Evidence of meeting #42 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 technology.
A recording is available from Parliament.
Liberal
John-Paul Danko Liberal Hamilton West—Ancaster—Dundas, ON
If we don't have a domestic supply of enriched uranium, where would it be coming from? Maybe touch on the export opportunities as well.
Associate Vice President, Counsel Public Affairs, As an Individual
The current market is dominated by hostile state actors in Russia and China. Otherwise, the rest of the world is trying to catch up with their capacity. Europe and the U.S. will have an enrichment gap by 2050.
Associate Vice President, Counsel Public Affairs, As an Individual
We're not the only country trying to procure on the open market.
Liberal
Bloc
Mario Simard Bloc Jonquière, QC
Thank you, Mr. Chair.
Mr. Leuprecht, I am a bit surprised by what I heard in your opening statement. I'll explain why.
When you say it's troubling to see that Quebec, which is a major producer of hydroelectricity, imports electricity, you're overlooking the logic behind it. Hydro-Québec's reservoirs act as a massive battery—something the Americans don't have.
Hydro-Québec therefore imports electricity during off-peak periods. It pays 5¢ per kilowatt-hour for it. During peak periods, Hydro-Québec feeds it back into the grid at 15¢ per kilowatt-hour. It may consume more, but that's because the grid is designed that way. This gives it a significant competitive advantage.
The grid is therefore integrated between Quebec and the United States, and we pay less for the electricity we import than we receive for the electricity we export at 15¢ per kilowatt-hour. So, roughly speaking, the Quebec government receives about $1.5 billion per year from these contracts. Buying electricity at a low price to resell it at a higher price—I see that as a benefit. I don't know if you do.
What I can't understand, however, is the significant competitive disadvantage we face when it comes to natural gas and oil. From 2021 to 2024, major oil companies raked in $131 billion in profits, and 60% of that money was funnelled back to the United States, because the ownership structure of these companies makes them American corporations. We lose $12.3 billion every year, and these oil and gas companies tell us they don't want to pay for export infrastructure. They say it should be up to the public to pay for it on their behalf. The most recent infrastructure project was Trans Mountain, at a cost of $34 billion. We, collectively, paid for it.
That said, major players in the oil sector are now saying that the risks are currently too high for them to pay for infrastructure. I also find what you said in your opening statement troubling. According to you, when we work on electrification, we're helping China. It's true that the current structure of electrification gives China a huge competitive advantage. However, does that mean we shouldn't pursue electrification, when everyone else is doing so and the industrial landscape is changing?
For us in Quebec, this advantage is significant. What we need to do is further develop the value chain surrounding electricity. We shouldn't withdraw from this field. If we do that, we'll be doing it at our own expense, and that's terrible.
When an investment is made in the oil and gas sector, to me, that means I'm competing with the rest of Canada. It's money I've sent to the federal government that won't end up here. We don't produce oil or gas in Quebec. So, for a Quebecker, exporting more oil and gas means absolutely nothing.
Therefore, I'd like to hear your thoughts on this. I don't know if you're aware of Hydro-Québec's rate schedule and the 5¢ and 15¢ rates that make it advantageous for us.
I'd also like to know what you think about the fact that a significant portion of the money generated by gas and oil ends up in the United States in the form of dividends paid to shareholders.
Professor, Royal Military College of Canada and Queen's University, As an Individual
First of all, for the past five months, Quebec has been importing more electricity than it has been exporting.
Professor, Royal Military College of Canada and Queen's University, As an Individual
Yes, but this is the first time, to my knowledge, in the history of Canada's electrification policy, that two provinces have done this. This is a direct consequence of the policies the federal government has implemented in recent years, which have also made the investments in critical infrastructure you're referring to unprofitable for the private sector.
We have therefore created an environment where it's more profitable to export our profits. In this regard, Mr. MacDonald's remarks were important. In fact, we have not invested in adding value to the supply chain in Canada.
Professor, Royal Military College of Canada and Queen's University, As an Individual
Which means, then, that we're simply exploiting natural resources and—
Liberal
The Chair Liberal Terry Duguid
Excuse me. Let's have order.
Gentlemen, speak through the chair, please. There are others around the table who want to hear what you have to say.
Bloc
Mario Simard Bloc Jonquière, QC
In the little speaking time I have left, I want to point out that the infrastructure enabling electricity trade with the United States was paid for by Hydro-Québec without federal government support. It was Hydro-Québec that decided to invest in the transmission lines that allow us to send electricity to the United States.
Furthermore, you need to back up your claims by comparing the price paid for what we import with the price paid for what we export.
It's important to understand that Hydro-Québec's reservoirs act as a massive battery. When we import electricity at 5¢ per kilowatt-hour, we fill our reservoirs, and during peak periods, we export electricity at 15¢ per kilowatt-hour. So, you have to understand this dynamic. You can't just look at the volumes of electricity imported from the United States. You also have to understand Hydro-Québec's strategy. You might benefit from talking to these people, who are very aware of this situation, which often works to their advantage.
In the oil sector, it's the opposite. The profits made in the oil sector are mostly injected into the U.S. economy. That's what I find highly questionable. Currently, from a geopolitical standpoint, the country with which we have the most difficulties is the United States. They're waging a relentless trade war against us, one that doesn't actually affect the energy sector. However, they're not good economic partners. So, the fact that I'm going to be paying for gas and oil infrastructure that will benefit the United States—well, that leaves me perplexed.
Liberal
The Chair Liberal Terry Duguid
Thank you.
It was a good exchange, gentlemen. I'd just remind you that it's through the chair, please.
Professor, Royal Military College of Canada and Queen's University, As an Individual
Can I give a 10-second reply, Chair?
Professor, Royal Military College of Canada and Queen's University, As an Individual
It is nonetheless surprising that Quebec is the province that benefits most from fiscal equalization, the proceeds of which are generated disproportionately by natural resources in Alberta.
Liberal
The Chair Liberal Terry Duguid
Thank you.
Mr. Simard, you'll get another chance. You have another round.
We have time for quick rounds for Mr. Martel, Mr. St-Pierre and Mr. Simard, for two and a half minutes.
If you want to talk to your colleagues and split your time—because unfortunately we won't get to Mr. Rowe and Mr. Saini—I'll just leave that with you. We've had some good, vigorous exchanges.
Let's go to Mr. Martel for five minutes.
Conservative
Richard Martel Conservative Chicoutimi—Le Fjord, QC
Mr. Leuprecht, I would like you to respond to what my colleague Mr. Simard has just told us. I'm curious to hear your explanation.
Professor, Royal Military College of Canada and Queen's University, As an Individual
From an economic standpoint, there is certainly a case to be made for what Mr. Simard is saying. However, for me, what matters is that at a time when we face a challenge regarding political and economic sovereignty, we find ourselves in a situation where we are becoming more dependent on the United States.
We have indeed become dependent on electricity from the United States. This is the first time this has happened in Canadian history, and it is happening at a time when the Prime Minister is aiming to decouple Canada and reduce its dependence on the United States. I'm a little surprised that this is being interpreted as a success in public policy.
Conservative
Richard Martel Conservative Chicoutimi—Le Fjord, QC
Thank you.
As you know, there is a glaring lack of natural gas infrastructure in Europe, which means our allies are pretty much stuck with Russian gas. Recently, an agreement was signed to export natural gas, or LNG, to Germany from British Columbia. That represents enormous additional transportation costs.
Compared to projects like GNL Québec, which never got off the ground here in the Saguenay region, what would be the concrete benefits of having LNG infrastructure in eastern Canada?
Professor, Royal Military College of Canada and Queen's University, As an Individual
In principle, there are three export options: to the United States, to the west coast, or to the east coast. In principle, there is also the Churchill project, but, in my opinion, it will never be profitable.
However, we have created a public policy environment where we would like to export from the coasts, but where, due to public policies, it is more profitable to export to the United States. Therefore, we need to review the existing public policy incentives to encourage stakeholders in this sector to export to the coasts.
Naturally, our most important relationship is the one we have with our allies in Europe. We have been using it for about a hundred years to counterbalance the unilateralism of U.S. foreign policy. However, the most cost-effective and efficient way to ensure the energy security of our partners in Europe is inevitably via the east coast.
Conservative
Richard Martel Conservative Chicoutimi—Le Fjord, QC
Given current geopolitical developments, it is clear that Canada is lagging behind in terms of the infrastructure and supply chains needed to achieve self-sufficiency. We have resources that would allow us to have almost everything we want, but we send them elsewhere to be processed, and then we bring them back home.
In your opinion, what are the main regulatory or political obstacles currently hindering the development of certain projects, such as the LNG project?