Natural Resources Committee on May 23rd, 2024

[Julie Dabrusin, Liberal, Toronto—Danforth, ON]

A lot of the conversation I hear these days is about SMRs. There's a lot of conversation about their potential, particularly in provinces that may not have much nuclear as part of their resources.

I know that Canada's first commercial grid SMR reactor is at Darlington and had support from the Canada Infrastructure Bank. Can you talk to me about what role SMRs play in having a clean grid?

[John Gorman]

Given the incredible track record and history of nuclear we have as a nation, which is really respected around the world, and because of the refurbishments that have the industry firing on all cylinders right now, we have been able to do some remarkable innovations in the development of these new nuclear technologies, these small modular reactors, which are ultimately scalable. They could be as small as something that fits on the back of an 18-wheeler and could be brought to a remote community or a mining site, for example. They're up to 300 megawatts, which is on the larger side.

To your point, Ms. Dabrusin, about the Darlington site, those things are under construction right now. They will be generating electricity on the grid by 2028. The one thing that differentiates some of these new small modular reactor technologies, in addition to being scalable and emissions-free, is that they produce very high-temperature heat. That heat can be used to replace fossil fuels in heavy industry operations that require high-temperature heat.

They have electricity capabilities, of course, and are scalable, but they can also produce steel, cement or even hydrogen, or do all three at the same time.

[Julie Dabrusin, Liberal, Toronto—Danforth, ON]

Great. Thank you.

In the remaining time, perhaps I could go to Ms. Bellissimo of CanREA.

We've been hearing some conversations about renewables. Are they able to meet our energy needs and are they affordable and reliable? If you could, please comment on that.

[Vittoria Bellissimo]

Thank you. I'd be happy to.

One of the ways people look at affordability is through levelized costs. I'll give you a cost comparison from the Lazard study that was done in 2023.

Solar photovoltaic dollars per megawatt hour range from $24 to $96. Wind ranges from $24 to $75. Nuclear ranges from $141 to $221. A natural gas combined cycle starts at $39 a megawatt hour and goes to $101. Electricity is a portfolio approach. When you want to deliver clean, reliable, affordable power, you need a mix.

We're going to need everything. We have talked about it. In my introductory remarks, I talked about how much electricity growth we're going to see. It is a mix. The most affordable sources of new electricity supply in the world today are wind and solar, and batteries are dropping in cost very impressively. They've dropped to 10% of what they were 10 years ago, and it's getting better.

Going forward, what we need for building reliable electricity grids all across Canada is diverse supply mixes that are complementary. One of the areas where I think we get into some problems is baseload power. What we need is flexible generation. We can get really affordable renewables on the system, and we can supplement that with energy storage. We need flexibility in our resources so that they can ramp up and meet demands when we need to meet them. I think the way we talk about it is, honestly, a little bit backwards.

I'm happy to answer more questions on this.

[The Chair, Liberal, George Chahal]

Thank you.

Time is up. Maybe you'll get some questions as we move along.

I'll now go to Monsieur Simard for six minutes.

[Mario Simard, Bloc, Jonquière, QC]

Thank you very much, Mr. Chair.

I'd like to thank the witnesses.

Mr. Egan, I don't know if you're familiar with a recent statement by Mr. Derek Evans, executive chair of Pathways Alliance, that Mr. Poilievre will have to clarify his position on carbon pricing. I'm telling you this because I believe that the deployment of clean energy requires a price on carbon.

Do you support a price on carbon? My question is for each of you.

[Timothy Egan]

I think the honourable member is referring to Mr. Evans's comments. Mr. Evans runs the Pathways Alliance, an alliance of oil sands companies. He's not involved with the natural gas industry. That's the first point.

The second point—

[Mario Simard, Bloc, Jonquière, QC]

I understand.

If people in the oil sector are in favour of carbon pricing, I don't see why people in the gas sector would be against it. Ultimately, what I'm asking you is quite simple: Do you support some form of carbon pricing?

[Timothy Egan]

We do not take a position on the carbon tax as the Canadian Gas Association.

[Mario Simard, Bloc, Jonquière, QC]

Very well. You're neither for nor against it, you're indifferent.

I'm asking all the witnesses if they agree with carbon pricing, because the issue may arise again in the report we will prepare on this study.

[John Gorman]

Thank you, Mr. Simard.

Look, I would say there's a fairly strong international consensus that carbon pricing is a very effective way of guiding our industries towards a lower-carbon future, but I would also say that it's not the only mechanism you can use to get there. What is important is sending a strong signal and having guide barriers that point industry and their plans, investments and developments in the right direction.

[Mario Simard, Bloc, Jonquière, QC]

Thank you very much.

[Francis Bradley]

From our perspective, much like Mr. Egan, we don't have a firm position with respect to specific pricing instruments. What we want, and what I think most people want, is certainty from an investment standpoint.

[Mario Simard, Bloc, Jonquière, QC]

Thank you.

[Dale Friesen]

At ATCO, we've been familiar with the provincial specified gas emitters regulation since 2007. The carbon tax on industry can be very helpful for incenting certain behaviours, but there are other ways of doing it. However, I think it's about certainty and consistency so businesses can make the types of decisions they need in order to move forward.

[Mario Simard, Bloc, Jonquière, QC]

Thank you.

[Carol McGlogan]

At Electro-Federation Canada, we don't have a firm policy on the carbon tax. However, we feel it is an effective measure to help reduce greenhouse gas emissions.

We have a lot of manufacturing capacity within Canada among our membership, so they are also concerned about competitiveness and cost. Steady policy signals and timelines are important when implementing these types of measures.

[Mario Simard, Bloc, Jonquière, QC]

Thank you very much.

I have a question specifically for you, as you represent Electro-Federation Canada. Some time ago, we heard from Normand Mousseau, a witness from the Trottier Energy Institute. He told us that we had to stop designing federal programs exclusively for large businesses and instead find solutions to electrify small and medium-sized businesses.

Can't the companies you represent play a role in this?

[Carol McGlogan]

I'm not sure I understand the question.

[Mario Simard, Bloc, Jonquière, QC]

The federal government's electrification strategy consists of clean electricity generation tax credits. A previous witness told us that tax credits for large businesses may not be the best solution, as the major challenge we will face is electrifying small and medium-sized businesses.

Since you represent an economic sector that can provide solutions for the electrification of small and medium-sized businesses, do you think the federal policy is adjusted to support the members you represent?

[Carol McGlogan]

When it comes to investment tax credits, where we're coming from is having the ability to get credits for the manufacturing of grid equipment, which is currently not included in the ITC system. Many of the grid equipment suppliers are in Canada, and they would not be considered the mega organizations you're talking about. They are more medium-sized organizations, but they play a role at the forefront when it comes to energy transition.

[Mario Simard, Bloc, Jonquière, QC]

Thank you.

[The Chair, Liberal, George Chahal]

Thank you for that.

I want to give a reminder to everyone: When we speak into the mics, we don't need to lean too close to them, because it impacts interpretation. You can keep a bit of distance.

We will now proceed to Mr. Angus for six minutes.

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

Thank you, Mr. Chair.

I want to thank our witnesses for providing their expert advice on the very complex set of issues we're confronting.

I will use my six minutes to move the motion that I gave to my committee colleagues on May 8, 2024:

That, pursuant to Standing Order 108(2), the committee undertake a study on the TMX pipeline to determine how, as in the case of the ArriveCAN app, the cost to taxpayers spiralled out of control, to get clarity on plans to divest and sell off the now completed pipeline and on the implications of such a sale to Canadian taxpayers, and to examine how increases in export capacity will impact a future cap on GHG emissions; that the committee invite the Minister of Finance and the Minister of Natural Resources, as well as experts on the economy and the environment, to provide testimony; that the committee hold no fewer than five meetings for that purpose; that the committee report its findings and recommendations to the House; and that, pursuant to Standing Order 109, the government table a comprehensive response to the report.

I move this motion because of my growing frustration, after having come into this Parliament really believing that we had a moment, a rare moment, to confront the two unprecedented crises of our age: a crisis facing our species and our planet due to climate catastrophe, and trying to find a means to maintain the incredible quality of living, jobs and sustainability that our communities have depended on. I really thought this was going to be that moment. I heard in the Prime Minister's speech in Paris that Canada, with our incredible natural resources and talent, would lead the way, but I haven't seen that.

We've heard our witnesses talk about how they're still waiting on the ITCs. We saw the Biden administration bring in an all-of-government approach. We see investment moving there. Throughout this, the TMX pipeline moved ahead and the government has never blinked once.

Our latest greenhouse gas emissions show that once again, oil and gas emissions continue to rise. They've risen every single year since 2006. The energy emissions in Alberta now account for 38% of total emissions in Canada. This issue is not going away. The UN Secretary-General António Guterres recently said that we are at a make-or-break moment for our planet. He said, “Today, humanity spews out over 40 gigatons of carbon dioxide every year. At this rate, the planet will soon be pushed past the 1.5°C limit.” That, of course, is the red line that we've been warned about by scientists again and again.

As a Politico article said, “Another U.N. report in 2022 warned that countries’ carbon-cutting pledges were too weak and, as of that moment, there was ‘no credible pathway’ to 1.5°C.” We've certainly seen that the last 11 months have been the hottest on record. Secretary-General Guterres called out the politicians who made promises and commitments on lowering emissions while failing and ignoring them.

That brings me to my concern about the TMX pipeline. There was no business case for the pipeline. There was no company willing to do this. The International Energy Agency has written report after report warning governments against locking into long-term infrastructure because of the changing market. However, what we saw this government decide to do was lock Canada in for bitumen processing in the long term, no matter what it meant for the economy, no matter what it meant for changing global markets and no matter what it meant for the environment and the crisis we're facing.

We've seen as a result of the news on TMX that oil production in Alberta has jumped based on the knowledge that 900,000 extra barrels a day will create a major opportunity for the Pathways Alliance. This is a group of companies that have never ever lowered emissions. We've given them all kinds of tax breaks; we've given them all kinds of gifts, and now we've given them $34 billion in taxpayers' money. There has to be accountability for that. There has to be accountability for how that much money was spent on a pipeline that should have cost $5 billion or $6 billion.

Why did we have to pay that amount of money? Why is that being given to an industry that made $48 billion in profits in two years while continuing to ignore emissions obligations? In fact, Derek Evans, the head of Pathways Alliance, is now questioning, after all these gifts we've given to them, why they should be forced to meet any future emissions caps. Maybe they'd do it in 2050, but not before then.

We also have to address this because we saw the Prime Minister go to the international stage with the environment minister and claim that they were going to put in an emissions cap. You can't put in an emissions cap if you're going to massively increase production. That's like saying you're going to drink your way to sobriety.

Everybody knew they were making that up. Everybody knew Mr. Trudeau had no intention of doing that. However, $34 billion later, we are stuck now with massive increases in GHG emissions when we've been told again and again by the world's scientific community that we're at peak carbon. That $34 billion could have been spent on a whole manner of elements to transform things, create clean energy and create alternatives, but that wasn't the choice. We need explanations for that.

What really concerns me—and I hope my colleagues will offer their thoughts on it—is that since there wasn't a business case and it blew the budget so badly, there is no way that any company can use TMX unless it's massively subsidized. The toll costs on the bitumen you'd have to run down that pipeline would be too high to make it worthwhile.

The CER, the energy regulator, estimated that 78% of the cost of every barrel will have to be paid for. By whom? Is it going to be by the public? Is that what we're being told? Or will this be the great reconciliation project of the Trudeau government and they're going to give the pipeline to some group? They may call that reconciliation, but I call that pork barrel. I want to know who's getting that pipeline. I want to know whether whoever buys that pipeline is going to pay the taxpayers back $34 billion. Is it going to be a group of friends who get that pipeline at a massive subsidy? We need to know.

This is, to me, the priority that our committee has to address, because if we don't address how this pipeline is going to operate, there's going to be an agreement—maybe this summer, maybe in the fall—and suddenly $34 billion of infrastructure is going to be given to some group. There will be a big press conference, everyone will slap each other on the back, the taxpayers will be left as suckers and the planet will be paying the cost. We need to hear what the plan is. If they're going to massively increase production, where is this emissions cap? Was that just another bogus promise while Canada continues to ignore its obligations?

I will refer to our environment commissioner, who's warned us again and again that this government has missed every single climate target they promised. He said:

After more than 30 years, the trend in Canada’s greenhouse gas emissions that create harmful climate impacts is going up....

Canada was once a leader in the fight against climate change. However, after a series of missed opportunities, it has become the worst performer of all G7 nations since the landmark Paris Agreement on climate change was adopted in 2015...[and] we can't continue to go from failure to failure; we need action and results, not just more targets and plans.

Mr. Chair, I'm willing to talk with my colleagues about this, but I think we have to make it a priority to get a sense of what is happening with TMX, why these decisions were made and what the plan is to have an emissions cap when we're going to massively increase production to get the highest levels of GHG emissions and carbon on the planet.

[The Chair, Liberal, George Chahal]

Thank you, Mr. Angus.

We now have a motion on the floor.

For our witnesses, as we have a motion on the floor, we have a speaking order that we'll be going through. We have time until 5:30, so if we are done with this, we'll get back to questioning. I'll ask everybody to be patient as we go through this process.

I'll now go to Mr. Patzer.