Evidence of meeting #44 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 need.
A recording is available from Parliament.
Conservative
Shannon Stubbs Conservative Lakeland, AB
I'm definitely not telling you what to say. I'm just quoting what the members said.
President and Chief Executive Officer, Canadian Fuels Association
I'll answer your question on the output-based sector, as far as the refining sector goes. It is impacting our sector. You're right. The United States does not have any carbon pricing, and we do. I think we need to look at the carbon border adjustment, for example, to make sure both what is Canadian and what is coming into the country are protected.
I think we need to maintain the provincial leads on this, because they have a lot of regional programs that support regional differences. So far we are doing that, but we're not sure yet where the benchmark is going to land, to be honest with you. We're a huge proponent of leaving the provincial systems in.
Conservative
President and Chief Executive Officer, Canadian Fuels Association
Yes, it is, 100%.
Conservative
President and Chief Executive Officer, Canadian Fuels Association
Not as far as.... I'm sorry.
On permitting or anything...we don't need any major changes from the refining side or downstream.
President and Chief Executive Officer, Canadian Fuels Association
We need it in regulation but not legislatively.
Conservative
Shannon Stubbs Conservative Lakeland, AB
Yes. Definitely, though, the upstream production members deliver a totally different message.
President and Chief Executive Officer, Canadian Fuels Association
That's a very different thing.
Conservative
Shannon Stubbs Conservative Lakeland, AB
They are the producers, so it's extremely important to Canadian energy security, self-reliance and exports.
Ms. Dovgal, perhaps you would like to answer.
Managing Director, Resource Works Society
Canada needs to diversify trade. We need to get our product to markets. We need to ensure that the capital flows in a way that is accomplished through competitiveness.
To your earlier question, I have three broader recommendations.
The first one is to conduct a comprehensive review to ascertain whether our broader legislative and regulatory system around energy and climate is aligned with the objective of fully leveraging our natural resources assets for the benefit of Canadians. To the points you raised, there is tremendous room for improvement, at the very least, certainly in impact assessment, carbon pricing and all sorts of regulations, including the ones currently being studied here.
Second, I recommend something rather philosophical: Honestly assess where subsidies are necessary or being used to bridge policy failures rather than market failures. We often hear the idea that it is market failure that is responsible for why things are so expensive, or why it is hard to build large infrastructure, whether it's domestic electricity generation and transmission or something else. There is plenty of evidence from many fields across the broader energy ecosystem that we are getting in our own way pretty habitually.
Finally, I'd say that a more practical solution in relation to the study is self-generation. Industry has the ability to do that. Our electricity grid, particularly in British Columbia, is strained. We're increasingly relying on imports from jurisdictions like the United States. As we grow the production of products that are very valuable and necessary for our economy, like liquefied natural gas, we need to allow industry to generate its own electricity, because they are producing the product they are shipping abroad. It makes no sense to force them to rely on the electrical system for that.
Conservative
Jonathan Rowe Conservative Terra Nova—The Peninsulas, NL
I have a question for Ms. Dovgal.
Bay du Nord in Newfoundland and Labrador was approved on the condition that it will achieve net-zero operations by 2050.
Is that even possible? How does an offshore oil rig achieve net zero by 2050? Are they going to have solar panels out there on the rig? How does that happen?
Managing Director, Resource Works Society
I'm not familiar with that specific project. I know of it but not in detail.
I will say this. Generally speaking, requirements for net zero are achievable at great expense, and that's a direct hit to the competitiveness of our industry. If your goal is to get projects built and produce products that pay into our tax coffers and put Canadians to work, you need to seriously think hard about the imposition of net-zero requirements.
Liberal
Liberal
John-Paul Danko Liberal Hamilton West—Ancaster—Dundas, ON
Thank you, Chair.
My questions will be for Ms. Sinasac.
This committee has heard a lot about opportunities for electrification in buildings, industry and transportation, but I want to focus on industry specifically.
I am a representative for Hamilton, Canada's industrial centre. Hamilton's industry was built in that area specifically because there was access to abundant and affordable electricity supply from DeCew in St. Catharines and hydroelectricity in Niagara. We're seeing the reindustrialization of those same sectors. Electric arc furnaces at ArcelorMittal Dofasco, AI data centres that use a large amount of energy, and advanced manufacturing and new technologies all have very specific energy needs in those industrial centres.
You talked about the national energy strategy, and we talked about doubling the capacity, but a lot of those industrial uses have very different needs. For example, data centres are a steady 24-7 draw, whereas an electric arc furnace has a very time-intensive use, and then it's not in use for a particular time.
How do we make sure the electricity grid is able to supply that developing new industry, that reindustrialization? Also, what are the risks to Canada's economy if we don't move at speed?
Director, Government Affairs, Electro-Federation Canada
We know that, as you said, there are a number of examples of organizations who have said they've located in Ontario or in Canada or in particular areas of Quebec because of the abundant electricity there. It's affordable and it's clean. That's a major attraction for businesses.
Then we look at how to manage the demand. That's where modernizing the grid to have controls, substations, digital substations, sensoring, all of these technologies will allow us to demand flexibility. Even integrating vehicle to grid and utilizing the millions of batteries in EVs themselves can allow us to help control those peaks and flows.
If we don't modernize, we will have to build more infrastructure in order to manage that. It will be more costly to do so. The whole idea here is to prevent having to fire up those peaker plants. Through the technology that we currently have available, we can help to balance the peak grid demands and help to foster and ensure that we have enough electricity. Right now there are regulatory barriers at the utilities. The way they calculate their return on their investment and the way they evaluate which technologies to use currently really favour building hard assets instead of utilizing these smart grid technologies and demand flexibility technologies we have in order to make the most of optimizing the efficiency of the current assets.
I hope that answers your question.
Liberal
John-Paul Danko Liberal Hamilton West—Ancaster—Dundas, ON
It absolutely does. Thank you.
I want to ask you specifically about some of the deployment barriers in the supply chain.
You talked about critical grid supply chain equipment. I think this is a really strong opportunity for Canada, again, talking about reindustrialization, to make some of the equipment and components that we used to produce and now import from offshore. In terms of advanced manufacturing, are there specific components that you would like to see available in the Canadian supply chain that would have an impact on our energy security in that we would now have the ability to produce those components domestically?
Director, Government Affairs, Electro-Federation Canada
Yes. Thank you for this question. Our report does show where we have significant opportunity here in Canada. That's where the supply chain study from the federal government will help us to identify where those gaps are.
We currently have areas where domestic manufacturing is strong. That's in wire, cable, transformers and switchgear. There are probably other areas in which we could scale domestic manufacturing and actually create new industry here in Canada. We want to make sure that is located here in Canada. There is significant competition right now from the U.S. We saw that the U.S. included funding from their defence spending to help build out the electricity grid. That will pull investment down into the U.S. We need to be just as competitive here in Canada.
We are currently surveying our members to identify how we can be more competitive, who is anticipating to put down more manufacturing here in Canada and how we can help.
Liberal
The Chair Liberal Terry Duguid
Thank you both.
Mr. Simard, you have the floor for two and a half minutes.
Bloc
Mario Simard Bloc Jonquière, QC
Thank you, Mr. Chair.
Mr. Larocque, I would like to pick up on a previous conversation. Don't worry. I won't reveal any secrets. It's about the deployment of clean fuels and biofuels. There are projects in my constituency. For example, the Groupe Rémabec is currently producing them. This helps the company keep its forestry operations afloat.
I've always understood that, without carbon pricing, these projects become difficult or even unfeasible. We need some form of carbon pricing in order to develop these types of projects. We aren't doing anything out of the ordinary here. It's the same thing in Europe. Everyone operates the same way.
Could you give us some guidance or clarify this for us?
President and Chief Executive Officer, Canadian Fuels Association
I agree with you, Mr. Simard. We need an additional cost that reflects the situation. This could be a carbon price or a clearance market, as proposed by the federal Clean Fuel Regulations. These incentives play a critical role in ensuring that all biofuels can be produced in Canada.
Our issue is that other countries, such as the United States, have added domestic production. We don't have this in Canada. That's our biggest problem. That's why you don't see more factories going up in Quebec. It's supported in the United States, but not in Canada.