Mr. Speaker, I appreciate the opportunity to stand and speak to the NDP's opposition motion.
Canada's Conservatives believe that to mitigate climate change we need to support investments in renewable and clean energy technologies. Canada's Conservatives believe that to become a global leader in clean tech and to ensure that future jobs will be located right here in Canada, we need to make the right choices in those investments. Canada's Conservatives believe that spending billions of taxpayer dollars to buy out the Kinder Morgan Trans Mountain pipeline and sending that investment south into the United States is not one of those right choices.
Canada has a world-leading regulatory regime and an internationally renowned track record of environmentally and socially responsible oil and gas development, and we should be proud of that. We should not forfeit Canada's position as a natural resource superpower to grow the clean-tech sector. We should leverage it. The challenge for clean technology is to effect that transition by producing more energy while reducing CO2 emissions. This issue affects the entire global community, including consumers of energy. While government plays a role in spurring investment, we must not overlook the role that the private sector, and the energy sector specifically, play in driving innovation and clean technology advancements.
Andy Brown, the chief executive responsible for Shell Global's upstream business, had this to say on the energy transition and the role the sector has in achieving climate change goals:
A successful energy transition will require vision, urgency and realism: vision for a long-term approach to policy setting, business planning, and investment; urgency and realism about the scale and costs of orderly transformations, both for energy suppliers and consumers. Society has to be ambitious to achieve climate-change and development goals. Decisions must tackle the breadth and complexity of the challenge. Conversely, rapid, poorly considered, [poorly driven] changes could result in unexpected consequences and fail to achieve their intended goals.
Brown concludes, 'The energy industry must unlock the potential we have for new technology through collaboration and innovation....
Last week, Ontarians in my riding and across the province sent a strong message to Kathleen Wynne's Liberal government that they had had enough of unrealistic and poorly considered environmental policy. It has been nearly a decade since Ontario's Liberals passed the Green Energy Act. A key component of that plan, the FIT and microFIT program, saw billions of dollars in green energy contracts awarded to solar and wind companies. The provincial Liberals never provided details of public promises about how much that plan would cost Ontarians, like how their federal cousins will not tell Canadians how much their federal carbon tax scheme will cost Canadian families.
Experts advise the government that technologies such as solar power needed to be developed gradually to prevent renewable energy contracts from overwhelming the province's electricity system and sending hydro bills skyrocketing. Ignoring the experts, the province went ahead with unrealistic and poorly considered policies that it knew were going to be costly, ineffective, and inefficient, policies which cost Ontarians billions of dollars and ultimately cost the provincial Liberals official party status.
This is a lesson the current government would be wise to heed. As the Prime Minister shut down pipeline after pipeline and has ignored the growing uncertainty over the Trans Mountain expansion for over a year and a half, Canadian taxpayers, backed into a corner by the government, found themselves owning a pipeline Kinder Morgan did not need to sell. All that was needed was regulatory certainty for a pipeline project that had already met every possible criterion for approval and certainty that the government that had made those approvals would see them through. The ramifications of poorly considered policies like the nationalization of Trans Mountain, the oil tanker ban, the derailing of energy east and northern gateway, and the job-killing carbon tax are all too clear as investment flees south of the border to the United States and other international jurisdictions.
Royal Bank's president and CEO, Dave McKay, told the Canadian Press that a significant investment exodus to the U.S. is already under way, especially in the energy and clean technology sectors.
That is right, we know the investment climate in Canada is in distress when even investors in renewable energy, where subsidies abound and competing oil and gas face carbon taxes and regulatory excess, are leaving because they favour lower U.S. corporate taxes more.
In early April, NextEra Energy said that the sale of its wind and solar generation assets in Ontario for $582 million was specifically motivated by U.S. tax reform. Jim Robo, chairman and chief executive officer, stated, “we expect the sale of the Canadian portfolio to enable us to recycle capital back into U.S. assets, which benefit from a longer federal income tax shield and a lower effective corporate tax rate”.
The latest data from Statistics Canada shows foreign direct investment in the country dropped to $31.4 billion last year compared with $49.4 billion the year before. The rapidly declining investment climate has important and far-reaching consequences. If we want to ensure Canada becomes a global leader in clean tech and want to ensure future jobs will be located right here in Canada, industry investment will be critical.
In 2016, oil and gas business expenditures on research and design were nearly $1.5 million of the $2 billion that was invested in clean-tech R and D in the energy sector. Nearly 10% of all money spent on R and D in Canada was in the energy sector. Enbridge and TransCanada, the country's largest pipeline companies, both invest heavily in renewable energy.
CGA, ATCO, Enbridge, Énergir, FortisBC, Pacific Northern Gas, SaskEnergy, and Union Gas pool capital investment in the natural gas innovation fund to support clean-tech start-ups, which innovate in the natural gas value supply chain.
As the potential for renewable energy grows and the cost of the technology falls, experts anticipate a growing number of traditional oil and gas companies to invest in the renewable sector. Morgan Bazilian, former lead energy specialist at the World Bank, told an audience of Calgary oil executives in May that the industry has already seen some of the sector's largest companies such as Shell, Total, BP, and others, make billion-dollar investments in renewables. However, to get industry investment in clean tech, there must be industry in Canada to begin with.
Murphy Oil Corporation said it would repatriate Canadian retained earnings and that it sees the substantially lower tax rate in the U.S. as a big advantage for capital investments.
Dan Tsubouchi, chief market strategist at Stream Asset Financial Management LP in Calgary said, in an interview with the Financial Post, that oil and gas companies with assets in Canada waited for the Canadian government to respond to U.S. tax reforms in the federal budget but when “it offered nothing on tax competitiveness”, the next step was to look at redeploying their capital.
In its 2018 report entitled, “Competitive Climate Policy: Supporting Investment and Innovation”, the Canadian Association of Petroleum Producers makes the case succinctly:
The Canadian oil and natural gas sector is supportive of climate policies that are effective and efficient, and take into account cumulative impacts including taxation, market access, and regulatory review processes. With the right policies in place, the Canadian industry can be competitive, can attract investment and can reduce GHG emissions.
However, current climate and other policies are inefficient and duplicative, and are combining to create unintended consequences such as driving investment away from Canada into other countries that have less robust emissions-reduction policies. This emerging policy environment promotes carbon leakage and therefore does not lead to global emissions reduction.
Once again, unexpected consequences of poorly considered policies, which led to the demise of the Ontario Liberal Party, is leading to the demise of the energy sector in Canada, and with it, the unintended consequence of carbon leakage.
For those not aware, carbon leakage is the shift of greenhouse gas emissions from one part of the world to another, usually because of governments implementing uncompetitive policies. An example of carbon leakage can be seen in Canada as the Liberal government's tax policies increase cost to industry, and as a result, industry shifts its investments elsewhere. The implications of carbon leakage are both economic and emission related.
Economically, we are seeing reduced investment in Canada and the loss of good-paying jobs for Canadian families. Globally, as investment and jobs shift, we will see an increase in emissions, because that production is going to be moved to countries that do not have anywhere near Canada's world-leading regulatory regime. However, there is still time to reverse the course of declining investment in Canadian industry, time to stop carbon leakage, and time to support the growing but fragile clean-tech industry right here in Canada.
Canada's clean-tech energy industry now ranks fourth-highest globally and first in the G20. Canadian clean-tech businesses is already booming, accounting for 3.1% of our GDP, or $59.3 billion. According to the 2016 report of the Standing Committee on Natural Resources, “De-Risking the Adoption of Clean Technology in Canada's Natural Resources Sector”. There were 800 companies that employed 55,300 direct jobs, with $17 billion in revenue. Clean-tech firms paid 48% more than the Canadian average wage.
Eleven of the top 100 clean-tech companies are in Canada. Global clean-tech market value, by trade, is $1 trillion. Canada's share is 1.4%, or the 26th-largest in the world.
Canada has some great clean-tech stories to share, such as Montreal-based GHGSat, which can track global greenhouse gases from any industrial site in the world using a high-resolution satellite. This technology, more accurate and affordable than its alternatives, enables oil and gas companies to better understand, control, and reduce greenhouse gas emissions.
There is Manitoba-based HD-Petroleum, which has created small-scale waste-oil micro-refinery units that transform used oil into diesel fuel. The cost of implementing this technology is relatively inexpensive, and the recycling process substantially reduces GHG emissions when compared with more traditional oil-disposal methods.
There is lmaginea, which uses its clean hydrocarbon ecosystem to deliver energy produced with the use of zero freshwater and with no toxic emissions or air pollution; DarkVision, which developed a new ultrasound technology that allows companies to create 3D images of the inside of oil wells, enabling them to make more informed and cost-effective production decisions; and Unsist, a company that uses artificial intelligence to help oil and gas companies make better production and operational choices.
These are just a few of the success stories right here in Canada's clean-tech sector. However, as I have said, it is a fragile sector that needs more than subsidies to thrive.
If we are serious about mitigating climate change, if we are serious about becoming a global leader in clean tech and ensuring that future jobs will be in Canada, we need sound fiscal policies and a competitive tax regime in Canada. We need to support the industry, which in turn will support the growth of Canada's clean-tech sector. Industry leaders have told us that they will do this, because it makes sense, it is good for business, and it is good for the environment in which their families and the families of their employees live, work, and play.
Making policy decisions regarding the energy sector is difficult, because on the one hand, we must consider our environmental health and on the other, our wealth as a nation. Clean tech is not meant to make that decision easier. Clean tech is meant to remove the need to make this decision in the first place.