Natural Resources Committee on Oct. 25th, 2023

[The Chair, Liberal, George Chahal]

I call this meeting to order.

Welcome to meeting number 79 of the House of Commons Standing Committee on Natural Resources.

Today we meet to resume our study of Canada's clean energy plans in the context of the North American energy transformation. We will then proceed to sit in camera to discuss committee business.

Since today's meeting is taking place in a hybrid format, I would like to make a few comments for the benefit of members and witnesses. Please wait until I recognize you by name before speaking. For those participating by video conference, click on the microphone icon to activate your mike, and please mute yourself when you are not speaking. For interpretation for those on Zoom, you have a choice, at the bottom of your screen, of floor, English or French. For those in the room, you can use the earpiece and select the desired channel. As a reminder, all comments should be addressed through the chair. Additionally, screenshots or taking photos of your screen is not permitted.

In accordance with our routine motion, I am informing the committee that all remote participants have completed their required connection tests in advance of the meeting.

I'll be using two cards: the 30-second warning in yellow and the “time's up” card in red.

I would now like to welcome the witnesses who are with us this afternoon.

From Carbon Connect International Inc., we have Al Duerr, partner and co-founder, and also Jackson Hegland, partner and co-founder, by video conference.

From Cégep de Jonquière, we have Martin Bourbonnais, from Centre TERRE, by video conference.

Thank you for taking the time to appear today. Each witness has up to five minutes for an opening statement.

We will now begin with Mr. Hegland.

Welcome to the committee. The floor is yours.

[Jackson Hegland, Partner and Co-Founder, Carbon Connect International Inc.]

Thank you, Mr. Chair.

Good evening, ladies and gentlemen.

Thank you for this opportunity. Today we'd like to focus on investment into our economy and enabling action now.

Canada's clean energy plan needs to ensure the following—no carbon leakage, no financial leakage, no jobs leakage. As it stands, the IRA threatens each of these.

To protect our economy, our jobs and our leadership position on climate action, we need certainty and stability in our regulatory system and financing mechanisms that ensure that both public and private sector capital are accessible and efficiently allocated. Our clean energy plan should encompass the tools that create an imminent need for other jurisdictions to meet our performance standards, given our history with economy-wide carbon pricing, active carbon markets across the country and multiple successful incentive programs. However, we need to streamline these financing mechanisms to incent further action.

It is clear that we need to do more, because the scale and scope of our investments are not sufficient to keep pace with the IRA. Canada's clean energy plan can create domestic jobs by greening our value chain through distributed technologies and by providing large infrastructure projects with the certainty they require to operate over the long term.

Subsequently, we need to be proud of our products like liquefied natural gas and our homegrown technologies like methane mitigation from oil and gas, as each contributes to a cleaner global energy economy. There's no doubt that we are seeing significant innovations, large and small, in Canada: in transportation, such as hydrogen, electrification; in agriculture, such as methane reduction through cattle feed additives; in the built environment, with heat pumps; in oil and gas, with methane emission reduction technologies; and in partnerships with indigenous nations.

We're seeing this permeate now into other growth sectors like lithium, CCUS, biofuels and geothermal. And let's not forget about the unicorn success story in direct air capture with the recent acquisition of Carbon Engineering, out of British Columbia, by U.S.-based Oxy Petroleum, a clear signal that the IRA is driving massive investment into clean energy solutions.

We need a suite of new financial incentives that efficiently deploy capital to our high-emitting sectors, and we must not halt programs or initiatives like our functioning offset system, which generates substantial emissions reductions. We have the data to prove it.

Please welcome my business partner, Mr. Al Duerr, to provide further comments.

[Al Duerr, Partner and Co-Founder, Carbon Connect International Inc.]

Thank you, Jackson.

I will focus on one example of how Alberta's leadership in carbon pricing and offsets has created a vehicle for substantial private sector financing for, and investment in, emissions reduction technology innovation and implementation.

Fifteen years ago, Alberta established the first functioning carbon markets in North America. Since their inception, the challenge has been to strike a balance between regulatory oversight and flexibility, ensuring stability to incent technology innovation and attract financing for implementation.

To illustrate, in areas where line power is not available in the industry, the oil and gas industry has deployed natural gas-powered pneumatic controllers and injection pumps, resulting in one of the largest vent gas contributors to methane emissions. In Alberta, offset protocols were developed to reduce or eliminate these emissions.

Annual offsets created by pneumatic pump conversions went from almost zero in 2017 to over two million tonnes of CO2 in 2021. In 2021 alone, pneumatic replacements delivered twice the annual carbon emissions reductions achieved in a major Canadian carbon capture and storage facility. Privately funded offsets from pneumatic conversions in 2021 represented over 30% of reported upstream vent gas emissions.

However, carbon markets are fragile. As Jackson noted, risk reduction and legislative certainty are critical to attract private capital to finance our climate ambitions. Unfortunately, proposed revisions to the 2018 federal methane regulations will create significant unintended consequences. Requiring all pumps and controllers on oil and gas facilities to be non-emitting may sound like a good thing, but it effectively eliminates the potential for Alberta's highly robust and thriving carbon offset market to attract private capital to fund emissions reduction for pneumatic conversions. This will cause hundreds of millions of dollars in private capital to dry up, and it will send a chilling signal through, arguably, the most robust carbon market in the world.

As international voluntary carbon markets are being formed, Canadian leadership is essential to a world community crying for successful models to emulate. Canada can be a leader. Canada needs to work with the provinces to ensure that regulatory reforms add, and do not inhibit, functioning carbon markets across Canada, and to then take that Canadian experience, the Canadian successes, to the world.

Thank you, Mr. Chair.

[The Chair, Liberal, George Chahal]

Thank you, Mr. Hegland and Mr. Duerr, for your opening remarks.

We'll now go to Cégep de Jonquière.

Monsieur Martin Bourbonnais, you have five minutes, sir.

[Martin Bourbonnais, Chair, Centre TERRE, Cégep de Jonquière]

Thank you, Mr. Chair.

I thank the members of the committee for inviting us to share our thoughts on this interesting topic of energy.

The Cégep de Jonquière is an educational institution that welcomes 3,000 students a year. It is located in Saguenay‑Lac‑Saint‑Jean, in the province of Quebec.

We are fortunate to have nine teaching programs in the field of physics, including mechanical and electrical engineering. We've been involved in applied research with companies for 40 years.

The brief we'll be sharing with you over the next few days doesn't pretend to be exhaustive, as energy is a broad field. It summarizes what we have called the 12 tasks required for the energy transition. These are listed in my speaking notes, which I have passed on to the committee. I won't go into detail on each of them now, but we can discuss them later.

Job 1, i.e. the first thing that's very important to do, in our opinion, is to prioritize energy sobriety. We need to reduce consumption at source, avoid waste and deliver electricity more efficiently. In Quebec alone, 77 terawatt-hours of electricity are lost in non-recovered industrial thermal waste. To give you an order of magnitude, this corresponds to 10 power plants like La Romaine. That's a huge amount of energy that could be recovered.

Job 2 is to ensure that each region has an optimal energy mix. Localities are different and there isn't necessarily a single solution that applies in very large regions.

With regard to job 3, it is very important to ensure the energy sovereignty of peoples. We believe that natural resources belong to the people. They must be managed for the majority by state-owned companies like Manitoba Hydro or Hydro-Québec, for example.

As for job 4 and job 5, it's all about strengthening energy production aimed at stabilizing the grid and gradually integrating renewable energies. Of course, there is always a balance between supply and demand for the grid. We need to ensure that intermittent renewable energies, such as solar and wind power, are integrated intelligently. There are ways to integrate them where there is very high penetration, but there are a lot of technical hurdles.

Job 6 consists in putting dormant thermal batteries to good use. We have carried out several projects and developed new products with companies, for example a hydroelectric solar water heater, where the water tank serves as a thermal battery. The air in a house, with a solar heat pump, can also be used as a thermal battery. We often talk about electric batteries, but we leave thermal batteries far too much to one side. They already exist, they're dormant and just waiting to be used.

As for job 7, we're doing a lot of work on supplying isolated sites from the major hydroelectric grids. There are 300 communities in Canada, thousands of outfitters and logging camps that have no other option but to use diesel to generate electricity. Along with salaries, energy is the biggest expense in these places. We are currently carrying out projects with the Fédération des pourvoiries du Québec and various other people to survey the state of energy in these places. We want to help them make progress on the energy front.

Job 8 is about automation and digitization, which are must-haves, obviously. In Canada, we're currently a long way from automation, and even further from Industry 4.0 when it comes to digitization.

Job 9 involves working on the legislative front. My colleagues have talked about this. There are various issues here.

Job 10 involves training a skilled workforce. This is an issue that's particularly close to my heart, given that I'm in a CEGEP. According to the Massachusetts Institute of Technology, renewable energies will create the most jobs over the next 10 years. In 2020, 12 million people will be working in the renewable energies sector, mainly in photovoltaics, hydroelectricity and bioenergy. In fact, 80% of jobs in the field were in these sectors.

The Cégep de Jonquière offers technical training programs. We are also working to offer customized training to companies. We work with provincial groups, such as the energy squad, to design new training programs. Training is very important to achieve the energy transition.

Job 11 relates to funding applied research. Technology access centres like ours, or TACs, need funding to help companies progress and meet challenges. Changes in TAC funding, which are currently tied to the federal government, could affect many TACs and have quite a negative impact on this super innovation network.

Finally, job 12 is about making the transition with people and for people. Transition is much more social than technical. It's everybody's business.

Thank you.

[The Chair, Liberal, George Chahal]

Thank you, Monsieur Bourbonnais, for your opening statement.

Colleagues, we'll now go to our first round of questions.

We will begin our first round with Mr. Earl Dreeshen from the Conservative Party of Canada, for six minutes.

[Earl Dreeshen, Conservative, Red Deer—Mountain View, AB]

Thank you, Mr. Chair.

Before I start, is there a guarantee that we will be going through the full round? We have only 20 minutes left before 5:30. Could you explain that before I get started?

[The Chair, Liberal, George Chahal]

I'm hoping that we can get one full round of questions in, up until we decide to go into committee business at 5:30 or 5:32. With 24 minutes, that puts us at 5:36.

[Earl Dreeshen, Conservative, Red Deer—Mountain View, AB]

If I understand, it's not one full round.

What you are saying is that it will be one person from each party, not one full round.

[The Chair, Liberal, George Chahal]

I'm hoping we can do one from each party for six minutes.

[Earl Dreeshen, Conservative, Red Deer—Mountain View, AB]

Under those circumstances, Mr. Chair, I will give my time to my colleague Mrs. Stubbs.

[Shannon Stubbs, Conservative, Lakeland, AB]

Thank you, Chair.

Thank you, Earl.

Thank you to all the witnesses for being here. I certainly do encourage all of you to submit comprehensive written submissions to this committee, which will be included in the final report.

To begin, Chair, I would like to give verbal notice of the following motion:

That, pursuant to Standing Order 108(2), the committee undertake a study of the Supreme Court of Canada's ruling that Bill C-69, An Act to enact the Impact Assessment Act and the Canadian Energy Regulator Act, to amend the Navigation Protection Act and to make consequential amendments to other Acts, is unconstitutional immediately following the completion of the clause by clause review of Bill C-49, An Act to amend the Canada—Newfoundland and Labrador Atlantic Accord Implementation Act and the Canada—Nova Scotia Offshore Petroleum Resources Accord Implementation Act and to make consequential amendments to other Acts; for the purposes of this study, the committee: (a) hold at least 5 meetings, (b) invite the Minister of Energy and Natural Resources and the Minister of the Environment and Climate Change to appear for one hour each, (c) report its findings and recommendations to the House and, (d) pursuant to Standing Order 109, request that the government table a comprehensive response to the report.

Now, Chair, I would like to move the following motion that I gave notice of on October 16. You were right about the timing then, and so now, of course, it's all in order.

We urge that:

The committee recognize that Bill C-69, An Act to enact the Impact Assessment Act and the Canadian Energy Regulator Act, has been ruled unconstitutional by the Supreme Court of Canada in a 5-2 decision, that the Chief Justice of the Supreme Court said that Parliament has to “act within the enduring division of powers framework laid out in the Constitution,” and that all provinces and territories called for major changes to Bill C-69 and were ignored by the Liberal government. It is the opinion of the committee that Bill C-69 should be repealed, and report this finding to the House in order for the House to vote on the viability of the bill given the Supreme Court's majority ruling.

For our witnesses, who have given of their time and expertise to be here today, and for all Canadians, I want to make it clear why this is so crucial.

It is, of course, because the uncertainty, the death by delay, the endless timelines, and the abilities and opportunities for political interference at many different stages throughout the assessment have not only driven out billions of dollars in traditional oil and gas development and already killed 300,000 jobs for oil and gas workers in every corner of this country but also, of course, disproportionately impacted provinces like Alberta, Saskatchewan, B.C. and certainly Newfoundland and Labrador.

The reason this is important for everybody here and for all Canadians is that Bill C-69, which now, even though the NDP and the Liberals ignored Conservatives' cautions at the time.... As you know, I am here to represent the people of Lakeland, so that's my number one job, but I have to say it's a little bit awkward because, of course, I was the shadow minister for natural resources for the official opposition during all that time. I did warn about every single aspect that the Supreme Court has now said is unconstitutional, but, of course, so did every provincial premier and every territorial leader by the time it was getting out the back end.

Here is the fact. Because of the Liberals and the NDP, a law that the Supreme Court now says is unconstitutional has been in place for five years, for half a decade. That not only will continue the flood of traditional oil and gas investment and jobs from this country to others, as a consequence of years of anti-energy, anti-resource development and anti-private sector policies, but it will also absolutely hamper and prevent the private sector investments, technology and innovation required for more clean energy, green energy and renewable energy development in the future. It will absolutely stop and is stopping in its tracks the development of alternative energies and fuels of the future, which, I would note, Liberals and NDP members say they support.

[The Chair, Liberal, George Chahal]

We have a point of order from Monsieur Simard.

Monsieur Simard, go ahead.

[Mario Simard, Bloc, Jonquière, QC]

Yes, Mr. Chair, I have a point of order.

I apologize to the witnesses if my intervention delays our discussion with them, but, when I read my colleague's motion, I wonder if there isn't a formal defect. That's because you can't declare a bill unconstitutional. You can declare a law unconstitutional, but the Supreme Court won't rule on a bill.

I wonder if my colleague's motion, as currently drafted, is in order. Perhaps the clerk will be able to tell us.

In fact...

[Shannon Stubbs, Conservative, Lakeland, AB]

I'm talking about the Supreme Court ruling on Bill C-69, a bill that's already law. I'm not talking about Bill C-49.

[Mario Simard, Bloc, Jonquière, QC]

... as far as I know, a bill cannot be considered an applicable law; it's a project. We're talking about a bill from another legislature. We want to apply a Supreme Court decision to a bill from another legislature.

In my opinion, there is a formal defect.

[Shannon Stubbs, Conservative, Lakeland, AB]

This is—

[The Chair, Liberal, George Chahal]

Wait one second. Excuse me, colleagues.

I have a point of order from Monsieur Simard, and I have to hear the translation. I am not bilingual yet, so I need to understand the translation, and it takes me a moment.

[Mario Simard, Bloc, Jonquière, QC]

I can repeat it.

[The Chair, Liberal, George Chahal]

When everybody is yelling or trying to make a comment, it's hard for me, and it's hard for the translators as well.

I am going to go to the clerk on the point of order.

[Shannon Stubbs, Conservative, Lakeland, AB]

Certainly no one is yelling, Chair.

[The Chair, Liberal, George Chahal]

But it is difficult when you're—

[Shannon Stubbs, Conservative, Lakeland, AB]

No one is yelling, so let's all characterize each other accurately.

[The Chair, Liberal, George Chahal]

That's what it seems to me.

[Shannon Stubbs, Conservative, Lakeland, AB]

I'm not yelling.