Evidence of meeting #21 for Natural Resources in the 45th Parliament, 1st session. (The original version is on Parliament’s site, as are the minutes.) The winning word was electricity.
A recording is available from Parliament.
Conservative
The Vice-Chair Conservative Shannon Stubbs
Thank you, Mr. McTeague. I went over so that you could answer my colleague's question.
Conservative
The Vice-Chair Conservative Shannon Stubbs
Thank you.
We'll go to the next round of questions.
For six minutes, we'll go to Monsieur Simard.
Bloc
Mario Simard Bloc Jonquière, QC
Thank you very much.
It's good to see you again, Ms. Exner‑Pirot. The last time we spoke, as part of the study on critical minerals, you were very effective at providing an overview, perhaps more so than our colleagues in the government. We might not be on the same page, and I'll tell you what I'm getting at with my questions.
First, I want to understand the dynamic between building infrastructure for the commercialization of gas and what I see today as the lack—and I'd like your thoughts on that—of a clear signal from private companies. As I understand it, the Trans Mountain pipeline is the latest oil infrastructure to be built in Canada. It cost $34 billion of taxpayers' money. Also, as far as I know, the government is still offering a subsidy of about $7 per barrel. So companies don't want to pay the cost of using this refinery.
When I look at the projections, I see that, in the next 20, 30 or 40 years, China and Europe will significantly reduce their oil consumption. So I wonder why a private company would want to invest billions of dollars in infrastructure that will be ready, at the very least, in 10 or so years, on the assumption that it will be profitable. I don't understand this dynamic. This often leads me to believe that there may not be a cost-benefit analysis for building oil refineries.
Perhaps you can convince me that my statement is irrelevant, but I'd like to hear your comments on that.
Director of Energy, Natural Resources and Environment, Macdonald-Laurier Institute
I will certainly try to persuade you otherwise.
On the question of Trans Mountain being $34 billion, that was absolutely unnecessary. It doesn't need to cost $34 billion to build an oil pipeline. Right now, as you may know, some of the shippers are in a legal case with Trans Mountain to figure out what the cost overruns were, what the shippers should be responsible for paying and what the inappropriate expenses were that the government took on in building Trans Mountain. We'll get a better sense of how much that pipeline should or could have cost.
On partly going through Prince Rupert or some northwest port, the idea is not to have to go through Canada's third-largest city and have all of the costs and delays that would bring.
On the question of long-term demand, this is the major question. I feel pretty confident that Canadian heavy oil has a long lifespan in Asia. I'll give you a few reasons. One is that, compared to light oil, heavy oil actually produces less gasoline and more petrochemical feedstock, more jet fuel, more bunker fuel and more diesel. Even as we do see some electrification of transport, especially in light-duty vehicles, we are seeing increases in demand for petrochemical feedstock and jet fuel, and heavy oil is a better mix and a better complement for refineries, given what the Asian market is actually looking for.
That being said—
Bloc
Mario Simard Bloc Jonquière, QC
I'm sorry to interrupt, but I don't have a lot of time.
Do you have any data on what you just said?
I know you work very efficiently. You may have some data on potential opportunities for other types of fuels. If you could provide that to the committee, that would be great.
Director of Energy, Natural Resources and Environment, Macdonald-Laurier Institute
Yes, absolutely.
With India, which is obviously where Minister Hodgson was, no one expects its demand will plateau in the coming decades. It has a lot of runway before it even gets close to the kind of gasoline and oil consumption we have in North America. The sense is that even if China's demand plateaus, Southeast Asia will have much more demand in the coming decades.
Bloc
President, Canadians for Affordable Energy
Today, according to the International Energy Agency, there is an increase in demand, not only in China, but also in India, as Ms. Exner‑Pirot explained. I explained it myself in my comments at the beginning. Could Canada find a way to more easily provide other countries with something that is absolutely necessary?
As I said earlier, heavy oil has greater potential, and that goes beyond just gasoline-powered vehicles. It's interesting that countries like Japan, South Korea and China have refineries that are able to take heavy oil and turn it into products that are much more important for their economies. So Canada plays a very important role, despite geographical challenges.
Conservative
The Vice-Chair Conservative Shannon Stubbs
Thank you.
There are 12 seconds left for any takers, but if we're good, we're good.
For five minutes, we'll go over to my colleague Jonathan Rowe, who comes from Newfoundland and Labrador, the province in which oil and gas makes up the highest percentage of its GDP, which is even higher than in Alberta.
Go ahead, Jonathan Rowe.
Conservative
Jonathan Rowe Conservative Terra Nova—The Peninsulas, NL
Thank you for having me.
I have a hundred questions, so I'll try to be quick.
We have a refinery in Newfoundland and Labrador, and the Liberal government spent $86 million to retrofit that refinery, which once produced gasoline, propane, diesel and, I believe, even jet fuel. It now produces only biodiesel. The biofuel market was the U.S. After Trump made changes to the carbon credit regulations, biofuels have been struggling to find a new market.
Ms. Exner-Pirot, do you think it's wise for the Liberal government to subsidize a retrofit that was dependent on the carbon credit subsidies of foreign nations?
Director of Energy, Natural Resources and Environment, Macdonald-Laurier Institute
Thank you for the question.
I have to mention that I did my master's at Memorial University. I lived on Topsail Road, so I'm delighted to hear from you.
I guess the proof is in the pudding. The retrofits happened and it wasn't economic. The opportunity costs in terms of putting subsidies and a policy direction into something that isn't economically sustainable.... We're seeing that now. I do understand. Even with trying to make changes to the clean fuel regulations and trying to, for example, potentially set up quotas for domestic production, there is demand for these biofuels under the CFR, but Canadian competitors were just not as competitive as foreign exports.
Part of it is making sure we're competitive and—Dan can speak to this—not just putting those costs onto the Canadian consumer by first having the clean fuel regulations, having that carbon price and now also having further expenses with the quota system.
On all of these things, I would say yes and I would agree with you. Economically, at least, it has proven objectively not to be wise.
Conservative
Jonathan Rowe Conservative Terra Nova—The Peninsulas, NL
I have a question for either one of you—perhaps Dan McTeague may want a chance at this.
It's no good to cry over spilled milk. Now this refinery needs to diversify, like you were saying, and they're looking to the EU. Newfoundland is placed on the very east coast of Canada, close to European markets. Our Prime Minister has been to Europe numerous times, yet as far as I know there has been no deal to get this biodiesel into the EU market immediately.
For the sake of the Newfoundland economy, do you think that should be a priority for Mark Carney and the Liberal government?
President, Canadians for Affordable Energy
Yes. Given the cost of diesel today—which, of course, everyone has noticed is much more expensive than it has been in the past—and given the demand—particularly in Europe, but also here in Canada and North America—for ultra-low sulfur biofuel diesel, why not?
By the way, Come-by-Chance, the refinery is something that's near and dear to my heart. In 1998, a report said the federal government should use its power at Petro-Canada to release the restrictive covenant. Guess what: We got the damn thing rolling again. I say this only because I think there are great opportunities; we're just not looking at those opportunities, or we're not paying a lot of attention to them. We can do other products, but we won't deal with what we have at hand, which is the ability to send diesel to Europe. Last time I checked, with the war in Ukraine, they are still seeing significant costs, not only for LNG but for diesel itself, especially with colder weather and, of course, fuels that are used for jets and other things.
The reality is that it's an open market. Maybe we've taken too much of a stance that there's no business case, when in fact there's a huge business case, not just in Europe but around the world. Last time I checked, that place is certainly amenable to sending that kind of diesel anywhere in the world.
February 3rd, 2026 / 12:45 p.m.
Conservative
Jonathan Rowe Conservative Terra Nova—The Peninsulas, NL
Absolutely.
I'm going to transition a bit. We had the German Chancellor come to Newfoundland and Labrador. They were trying to get natural gas to pivot away from their Russian energy dependence. The Liberal government said no, they didn't want to sell them natural gas. They said there was no business case for that, so they wanted to sell them hydrogen. The thing with that is Canada and Germany jointly pledged $600 million to the project, and a CBC article is now saying that they're waiting for more subsidies from either the Canadian or the German government.
Does it make sense to subsidize one energy form and rely on foreign German subsidies, rather than simply produce more offshore oil and gas that makes a profit, paves roads, improves health care and gives us more geopolitical leverage internationally?
Director of Energy, Natural Resources and Environment, Macdonald-Laurier Institute
Obviously, it didn't make sense, and obviously we're not exporting hydrogen. A lot of government money was put into that, and it didn't produce the economic development that we were hoping for in Atlantic Canada. Germany and other European countries continue to come to Canada and say that they would really like to diversify their LNG import sources. They would like to diversify it off the Americans toward more Canadian sources.
If we are serious about increasing our alliances, and if we really do want our allies to have energy security, then obviously we should still be focusing on the best ways we can get LNG to those European allies.
Conservative
The Vice-Chair Conservative Shannon Stubbs
Wow, that's on time.
Our next questioner, for five minutes, will be Mr. Danko.
Liberal
John-Paul Danko Liberal Hamilton West—Ancaster—Dundas, ON
Thank you, Madam Chair. You're doing a great job, by the way.
I appreciate the discussion today. There are a couple of points I've taken so far from what we're hearing. The global demand for Canadian hydrocarbons is strong in both Asia and Europe. The need for global diversification from U.S. markets is a priority for the government, and I think that's pretty clear. Also, the inherent nature of Canadian hydrocarbons—being low-carbon, protecting Canadian workers, protecting the environment and using Canadian materials, Canadian labour and so on—just benefits us domestically. In that context, I think most of us agree that there's a need to expand and accelerate the sale of Canadian hydrocarbons abroad.
My first question is for Ms. Exner-Pirot.
You talked about some of the geopolitical issues currently in the world. A huge one, of course, is that the U.S. just invaded Venezuela and effectively has control of that country, including the second-largest hydrocarbon reserves in the world. How does that impact Canadian markets and the uncertainty broadly in the fossil fuel industry?
Director of Energy, Natural Resources and Environment, Macdonald-Laurier Institute
It's a great question.
In the short term, it hasn't impacted too much. Venezuela is ramping up to the production it had before the blockade, so while it may seem like there's a ramp-up, it's really getting to what was normal a year ago, which is still very far below what it was, let's say, 10 years ago.
Obviously, Venezuela can, and likely will, ramp up, but there will be limits to how much it can ramp up. In Canada, we know how expensive it is to develop heavy oil assets, and we know the kind of regulatory certainty that businesses need. We may lament that Canada doesn't have perfect certainty, but it's obviously very much worse in Venezuela. Reserves don't equal profitability, and they don't equal exports. There's a lot of work to be done there.
On the bright side, we are seeing some benefit in that China is also looking at the situation and seeing Venezuela as a potentially more unreliable source. It had been importing from Venezuela, and that helped to account for some of the diversification we've seen here from China demanding more heavy oil, and China and India are, I think, looking to secure more Canadian heavy oil.
The important part for us all to know is that, even as Canada is looking to diversify its exports, all nations are looking to diversify their oil imports, and because Canada hasn't been on the scene and hasn't been a meaningful exporter of oil, we are a new kid on the block. We are seen as reliable and friendly. Those are the kinds of attributes your energy importers want.
For me, Venezuela shows the whole world why reliability matters and why Canada, by contrast, is a very attractive place to get hydrocarbons.
Liberal
John-Paul Danko Liberal Hamilton West—Ancaster—Dundas, ON
Thank you.
Both of you mentioned Asian markets particularly as an opportunity for Canada's sales of hydrocarbons.
Ms. Exner-Pirot, you talked specifically about opportunities for petrochemical feedstocks. I want to give you an opportunity to expand on that. If I take that correctly, that's plastics and industry, but not gasoline and diesel, burning hydrocarbons for fuel.
Director of Energy, Natural Resources and Environment, Macdonald-Laurier Institute
Yes, that's correct. That segment of the hydrocarbon market is growing the fastest. Maybe you could say that you can displace oil with electricity, but you can't really displace petrochemicals with another material. They are cheap and abundant.
Again, heavy oil is well suited for some petrochemicals. Obviously, Asia has a very large manufacturing base, and some of Southeast Asia is trying to do more of that, so you see demand for that growing, even as gasoline demand in particular may be plateauing in some countries.
I thought I was out of time with Monsieur Simard, so I just wanted to add one other thing. The world produces and uses about 105 million barrels, and we're competing for those 105 million barrels. What we don't appreciate is that some countries won't be able to produce the same level as they are today. In 10 years, they will run down their reserves. United States shale is already peaking. In Norway and Mexico, you've already seen that. Even if you don't expect any growth in oil demand, there is still going to be a larger portion that Canada can take over from other countries.
President, Canadians for Affordable Energy
I'll just mention the investment side of it. There is real concern that what we're using today is not being replaced or replenished by approvable, available reserves. Yes, you have Guyana and Brazil. We can discount the geopolitical strains of what would happen if there's suddenly a regime change in Iran to complement what's happened in Venezuela.
However, I think the International Energy Agency—which is not a big friend of oil in its comments over the past several years—has had to finally throw in the towel and admit that the world is going to need more oil. The question is whether it will come from Canada or from some unsavoury country.
Conservative
The Vice-Chair Conservative Shannon Stubbs
Thank you, Mr. McTeague.
We're going next to Monsieur Simard for two and a half minutes.