Evidence of meeting #99 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 need.
A recording is available from Parliament.
Conservative
Conservative
Jeremy Patzer Conservative Cypress Hills—Grasslands, SK
Chair and Clerk, I'm wondering if you can confirm this. I believe that because we are still dealing with a motion, we can't adjourn; we have to suspend the meeting. These technicalities do matter, so I think the proper procedure at this moment is to suspend the meeting, not adjourn it.
Liberal
The Chair Liberal George Chahal
Ms. Dabrusin moved to adjourn, so we're in the middle of a vote on a dilatory motion and we have to proceed with that.
(Motion negatived: nays 6; yeas 5)
That did not pass.
Liberal
The Chair Liberal George Chahal
We are out of time and resources. We can either try to request resources or suspend.
Liberal
The Chair Liberal George Chahal
I'll ask for unanimous consent to suspend, and then we'll resume debate where we ended off today, with Mr. Dreeshen having the floor.
Liberal
The Chair Liberal George Chahal
The meeting is suspended.
[The meeting was suspended at 5:35 p.m., Thursday, May 23]
[The meeting resumed at 3:55 p.m., Monday, May 27]
Liberal
The Chair Liberal George Chahal
I call this meeting back to order. Welcome.
We are resuming meeting number 99 of the House of Commons Standing Committee on Natural Resources.
Since today's meeting is taking place in a hybrid format, I would like to make a few comments for the benefit of all.
Before we begin, I would like to ask all members and other in-person participants to consult the cards on the table for guidelines to prevent audio feedback incidents. Please take note of the following preventative measures in place to protect the health and safety of all participants, including the interpreters.
Only use a black, approved earpiece. The former gray earpieces must no longer be used.
Keep your earpiece away from all microphones at all times. When you are not using your earpiece, please place it face down on the sticker placed on the table for this purpose. Thank you for co-operation.
Please wait until I recognize you by name before speaking. I remind you that all comments should be addressed through the chair. Additionally, screenshots or taking photos of your screen are not permitted.
We are resuming debate on the motion of Mr. Angus and on the amendment of Ms. Stubbs.
We will begin with Mr. Dreeshen.
Conservative
Earl Dreeshen Conservative Red Deer—Mountain View, AB
Thank you very much, Mr. Chair.
I want to thank Charlie for bringing this motion up.
We'll certainly be supporting it, maybe for opposite reasons, but nevertheless, I do think it is something that is very important.
As a bit of a summary, the key part is finding out why this thing had spiralled out of control as far as costs are concerned, trying to get some clarity on the plans to divest and sell off the now-completed pipeline, and the implications of the sale for Canadian taxpayers now and in the future.
We recognize the increase in export capacity and how significant it is. There is always that other question of “impact on a future cap on GHG emissions”. However, this is where the real discussion is and always should have been: What is it worth to be sending Canadian oil and gas around the world versus importing it from other places or simply hoping that people are going to do as some people in our country plan and just shut it down, and then everything will be so much better?
I don't think that's reasonable. There are certainly many arguments for why we should be using the wealth of our nation in order to help the rest of the world. I think people will look for plans that make that part of it.
The subamendment that we are speaking of has to do with the study occurring as soon as possible and superseding all other work of the committee. Why is this so important?
We need to know what was in the mind of the government. We are talking about bringing in the Minister of Finance, who should have the answer to what that's going to do for the nation's finances.
In terms of the Minister of Natural Resources, I think it's important that we talk to him. Quite frankly, I don't see us getting a lot from that discussion because many times he seems to be more in line with the role of the Minister of Environment versus that of the Minister of Natural Resources.
We are here in this committee to look at what Canada has to offer and how we can position ourselves in the future. Therefore, when you have a Minister of Natural Resources who looks at ways to limit that, I think that's an issue, but certainly, that's why we bring ministers here. It is so that we can talk to them, find out what is on their minds and come up with some justifications as to what should take place. Of course, this all has to do with energy and how we are going to take the great wealth we have, turn it into something that helps all Canadians and work from there. I think, really, that's where I'd like to start today.
There are a lot of things that happened with Kinder Morgan that, perhaps, we have forgotten about in the last four or five years, or longer, actually. The basic cost of the pipeline, and what this private entity had in the books, was $7.4 billion. It was taking a pipeline and increasing its volume capacity. A lot of what was required was already there.
The argument seemed to simply be, “Well, do we really want to sell more of our hydrocarbons and take them through the west coast?” There was a lot of discussion there, and I think it was fair. The pipeline was 60-some years old at the time, so people wanted to see just what was taking place. I think that's important.
The government decided that it was time, because all of the other limitations they had put in front of them were making it very difficult for them to be able to make it work, and they said, “Okay, well, maybe the government should buy it.” I don't think that was exactly the way the discussions had taken place, but the government chose to. It knew, of course, that if you're government, you're going to end up paying a lot more, but a lot more shouldn't be four times the amount. This is one of the concerns.
What did Kinder Morgan do? What was the whole point?
The whole point was, to the argument of many people in Canada who wanted to restrict it, why take more hydrocarbons—more oil and gas—to tidewaters?
Of course, we know why it has to go there. It has to go there to be able to compete on the world market stage, so you can get good value for it and so it isn't discounted simply because the only option that we had was the U.S. That was the reason for it.
It's very interesting what Kinder Morgan did with the $4 billion or so that they were able to get after they paid down debt. I mean, a lot of it was paying down debt on the project. Of course, if you pay down debt, that means you have some more flexibility to invest in other areas.
That, I think, is one of the key things as they were making decisions on their Permian Highway pipeline project. They had a final investment decision that was made in September 2018. They had a natural gas pipeline aiming to increase the Permian Basin's gas exports to the U.S., gulf coast and Mexico. That total cost was $2 billion and it was in Texas.
They were able to take Canadian tax dollars—dollars that we were paying for a project, so it wasn't though it had no specific value. They took that and then they started building their pipelines in Texas, so that U.S. products could get to tidewater and go around the world. That was one of the things they had done.
They had the TGP East 300 upgrade project, which was there to improve compressor facility capacity. That is another type of thing that you can do to increase the amount of hydrocarbons that you're moving: Make sure that you can upgrade the facilities that it goes through.
Then the Kinder Morgan Louisiana pipeline Acadiana expansion increased capacity to the Cheniere Sabine Pass LNG terminal.
A lot of these projects weren't a lot of money. They were $150 million and so on. I mean, it's a lot, but not when you're producing to that level and trying to get assets out the door.
That's what we did. That's how we stopped and slowed down hydrocarbons to tidewater. We paid them to take it to another country so that they could get it to tidewater. There is a certain irony to that. There is certainly an irony that by adding so many extra barriers, we ended up paying four times more than we should have for that particular project.
I submit that it was by design and that people knew how much extra cost it would be. I know people who have worked on the pipeline. Some of the things that stopped them are head-scratchers. Everybody's being paid, but people are being paid to sit around and wait for somebody else to make a decision.
Again, the intent was to slow down the project in its entirety. That's why I believe it is important for us to look at this. Yes, we can stay here and wring our hands about how we have to do our part to save the world from CO2 pollution. I don't know; I guess I spent too much time teaching science to really jump on that bandwagon. Nevertheless, that's the argument and we all have to make sure we are onside. We always talk about all these other places in the world and how we just have to make sure we catch up to what they're doing. We listen to the ministers talk about what other governments are talking about as far as greenhouse gas policies are concerned.
As I've mentioned at other times, in my time with the OSCE, the Organization for Security and Co-operation in Europe, we talked about food security, energy security and security in the region. Of course, Ukraine and Georgia and all of these other countries are affected by what happens with the Russian aggression there. These people, these countries and the businesses and the manufacturers are clamouring for energy. They don't want to get their energy from Russia, because they see what is happening. They understand the dynamics associated with that. But we sit back and say, well, here's a good opportunity for us to stop. If we don't supply it, then maybe they're going to start looking at more windmills, which they already have a bunch of, and more solar panels and all of the other types of things that will really help them.
When you talk to the business people there, it's like any of the businesses we have around here. If the government says this is what you have to do, well, okay, you're 100% onside—until you can get rid of the government so that you can try to bring some common sense back into the discussion.
We talked about sanctions, and of course sanctions of Russian oil into these places that could be markets for us. Everyone was very excited about it until you started realizing what was really happening—simply, that Russia was then selling into the Chinese and Indian markets. We found that they then did their production there. They have massive coal expansions, and they could continue with coal coming from Russia into China for its industrial base.
Since there's no market, and you can't buy anything from Europe because their manufacturing has tanked, we have to buy it from China. We have to buy it from India. We have to buy it from these other countries. In the past, we simply said, well, we'll give them a pass, because they need to build up their capacity. It wouldn't be fair if we developed our country using oil and gas and we didn't give them an option to just pollute a little bit for a while and then go from there.
But they're not just polluting a little bit for a while. They are at a continual uptake of emissions, and it's not just greenhouse gas emissions. That's something I'm so curious about—namely, how we think that a little bit over 400 parts per million is terrible when greenhouses pump three times that in so that they can have their plants growing properly in a greenhouse. The drop-dead part for the planet is a lot closer on the negative side if we go too low than it is on the upside. But we don't want to talk about that, because that might cause a few other people to be excited and triggered.
I guess, really, where we want to be is looking at actual environmental issues.
Quite frankly, I appreciate the electricity portion. To me, electricity is such a critical component. When I used to teach my students about electricity, I would start off that you have your protons that are quite positive, and they make up the foundation of the atom. Then you have these electrons that wildly go off in all directions, so when they get a chance to be free, they're anxious to go out with the flow. Then you have neutrons that help make up the mass of the atom, but they can't really get a charge out of anything, so they just stay there.
Then, of course, sadly, we have come up with another group, and it's maybe a little bit of a quirk, but it's the morons who think that exclusive use of energy from electricity is the way to ensure a net-zero environment. Obviously, the latter have no idea about the foundations required to produce, store and transmit these little eager electrons that are always on the hunt for some place to land. I think you have to make sure you have the wires to transfer them, and you have to make sure you have all of these other components that are necessary; and it is as though that is going to come out of thin air.
We have proudly spoken of the minerals we have and the opportunities we all have to produce the raw materials that are needed for us to be able to take charge and be in complete control of that part of the supply chain.
The problem, of course, is sometimes we have trouble getting a transmission line over some farmer's field. We seem to think we'll be able to start having open-pit mines and everything else to find all of these minerals, that we will take all of the caustic chemicals that are needed to process all of these different minerals once they have been mined and that we have some place for the tailings to go after that process has been spent. We seem to forget that's how it really is. It really is like that, whether you are here in Canada or some place else in the world.
I agree with many of my colleagues, who say, wouldn't it be better if it were all done in Canada? That's because we make sure we look after the environment. That's uppermost in our mind, even if we go through the mining processes. It's the same sort of thing I try constantly to convince my colleagues about.
Take, for example, Fort McMurray. I've gone up there with many people, and you take a look into the pit where the open-pit mining is, and yes, it looks like sausage making, and everybody can “ooh and ahh” about how bad it is. Then you will turn around 180 degrees and you say, wouldn't it be nice if it was like that forest back there? That forest back there used to be the pit. That's what reclamation is all about.
You don't see that necessarily in open-pit mining. We have other forms of getting electricity, and people seem to forget how much impact there is to the environment for that. My colleagues explain how important it is to have hydroelectricity. I believe that once you have chosen an area to flood and then wish to set up your dams, if you don't count that area that you dispersed and the people, animals and other opportunities that were displaced there, it looks pretty good with the sailboat on top. We can all talk about how there are zero emissions from it and how it is the cleanest.
That isn't so, however, if you're going to count it. As I've said in this room before, if you count the environmental impact, from the first shovel you use to dig something up and then create the energy needed until the last shovel you have to use to cover it up once it has been spent, then we can start comparing environmental impact from one part of the six time zones we have across this country to another, because there are strengths we have throughout the nation. That, to me, is what we should be doing.
The worst part is when we end up, sadly, too much into the political side of things, simply saying, “Well, we're not going to allow you to do that over there because we do this over here, and it's so much better.” There are strengths to everything. However, if we, as a nation, were to simply say, “Let's find where our strengths are. Let's take the advantages that we have, whether they're from what we have in Alberta with our oil and gas or hydrocarbon industry...,” then we can make sure that this money goes to other places and that it helps them.
If people around the world would just get to the level of the technology of oil and gas and the environmental safeguards that we have.... All these projects down in the U.S. that they were lauding and going to.... We'd blow them out of the water because that's how much better we are. However, if we simply say that, no, we've decided that, in order to find our place in the groups of nations that wish to reduce oil and gas, we're going to take this, so you had better shut it all down because that's the only way it's worthwhile, that, to me, is a problem. That's what I hope we will be able to get to when we speak about the TMX pipeline: that people will at least sit back—I know the money's gone—and think about what contributions those hydrocarbons have made to the world, have made to our nation, have made to the people of B.C. and Alberta—where these products are coming from—and Saskatchewan when we start looking at the advances that we have.
We have such an amazing story to tell. My other side of the story is that, usually, we do better if government isn't involved. I guess that's what my dad ingrained in me. He said that whatever the government says to do, if you do the opposite, you'll probably be better off. Well, this was a decision where, had we just stuck to what was there at the beginning, then, yes, the extra little roadblocks that we put up would have made it more expensive but certainly not more expensive than buying the thing and saying that that's how we're going to solve this problem.
We have sort of solved the problem. We are now going to be able to have much more oil and gas coming to tidewater and being able to then displace dirtier oil from different places. However, somebody has to pay for it. It's an irony to think that we should have some extra taxes on the oil and gas system.
Well, I can see where they're coming from. How else are they going to pay for that extra $27 billion that was in cost overrun? So, yes, I can see where people are going to say, “Well, they should pay for it.” Well, it would have been paid for in the beginning if the government had stayed out of it.
Again, there are all of the things that are happening around the world by this relatively small oil and gas company of Kinder Morgan. If you compare assets and so on, the things that they ended up doing because we took an expense off the books for them so that they had that capability.... It worked out well for them, and I could go on to other types of issues.
We talk about the U.S., and this is another thing that we talk about with this Inflation Reduction Act and so on and how it is that we have to compete against the U.S.
The first thing that they did when they cancelled Keystone XL was that they stopped again. That's how they managed to stop this from going to the gulf coast. So, what did they fill it up with? They filled it up with Venezuelan oil. They filled it up with other oils coming from other places. That's what they did with it.
People can stand up and say that this meant that we didn't take any of the heavy oil from Alberta, that we made sure that we stopped that.
Meanwhile, the U.S. government took that as an advantage to start filling all of its hundreds of thousands of pipeline miles with shale oil to send it to the market so that the U.S. actually became the largest exporter of oil and gas in the world. That is simply because we got shut out. Here we were with the ability to do that with the reserves that we had, but there were political decisions and so-called environmentalists who jumped up and down and said, “That's no good.” That's just one small picture.
I hope we will be able to see that much bigger picture once we get a chance to debate this. I certainly believe that this study should come about as soon as possible. I'm prepared to see it supersede the other work that we have in the committee.
Thank you very much, Mr. Chair.
Liberal
The Chair Liberal George Chahal
Thank you, Mr. Dreeshen.
I have Mr. Angus next.
Mr. Angus, I'll turn the floor over to you.
NDP
Charlie Angus NDP Timmins—James Bay, ON
Thank you, Chair.
I want to speak to the Conservative amendment, because I think we have a window on this deal, and if we don't take this window now, anything we study later will be irrelevant. That window really comes down to the fact that there are a number of key concerns that have never been addressed, but I'll start off with the issue of the sell-off of the pipeline.
After $34 billion of public money, it is not a feasible financial operation to ship bitumen down that pipeline, because the toll fees would be so extraordinarily high. We tried to get an answer from the Canada Energy Regulator on the reports that they'd capped the toll fees at 22% of the cost, so 78% of the cost has to be borne by the taxpayer. That's outrageous.
How, in any universe, are we going to say the taxpayer should pay 78% of the cost for an industry that made about $50 billion in the last two years? That's not going to fly with anybody.
The reason we need to make this a priority above other studies, though, is the government has been floating an idea that they're going to sell the pipeline. Obviously, they have an idea who they're going to sell it to. I've been around politics long enough to know that backroom deals are in the Liberal DNA—no offence, Chair, I think you're a great guy.
Who are they selling the pipeline to? If the pipeline gets sold off, then by the time we get to study it, it's going to be too late. I want to know what the terms are, because if we're going to look at this just on a financial cost basis, at the very least the Canadian public deserves to be paid back $34 billion for this. If we're going to give it to some group, or they're going to create some fiction group out of thin air and call it the reconciliation pipeline, how about telling us how much of a cut-down, haircut, they're going to be taking on this that is going to end up being borne, again, by the taxpayer? That's why I support the Conservative motion to bump this study up.
The other area, of course, is the Prime Minister went to COP26 and announced an emissions cap. What we found out is that there were no prior discussions about how that emissions cap would be implemented. In fact, the net-zero advisory council had never heard of the discussion about an emissions cap until it was announced at COP26.
Was the Prime Minister just doing what he's really good at, which is going on the international stage and making grand pronouncements? An emissions cap is a serious issue, and many people who are super concerned about the climate crisis took the Prime Minister at his word.
An emissions cap is impossible if the one major financial investment that this government has made in terms of environmental legislation is $34 billion to massively increase bitumen production. There is no way you can impose an emissions cap, and there is no way you can meet the targets that they have been announcing.
We see that, because Mr. Guilbeault is trying to pull numbers out of thin air and his best thing is saying how it's actually not as bad as it looks. Well, that's a pretty weak excuse after nine years of saying you're going to deal with the climate crisis, and that the numbers overall are actually going down. Yes, some of the emissions numbers are going down, and certainly the industrial tax on emissions has helped, but what we've seen in the oil patch are emissions continuing to rise. Those are the facts.
What we've seen with the announcement of the Trans Mountain being finished is that production in the oil patch had its biggest increase ever. In fact, in February, production rose to 3.95 million barrels a day—which is bigger than ever—and that was based, according to ATB Financial, on the expectation that now they have a pathway to move 900,000 barrels a day.
Expanding bitumen production is going to increase emissions. As I said earlier, to pretend otherwise is like when you're dealing with someone you're trying to get to go to A.A., and they're telling you to just let them keep drinking, and they'll drink their way to sobriety. It's not going to happen.
Either there's an emissions cap or there's no emissions cap. I think the least this government can do is be honest with Canadians, because people are taking this issue very seriously.
We have the huge increases. We have the massive overrun of costs, and there seems to have been no public input. There was no parliamentary oversight as to how this boondoggle carried on.
There is the issue now of who is going to end up covering off to make this financially viable for some kind of front group, and it's all being done to the benefit of Pathways Alliance.
I've worked with the mining industry. It's the area I come from. I know many of the leading people in the mining industry, and we expect that in mining if we're going to say that they're going to have to meet standards, they have to meet them. We expect the same from oil and gas.
Yet, last year, we saw Rich Kruger, Suncor CEO, in the middle of the biggest fire season in Canadian history, talking about the urgency to make more money in automation so they were going to use fewer workers and make more money in stock buybacks and dividends. If that was the biggest urgency that we were seeing in climate fire, there are serious questions that need to be asked.
However, the new Pathways Alliance head, Derek Evans, said that he believes that the emissions cap isn't fair and that it's unreasonable to meet the targets that are being suggested.
Why would we spend $34 billion aiding an industry right now that hasn't met the targets, and hasn't even tried? Their numbers are going up. So if their numbers are going up, why are we making it easier for them to go even higher? This is a question about government policy that the government has to answer, and they haven't answered that. People expect an answer because people are deeply concerned about where we're going.
When we look at other regions in the world and the amount of investment that's happening now in clean energy and long-term jobs, Canada is not even in the game. For over a year we've been promised these ITCs. Where are they?
Biden came in, he brought in an all-of-government approach. We're seeing hundreds of thousands of jobs. We can actually track the projects that are getting off the ground.
We've been talking about a lot of projects here, but what we can track is $34 billion that was given to TMX. That is going to increase emissions. There is no pathway to getting lower, under this plan.
The deep concern, which I'm going to end on, is the UN that has been warning that the window is rapidly closing. The 2022 report said that there is, “no credible pathway to [maintain]1.5C”, which is the red line between catastrophic feedback events of climate catastrophe. The “Emissions Gap Report 2023”, released in November 2023, reiterated that failing to sufficiently reduce emissions over the next six years will, “make it impossible to limit warming to 1.5°C with no or limited overshoot”.
Canada is failing. Canada is the outlier in the G7. Canada has failed to meet its targets, and we have a government that's now locked us in.
I am urging my Liberal colleagues not to filibuster. I think it would send a very bad message if this government tries to filibuster a fair study, an open study. Everyone can bring their witnesses, but it's our job to get answers to the Canadian public.
I am not going to speak any further. I am ready to vote on the Conservatives' amendment. I come here in good faith. I'm asking my Liberal colleagues to do the right thing. Let's get this thing cleared up. Let's get on with this, and then we can finish our other reports so that we can continue to show Canadians that we're here to work.
Conservative
Jeremy Patzer Conservative Cypress Hills—Grasslands, SK
Thank you very much, Mr. Chair.
You know, there are quite a few things I agree with my colleague, Mr. Angus, about. There's lots that I don't, but the point is that we both want the same thing, and that's to get this study happening as soon as we can here.
Again, the amendment is saying that the study should occur as soon as possible and supersede all other work of the committee. Now, that's a perfect amendment because the study that we were just venturing into prior to this was a study on a topic that this committee had previously studied. I find it quite fascinating that one of the first witnesses we had here last week spoke to that previous study on electrical interties. He was part of the study that happened in 2017, and one of the questions that was asked of him was whether anything had changed since 2017. He said that it had not. That's the answer right there, so there's nothing wrong with shelving that one for the time being and getting on with this one.
The government is well on its way to imposing electricity regulations and these other regulations, like their Liberal fuel regulations and things like that, on Canadians anyway. It's as if they want to do this study even though they're already doing all the things that they're going to try to accomplish at the end of the study when they'll say, “Oh now we need to do these things.” Well, they're already on their way to doing what they are planning anyway, so it's basically wasting this committee's time.
This study, though, which we want to happen right away, would not be a waste of time because of the cost overruns touched on by my colleague, Mr. Dreeshen, and spectacularly well by Mr. Angus. When we look at what the shippers through the pipeline are talking about, due to the uncertainty that this Liberal government put onto the Trans Mountain pipeline expansion, the cost overruns that it has incurred are going to impact them and the tolls that they're going to have to pay, which in turn are going to ensure that there's just not certainty for people who want to get through the next project, or even for people who are going to use this existing project.
It's quite remarkable what the government is capable of screwing up, it never ceases to amaze me. I think we need to get to the bottom of it. As I say, some of us might be approaching why we want to get the bottom of it from different sides of the issue. Nevertheless, we need to get to the bottom of it. I think we need to prioritize it, and I agree with Mr. Angus that we should do that as soon as possible before the pipeline gets sold by the government. If there is a backroom deal, this committee needs to figure it out before it happens.
Liberal
The Chair Liberal George Chahal
Thank you, Mr. Patzer.
I will now go to MP Jowhari. The floor is yours, sir.
Liberal
Majid Jowhari Liberal Richmond Hill, ON
Thank you, Chair.
First of all, it's good to be on this committee on a permanent basis, and I welcome working with all of you very closely.
One of the reasons I personally requested to switch from the committee that I was on to join this committee was the study that is ongoing, or it was ongoing until, I believe, Thursday. As I understand it, we were talking about the amendment, and the amendment talks about the urgency of the proposed study by MP Angus. It is my understanding also that, in general, there was an agreement that the disagreement right now is over the timing.
I was somewhat surprised to hear from colleagues who intervened to say that we're not dealing with an urgent issue or an urgent study. I was taken aback by that and it's why, as I said, when I started looking into the need for the generation of clean electricity and where the directions of Canada and the world were going, I personally felt a sense of urgency to come up with a proposal for a study. I tried to find a member of this committee who would table it. I was informed that there is a study, so here I am.
Let's talk about the source of urgency, because I think the fact that we want to look at that study after this study is done is already agreed on, so why is it urgent? Why should we continue with the study that we're doing?
If you look at the the new report from the Public Policy Forum, what we heard was that we need to double and, in some cases, triple the amount of green energy produced for us to be able to meet our 2035 and 2050 targets over the next 25 years. The timeline is already given, and these 25 years are basically equivalent to what has happened in the past century, so we need to expedite the generation, the transmission, the distribution, the storage and the many other elements around that, which I will touch on shortly.
Is there a sense of urgency? Absolutely. We have a very short runway. How long is that runway? It's 25 years.
How much is it going to cost? I believe I heard from the officials that we're talking trillions. It's going to cost a lot, and most estimates are in the trillions. If you look at trillions, if it's a trillion dollars. Just to put it into perspective for Canadians, if it's going to cost us a trillion dollars, just $1 trillion, that translates into about $40 billion a year. That $40 billion has to come from the federal government, the provincial governments and a lot of organizations or companies that are into generation and, from an investment point of view, in transmission, building more lines and enhancing the capacity of the distributors.
Now, if it's $2 trillion, it's going to be about $80 billion a year. Just to give Canadians a sense of what that number is, Canada's annual GDP is about $2.1 trillion. What we are asking for and what we understand we need to invest over the next 25 years in a very urgent way is the equivalent of the GDP of Canada for one year. The nominal GDP is around $2.3 trillion.
Therefore, we need to invest, in very short order, nearly the one-year GDP of Canada over 25 years. What does that entail? We need to do, as Mr. Greenspon said, two major things, and he called them major challenges ahead: massively expanding how much power we make and making it all clean.
How do we massively expand how much power we make? Where do we generate the power?
When you look at the whole extended supply chain of energy, as I call it, when it comes to generation, we have to massively expand. Not only do we have to build on the existing capacity, refurbish some of them, and introduce and expand, but we also need to explore new areas. For example, everybody is now talking about nuclear. SMRs for generation are now being considered by some other countries. There's wind.
On Ontario, I'll quote this:
Five years ago, the Ontario Tory government spent nearly $300 million to end hundreds of renewable electricity projects the previous Liberal government had launched. Premier Doug Ford said the power wasn't needed and that wind power was destroying the province's energy system.
It's a funny thing. It goes on:
Last week...Ontario Energy Minister Todd Smith outlined a power plan that includes billions in new nuclear projects as well as a return to wind and solar projects the government once called a waste of money.
What we see is that, even in generation, provinces that cancelled many of those projects are now trying to be the leaders. When you look at generation from nuclear to hydro to wind to solar—now we are exploring geothermal and areas that haven't been tapped into like magnetic and hydrogen—these are all sources of generation we need to invest in or where we need to massively expand our capacity.
With that expansion of capacity and generating two to three times more electricity, naturally we need two key infrastructure elements. One of them is transmission lines. The other one is huge storage capacity—industrial-sized storage capacity.
When you look at the transmission and at storage capacity, for us to be able to build that infrastructure and enhance the existing structure, we need to start now. Actually, we should have started many years ago. We need to start now, hence the sense of urgency.
Look at distribution. I talked about Alectra, which is a distribution company in my neck of the woods, in Richmond Hill and in York region. For them to be able to meet the target of 2030 to 2040, they need hundreds of millions of dollars in investment. It's not going to come from the ratepayers. It's going to come from foreign investment. It's going to come from relaxing some of the regulations, which we need to study as part of this study.
Actually, it comes from the consumption. As you can see, with the introduction of some of the government programs around greening, heat pumps, energy-efficient projects, as well as electric cars, not only is the amount of consumption going up, but also the infrastructure that's needed to support it. A lot of households are going to find they need to upgrade their electrical system to be able to handle that.
When you look at this whole spectrum, we need to generate and invest to the tune of $80 billion a year to make sure that we can double or triple the energy that's generated from all those sources, through to transmission, distribution, consumption and storage. Now you look at it and ask what other elements we need to look at. Is it just as simple as coming in and saying that we'll build five more nuclear plants and three more SMRs?
No. We also need to look at elements such as energy modelling. We look at different jurisdictions. If there's any company out there that's working on energy modelling, come and talk to me because I'm very much interested.
Look at the energy modelling and you'll see that we have 13 provinces and territories and we have indigenous areas. They have different characteristics. If there is a company that's looking at those capabilities and asking what kind of energy modelling they need to do to find that balance to use, expedite and accelerate the needed generation and transmission, I would really like to invite you to come to this committee.
We need to talk about the management of the electricity and how efficiently we are managing it. We need to talk about how we optimize the energy. If there is any company—and I worked with one of them; it's called Edgecom—that's leading on looking at all the sources of energy and trying to optimize based on the cost and the timing and the sources of all of this energy, we need to talk about that. Aside from generation, we also need to look at how we are going to ensure that we optimize the use of energy. We have to talk to consumers and understand how they can change some of their behaviours. We need to talk about integration and look at different sources of clean electricity and how they can be integrated. We need to talk about exchanges.
One of the areas that Alectra is seriously looking at is almost an exchange market where you look at it and you say, “Okay, all these sources of energy are generating, but what is the best way for us to be able to exchange it so we can keep that rate for consumers down?”
If you look at the current administration in the U.S. and the investment they did with ERA, what they are doing to make sure they can generate enough electricity to be able to run their plants is humongous, and we are behind. Edward Greenspon said, “We need to move very quickly, and probably with a different approach, you know, no hurdles, no timeouts.” We need to move now, hence the sense of urgency.
Now you come in and you say, “Okay, you talked about the supply chain and, let's say, the model, and you're talking about the energy model, but is that all?” No, that's not all. We need to look at the social and environmental policies both domestically and internationally. If we are going to produce products that use electricity—and nowadays almost everything uses electricity—and we are a trading country, when we look at the international trade that we have to do, part of our free trade agreements is that the products being produced need to be produced on green electricity or renewable electricity. We need to think about it now.
We need to look at incentives. There is no way the Government of Canada is going to be able to invest $80 billion every year. Let me give you an example. If it was $1 trillion, it would be an investment of $40 billion a year. The Government of Canada's 2024 budget for defence is $44.2 billion. The health care transfer we did to the provinces this year was $55 billion. This is an enormous amount of investment that needs to be done. The Government of Canada has the reconvening and convening power to be able to bring all these players in, but we need to also look at the incentives. When you look at the ITCs around clean energy, etc., we need to have experts coming here and telling us what programs and what incentives we need to ensure that key players are going to come to Canada and invest. There is no way that $80 billion could come from the federal government.
Look at what Honda did with a $15-billion investment in four plants. Why did they make that decision? It was because we have the capability.
It was interesting: I was sitting in the OGGO committee this morning, and they were talking about foreign investment, why foreign investment is coming to Canada and what we need to consider. Aside from the fact that we provide a safe environment and we have the green philosophy, it also looks at the talent we have and the direction the government is taking. When you look at these incentives and you look at the amount of international investment that's needed, we need to build incentives around that and we need to provide that environment. That sense of urgency cannot wait. Look at the amount of research and development that we need to do.
Conservative
Liberal
The Chair Liberal George Chahal
Mr. Jowhari, I would ask you to take a break for a second. We have a point of order from Mr. Patzer.
Conservative
Jeremy Patzer Conservative Cypress Hills—Grasslands, SK
Thank you.
I'm happy that you've joined our committee. It's great to see another member on the committee. Just for your own benefit, we actually just did a study on ITCs and on what the U.S. is doing and what Canada's response maybe would be.
We already did that study, so I'm just wondering if you wanted to get back to the amendment at hand. That would be beneficial.
Thank you.
Liberal
Liberal
The Chair Liberal George Chahal
Thank you, Mr. Patzer, for providing your recommendations to the member. I'll let the member proceed as to why he's supporting or not supporting this amendment to the motion on the floor.
I'll let Mr. Jowhari continue in providing his rationale.
Liberal
Majid Jowhari Liberal Richmond Hill, ON
Thank you, Mr. Chair.
I think each one of those areas, and I have probably five or six other areas to cover, is talking about an aspect we need to look at. I want to give Canadians a sense of the study that we were on and got derailed from—how encompassing, how important and how broad it is—what the aspects are that we need to take into account and how urgent it is. Indeed, each item I'm dealing with is talking about the urgency that I believe exists. It should not be superseded by the study proposed by MP Angus.
We talked about research and development. Let me give you an example. How many of us have thought of magnets as a perpetual source of generating electricity, green electricity? What kind of investment or what kind of research and development are we doing on that? Research and development is yet another area that we need to really focus on.
Now it comes to why we're doing all of this. We're doing all of this because we want to make sure we have adequate, reliable, affordable and accessible clean energy for our targets for 2035 and 2050. We have to increase our capacity by two to three times. I haven't even started bringing in the other elements that need energy on top of the programs that the government has rolled out.
Imagine the food security over the next 25 years, which a lot of countries are focusing on, and the sources of energy needed to ensure food security around some new innovations, specifically around vertical farming. If you now look into the intersection of vertical farming as a source—
