Natural Resources Committee on Sept. 27th, 2023

[Rachel Doran]

Thank you so much for the question.

We actually released a report today looking at household affordability and energy transition. We really crunched the numbers on the impacts at the household level of adopting EVs and making the switch to heat pumps. We looked at average households in the greater Toronto and Hamilton areas that made the switch to a heat pump or to an electric vehicle, or at the condo level may have adopted a transit pass or switched their cooktops to electric. We found that the further you went along that spectrum, away from how we have traditionally heated and powered our homes and vehicles with fossil fuels, the more money you saved. It really added up over time. We found that a household homeowner in the GTHA could save $800 a month, or $10,000 a year. A condo owner could save $5,500.

Colleagues at the Climate Institute as well as the IEA have also found that over time, through the energy transition, energy prices for individual consumers and households will actually go down. Right now consumers are really feeling the pinch at the gas pump. Electric vehicles can be powered by electricity that will still cost less over time. With electric vehicles being more efficient, even if rates were to raise slightly, they would still cost less than what households are currently paying for their overall energy bills.

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

I certainly talk with envy with my colleagues in northern British Columbia, who can drive all over the north on five dollars. In my region, it kills us. We don't have any of the infrastructure in place.

I want to ask about heat pumps. Again, my region is very rural. People are on rural farms. They heat with oil because they have no alternatives. It's getting more and more difficult to pay for not only the oil but also the service and the insurance. I know a lot of seniors who simply aren't going to get through the winter. We have a program for heat pumps; God help us if we could actually make it work.

What do we actually have to do to be able to say to people, “Yes, you can transition, and this is how we're going to help you”? With regard to our present offer, I've not seen a single person get a heat pump in my region. What do we need to do? What is practical so that we can say to people, “Yes, here's your transition, and here's how you save money”?

[Rachel Doran]

I think ensuring affordability, accessibility and simplicity in the energy transition will be key. We've suggested that the program you're describing, with $10,000 going to transitions from oil to heat pumps, could even be increased by the federal government to be able to make it accessible for low-income households across the country to have a free heat pump. This is what happens in provinces in the Atlantic region. I believe Prince Edward Island and Nova Scotia currently have those programs in place.

More can be done to make that accessible by really looking at the programs. Is it easy to find out about them and access them? Do you need someone to come into your home and do an audit? Is it possible for the government to cover that cost up front in the way that it happens directly at the auto dealership with electric vehicles?

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

Thank you.

[The Chair, Liberal, George Chahal]

Thank you, Mr. Angus. You're right on time.

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

I'm always on time. I've got your back, Chair; I've got your back.

[The Chair, Liberal, George Chahal]

Thank you. I appreciate that.

We'll now move over to the next five-minute round of questions. We'll start off with Ms. Stubbs from the CPC.

[Shannon Stubbs, Conservative, Lakeland, AB]

Thanks, Mr. Chair. Congratulations on your new role as of today.

Mr. Meadowcroft, it might surprise you to hear that Conservatives agree wholeheartedly with you about the realism around the timeline in which such a transformation should occur. That's why it's our position that governments shouldn't be setting targets, in some cases complete with criminal charges and other measures, that are unrealistic for the timelines they set, and they owe answers to Canadians about exactly how these goals are going to be achieved.

Ms. Doran, you are so articulate and you're very powerful. I just want to recognize that and to acknowledge your capacity here to help the coalition partners get their messages out on the policy agenda that you helped deliver and develop for the government when you were the senior adviser to Minister Wilkinson. Given that much of the airtime has been given to you today, I'm just going to ask the other witnesses to make some comments on the following questions.

Of course, Conservatives agree wholeheartedly that Canada must be competitive, and we must secure our supply chains and our value chains. We must put the cart before the horse, so we must develop our resources of rare earth metals and critical minerals that then can feed into the value and supply chains to develop EVs. We agree that interties need to be done. There have to be end-user distribution networks. All of those are undone. The governments and politicians who wax eloquent in this regard have not, to this date, answered Canadians on a single, actual, concrete, tangible question about how all of that is actually going to unfold in 11 years.

All of you have recognized the issues of competitiveness and different policies. Economists who propose carbon taxes for the purposes of emissions reductions do so in the context of saying that they must be implemented with an equivalent reduction of red tape and all other kinds of taxes, as well as protections for, in Canada's case, very critical emissions-intensive trade-exposed industries. That model is not on the table for debate in Canada. It's not the one being implemented by this government.

I would note some of the competitiveness issues, and I hope that representatives from the Chemistry Industry Association and also from Resource Works might want to get into this.

What strikes me is that the U.S. has no national carbon tax, and Canada does. The U.S. fuel regulations aren't nearly as aggressive as ours, which have caused all kinds of uncertainties, and others are about to come in. The U.S. has production incentives, not just investment incentives. Canada has investment tax credits that aren't ready; there are no production incentives, and they're, as we've all discussed, not yet complete. The U.S. has increased foreign and private sector investments, and Canada's are dropping like a lead weight because of the policies that are holding us back.

In Alberta's case, it is the private sector that has led those investments in clean energy and renewables. In fact, the oil and gas sector accounts for 75% of private sector clean-tech investment. It's the Province of Alberta, oil and gas, and pipeline companies that have long led this country in the development of renewables and alternative energies and the technology of the future. We'll do it again if we could just be allowed.

I also partly represent the industrial heartland. I thought you may want to comment about policy cues like declaring plastics as toxins, or some of the other policies that do the exact opposite of what people say they want, which is to incent investment and to develop all these technologies and products of the future.

I'll just open it up and let you take the remainder of the time if you want to comment on any of those contradictions.

[Greg Moffatt]

Thank you for the question.

What I would say is it's about regional opportunities and constraints when you think about where Canada is relative to the U.S. They're completely different systems. They're completely different approaches.

Why is it that Canada has a large industrial chemical cluster in southern Ontario? Why does Canada have a chemical manufacturing cluster in the industrial heartland, and why is it growing in other jurisdictions in the province? Why do we have a cluster in Quebec?

Again, it's regional opportunities. Again, industry has to deal with governments of the day. Decisions are made based on the availability of inputs: well-priced reliable power, and well-priced, abundant and low-carbon feedstock in western Canada. These all factor in.

There is an element to your question that is overly political for an association to get into. It's about opportunities and constraints, and leveraging off those opportunities to the greatest extent possible.

[The Chair, Liberal, George Chahal]

Thank you.

We'll now move to Mr. Sorbara for five minutes.

[Francesco Sorbara, Liberal, Vaughan—Woodbridge, ON]

Thank you, Chair. Congratulations on your new role.

First of all, I'll go to Ms. Doran at Clean Energy Canada, for a couple of reasons. First off, Clean Energy Canada is situated at my alma mater, which is Simon Fraser University. It was 25 or 26 years ago—not to date myself—but it is a place where I grew as an individual and completed my first degree.

I do want to just put on the record—it's not a question—that I agree with the commentary that was issued: “When building Canada's EV battery supply chain, the sum is greater than the parts”. The two EV battery plants, Stellantis and Volkswagen, are strategic investments for Ontario and for Canada. Beyond that, they are part of a larger picture in which you have to measure both the direct impacts of those plants and the indirect impact of then setting up and putting into place an actual supply chain. Canada was recognized for that in the BNEF—the Bloomberg index—when we moved up to second place globally on the electric vehicle supply chain.

I always look at things as a continuum, whether it's the housing market or the industrial sector. This place is the automotive sector, and the electric vehicle sector is a continuum. This is what we're doing in Canada very strategically, where we are putting in place the pieces for a supply chain through a continuum, which will benefit Canadians not just today but for generations to come. I thank Clean Energy Canada for that.

My question, however, is going to go to the folks at the Chemistry Industry Association of Canada. I've worked with you folks for a long time. Many years pre-COVID, I went out to the Alberta industrial heartland and visited the facilities. Some of them are being constructed; they are multi-billion-dollar investments.

I do believe in global competition, and we need to always measure that in place, but can you reference it in the global marketplace? There is leakage. We do know that. Our goal is to reduce greenhouse gas emissions here in Canada, but also globally. Can you talk about the global competition for these types of facilities and the opportunities that, for example, Alberta as a province has within our beautiful country? I would be really happy to hear that.

[Greg Moffatt]

What I'd like to say in that regard is, again, that chemistry is probably one of the largest globally traded commodities. It's a trillion-dollar industry.

The reality is that the pathway to manufacture these chemistries in Canada is a little bit different from what it is in China, in Asia or in the Middle East. In Canada, we use low-carbon natural gas. It is the most emission-efficient pathway to manufacture these chemicals, compared to coal to olefins, which you would see in China, or crude oil naphtha to chemicals, which you would see in Europe and some parts of Asia. We're competing against higher carbon-intensity products. The reality is that those commodities are not traded globally based on their carbon intensity, but if a time comes when there actually is a premium placed on commodities that are of a lower carbon intensity, then there will be some value and benefit to chemistry produced in Canada.

I always comment a little bit that there's this notion that when Canada moves natural gas via LNG to Asia, it will generate some benefit through Article 6 in terms of avoided emissions in other jurisdictions. The reality is that chemistry is a proxy for energy. The lowest-carbon pathway to manufacture these chemistries is here in Canada. We should be exporting these products globally and securing emission benefits through that.

That was a roundabout way of answering your question. The reality is that there is no premium for what we do here in Canada. With carbon pricing and regulations around reducing the carbon intensity, when you're exporting 80% of what you produce, there's no way to get a return on those costs.

[Francesco Sorbara, Liberal, Vaughan—Woodbridge, ON]

On the sector's path to net zero by 2050, people can go to the AIF or the 10-K form and read that your members—I don't want to single out one or two—have all committed to that path of getting to net zero. Is that not correct?

[Greg Moffatt]

I would say that for the most part, most companies have in place aspirational goals for scope 1, scope 2 and/or scope 3 emissions by a point in time, by 2050. That's for sure, yes.

[The Chair, Liberal, George Chahal]

We are done for time.

[Francesco Sorbara, Liberal, Vaughan—Woodbridge, ON]

Thank you, sir.

[The Chair, Liberal, George Chahal]

Thank you, Mr. Sorbara.

Thank you for your answers, Mr. Moffatt.

We'll now move to Monsieur Simard for a two-and-a-half-minute round.

[Mario Simard, Bloc, Jonquière, QC]

I think it was in Ms. Doran's presentation that indicated that, based on modelling, there would be five times as many jobs in clean energy by 2030. That is what I understood.

If I also refer to Mr. Meadowcroft's presentation, we have to move to clean energy if we want to be competitive on an industrial level, we need to shift to clean energy.

Does this mean that an economy still based on fossil fuels would be doomed to industrial decline over the next 20 years?

[Prof. James Meadowcroft]

We don't know exactly how quickly the transition will take place. However, there is no doubt that if most countries aim to decarbonize their economies by mid-century, there will be a decline in demand for oil, natural gas, and other products. It will be very difficult to maintain an economy that produces only fossil fuels in terms of energy.

The speed of the energy transition is still somewhat up in the air. It depends on technological developments. It depends on political decisions by many countries. Most of the models for decarbonization show that there will still be a viable oil industry in Canada in 2050. There are uses for fossil fuels other than burning them to heat houses or using them to power cars. What we need to do in a decarbonized world is make sure that those fossil resources are produced without emission, using CCS—carbon capture and storage—or other techniques.

I see the yellow card.

[Mario Simard, Bloc, Jonquière, QC]

I understand what you're saying, but what I'd like to hear you say is that no government should be advised to launch new oil and gas development projects. After all, we won't be consuming more oil in the future.

[Prof. James Meadowcroft]

The vast wave of inward investment in petroleum in Canada has probably passed, so yes, I wouldn't hitch my wagon to that horse. It doesn't mean the industry will disappear, but the growth is going to fade in—

[The Chair, Liberal, George Chahal]

Thank you, Mr. Meadowcroft. Your time is up.

Thank you, Mr. Simard.

We'll move over to Mr. Angus for two and a half minutes.

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

Thank you.

Again, you mentioned the International Energy Agency's latest report, Mr. Meadowcroft. I read those reports. They're usually pretty boring, but they're almost beside themselves right now. They can't keep up with, they said, the “staggering” level of growth in clean energy. For the first time, I think, clean energy is almost double to fossil fuel. What they also said, though, was that, again, the big oil companies are not doing their part, and that's the threat.

I don't know if you've had a chance to read “The People of the State of California versus ExxonMobil, Shell, Chevron, ConocoPhillips, British Petroleum”, and so on. It's a fascinating read. I mention it because they identify all the main companies for their claim that they are working towards net zero and are presenting themselves as climate leaders when they're doubling down on fossil fuels at a staggering rate. This is part of the indictment against these companies. I notice that Suncor has done the same thing. It has walked away on sustainability.

I want to get your perspective on where we're at. On the one hand, we could save ourselves at 1.5° Celsius, and on the other hand, we see the strategy of the big oil companies, as in the big tobacco indictment, is to say they're on clean energy when they're heavily doubling down on fossil fuels.

[Prof. James Meadowcroft]

My academic research studies the transitions in big sociotechnical systems. That's everything from developing piped water and sewage to the transformation of farming to rely on chemical fertilizers. It's many different changes. The typical pattern is that most of the incumbent industry sticks with the old technology because they're doing so well selling it and they have many sunk costs in investment. Very often—not always, but very often—the pressure to change comes from outside. I gave the Kodak example. It wasn't the film companies that made the transformation; it came completely from outside, with the digital technologies.

Sometimes the incumbents, the established firms, can adapt. That's what I would hope for Canadian industry—that some of our big energy companies could adapt and start investing in some of the technologies of the future as well as the technologies they've mastered already—but we'll see.

[The Chair, Liberal, George Chahal]

Thank you. The time is up. Thank you for your answer.

We'll move to Mr. Falk for five minutes.