Evidence of meeting #74 for Natural Resources in the 44th Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was clean.
A recording is available from Parliament.
Conservative
Ted Falk Conservative Provencher, MB
Thank you, Mr. Chair, and congratulations on your new role. I'm sure you'll do well.
Thank you to all our witnesses. I know that the time will evaporate quickly, so I'll start off right away with Margareta.
You've had lots of international experience in the UAE and Taiwan, helping to consult on different energy projects and resource development. You talked a little bit about LNG here in your initial comments.
When you look at Canada's resources, what do you see right now as most in demand?
Managing Director, Resource Works Society
Canadian ingenuity and our ability to tap into the raw materials that we have at our disposal are the things that have the greatest value in offering to the world. I see a huge amount of traction in British Columbia right now on LNG, as you mentioned. It's highly promising. We've been hearing a lot of conversation here about the different drivers of energy systems transformation. Policy, of course, when societies collectively decide that we need to go in one direction, can provide that push.
We see a positive effect from clustering. When an industry has developed a base of people and skills and institutions and organizations and companies working together with a rich and diverse supply chain, you do get some positive effects from that as a driver of innovation and transformation. However, I think ultimately markets and consumer demand will determine the direction of the transition.
When we're talking about these highly promising opportunities for Canada, we need to remember that we're a small, open economy. We're a trading nation. As a trading nation, we can't just be looking to our domestic consumption and the changes we can make and how we produce and use things like energy within Canada; it's about what we offer to the world. Technology transfer from clean technologies is a very valuable thing that we can provide, but I think those raw commodities produced in an environment that leads the world on many dimensions is where that value is. While the demand is there for industries like LNG, I think we should enable those industries to survive.
Capital risk is a good filter for that. If private industry is willing to take the risk and they believe the conditions of the world at large would enable them to go out there and sell those products, then policy-makers should be responsive to that, rather than saying, “Let's arbitrarily kneecap industries that we don't think meet our ideal future scenario for what Canada's economy should look like.”
That's not to say that there shouldn't be a nudge from policy-makers. I strongly support the work that colleagues here are doing to advance that push from within government and from outside of government, but we need to take stock, in a sense, of our fundamentals.
If as a country we are blind to what has been our economic strength and where we can derive the greatest security and well-being for Canadians in increasingly uncertain times, we're going to be at a serious disadvantage. I'm worried that we're not just going to be out-competed by the U.S.; we're also going to be experiencing a substantially deprived quality of life for all Canadians.
Conservative
Ted Falk Conservative Provencher, MB
Okay.
Some of your work has been in the field of energy security, grid capacities and all that. Where do you see the biggest risk for Canada going forward?
Managing Director, Resource Works Society
I think I alluded to the distinction between domestic energy policy and international export as a problem long recognized by many analysts. I'm a generalist, so take what I say with that in mind. We just don't have enough interties between provinces. There's work being done to remedy this, but we have serious deficiencies in how we use the resources that we currently have in the country to get energy where it's needed.
I come from B.C., which, like Manitoba, is a major producer of hydroelectric power. It's a mystery to me that we don't get to sell enough of it to the rest of Canada but instead sell it to the United States. I see small modular reactors as a problem with the same opportunity. Ultimately, the security and the stability of that supply for Canadians is important for things like affordability, but when it comes to exports—
Conservative
Ted Falk Conservative Provencher, MB
I'm quickly running out of time here.
When it comes to developing some of these resources in which you say Canada is rich, what are the impediments to doing that? Do we have a regulatory environment that is not friendly?
Managing Director, Resource Works Society
We have regulatory capacity, yes. As for certainty, as I mentioned, the politicization of the process sometimes makes the outcomes from the regulatory process uncertain. That impedes capital flow. We're losing a lot of investment dollars.
Capacity even within indigenous communities is another one. Increasingly, mining is where—this is positive—we see the involvement of indigenous communities. However, if the capacity is not there to support their participation in the decision-making process, then we see material delays in permitting approvals and the ability of joint ventures to be worked out. It's things like that.
Devoting more energy to being outcome-oriented by saying, “These are the things we want”, and then working backwards from that will get us to where we need to be.
September 27th, 2023 / 5:45 p.m.
Liberal
The Chair Liberal George Chahal
Thank you, Mr. Falk.
We will now move to Mr. Aldag for our final five minutes today. Bring it home.
Liberal
John Aldag Liberal Cloverdale—Langley City, BC
Thank you, Mr. Chair.
Congratulations on your election. I would like to point out that yesterday I was elected as the chair of the indigenous and northern affairs committee. Today we tabled our first report. I'm hoping this committee will be able, under your leadership, to take up that same pace of work and have lots of things come forward.
Liberal
John Aldag Liberal Cloverdale—Langley City, BC
I look forward to working with you in your new capacity.
I'd like to thank our witnesses for being here for the excellent conversation we've had so far today.
In the opening statements, it was mentioned that Canada can't compete dollar for dollar with what the Americans are doing under their IRA. In the fall economic statement last year, and with the spring budget, we saw some very targeted measures put in place. I think we all know this. We had a bunch of stuff: the Canada growth fund, the investment tax credit for clean technologies and the pursuit of hydrogen. Then in the budget there's the pursuit of this transition through other tax credit measures, and so on.
I'm curious about your thoughts. We've seen the federal government step up and try to move our economy to decarbonize, moving to a green economy and competing to make sure there are investment dollars staying in Canada, yet we see provinces like Alberta introducing a moratorium on clean energy projects. There is an article in the Calgary Herald that indicates they anticipate 118 projects have been affected, representing $33 billion in investment and enough work to give 24,000 people a job for a year. To me, that should be very concerning to Canadians, and particularly to Albertans.
When we have the federal government providing such leadership, what are your thoughts about the opportunities we're losing when the provinces fight tooth and nail along the way to retain old ways? We're seeing the loss of investment that should be coming to Canada despite the IRA, yet we're creating this situation. Does it mean all of that investment is going to B.C.? What measures does the federal government need to put in play? Is there anything beyond what we've already done to make sure we retain investments, that Canada continues on this transition and that we don't bury our heads in the soil and lose out on great opportunities to do the right thing at this point in time?
Are there any thoughts on Canada's response to the IRA and how we compete with this sort of tension we're seeing right now in Canada?
David Cherniak Policy Manager, Business and Transportation, Chemistry Industry Association of Canada
One quick thing I would like to note is that the IRA has been the law of the United States since August 2022, and there is not a single tax credit proposed that is currently a law in Canada. That's part of our problem right now, particularly around things like carbon capture and storage, which we've been talking about since 2020 or 2019. This is the fourth year of the most recently completed consultation and discussion of this tax credit. There are excellent parts to it. There are other parts we'd like to have a chat about, but there are excellent attributes to that tax credit, and nobody can take advantage of it. It's not the law of the land.
If there's one message you can take away from the chemistry sector today, it's that we have to get these past the House of Commons. This has to be a statute in Canada. It unlocks private sector capital. It's up to our companies to then deliver, but we need that as law first. You cannot take a promise to your board to approve a final investment decision. You need something a bit more concrete.
Liberal
John Aldag Liberal Cloverdale—Langley City, BC
What I'm hearing is all-party support to move things forward as soon as we get the legislation tabled and make this happen.
Are there any other thoughts from any of you?
Prof. James Meadowcroft
Yes. You raised the question about the relationship ultimately between the federal government and the provinces. Of course, Canada has a complicated political system with jurisdictional divisions and elections from time to time that will turn over governments in a province or federally or things like that.
From the point of view of the energy transition, some sort of policy stability is really very desirable. Maybe it's not the details of this policy and that policy, but at the least they should tend in the same direction, with the same directionality of policy.
I want to say one thing: There's no way that the federal government can decarbonize Canada on its own. It depends on co-operation with the provinces. The political economies of energy are different from one side of the country to the other. Where people get their energy and how the economy has been built are different in Quebec from what they are in Alberta, yet over the long term we want each to develop their own pathways towards a net-zero world.
One of the things my organization does is that we really believe in sectoral and regional pathways because of the nature of Canada and the nature of the problem. Every sector won't decarbonize at the same rate. Light-duty vehicles are happening rapidly now. Heavy trucks are a big problem. We'll have to wait for a decade or whatever.
It's the same provincially. What will happen in B.C. is going to be different from what will happen in Ontario. It's important that we do this in a way that's flexible and has federal leadership but also provides substantial autonomy for the provinces to make their own way.
Liberal
The Chair Liberal George Chahal
Thank you, Mr. Meadowcroft. That's it for time.
I want to thank the witnesses for their testimony and for the great insights today.
Thank you so very much. If you did miss something and would like to provide a written submission to the clerk, please do so. We look forward to seeing you again sometime, possibly in a future study.
Liberal
The Chair Liberal George Chahal
Yes, like the electricity study that's coming up next.
Colleagues, we will now suspend for a few minutes so we can go into in camera business. We will resume in a few minutes once we're set up to do that.
[Proceedings continue in camera]