Natural Resources Committee on May 9th, 2024

[Drew Leyburne]

I'll start the response by saying that the cheapest electron is the one you don't need to use. In terms of return on investment, energy efficiency measures are typically the cheapest way of getting clean electricity in that sense.

After that, it really varies by setting. The technology that might be the cheapest or the best investment in Nova Scotia is going to be different from, perhaps, one in British Columbia.

I don't know if you want to add anything, Debbie.

[Debbie Scharf]

The only other thing I will add is that governments do play a role in helping to de-risk technologies by helping to advance their deployment at their early stages, so they can get commercialized as quickly as possible and prices can come down.

Over time, we've seen a number of NRCan programs. If we go back to the day when we did programming around wind, before it was ubiquitous, it was actually quite expensive. Helping to motivate those investments and bring those prices down is another area where there's been bang for your buck.

[Peter Schiefke, Liberal, Vaudreuil—Soulanges, QC]

Thank you very much, Chair.

[The Chair, Liberal, George Chahal]

Thank you, Mr. Schiefke.

We'll now go to our next speaker, Monsieur Simard, for two and a half minutes.

[Mario Simard, Bloc, Jonquière, QC]

Thank you, Mr. Chair.

I'm going to pick up where I left off earlier. It will also be related to what you just said.

Could you provide the committee with information on the independent scientific committees that advise Natural Resources Canada, or NRCan, on the various energy sources?

Is there an independent scientific committee that can provide you with information on electricity generation projects that use carbon capture and storage strategies? Does that exist?

[Drew Leyburne]

I can start with the scientific side.

Obviously, Natural Resources Canada is a science-based department. About a third of our employees are scientists, engineers or technicians. While they are federal public servants reporting through the normal channels, they provide us with very important independent advice. Engineers, obviously, professionally are required to give that advice—

[Mario Simard, Bloc, Jonquière, QC]

I don't mean to cut you off, but my time is very short.

If possible, I would like you to provide us with an organization chart so that we can see how the process works when an independent scientific committee, or people with the expertise to understand the technical ins and outs, assess a project.

I am saying this because I saw what was announced by Capital Power. Let me tell you about a meeting I attended with the minister himself in Berlin.

When we spoke to the representatives of the large German corporation Siemens, they made it clear to the minister that, in their opinion, hydrogen made from gas using carbon capture and storage technology was not viable. First, it costs a lot more. Perhaps the government could agree to reduce the cost by paying a portion, but they said they felt the technological risk was much too high.

Personally, I think the people at Siemens have the expertise. They have the technological expertise to produce hydrogen. If a private company considers it to be inefficient and doomed to fail, I don't understand why the government is investing massive amounts of public money in it.

I would like to understand the basics, and I will end on that note. I would like to understand how NRCan analyzes the feasibility of these projects and I would like to know who these people are who have the technical knowledge needed to give you advice and opinions.

If you could get back to the committee with that information, I would really appreciate it.

Thank you.

[The Chair, Liberal, George Chahal]

Make it a short answer, please.

[Drew Leyburne]

We can certainly provide more detail on where that expertise comes from.

Again, I'll just briefly say that NRCan is primarily made up of scientists, engineers and technologists who provide us with ongoing advice about the latest innovations that are happening in Canada and around the world.

[The Chair, Liberal, George Chahal]

Thank you.

We'll now go to Mr. Angus for two and a half minutes.

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

Thank you.

I want to thank the witnesses. You know your files well. This is impressive.

I want to help my good friend Mr. McLean, because I'm so glad he's back. He was asking where these projects are. Well, Vineyard Wind 1 in the United States will power 400,000 homes, and the projects are happening. Another one will power 250,000 homes. The one on Rhode Island will power 100,000 homes.

However, we're seeing in Canada, in Alberta, that our good friend Danielle Smith chased out billions in investment. Calgary Economic Development said that there were 170,000 jobs in clean tech that could happen in Alberta, and that got chased out.

He mentioned reliability. The problem is that renewables did not cause the blackouts in the winter; it was a lack of investments in the natural gas power plants by privatized operators. I mean, God, what province has blackouts in April? I thought they were an energy superpower.

Then I was looking at what the Alberta advantage was. Do you know what the price per kilowatt hour is in Manitoba? It's 10¢. In New Brunswick, it's 13.9¢. In Ontario, it's 14¢, and we're mad as hell about paying our hydro bills at 14¢. In Alberta, it's 25.8¢ per kilowatt hour. That's with privatized operators. They can't even run the power. It's the third highest. The only places higher are Nunavut and Northwest Territories. You're paying through the nose for power in Alberta.

I just have to end with what it is in Quebec. It's 7.8¢ a kilowatt hour. That's what happens when you have a plan.

I want to end on a simple question. Do you believe that if we invest in renewable energy, we will have long-term power, based on what you're seeing in the rest of the world?

[Debbie Scharf]

Renewables can play a very significant role in an electricity system. It's attractive because it is low cost, and there's been record global investment in renewables. There are many jurisdictions globally that operate with a very significant share of variable renewables in their system, but it needs to be a well-crafted system, and that system is going to have to operate with a number of other features to it for the system to work.

That is going to include things like storage, optimized interconnections, demand-side response, smart grids and a market structure that brings that all together. I think it's not a simple, single thing; it takes a well-crafted market structure.

I think that Alberta is making changes to its system that are going to bring that well-crafted structure to fruition in the months and years ahead.

[The Chair, Liberal, George Chahal]

Thank you.

We will now go to Mr. Patzer for five minutes.

Go ahead, Mr. Patzer.

[Jeremy Patzer, Conservative, Cypress Hills—Grasslands, SK]

Thank you very much.

Let's not forget that it wasn't that long ago when Ontario had to subsidize people's bills because the—

[Greg McLean, Conservative, Calgary Centre, AB]

They still are now.

[Jeremy Patzer, Conservative, Cypress Hills—Grasslands, SK]

Yes, they still are now, so there we go. I don't need to say any more than that.

With the clean energy regulations coming in and this whole notion of requiring that all power be generated from non-emitting resources by 2030, how much is it going to cost to achieve that?

[Mark Cauchi]

We're in the process, as you know, of updating the draft regulations. They will be published later this year, and we intend to publish a final cost-benefit analysis.

Our draft regulation amount was a $70-billion cost between now and 2050, with an overall net benefit of close to $30 billion, so the benefits were greater than the costs over that period.

[Jeremy Patzer, Conservative, Cypress Hills—Grasslands, SK]

Did you say $7 billion?

[Mark Cauchi]

I said $70 billion.

[Jeremy Patzer, Conservative, Cypress Hills—Grasslands, SK]

It was $70 billion. All right.

The federal government's own modelling shows more than $400 billion is needed to replace aging facilities and to expand generation capacity in Canada's electrical grid. How much of that will have to be subsidized?

[Mark Cauchi]

Those are two separate numbers. The $400 billion is the estimated system cost as a whole. The $70 billion is the amount, the increment, of the CER, the clean electricity regulations.

[Jeremy Patzer, Conservative, Cypress Hills—Grasslands, SK]

Is that $70 billion all public money, then?

[Mark Cauchi]

Not necessarily. It depends on the jurisdiction. Some jurisdictions, such as Alberta, have privately run electricity systems. We have a mixed system in Ontario. It depends on the jurisdiction.

[Jeremy Patzer, Conservative, Cypress Hills—Grasslands, SK]

Right, but you said that the federal government has jurisdiction on things like nuclear and interprovincial ties and things like that. Given that the whole point or part of what the CERs are going to be—it's based off two of those things—how much is the federal government going to be subsidizing to hit those targets?

I mean, whether it's the $70 billion or the $400 billion, there will be some private money in there, I'm sure, but how much is it going to cost the taxpayer on government regulations to do this, to electrify our country by 2030 or 2035?

[Mark Cauchi]

The federal government obviously is contributing through the ITCs that have been raised in other programs. I think that in budget 2023 alone we saw a commitment of $40 billion over the next decade to help facilitate the provincial transition, and that's an important amount of money. The federal government is a partner in this, and there are other contributors to that, obviously: provincial ratepayers, foreign investors and so on and so forth.