methane capture from fugitive emissions, industrial energy efficiency, and carbon capture, utilization, and storage, CCUS, for concentrated streams of CO2. Safe bets are critical for achieving the 2030 target.

Wild cards on the other hand might be game-changers, or they might not contribute significantly. In oil and gas, wild cards include blue hydrogen, direct air capture for carbon removal, and CCUS for unconcentrated streams. Achieving net zero by 2050 becomes easier if wild cards become available. That means safe bets and wild cards are complements. Both are necessary, and both require policy.

Safe bets are driven by increasingly stringent carbon pricing and regulations, for example, methane regulations to the clean fuel standard. Wild cards are driven by expectations of future carbon prices; they require policy certainty, but also public investments in innovation demonstration projects.

A cap on emissions in the oil and gas sector should be part of a coherent strategy that includes policies to create incentives for both safe bets and wild cards.

Second, a cap should take into account international shifts. Our research finds that international action on climate change, and the market shifts that will come with it, will have bigger implications for the long-term competitiveness of oil and gas than domestic climate policy.

This shift is already under way. International investors with over 40% of global assets under management have committed to supporting net-zero goals. Countries representing more than 90% of global GDP have committed to net zero, and the costs of low-carbon technologies are dropping rapidly.

A sector cap should recognize that this international momentum could decrease demand for Canadian oil and gas over the medium to long term, creating risks of lost competitiveness and lower production. Projections from the IEA and the Network of Central Banks and Supervisors for Greening the Financial System highlight that an accelerating global low-carbon transition is a credible future with real risks and opportunities, and must be taken seriously by policy-makers.

An ambitious but practical cap on oil and gas emissions can also support long-term competitiveness in an investment environment that increasingly prioritizes transparency and disclosure around environmental performance.

Third, a cap on oil and gas emissions should be designed to cost-effectively work with other policies as a coherent package that can be adjusted and adapted over time.

A sector cap should cap emissions, not production. It should rely on a flexible, market-based policy instrument to implement a regulated cap. Existing output-based carbon pricing systems could be adapted to provide certainty with respect to emissions and emissions levels.

Incentives should be created for carbon removal. Credits for permanent carbon removal under the cap could create these incentives, but they also could create liquidity in markets for credible credits under the cap.

There should be coordination with other policies. A tax credit for carbon capture, utilization, and storage, for example, would make it easier for firms to achieve the emissions cap, but would also affect demand for tradable credits and the price of carbon in the sector.

It should be robust to uncertainty. Faster than expected declines in global demand and low oil prices could also lead to lower carbon prices under the cap. Spikes in demand could lead to high prices.

Relying on transparent and predictable governance processes is one approach to update and adjust these strategies in this coherent package of policies over time to address those challenges.

Thank you for the opportunity to speak. The institute looks forward to sharing additional research to inform this policy issue in the future.

I'm happy to take any questions.

[The Chair, Liberal, John Aldag]

Thank you for your opening comments.

With that, we will now go to Clean Energy Canada, and Merran Smith, for five minutes.

[Merran Smith, Executive Director, Clean Energy Canada]

Good afternoon, Mr. Chair and members of the committee.

I'm a fellow at Simon Fraser University and the executive director at Clean Energy Canada, which is a climate and energy think tank at SFU.

Today, I want to share three recommendations for implementing this oil and gas sector cap. First, however, innovations in the oil and gas sector should be recognized, as emissions per barrel have declined over the past two decades. Unfortunately, overall emissions from the oil and gas sector have nevertheless been increasing steadily over the long term.

Canada's oil and gas sector emissions are significant, at 26% of our total emissions. For Canada to succeed in meeting our climate target, all sectors, including the oil and gas sector, will need to reduce emissions in the range of 40% to 45%. If we design this oil and gas sector emissions cap well, it will provide a predictable transition to a net-zero future for oil and gas workers, their communities and the economy, and will support Canada in meeting our climate commitments.

What must Canada do while setting this cap? I advise the government do three things. First, make the plan clear this year. Second, everyone in the sector needs to do their fair share. Third, incent the energy and industries that will be growing in 2030 and 2040.

The first recommendation is make the plan clear this year. Like any new regulation or legislation, the process for setting this cap needs to be done well. It needs to have the right consultations and be evidence based. With Canadians and people around the globe already living with climate change impacts, this cap needs to be put in place quickly. We recommend that Canada set an interim 2030 emissions cap for the sector by the end of 2022. This is to provide industry the clarity it needs to make investments now to reach that 2030 target. The interim cap must align with Canada's 40% to 45% emission reduction commitment. It should be consulted on in 2023 and finalized by the end of that same year. We also need five-year milestones that linearly and predictably drive sector emissions to zero by 2050 to align with Canada's net-zero legislation. This is to ensure that we aren't allowing industry to back-load those reductions.

Our second recommendation is that is everyone in the sector needs to do their fair share. Government should establish disincentives for operators exceeding their share of the sectoral cap, which could include things like financial penalties, removal of tax incentives or loss of trade protections under the federal output-based pricing system. Everyone needs to do their fair share.

Thirdly, we need to incent the energy and industries of the future. The cap shouldn't be used by governments or industry as a mechanism to grow Canada's oil and gas industry. The International Energy Agency is clear that under its announced pledges—this is what nations committed to prior to the Glasgow climate summit—global oil production will decline to 90 million barrels per day in the early 2030s and to 80 million barrels per day in 2050. Global gas production will plateau in just three years—by 2025—and remain flat thereafter. The evidence is clear: Canada's future economy will be less reliant on oil and gas exports and therefore, the Government of Canada should avoid investing in industries that will not be growing beyond this decade.

Fortunately, Canada is well positioned to be a leader in clean energies, from our abundance of renewables to blue hydrogen potential while transitioning to cleaner green hydrogen. We have the metals, minerals and opportunities to be a leader in batteries and other storage technologies, along with carbon capture and storage. We can use our clean energy to produce low-carbon metals, minerals, steel, cars and other manufactured products.

If Canada acts on it current climate commitments, there are projected to be 640,000 clean energy jobs, which is an increase of almost 50%, or 209,000 jobs, over this decade. These are diverse, blue-collar and white-collar jobs. They're in rural and urban communities in every province across the country.

Lastly, I would bring to the committee's attention that the carbon intensity of oil produced from Canada's oil sands remains the highest globally. That is why a cap on oil and gas emissions followed by five-year emissions reduction milestones is critical if Canada is to reach its climate targets.

Thanks for the opportunity to speak with you. I look forward to questions and discussion.

[The Chair, Liberal, John Aldag]

Thank you for those opening comments.

Next up we have Michael Bernstein from Clean Prosperity .

Michael, we'll go over to you for five minutes.

[Michael Bernstein, Executive Director, Clean Prosperity]

That's great. Thank you very much, Chair, and thanks to the committee for having me here today.

I want to use my time to explain why I think leveraging the existing carbon pricing system for heavy industry is the best approach to pursuing the goals of the emissions cap.

I know a number of previous witnesses have argued for a cap-and-trade system. I agree that a cap-and-trade system is a viable option here, but I think there are some shortcomings to a cap-and-trade system that would make direct pricing a better choice. Here are the three reasons for that.

First, it's going to take time to set up a new system, and we really do not have more time. We need businesses to move forward with emissions reductions as soon as possible, because 2030 is really tomorrow when it comes to large capital projects.

Second, a new system creates more instability when what we most need, and what investors and businesses most need, is stable long-term policy.

Third—and this is a key thing—a cap-and-trade system doesn't necessarily have a true, hard cap, because they're almost always designed with price controls. If you look at the California and Quebec system, the EU system, or really any system around the globe, what you're going to see is if the price gets too high too quickly, the government will inject more credits into the market to reduce price pressure. Once they do that, a cap-and-trade system becomes functionally very similar to a direct carbon pricing system.

Those are the three reasons that I think a direct pricing system, meaning the output-based pricing system we have today as well as the provincial and territorial systems that are equivalent to that system, should really be the primary tool we use to drive emissions reductions across oil and gas and around heavy industry as a whole.

If that approach is to be followed, I would really emphasize to the committee three key recommendations for how that direct pricing system could be strengthened to achieve the objectives that would otherwise be achieved by a cap.

The first and biggest thing that should be done is to provide the private sector more confidence that the price will actually reach $170 per tonne by 2030. We have many decarbonization projects today that would be profitable at $170 per tonne, but they're not happening, and why is that? The key reason is that business doesn't have the certainty that the price will actually reach that $170 level, so I think the federal government should address this. They have a few options to do that, but one of them would be to sign so-called “contracts for difference”, under which the government would basically agree to provide financial relief to companies if the carbon price doesn't hit a specified level, such as $170 per tonne.

The second key recommendation to strengthen carbon pricing would be to increase the share of emissions that a carbon price applies to, within both the federal system and the provincial and territorial systems. Today, as many of you will know, the average oil and gas firm pays the carbon price on a pretty small share of emissions. Depending on the system and the firm, it's around 20%. The federal policy could be strengthened to require that the share of emissions grows over time to 25%, 30%, 35% and so on.

The third recommendation is that the government could, and should, reserve the right to increase the carbon price beyond the schedule if emissions reductions are not occurring quickly enough in accordance with the target or cap that might be set.

In using these three approaches, it would be a faster system. It would be functionally similar to a cap-and-trade system, and it has another really important advantage, which is that it will enable more emissions reductions at a lower cost. That's because if you strengthen the industrial carbon pricing system as a whole, it's going to apply not just to the oil and gas sector, but to all heavy emitters. Therefore, you're accelerating decarbonization and you're doing it at a lower cost by allowing trade. Of course, you'd need to do this all in a way that treats industry as a partner in decarbonization and allows them to maintain competitiveness. That's going to require policies such as an investment tax credit, such as a border carbon adjustment, but taken together, these policies can help industry do what they themselves have committed to doing.

In conclusion, I really think the government should closely consider using the existing carbon pricing system to achieve the types of reductions that are intended under a cap.

Even though a cap-and-trade system is viable—it can work—strengthening the carbon price can more quickly do more, and it would likely achieve those emissions at an even lower cost.

Thank you very much.

[The Chair, Liberal, John Aldag]

That's wonderful; everybody's staying very close to the five-minute mark. I really appreciate it because we can get right into the questions and answers.

Next up we have Seth Klein from the Climate Emergency Unit.

Mr. Klein, we go over to you for five minutes.

[Seth Klein, Team Lead, Climate Emergency Unit]

Thank you, and thank you very much for this invitation.

I'm joining you from the unceded territories of the Musqueam, Squamish and Tsleil-Waututh nations and from a province where major fossil fuel pipeline projects, the Trans Mountain pipeline expansion and the Coastal GasLink pipeline, one owned by the federal government outright and one where Export Development Canada has a major stake, are being built over the objections of indigenous titleholders and in clear violation of the United Nations Declaration on the Rights of Indigenous Peoples.

Honourable members, we have a problem. Your deliberations cut to the root of how serious we are as a country when it comes to confronting the existential threat of our time. We pride ourselves on being climate leaders, yet we have been highly resistant to tackling our role as global producers of fossil fuels. Our governments have persisted in peddling a fundamental falsehood, namely, that we can significantly lower our GHG emissions while doubling down on the extraction and export of oil and gas.

As a country, for the last 20 years, despite all of our pledges and commitments, the best we have managed to do is plateau our emissions at a historic high. We have failed to bend the curve. Why is that? In fact, many sectors of the economy and most provincial jurisdictions have managed to lower their emissions, but all their good work has been undone by the expansion of production and emissions from the oil and gas sector. The combined impact is a wash.

For years, the 26% of our emissions that derive from this sector have been the elephant in the room, so it is of great significance and very welcome that the governing party has finally named this and recognized the need for a declining emissions cap on the oil and gas sector, but, in the absence of strong action from the federal government, the trends show little sign of abating. Canada is on track to produce more oil and gas this year than ever before.

Here in my province of British Columbia, plans continue to build LNG Canada, aided by a huge federal subsidy which, if completed, will become the largest point source of emissions in this province.

Off Newfoundland, the proposed Bay du Nord project would be another carbon bomb, one that the federal government will hopefully reject. Yet, according to the UN's 2021 “Production Gap” report, “Governments' planned fossil fuel production remains dangerously out of sync with Paris Agreement limits.” They place us on a path to produce more than twice the amount of fossil fuels in 2030 than is compatible with limiting global temperature rise to 1.5 degrees. Within those global production plans, Canada's expansion plans rank sixth.

We are on a collision course with what our children require for a safe future.

You have heard testimony that what Canada exports is not our concern and that our task need merely be to achieve net-zero emissions from our domestic extraction and production processes, but this view is untenable. As one Forbes columnist recently put it, “It is like Philip Morris International promising that none of its workers will smoke while manufacturing cigarettes.”

In the end, who cares? The greatest concern isn't the production emissions, it's what happens when that product successfully gets to market and is burned. Those scope 3 emissions account for 85% of the GHGs from fossil fuels. As you've also heard, the GHG emissions embedded in the fossil fuels Canada exports now exceed our domestic emissions. To ignore these scope 3 emissions is a moral abdication.

I invite you to follow this argument that our exports don't matter to its logical conclusion. Ultimately, it is a deeply cynical take. It is cynical because only two outcomes are possible. Either a market will persist for our expanding fossil fuel exports because the Paris Agreement will fail and global demand will continue to grow, consigning our children and grandchildren to a hellscape. Conversely, global demand will in fact start to collapse, as it must, consigning fossil fuel workers and their communities, many of whom you represent, to an unplanned period of profound tumult and disruption. In either case, the outcome is bleak.

Real hope rests in a thoughtful, planned wind-down of the industry, paired with an audacious, compelling, just transition plan, one that puts on the table billions of dollars for real climate action infrastructure. This needs to be understood as the essential flip side of the emissions cap. This is where significant federal support money should be going.

Am I saying that we should reopen the Constitution? No, but the federal government can and should use every tool within its authority to drive down emissions and to effectively ramp down production, and those tools are many. Exports are under federal jurisdiction, and if the federal government can ban coal exports, so, too, can it begin to limit oil and gas exports. Interprovincial transport, like the pipelines I just mentioned, is under federal jurisdiction. Offshore production comes under federal jurisdiction.

The federal government can implement a carbon test on new fossil fuel projects and require that they comply with the UN Declaration on the Rights of Indigenous Peoples. Of course, in the absence of federal subsidies, many fossil fuel projects simply become economic. We are now obliged to ensure that our practices align with the international commitments we've made under Paris. The Supreme Court of Canada in its decision last year has recognized the imperative of this moment and the right of Parliament to act at a national level.

[The Chair, Liberal, John Aldag]

Excellent, thank you.

Now, we'll go to the final opening statement from The Pembina Institute.

You have five minutes.

[Chris Severson-Baker, Regional Director, Alberta, The Pembina Institute]

Thank you.

I am Chris Severson-Baker, the Alberta director of The Pembina Institute. I'm based in Calgary, on the traditional territories of the Blackfoot Confederacy in the Treaty 7 region of southern Alberta. Joining with me today is Jan Gorski, oil and gas director with the institute, who will be helping with your questions today.

As you've heard many times in the testimony over the last four sessions, the oil and gas sector is the largest emitting sector in the economy, and these emissions have risen by 20% since 2005, at a time when most other sectors have reduced emissions, with transportation being a notable exception to that. Therefore, there are significant opportunities to reduce emissions from oil and gas.

Companies have been investing in innovation, driving down the cost of abatement for some time, even though there have not been significant investments in the commercial scale application of many of these technologies. Companies have implemented cost-saving measures that have reduced emissions intensity even while absolute emissions have risen significantly, but many of the really big opportunities to reduce emissions are awaiting clearer policy and a clearer price signal.

Canada will be hard pressed to meet its target of an ambitious 40% to 45% reduction without an ambitious cap on oil and gas emissions. We therefore recommend a cap of emissions at 2019 levels for the oil and gas sector, declining by 45% from 2005 levels by 2030 with five-year milestones starting in 2025, all the way to net zero in 2050.

Reducing emissions from the sector is necessary, not only to meet our targets but also to remain competitive in a world that is placing increasing value on GHG performance. You've heard that the IEA is predicting the demand for oil will decline after 2030, and Canada's oil sands companies have recognized that the world is acting on climate change by committing to net zero.

These companies have published a vision statement that includes a 22-megatonne reduction by 2030 and a conceptual plan beyond that. That conceptual plan doesn't credibly get you to 2050, but the first chunk of emissions reductions to 2030 appears valid and is likely to require more policy stability and a higher carbon price as well. A cap on oil and gas emissions is a way to hold these companies accountable to their net-zero targets.

The oil and gas sector is well placed to make investments to reduce emissions. Peter Tertzakian, a respected voice in oil and gas, has pointed out that the sector's revenues in 2021 and 2022 are going to achieve record levels due to rising oil prices, lower costs and other factors. Companies are well placed to make investments, and there are plenty of low-cost emissions reductions available but, again—and it's been pointed out many times—they are awaiting a higher price on carbon, and stability in the carbon pricing policy in Canada.

One really significant opportunity is methane emissions. We can cut methane emissions by almost 90% for less than $25 a tonne by 2030. There are also efficiency gains and process improvements available in the oil sands and natural gas production sectors. There's a large opportunity to electrify natural gas production in B.C. with hydro power. Taken together, these emissions reduction opportunities are substantial and are based on current technology.

Finally, it is reasonable to expect that emissions reductions will also occur as a result of facilities reaching the end of their economic life between now and 2030, and then beyond of course.

Canada has the foundational policy pieces needed to achieve significant emission reductions in the oil and gas sector, and we recommend immediately strengthening Canada's industrial carbon pricing system during the review that is happening right now. This would require existing intensity benchmarks to decline by at least 4% per year so that all emissions from oil sands and other large emitters are fully priced by 2050.

At the same time, the government should develop a cap-and-trade system for the oil and gas sector, but we recognize that this takes time, and early-term reductions in emissions will only be achieved through tightening existing policy.

Strengthened methane regulations can also achieve significant reductions early on, well before 2030. The federal government has already committed to reducing methane emissions from oil and gas by at least 75% by 2030.

Thank you very much.

I look forward to your questions.

[The Chair, Liberal, John Aldag]

Excellent.

Once again, thank you to all of you for your opening comments and for staying pretty much right on the five-minute mark.

I'm going to our first round, in which each of the MPs selected will have six minutes.

First up is Ms. Rempel Garner.

It's over to you for six minutes.

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

Thank you, Mr. Chair.

I'm going to start my questioning with Ms. Petrunic from the Canadian Urban Transit Research and Innovation Consortium.

I do believe that we need more public transit as a substitute good, as a low-carbon alternative to vehicles. My question is this: How do we do that?

I know that your organization, Ms. Petrunic, is talking about innovations to improve and make public transit more carbon efficient. My concern is that there, perhaps, isn't enough governance research being done on how we actually build public transit writ large. For example, in my riding in Calgary, we've had a public infrastructure project, the green line—which would have seen about 50,000 cars pulled off the road—frankly held up in a bureaucratic quagmire by Calgary city council for about 10 years.

Has your organization undertaken any research to see how those types of roadblocks could be overcome in order to see these types of projects actually built in the first place?

[Dr. Josipa Petrunic]

As a fellow Calgarian, I can tell you that it's one of the things that I personally have been watching to try to understand why it's not moving forward.

In a rail sector, there is a different dialogue, compared to that of buses. There's a different kind of procurement at play.

In general, what I can say is the following. When it comes to zero-emissions technologies, for certain the public transit fleet, whether it's buses, coaches or trains, is a gateway to heavy-duty freights and trucks, so there's a benefit there. Even if it is bureaucratically challenging to get it out the door, it does move the industry pretty quickly.

When it comes to public transit, particularly technology-intense, complex transit projects, it is fair to say—and to be fair to our transit agencies in our cities—that they are not well equipped for this transition, to start with, which is why it becomes stuck in a bureaucratic quagmire, to some extent. I'll give you one example. Calgary Transit, Edmonton Transit, TTC, and OC Transpo are great transit agencies that do great work, but they have not, historically, had large cadres of electrical engineers, hydrogen engineers or high-power systems engineers, whose job is to innovate this stuff.

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

I'm sorry to interrupt, but I have only four minutes left.

[Dr. Josipa Petrunic]

Yes, sure.

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

Please try to keep your answers brief.

Again, we had this wonderful project teed up to come into my riding. It would have brought social inclusion and equity with respect to public transit to people in my community. There's really not a lot of public transit infrastructure for north or north-central Calgary. People want it, yet we have seen city council continue to impede the process of this. I'm wondering if you have any experience with how municipal politicians can get out of this habit of looking for ways to, perhaps, prevent public transit from being built out. How can municipal-level governments be incented by federal funding partners to actually get the projects, be they bus, BRTs, or LRTs, built out in the first place, given the climate emergency that we're facing?

[Dr. Josipa Petrunic]

To keep it short and simple, I would say that tying the money to a timeline is probably the quickest and most efficient way to move at the municipal level.

When it comes to zero-emissions technologies, most municipalities have passed a zero-emissions sustainability plan, so they're driven by their own timeline.

In those cases in which that plan is not rigorous, I would—

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

Would you, then, say that as a recommendation for this report, any federal infrastructure funding related to public transit should be tied to some sort of timeline in order to actually see emissions reductions gains that might be embedded into the funding program to begin with?

[Dr. Josipa Petrunic]

I would, one hundred per cent. It's a smart idea.

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

What do you think is the impact on climate change in Canada of municipal councils' delaying of projects like the green line?

[Dr. Josipa Petrunic]

That's a large question.

I think the general impression is that if you want to get cars off the road, you have to get bums in the seats of public transit systems, so the general impact is thousands of cars off the road and the greenhouse gas emissions that go with that.

I would say that whether it's the green line or any other public transit mode that's been delayed unjustifiably—because there are justifiable delays and then there are unjustifiable delays—in those cases you are talking about thousands and thousands of megatonnes of pollution that remain in the air that don't need to be there. Ultimately, delaying public transit delays our achievements.

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

Given that you're a Calgarian, this is a great case study. Would you say that the Calgary green line has been unjustifiably delayed?

[Dr. Josipa Petrunic]

That's a question I can't answer, unfortunately. That's one I think you would have to ask city council in depth about their procurement.