Evidence of meeting #33 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 biofuels.
A recording is available from Parliament.
President, Advanced Biofuels Canada
Crop inputs are extremely important, as I've said before. The ability to recognize the efficient use of crop inputs is one of the things that is a hallmark of modern renewable fuel policies like those Canada has in place at the federal and provincial levels.
Because these are inputs, and because these inputs have a cost and these costs are high and have a significant impact on a farm's financial viability, policies that reflect a more efficient use of these resources have led to a more efficient use of these resources, which means that the renewable fuels created in Canada have lower carbon intensity. With lower carbon intensity, often comes greater cost-efficiency.
Liberal
John-Paul Danko Liberal Hamilton West—Ancaster—Dundas, ON
Thank you, Mr. Chair.
It's so good this afternoon to get some good news about Canada's affordable, renewable clean energy sector and the growth potential for clean energy exports being growth industries in Canada.
There are two federal regulations that really come to mind when we're talking about biofuels and clean energy exports: the industrial carbon pricing and also Canada's clean fuel regulations, which really ensure a healthy market and ecosystem for the production and export of biofuels.
My first question is going to be mainly for Mr. Ghatala, because these regulations really focus in on reducing the carbon intensity of gasoline and diesel and increasing the demand for Canadian biofuels—ethanol, biodiesel, renewable diesel, sustainable aviation fuel, as was mentioned, biogas, etc.—and they also ensure access to export markets.
You mentioned in your opening statement the importance to canola farmers and agriculture. I think you mentioned 66,000 jobs in farming. We heard about the importance to the forestry industry as well. In Hamilton, we have an example of this, the Biox diesel plant, which is very supportive of the clean fuel regulations as part of their business plan.
I have three questions for you, Mr. Ghatala, and you can answer them in whatever order you wish: the importance of the Canadian clean fuel regulations to support the biofuels industry; the importance to Canadian agriculture and Canadian forestry; and also, the importance of industrial carbon pricing in terms of access to export markets.
Thank you.
President, Advanced Biofuels Canada
Thank you for those questions.
The biofuel policy in Canada has gone beyond the clean fuel regulations from the beginning, when former prime minister Stephen Harper put the renewable fuel requirements in place. Those still exist within the clean fuel regulations, so really, the CFR is built upon the strong start that former prime minister Stephen Harper put in place.
Its importance cannot be understated. Having a federal signal that requires fuel suppliers to reduce carbon intensity, that has land use and biodiversity criteria, that has the plumbing to include aviation fuel in the next update.... There's a reason why the clean fuel regulations are internationally recognized as very good policy. They are extremely important for the agricultural sector. They have a very agricultural sector-friendly approach in a world where policies are generally, in some cases, turning away from the solidity that agriculture-based biofuels provide.
To your second question, it's importance is fundamental to the agricultural, canola and forestry sectors. We saw the impact of foreign markets and the impact they had on Canadian production. The 5.9 megatonnes of seed that used to go to foreign export markets—our largest one for seed is China—is essentially 2.3 billion litres of renewable diesel that could be used at home, produced at home, to lower emissions at home and also be exported. It's extremely important in that sense. It would also provide the opportunity for forestry-based residuals and products to be processed in Canadian refineries. It's very useful in its role to encourage the development of these resource-based sectors.
Industrial carbon pricing is also a useful framework. Of course, we would like to see the shape it takes, but we view industrial carbon pricing, in a world with trading relationships, as a way to link jurisdictions that have similar focuses on reducing emissions. Therefore, we're very supportive of smartly applied industrial carbon pricing.
Liberal
John-Paul Danko Liberal Hamilton West—Ancaster—Dundas, ON
Thank you. That at was an excellent, very fulsome answer.
Mr. Renou, do you have anything to add, specific to the forestry sector?
President and Chief Executive Officer, FPInnovations
It's difficult. As a scientist, I tend to look at facts without policies and see how they compare. It's a sadder story for the forest industry in Canada because it will cost more to produce SAF here than it would cost elsewhere.
If you look at ethanol and agriculture, it's a completely different story. It's much cheaper to produce ethanol out of corn or canola, and other things. With forestry, you need to take our superb fibre—and I say that with pride—which is different from the other, and decompose it to the simple chemical expression, therefore removing all of the advantages we had, bringing it to a simple thing and then rebuilding it. If I were an oil company, I may go elsewhere to do it. If you look at Europe currently, the SAF quota is fulfilled by China because it's cheaper to do it in China than in Europe, more and more, every day.
There's a story to be told. There's something to be looked at. I'm not saying it's yea or nay; it's a choice of policy. That's your job, not mine. From a cost perspective, we have to do the right thing. From a competitive advantage, we have great fibre. Let's focus on making the best we can.
However, on the residue side, it's different.
Liberal
Bloc
Mario Simard Bloc Jonquière, QC
Thank you, Mr. Chair.
I'll return to the discussion Mr. Danko had with the previous witness.
Mr. Renou, in your presentation, you clearly demonstrated that the forestry sector is in transition, that the pulp and paper sector will inevitably decline and that the energy sector could be a good alternative sector for residues.
We've had these discussions many times here in the committee as part of our studies on the forestry sector. One thing keeps coming up from many witnesses when it comes to fuels produced from biomass.
I would like to make this very clear. It's important to develop a standard for clean fuels and for carbon pricing. Without these two tools, it becomes difficult to reduce the risk associated with the initial phase of the industrial-scale implementation of biofuels or clean fuels produced using biomass.
I'd like to hear your comments on that, as it strikes me as an important point. Often, here in the House of Commons, we hear people telling us that we need to eliminate the standards for clean fuels and carbon pricing.
What do you think?
President and Chief Executive Officer, FPInnovations
It all depends on what we're looking at and the goal we want to achieve. If we're aiming for decarbonization, we clearly need regulations to set a price on carbon. Fundamentally, technology and engineering alone won't lead us to a competitive price, whether we take the traditional path of oil and gas or that of forestry to get there. It's clear: We need policies to get there.
As for the other aspect of your question about whether we can support the forestry industry by generating energy, the answer is a resounding yes. However, we have to look at what we are doing and where we're doing it. Where are the power transmission lines? Where are the oil transmission lines? Where is the accessible biomass?
Someone in this committee asked whether there was enough biomass. Again, it's a big “it depends”. If I go into the forest to collect residues, it's very expensive. If I'm already harvesting trees for construction lumber, it costs less. So there is a deep integration that needs to be considered. We have to think about the locations. In the current context, I'll go a step further. We really have to look at which areas—which Canadian ecosystems—we can protect or help survive to ensure that we have an industry going forward. A one-size-fits-all policy won't work for the industry. We really have to proceed on a case-by-case basis.
Bloc
Mario Simard Bloc Jonquière, QC
I fully agree with you, but to reduce the risks associated with that, incentives will still be needed. Back home, yesterday or the day before, it was announced that Elkem Metal was selling its biocarbon pilot plant, which makes it possible to replace coal in its industrial process. So we know that there are significant costs associated with that. The reason this company decided to get involved in this is that there is a significant benefit in terms of reducing emissions. The same goes for Arbec, which produces biofuels.
In that regard, do you think government action—the assistance provided to the industry for the deployment of these technologies—is sufficient?
If you have any ideas on what could be done in the short term, since the forestry sector needs this in the very short term, we would like to hear them.
President and Chief Executive Officer, FPInnovations
Once again, I'll answer in a more technical way. Indeed, when we talk about metallurgical carbon, which is used to reduce iron to cut emissions, we can use anthracite, a traditional product, or products derived through a thermochemical process to produce metallurgical-grade biochar. The cost is higher.
So we need a carbon policy, an incentive or regulations, which can take various forms. Again, I'm not a lawyer. It could be a carbon tax, a specific requirement regarding the use of biochar in a metallurgical process or in something else. It is possible and feasible, but we need regulations to support it. If we rely purely on the economy, it won't work.
However, in my opinion, every policy must be part of a long-term vision. We have to think about the day when we won't need the policy anymore. Otherwise, we'll just create widespread inflation. So how do we balance the two? It's your job to answer that question. All I can do is provide you with data, unfortunately.
Bloc
Bloc
Mario Simard Bloc Jonquière, QC
Okay.
Mr. Noorani, I paid a very interesting visit yesterday to a company called IDEA Contrôle. It provides advanced management services to companies in Quebec that want to obtain an energy block. In Quebec, for projects under 5 megawatts, companies don't need to ask Hydro‑Québec for an energy block. It's given to them de facto. Using a battery system, IDEA Contrôle manages to reduce companies' energy demand to below 5 megawatts.
There's the well-known 30% tax credit for clean electricity, but do you, as someone who represents many members, believe that this is sufficient to deploy new technologies that will ultimately help us improve our storage capabilities, but above all make businesses more competitive—businesses that wouldn't have stepped forward if this type of technology hadn't existed?
Are there other things the government could do?
Vice President of Policy, Canadian Renewable Energy Association
Thank you for the question, Mr. Simard.
As it pertains to this sector and this size, we call it behind the meter. There's a lot of opportunity for Canada to be a leader within this space. Ontario is showing a lot of leadership already. Alberta will be next as well in terms of the storage capability that is likely to be unleashed, and I think Quebec will be too.
The federal government has set the right framework for large investments. As we talk about smaller investments, we're working with local provincial authorities. We're basically working with the ecosystems within to create a funding mechanism that will allow for more longer-term investments into these smaller storage facilities, or even solar for that matter.
Liberal
Conservative
Shannon Stubbs Conservative Lakeland, AB
Thank you, Mr. Chair.
Thank you to all the witnesses for being here. I have questions for all of you, so we'll see how far we can get. Maybe you'll have to submit afterwards if we run into the clock.
Thank you, Monsieur Renou, for just saying the non-partisan fact, which is that if we do impose federal taxes and policies on Canadian producers that other countries and competitors, especially the U.S., don't have, then we do, by nature, make it more expensive for Canadian producers to do business here.
Unfortunately, there isn't a proposition of a federal industrial carbon tax model that is offset by the equivalent cut in corporate taxes or other regulatory costs to ensure that funding then goes into innovation. That would be the kind of model that industrial carbon tax advocates propose, but it is not, of course, what has been imposed on Canada over the last 10 years. Instead, it has been a pancaking and layering of legislation, regulations, policies and taxes that add costs.
You previously wrote to this committee that “Canada's forest industry, once profitable and competitive internationally, is in a deep crisis.” Conservatives say part of that is a failure to get a softwood lumber deal done with the U.S., which the former Conservative government did in 80 days but these guys haven't gotten done in 11 years.
Of course, a lot of this is provincial jurisdiction, but I just wonder if you might tell us what the top priorities are that the federal government could do to ensure that forestry becomes globally competitive again and to save all the valuable pulp mills, sawmills and jobs in Canadian communities.
President and Chief Executive Officer, FPInnovations
That is a large question; a big purse is needed.
Every time we want to save a pulp mill, we need to modernize it. We are talking about $1 billion to $2 billion of investment. That's the reality of where we are, so enabling that with the right conditions is useful.
A few other things the federal government can work on are helping provinces harmonize a transport policy and helping provinces harmonize fibre costs and access to fibre. There's a large leadership role the federal government can play in different forms. Of course, there is the trade file, and depending on who you have on the other side when you're elected, you have a different problem. Let's acknowledge that first.
There's also this constant leadership role across all the provinces and trying to break down the barrier between the federal and provincial governments. Forestry is a provincial jurisdiction. Commerce trade is a federal one. What's killing all of us in the forestry sector is that we're constantly stuck between the two. We don't have time for a match. We have time to work together.
On the rest, listen: Economics is economics. Whoever is elected will face the same economics. The rest is choice of policy, based on their opinions and choices.
Conservative
Shannon Stubbs Conservative Lakeland, AB
Thank you.
It seems clear that if a government is serious about Canadian sovereignty, self-reliance and affordability, it will do everything it can as fast as possible to break down and to harmonize those jurisdictional challenges. The Liberals have been in power for 11 years, so they could get on at any time, especially given their specific promises about it.
This is for CanREA and the biofuels association. CanREA was here before. Talking about permitting for energy sites, the organization said, “I've been out to many a project site where you ask, 'How many permits are you filing?' and the answer comes 'Oh, five or ten'...And I go, 'one field.'”
As you know, Conservatives support the expansion of private sector traditional and new energy development. Like all of you, we believe this is a spectrum and that the answer is both and all for Canada—not either-or, some or the politically favourited ones.
Given that, what regulations should be either repealed or revised, or what other federal policy changes can be made so that energy development and supply chains of all kinds can be built in Canada? You mentioned the requirements for clarity and certainty.
Vice President of Policy, Canadian Renewable Energy Association
I can respond to that first.
Maybe I'll start with the provincial level. We're seeing a lot of streamlining across the country. We definitely endorse that, and we work closely with provincial governments to help do that. I can say that B.C. is a leader and that Ontario is really emerging as well, and we're seeing this across the country.
From a federal perspective, I think that where we stand to gain a domestic—
Conservative
Shannon Stubbs Conservative Lakeland, AB
Also, it does happen to be the case that Alberta, as a jurisdiction, of course, has the most planned investment in renewable and alternative energy development of any of the provinces in the country, although there was a pause in the regulatory process to give confidence.
