Proceedings of the Standing Senate Committee on
Energy, the Environment and Natural Resources
Issue 14 - Evidence - December 1, 2009
OTTAWA, Tuesday, December 1, 2009
The Standing Senate Committee on Energy, the Environment and Natural Resources met this day at 5:26 p.m. to examine and report on the current state and future of Canada's energy sector (including alternative energy).
Senator W. David Angus (Chair) in the chair.
[English]
The Chair: I call to order this meeting of the Standing Senate Committee on Energy, the Environment and Natural Resources as we continue our study on Canada's energy sector, the current status of the energy sector and the development of a framework for the future of this important sector of the Canadian economy.
I welcome all honourable senators, staff, guests and those watching on CPAC and on the World Wide Web.
[Translation]
My name is David Angus. I am a senator from the province of Quebec and I am the chair of this committee.
[English]
On my right is Deputy Chair Senator Grant Mitchell, from Alberta; our assistants from the Library of Parliament; Senator Richard Neufeld, from British Columbia; Senator Bert Brown, from Alberta; Senator Judith Seidman, from Quebec; and Senator Daniel Lang, from the Yukon. On my left is Lynn Gordon, Clerk of the Committee; Senator Elaine McCoy, from Alberta; and Senator Bill Rompkey, for Senator Tommy Banks, from Newfoundland and Labrador; and from Saskatchewan are Senator Pana Merchant and Senator Rob Peterson.
We are privileged to have with us tonight two very learned gentlemen with great expertise in this field of study. From the University of Calgary, David Layzell, Executive Director, Institute for Sustainable Energy, Environment and Economy; and Thomas Homer-Dixon, Professor, Centre for International Governance Innovation Chair of Global Systems at the Balsillie School of International Affairs. Both witnesses have provided the committee with copies of their presentations.
Dr. Layzell, your reputation precedes you. He has a Bachelor of Science, from the University of Waterloo; a Masters in plant science, from Guelph; and a Doctorate in plant physiology, from the University of Western Australia. He did post-doctorate work at Cornell University and came to Calgary in 2008 after a distinguished 27-year career as a Queen's University professor with appointments in biology, environmental studies and policy studies. He has authored more than 100 peer-reviewed publications and holds seven U.S. patents. His research accomplishments have been recognized by a number of awards, including the Natural Sciences and Engineering Research Council of Canada E.W.R. Steacie Memorial Fellowship, and election as a Fellow of the Royal Society of Canada.
Honourable senators, Dr. Layzell has distributed, through the clerk, the various materials I alluded to earlier.
Please proceed with your presentation. We have had a private word. I know you are familiar with our study, and you have evinced your interest in same and your willingness to help us along the way as we go forward. You are well known to a number of my colleagues on this committee, which makes it all the more friendly.
David Layzell, Executive Director, Institute for Sustainable Energy, Environment and Economy, University of Calgary: Thank you. It is a delight to be here and thank you for the opportunity. I congratulate you, Senator Angus and the rest of this committee, for the comprehensive approach that you have chosen to use to address the issues that I think are central to Canada's energy future, as well as our environment and the economy of the nation.
I will begin by introducing the Institute for Sustainable Energy, Environment and Economy. That is a rather long name, so we call it ISEEE. We are a multi-faculty research and teaching organization at the University of Calgary that has a mandate to develop cost-effective solutions to the environmental challenges of energy production and use. In ISEEE, we work with 120 engineers, scientists and social scientists at the University of Calgary to develop both the human capacity and the research delivery vehicles needed to provide the critical technologies and insights that will inform energy-environment policy and investment decisions by Canadian governments and industry.
One thing ISEEE has done over the past 18 months is to build an organization called Carbon Management Canada. It is a national university research organization focused on managing carbon in the fossil fuel sector. Our work on that particular organization, which is in partnership with the Canada School of Energy and Environment, paid off this morning with the announcement by the Networks of Centres of Excellence Program, or NCE Program, where we received $25 million in federal funding for this Carbon Management Canada network. We are pleased with that.
Over the next five years, Carbon Management Canada will focus on research to reduce greenhouse gas emissions associated with fossil fuel recovery and processing, and to develop the technologies and insights that will allow us to capture and safely store carbon dioxide emissions in geological reservoirs.
With Carbon Management Canada now officially launched, ISEEE is focusing its attention on building a new interdisciplinary research capacity that will work to understand and make recommendations for future North American energy systems that will take us on a path toward sustainability.
Today, I would like to spend a few minutes talking about some of our thinking in this area.
About three weeks ago, on November 10, the International Energy Agency released the World Energy Outlook 2009. This 691-page tome highlighted two scenarios for future energy systems and the resulting implications for global greenhouse gas emissions, and this is shown in Chart 2 of the document I handed out.
The reference scenario on the top right of the chart assumes business-as-usual energy policies for the next 40 years and predicts a 58 per cent increase in greenhouse gas emissions between now and 2050. This is on a global basis. Such a scenario would likely have devastating effects on our global climate systems, with serious implications for the world economy and the health of its citizens. The 450-ppm scenario, shown in the bottom right of the Chart 2 and recommended by the International Energy Agency, summarizes the trend in global greenhouse gas emissions required to limit global warming to 2 degrees Celsius, a temperature that should prevent dangerous or runaway climate change.
Chart 3 shows the commitment that the Canadian government has made in the global effort to mitigate climate change, including a 20 per cent reduction in greenhouse gas emissions by 2020 and a 65 per cent reduction by 2050. The commitment is the size of the gap between the business-as-usual scenario on the top and the bottom part, which is where we need to head if we are to meet Canada's commitment to address climate change by 2050.
Only a small part of that commitment can be met by reductions in non-energy emissions, such as those from landfill sites, animal production systems or deforestation. The majority of emission reductions will need to come from the energy sector, which currently accounts for about 80 per cent of Canada's greenhouse gas emissions.
The initiatives that we need to reduce energy emissions include three things. First is efficiency and conservation through the entire energy system, from the production of energy through to the use of that energy. This will effectively reduce the per capita market size for primary energy in Canada. Second is the implementation of low carbon renewable and alternative energy, including biomass, wind, solar, geothermal and nuclear. Third is the capture and storage of fossil carbon emissions, in either geological or biological storage systems.
All three of these strategies for reducing energy emissions will require major changes in both the market size and market share for energy production and use in Canada.
In effect, we need to see close to a 2 per cent change in market share for each and every year over the next 40 years. This represents a massive energy transformation.
Chart 4 is in both packages. It is the one with all the bar graphs. I will not take you through that at this time. It shows the size of the energy transition that we need.
Chart 5, entitled "'Learnings' from Past Energy Transitions," shows the history of market share for primary energy in the United States in the past 200 years. What can we learn about past energy transitions to help guide us through future energy transitions?
Over this 200-year period, two major transitions have taken place; one that occurred in the late 19th century, when the U.S. went from biomass to coal; and one that occurred right after the Second World War with the rise in oil and gas.
You should know three things about the energy transitions of the past. The first is that over the past 40 years, the relative market share for primary energy sources has been unusually stable compared to the previous 160 years.
Second, before a primary energy shift, such as when coal or oil and gas started to take serious market share from other sources, a long incubation period occurs. Indeed, studies by Marchetti and others, looking at energy system changes from around the world, suggest that it takes about 40 years to go from 1-per-cent market share to 10-per-cent market share. This has sobering implications for many renewable energy sources that today count for less than 1 per cent.
Third, the maximum rate of market share change that we saw in the past 200 years is about 1 to 2 per cent per year. Recall that we need close to 2 per cent per year, each and every year for the next 40 years, to meet climate change commitments.
What are the factors that favour rapid energy transitions? How does our situation today compare with the conditions that drove past energy transitions?
In short, current conditions are not favourable in North America. For example, we are not likely to have a rapidly growing demand in North America in the next 40 years. The alternatives tend to be more expensive, not less expensive, than our current energy sources. We do not have the resource depletion, especially in Canada. We are a net energy exporter. Many of the alternative technologies have not yet been proven for large-scale deployment.
The only real driver for an energy transition is government policy, whether at the regional, national or international level. Clearly, the next energy transition will be more difficult than those in the past and much more policy-dependent than past energy transitions.
Therefore, what are the policy instruments that could be used and implemented now to achieve and ease this transition?
I would argue that governments need to focus their policy instruments to achieve optimal results over three distinct periods in the next 41 years, as summarized in Chart 6.
For results in the short term, more or less the next 14 years, we need to encourage efficiency and conservation across energy systems — that is our low-hanging fruit — as well as the widespread deployment of low-carbon energy technologies that will integrate with our existing energy infrastructure.
For the medium term, between 2024 and 2037, in the next few years we need to set up and demonstrate large-scale deployment of known low-carbon energy technologies, such as carbon capture and storage, nuclear energy, electric vehicles, et cetera, and we need to fund R&D that is focused on reducing costs or removing barriers.
For results in the longer term, as we approach 2050, we need to invest now in fundamental, highly innovative research that has the potential to provide "game-changing" energy production and conversion technologies. The main point here is that I do not think we have the technologies yet to get us to where we need to be by mid-century.
Doing this effectively requires a national energy strategy that will address concerns about energy security and climate change, but ensures that we do not transfer problems to other areas such as food production, water use or biodiversity.
I am encouraged that the work of your committee may help us to work in that direction. Thank you for this opportunity.
Senator Lang: Thank you for coming and talking to us. You have an impressive curriculum vitae.
The areas of concern that come up repeatedly are innovation, technology and the changes that have to be made or that are being made. I notice that from 1998 to 2008, a period of 10 years, your university received $54 million in funding from governments for the purpose of research. Over that period of time, were you able to bring forward some of these technological changes that will be required looking into the future?
Mr. Layzell: The work I was doing with BIOCAP Canada was multi-university research involving 38 universities across Canada. Our research foundation was run out of Queen's University, but it was a national university research group. The $54 million was spread across 38 universities and about 250 researchers from coast to coast.
That initiative provided valuable insights for areas such as forest carbon management. Our network and the research that was done as a result of those investments helped to show the Canadian government and provinces that using forests to manage carbon, which was a popular idea in the late 1990s and early 2000s, would probably be a problem. Canada's forest carbon sinks were impacted by forest fires and insect infestations and, in fact, could become a liability rather than an asset.
We did a large amount of work in advising government and industry on the optimal way to use land area to address climate change. We suggested that perhaps making liquid fuels such as grain ethanols would be an expensive greenhouse gas mitigation alternative and that it would be better to use lignocellulosics, such as wood and straw, to replace coal fire in power plants. That is a much more cost-effective use of biological resources to address climate change.
Those are the type of insights that were generated as a result of our research, and a number of technologies as well. When you talk about hundreds of projects, it is difficult to pick out one. However, one of the most valuable outcomes of that investment was to guide federal and provincial governments, as well as companies that work in these sectors, on which biological solutions are more valuable, which ones are likely to deliver and which ones will not.
Senator Lang: At another point in your remarks, you mentioned that the only real driver for energy transition is government policy, whether at the regional, national or international level.
Would you comment with respect to the cost of energy?
In this last recession, the cost of a barrel of oil went down just below $40 a barrel. In the previous recession it was well below $20 a barrel, if I remember correctly. Now we are looking at $80 a barrel. In my own experience of filling up my vehicle, I got a bit of a shock the other day when I had to go and pay. That certainly woke me up to the price of energy.
Would you not agree that the high price of energy will be a major driver of how our lifestyles will be affected?
Mr. Layzell: My presentation focused on what is the driver to meet the climate change commitment that the federal government has talked about and that the international community is talking about in Copenhagen. We will go through some sort of energy transition in the next 20 or 30 years no matter what, but I was referring to the size and nature of the energy transition to meet climate change commitments.
I would say that our energy is incredibly cheap; even at $80 a barrel, it is still very cheap.
I think Dr. Homer-Dixon may have some examples in his book, to which he might refer, as to the quality or the amount of energy we have and the cost we pay for that energy and how inexpensive it is.
We do not use it efficiently or effectively, and that is one of the transitions we have to go through. We must develop technologies and strategies for using our precious resource much more effectively.
Senator Mitchell: Thank you, Dr. Layzell. It is great to have you here.
Just to follow up on Senator Lang's point, one of the ironies of the market is that when we do start to get alternative energies, then the demand for oil and natural gas could diminish. As it diminishes, its price will come down and take the pressure off the need to develop other energies, which is ultimately a strong case for needing to have a cap and regulations that say that this is what you have to do.
You are an accomplished scientist and peer-reviewed. There is no question in your mind that climate change is occurring because of human activity; is that correct?
Mr. Layzell: There is no question in my mind about that, no. However, I do not know how serious it will become in the future. We do know, and it is scientifically proven, that humans' burning of fossil fuels and deforestation are increasing the carbon dioxide in the atmosphere. There is no question about that.
There is also no question that CO2 is greenhouse gas. The uncertainty is the relationship between the CO2 concentration in the atmosphere and the magnitude and nature of the climate change that we will experience and are experiencing so far. The science is strong to suggest that we cannot explain the climate change of last 20 years without the CO2 effect. We cannot explain it through normal, natural variation. It is beyond what we would expect. However, we do not know whether it will get three times worse or whether it will become more severe or more gentle.
The talent here is in risk management. For a group such as this, it is about managing risks. Many of the scientific models suggest the potential risk could be quite severe. If it is severe, the impacts on our economy, the wealth, quality of life, food production systems and flooding of lowland areas will be devastating for the world.
The question is how much we spend now in order to reduce the risk. There is another factor here, namely, that we are also looking at a very rapid increase in global energy demand for oil, in particular, and gas in the next few years, and there are serious questions of whether we have those global resources. Certainly, Canada has a large amount of energy, and we will continue to be a net energy exporter for many decades to come. The world is also looking at the fact that, even to address the issues of energy supply and the huge demand for energy internationally, we need to examine changing our energy systems.
The challenges for this committee and the government in Ottawa, as well as in other major centres, are how you balance the changes that will need doing for energy security issues and the supply of energy globally, and the climate change balance. I think we do recognize that we will have to put investments in to change; and there could be some economic benefits by taking early action to address some of these issues.
Senator Mitchell: You have years of study in this, and I think it is implicit in some of what you are saying. Let us say that you are the prime minister, and you have to make a decision about what government policies will drive. How would you prioritize which initiatives you would use to reduce carbon emissions?
You mentioned problems with ethanol and biofuels, although some have been overcome. Carbon capture and storage receives ongoing criticism — you are from Alberta, so you know. Every single solution has difficulties.
What would you do, and how would you do it?
Mr. Layzell: One of the most important areas to focus on now is how to significantly change our ever-rising greenhouse gas emissions and energy use and start to turn it down in the next 10 years. The low-hanging fruit here is energy efficiency and conservation; we need to put in policies and regulations for energy efficiencies and conservations. The most important one is putting a price on carbon. I do not think it has to start as a high price; it has to start as a price and slowly grow. Companies, industries and the population need to know it will increase. We need to have a credible price on carbon.
We also need to look at setting up efficiencies standards that will help us to reduce what I call this "energy obesity" that we have. The United States and Canada have almost twice the energy use per capita of other developed countries, such as those in Europe, or Japan. We have the excuse that this is a big and cold country. However, look at the amount of energy that we use per capita and the size of cars we drive, et cetera. We could still have a high quality of life and not use those resources. Future generations will look back on our generation and say, "That was an incredibly precious resource that we did not use effectively."
Those sorts of incentives will be useful. We need to encourage renewable energy resources and technologies because they can be implemented. They will not be implemented in the next 10 or 20 years. They will not actually solve the problem because our problem is much bigger than that.
Therefore, there are things we can do. I do strongly support the carbon capture and storage investments in Alberta and by the federal government because those are the investments that we need to learn in the next five to ten years. We may have to implement those in quite a large scale, especially if we start to see massive global climate impacts. We will need to have some technologies in our back pocket to implement. It is important to do those types of investments that we can implement later if and when the climate change issue actually starts to become more obvious than even what it is today.
The Chair: You do not want to ask your next question about having a cap and trade system; let me ask that.
Mr. Layzell: My preference would be some form of a tax because the challenge with cap and trade systems is that the transactional costs can be high. Loopholes also present some challenges in that certain sectors can get away with things, et cetera. My preference would be a tax system since it is much simpler and easier to manage.
I think that is a great policy; it is just lousy politics. Maybe that is a role for the Senate to come out with; maybe there is an opportunity for the Senate to talk more about the policy and less about the politics.
The Chair: Are you against the carbon cap and trade? Do you prefer a carbon tax?
Mr. Layzell: I would prefer it. I think the way to start is to have some sort of tax shifting; that would not be a bad mechanism. It makes sense. However, I think we have to recognize that if we really want to shift human behaviour to try to shift our way or our investments of how we do it, it will cost money. We will have to raise enough money and increase the cost of energy. The cost of energy can be increased by putting in some sort of a tax shifting.
However, ultimately, we will have to pay more for energy and invest in technologies that will take us where we need to go. We will have to put a value on the environment essentially and recognize the environmental costs of certain energy sources as being more than others.
How does one work that into an economy? A tax structure is probably the cleanest and simplest way. Carbon trading systems have their benefits. Better than doing nothing, we should do a carbon trading system. However, I worry a bit about the transactional costs and whether it will get us where we need to go.
Senator McCoy: Thank you for an interesting presentation; I have never seen it put this way before.
I may be teasing your memory banks a bit too much, but I have a question on the "silver buckshot" chart. You have three approaches to reduce greenhouse gas emissions. Efficiency and conservation in 2020 looks to be roughly one third of the reduction. What is that number?
Mr. Layzell: One third, one third and one third are approximate numbers that are not mathematically determined. However, many people who have looked at the issue around what the components are of a strategy — especially for countries such as Canada and the United States — in meeting the climate change gap think that about one third will probably need to be efficiency and conservation.
Let me give you an example of what we are talking about. Right now we take coal that we are using for electricity, and we are running our electricity generation systems at about 30 per cent efficiency. We could increase the efficiency of turning a fuel such as coal into electricity; it could be up over 50 per cent efficient. That is one example of where we would be at on the production side. That will be more expensive, however, and it depends on the price of the feedstock and the carbon emissions as to whether it makes sense.
Senator McCoy: What is the tonnage roughly in 2020? It is 850 tonnes in 2050.
Mr. Layzell: Do you mean for the number of tonnes in the gap? That is a good question. I could probably do a quick calculation there.
Senator McCoy: I could let you think about it.
Mr. Layzell: It would be about 200, 250 to 300 tonnes maybe. We are talking about 25 per cent. I can do those numbers for you but maybe not right now.
Senator McCoy: Perhaps after we let you off the hot seat here.
In comparison, Alberta's plan by 2020 is about 24 tonnes of those 300 tonnes, is it not? It is quite a bit less. That is probably because of our industrial mix.
Mr. Layzell: Yes. The Alberta plan is only a 4 per cent decrease above 1990, or something in that range — or 2005.
This is 65 per cent of 2006. You have to put them on the same terms.
Senator McCoy: Fair enough.
Turning to your next chart, "Canada's 21st Century Energy Transition," I am intrigued to see nuclear; it is in this alternative and renewable energy source.
Mr. Layzell: Yes. Do you have a question about that?
Senator McCoy: I am not used to thinking about nuclear energy as a renewable source.
Mr. Layzell: I put it as an alternative. It is because nuclear is an alternative energy to our fossil fuels. We are a fossil fuel economy; about 82 per cent of our energy comes from fossil fuels now. Alternative energies are alternatives to the fossil fuels, so I grouped it in there. It is not a renewable energy for sure, but I think it will need to be a major player; and it is one of the technologies that Canada will have to seriously consider.
Senator McCoy: Producing electricity is what we are talking about. They say its cost is roughly equivalent to a coal-fired electricity generator with full carbon capture and storage, or CCS.
Mr. Layzell: It is difficult to know the real cost of nuclear in some ways. The cost in Ontario has been high, and I think that is partly due to the way it was managed and deployed. This is one of the challenges because it is a technology-rich energy source. We have to take into account the cost of waste management, waste disposal and so on.
Senator McCoy: That is another one of these externalities that has not been factored into the cost of nuclear power generation.
Mr. Layzell: It could be, especially for Canada. Canada has an option.
When we look at it, I think one of the comments previously was that we ultimately have to make choices. Every energy choice will have pros and cons. Even with wind power, many people do not like the look of windmills and fight against them. Solar panels have many challenges also, as do rare earth metals and resources. Every energy choice will have an associated cost.
The challenge for policy-makers, and in looking at the trade-offs, is how you weight those. We need a national discussion on this. Again, this is what part of the role of a national energy strategy is, namely, to identify what we want from our energy systems of the future.
Part of this will need to be framed in reality within the international global community and what they will demand from Canada in terms of our energy systems. We are a major energy exporter. We are probably one of the only developed countries in the world that is an energy exporter. We will have to devise an energy strategy with that in mind.
Senator McCoy: You have about 50 per cent with alternative and renewables in this chart and 50 per cent with carbon-free emissions and fossil fuels.
Mr. Layzell: Yes. I have a large question mark on there as to where that line will be.
Senator McCoy: Yes. I take it with the question marks on both the upper and lower limits that, for one thing, it is a suggestion, not a prediction.
Mr. Layzell: It is not a prediction. I have looked at some of the numbers about the transformational change that we need to meet the commitments that the federal government has made — namely, minus 20 by 2020 and minus 65 by 2050. These are the transformational changes that we will need.
It is important to recognize that because we can make these long-term commitments. We made a major commitment 12 years ago in Kyoto; we did not follow it up. It is important, and perhaps there is a role for academe to say, "This is what we are talking about when we make those sorts of commitments."
How will we meet those commitments? What are the technologies and types of market shifts that we need to put in place to meet those? What are the types of technologies we need? What are the criteria for those technologies? This is a sobering set of analyses when you look at the tools that we have now as to how we will meet those.
We can start on the path, but I do not think that we have the technologies today to take us all the way. We certainly have the technologies that we can implement in the next 10 to 11 years to meet a 2020 goal of minus 20 per cent. That will be transformational. I hope in the next 10 years, with the right investments, we will have a picture of what the next 20 or 30 years after that look like.
Senator McCoy: I have another burning question, but in courtesy to others, I will defer; or can I have it now?
The Chair: Is it a short one?
Senator McCoy: No. It is a short question, but I think it will involve a long answer, so I will defer to others.
Senator Rompkey: I want to ask about alternative sources as well. I want to particularly focus on hydro, wind and other forms of energy. I notice on the chart that the contribution of hydro could be significant.
First, what could the contribution be, and how significant would it be?
Mr. Layzell: Quebec and Manitoba have the potential for significant additional hydro — large hydro. There are also opportunities for small hydro across the country. I do not have a number on it. I know that others have done those sorts of calculations.
Certainly, there is an opportunity to increase the contribution of hydro within our energy mix. That makes sense for us to look at. Obviously costs are involved in doing that — for example, flooding of land and other challenges.
The Chair: You know this senator is from Labrador.
Mr. Layzell: Absolutely.
The Chair: When you talk about potential, you do not want to overlook it because Danny Williams is watching.
Mr. Layzell: No. Labrador and Newfoundland has huge hydro resources, and also some in British Columbia. Ontario has some potential, but not as much, unless you are looking in James Bay.
Senator Rompkey: Ontario has a need.
Mr. Layzell: Yes, Ontario has a massive need.
Hydro is one of the cleanest and most attractive energy sources. Ultimately, we have to go to much more electrification of our energy system.
Senator Rompkey: You also said that the only real driver for an energy transition is government policy.
Mr. Layzell: That is a driver for the energy transitions that we have talked about in terms of the climate change transition.
Senator Rompkey: That is so whether at the regional, national or international level.
On national and regional energy policy, what new policy do we need to add hydro resources to the mix?
Mr. Layzell: First, for large hydro we need to identify a carbon target because hydro has low carbon emissions per unit of energy. Second, we should look at the east-west transfer of power. Most of our hydro power lines go north-south, not east-west. It would be good to develop it so that Labrador would provide Ontario with hydro power. That would be a terrific opportunity.
Senator Rompkey: What is needed to do that? Is there a policy vacuum?
Mr. Layzell: It presents a challenge because energy is a provincial jurisdiction, making it difficult for the federal government to enter the mix. We need the provinces to cooperate and understand the value of cooperating to develop a national energy strategy to meet the goals.
I struggle with this because I do not have a clear fix on how to do it. We need all the provinces to agree that there are trade-offs and opportunities for those with hydro electric resources and opportunities for those with fossil fuel resources.
Senator Rompkey: Is there a role for the federal government in this and, if so, how should it be played?
The Chair: A larger budget for the Standing Senate Committee on Energy, the Environment and Natural Resources is a good idea.
Mr. Layzell: That is a challenging question. I can understand the difficulty. I would like to ask members of the committee how you would do this. How do we get the provinces to cooperate on this file? If we do not get cooperation, the country will surely fall behind.
A potential driver could be changes to energy and environmental policy in Washington, D.C. that would be imposed on Canada. It might create sufficient pressure on the provinces to work more closely together. Maybe that is the only way it will happen. It might only happen if it is imposed from without.
Senator Neufeld: This is an interesting presentation. I want to talk a bit about the Carbon Management Canada initiative because I am interested in carbon capture and storage. You talked about Alberta's carbon capture and storage. Which one is that?
Mr. Layzell: We are talking about three or four different storage sites within Carbon Management Canada. The 75 or so researchers involved in Carbon Management Canada are from all across Canada, from British Columbia to the Maritimes. This national research initiative is led out of the University of Calgary.
Some researchers talk about injecting CO2 back into spent natural gas and oil wells. Another component is enhanced oil recovery, but it is not large. There is a great deal of storage in saline aquifers and a bit in coalbed methane, but not much. Most carbon management is done with saline aquifers; the injection of CO2, which is a by-product of natural gas production systems; or the injection of captured CO2 from post-combustion in coal plants.
Senator Neufeld: Correct me if I am wrong, but I have been involved in the gas industry for many years. The most common process that I hear about in Alberta is the enhanced oil recovery. What is the net benefit of carbon capture and storage to enhance oil recovery? How much carbon comes back with the oil when they do enhance it?
Mr. Layzell: A large amount of carbon comes back with the oil. If you are producing oil from enhanced oil recovery and from oil sands, the amount of net emissions from enhanced oil recovery will be less than the net life cycle emissions from oil sands. At least it gets some CO2 out of the air and puts it back into the ground.
Senator Neufeld: We are producing oil doing that.
Mr. Layzell: Yes.
Senator Neufeld: I always think about producing more oil because the CO2 does not stay down there. It comes back and must be dealt with but not so with saline aquifer solutions, such as Spectra Energy is doing in British Columbia. We have not talked about the carbon capture and storage that will happen there. It will be the single largest source of carbon capture and storage if everyone can figure out exactly how to do it. The saline pools are in place; it is simply a matter of having the rest of the technology and dealing with the cost.
Mr. Layzell: Yes.
Senator Neufeld: Do we have the energy to sustain ourselves into the future? That is a huge question. I believe that we are having an effect on the climate. I was part of a government that levied a carbon tax, which was the first one in Canada. Fossil fuels power the world, not just North America. It is fine to say that we will build wind energy towers, but we need the steel and other materials to do that. We will be using this energy for decades. We have to depend on people such as you to figure out the smart way to do it.
You said that for results in 2038, we need to invest now in fundamental innovative research to develop game-changing energy technology, including those to achieve zero-carbon fossil fuels. What do you mean by zero-carbon fossil fuels?
Mr. Layzell: If we are to meet the level of greenhouse gas emissions that the Government of Canada, the U.S. and the world have talked about to address climate change and if we continue to use fossil fuels, most of them will have to add no net CO2 to the atmosphere. The numbers are quite clear on that.
As far as other technologies that are being looked at, perhaps we can make hydrogen out of the fossil fuels and then bury the CO2 back in the ground. The other possibility is to get hydrogen out and combine it and move it around as CO2, but the CO2 could be captured from the air. Essentially, that component would be recycled. Another possibility and opportunity is that, in Canada, we have large biological systems and the technologies to have our forests and agricultural lands pull carbon out of the atmosphere but convert it into a form of carbon that cannot be mobilized.
Some interesting studies were published this last week in Nature Geoscience magazine on technologies for converting CO2 at the end of emissions into essentially limestone or rock, a solid form that can be used. We could make a small mountain chain using that technology.
Those breakthrough technologies would allow us to continue to use our fossil fuel resources without compromising the global climate.
Senator Neufeld: I read in your report that it will take some government direction to start changing what we do and how we do it.
I want to bring forward a point. Many people talk about Denmark and how they are changing wind power. They ought to, as they generate 50 per cent from coal and have done so for a long time, most of it with very outdated coal technology. The last I checked, their price for electricity for the consumer was about 45 cents per kilowatt hour compared to ours in Canada at about 7 cents. The cost of it certainly has not changed how Denmark is generating, other than that they have some wind generation.
How we will do these things in the future poses a huge challenge. The cost will be horrendous when you think about what we pay for electricity and that we now have to change our coal to something else. Would you agree with me?
Mr. Layzell: I do not think it has to be 45 cents a kilowatt hour. Some of the Europeans, for example, Germany and Denmark, have put in and made very expensive electricity, and it does not need to be that expensive.
Senator Neufeld: Would that be wind energy?
Mr. Layzell: Wind is not that expensive, but to make electricity from bio-digesters on a small scale can be expensive. We have to be a little smarter in some ways and learn from some of the mistakes of other countries.
It does not have to be at the level of 45 cents, but it will be more expensive than 7 cents.
Senator Merchant: You may know that I come from Saskatchewan. I am interested in the carbon things.
This is a medium-term transitional instrument that you presented to us. The short term was 14 years and the long term was 50 years. We are talking somewhere between 2025 and 2050 between the short term and long term.
These large demonstrations of projects that we will have, are they between five and seven years?
Mr. Layzell: Yes.
Senator Merchant: What is the gap between the demonstration and the operation? What level of investment in infrastructure will be necessary for Canada's CCS technology to be operational by 2020?
Mr. Layzell: The initiatives that are being put forward already in Saskatchewan, British Columbia and Alberta have been about carbon capture and storage demonstrations, and about $3 billion is being spent. From those studies, we should have a good idea of which of the different technologies work better and which do not work as well by 2015, 2016, in that period.
That is the sort of investment we need. On the basis of that, we can then start to build larger plants and start to deploy if it is determined to be a good investment on a much larger scale. By 2024, we should be able to see significant amounts of carbon being captured and sequestered.
Chart 6 was about what we need to do now in the next five or ten years to achieve significant emission reductions in the medium term. Right now we need to develop these demonstration sites and trials for cost-effective capture, compression, transportation, safe and secure storage, public engagement and communications around all of that. That will allow us to deploy in about eight, ten or twelve years from now, where it can be deployed at scale. However, we cannot deploy it at scale in the next 10 years because we have to learn, and we have to bring the costs down. Let us be honest; it is too expensive right now. We have to bring the cost down and ensure that we can do this at scale so that we reduce the risks.
Senator Brown: Could you tell us how dependable you think carbon storage really is?
Mr. Layzell: They have been doing carbon storage in British Columbia and Alberta for many decades now. We have not done it at the scale that we are talking about. However, if carbon dioxide can stay down there, we know enough about the science, and if we put it in the right locations we will be able to know it is secure and safe. As part of our Carbon Management Canada initiative, we are developing technologies for monitoring the CO2 plume underground, for example, new seismic technologies and so on for measuring, monitoring and verification of that.
I am not a geoscientist, but I have spent a great deal of time with them. I have asked many of these questions and have become increasingly convinced that we do know how to do this. We can make it to minimize the risks, but there are still some unknowns. The question I have is not whether storage can be secure but how much we can do and at what point. How much carbon can we put down? We can put many millions of tonnes. However, can we put billions of tonnes? To address the carbon challenge that we are talking about, we need to think about billions of tonnes.
There is a real question of whether we can get to that scale. We will not know that until we have actually done a few at the millions of tonnes.
Senator Brown: I had two reasons for asking you about that. In rural areas around Calgary and Southern Alberta, we have a large amount of gas in water aquifers. I think you mentioned using those aquifers for storage.
Mr. Layzell: I am not referring to those aquifers. Instead of those aquifers you are talking about, we would be talking about ones down at 1.2 or 1.5 kilometres underground. We are talking about deep saline aquifers. They do not exchange with the type of aquifers from which you get drinking water. Again, these are the sorts of questions that I have asked my geoscience colleagues, namely, about the probabilities and the security or confidence that they have. Certainly, we have to ensure that we study each formation carefully. Much work is being done to ensure that we study it. We also have technologies for how to seal the storage sites and monitor them.
Senator Brown: Yes. My concern is sealing them off. These aquifers in rural Alberta have been increasing more and more with methane and SO2 gas just because of the drilling that has been done in Southern Alberta. Now we are drilling four wells per quarter section for methane gas. Geologists tell us that nature abhors a vacuum. When you start taking something out of an aquifer, nature wants to replace the pressure from someplace else and looks for the fractures to do that. That is why I worry about carbon getting away from us. I am not against carbon storage, but whether or not we can keep it there is open for question.
Do you know anything about the recent study in Alberta to try to find out if CO2 storage has the possibility to cause earthquakes?
Mr. Layzell: Yes, I am familiar; I know the researchers doing that study. It is an important study. It is the type of study that we need. This is what needs to be done in the next 10 years.
There are many eggs in the CCS basket in Canada. We need to do these studies because if it does not work, the challenge is so much greater.
It may be possible that we can find other ways to get carbon out of the atmosphere and store it in rock, as I spoke about, essentially making limestone. However, we do not have the technologies to do that in a cost-effective way.
We have many eggs in the basket right now. We need the next five to ten years to do the demonstration and answer exactly the questions you are asking. They are extremely important questions.
The Chair: Who is heading up that study?
Mr. Layzell: David Eaton, the head of the department of geoscience at the University of Calgary.
Senator Lang: You have taken a multiple-disciplinary approach to these studies, and we have talked and heard about the costs that will be associated with this, although we do not know what it will cost Canadians. At the end of day, Joe Lunch Bucket wants to know what the monthly cost will be to average Canadian families if we do go ahead with cap and trade, higher energy costs and all the aspects associated with it. Are we doing models of that so that we can give Canadians a complete, fair and honest bill of goods?
Mr. Layzell: I think you will be able to know the cost. The cost would not be imposed right away but would be gradually increasing. It will encourage more renewable and alternative energies so that the environmental cost will not have to be paid. If you plan over a 20- to 40-year period and the regions of the country cooperate, you can minimize that cost.
In the range of $50 to $100 a tonne may be what is required, although not for every tonne. That is probably the price we will need to have before we see major reductions in CO2 emissions. You can get some CO2 reductions for much less than $50 a tonne.
Fifty dollars for every tonne of CO2 emitted from a barrel of oil would increase the cost of a barrel of oil by approximately $25. We have seen the price of a barrel of oil go up $25 in the last few months. In this case, the $25 would be used to stimulate other alternative energies.
I am certainly not suggesting that we impose that now, and I do not think anyone is. However, that gives you a sense of the scale we are talking about.
Senator McCoy: We have a credible study predicting the cost on a regional GDP and employment basis. It is the one sponsored by the Toronto-Dominion Bank.
Mr. Layzell: I am familiar with that study.
Senator McCoy: It is based on modeling done by Mark Jaccard, who I believe was a primary adviser to the Government of British Columbia on their climate change plans. At the back of that study, Mr. Jaccard has estimated the technology penetration that his model would bring about using a $50- to $100-cost per tonne of carbon.
Does that reflect something similar to this suggested energy future that you have shown us tonight?
Mr. Layzell: I do not know. I have not done a detailed enough analysis of that.
Senator McCoy: We will have to have you back, then.
The Chair: Sir, I cannot tell you how much we appreciate you coming here to share your thoughts with us. I think you can see that we have taken a very large bite, and we are learning as we go. Luckily these are early days in our study, so I hope that we can call on you again.
Colleagues, our next witness is Dr. Thomas Homer-Dixon who holds the Centre for International Governance Innovation Chair of Global Systems at the Balsillie School of International Affairs in Waterloo, Canada. He is a professor in the Centre for Environment and Business in the Faculty of Environment at the University of Waterloo.
Welcome, sir.
Thomas Homer-Dixon, Professor, Centre for International Governance Innovation, Chair of Global Systems, Balsillie School of International Affairs: Good evening. I would like to begin with a bit of expectations management. I am a social scientist by training, although I have focused on climate change policy for two decades of research as well as on the complex relationships between energy and society. In general, my research focuses on how societies adapt and innovate under complex stress, including resource stress, environmental stress and energy scarcity.
Much of what I will say will echo what we have heard from Professor Layzell. I thought it would be useful for the committee if I provided you with some tools by which you can think about the nature of the energy challenge situation we face, which is of breathtaking magnitude. We need to acknowledge that this is a challenge that could rock human civilization to its core. It is easier to understand that when we understand some basic properties of energy and how some of the critical energy sources upon which we depend are changing with respect to those properties.
The Chair: Does it flows from what you just said that you believe in the science of climate change and that the need for re-engineering our energy system globally is a direct consequence of that science?
Mr. Homer-Dixon: It is a consequence of two things. In part, it is a consequence of the fact that 80 per cent of the energy the planet uses comes from fossil fuels, and that releases carbon dioxide, which is causing climate change.
The Chair: You believe that and you are comfortable with that science?
Mr. Homer-Dixon: I think the science is solid. I agree with what Professor Layzell said. I think there is a broad and deep consensus among scientists on this issue. The basics of climate change are fairly well understood. The details, especially as we go further out into the century, of how serious it will be are not so well understood. You can make at least a plausible case that it could be extraordinarily serious. Prudence dictates that we start addressing the issue aggressively now.
The other event that is driving this energy transition is the rapid increase in the energetic cost of conventional oil, which is illustrated by the diagram that we have in front of us.
We need to keep in mind two sets of properties of energy sources. Some properties relate to the intrinsic characteristics of the energy source, and I will address those in a few minutes.
Another property of our energy sources relates to the processes of production of energy. I want to emphasize the energy return on investment, sometimes called the energy return on energy investment, EROEI, as you can see on the left-hand axis of the first diagram.
How much energy do you need to obtain that energy? How much energy return do you get for every unit of energy you invest? This is a fundamental physical characteristic of our energy sources. It is not dependent upon market forces or economics; it is all about what technologies we use to get the energy and how much those technologies consume.
I would like to spend most of my time talking about this first diagram because it contains a great deal of information. You will notice that the diagram refers to U.S. net energy sources. We do not have equivalent calculations for Canada, but we can assume that the results would be similar for Canada.
The left-hand axis is the energy return on energy invested. For oil, this would be essentially how many barrels of oil you get back for every barrel of oil of energy you invest to drill into the ground and pump that oil out. At the bottom axis, you have the total amount of energy consumed or produced for each of these sources in quadrillion BTUs, or what specialists call "quads."
I want to draw your attention to a couple of points that are particularly important. You will notice that there are three bubbles for domestic oil in the United States. At the top, it shows around 100:1 for domestic oil in 1930. That means that the Texas drillers were getting back about 100 barrels of oil for every barrel of oil of energy they invested to get that oil. This fell to somewhere in the neighbourhood of 30:1 in 1970, but notice that the amount of domestic oil energy consumed or produced in the United States increased significantly between the 1930s and 1970s. This fell again to about 15:1 or 17:1 around 2005.
That transition is of extraordinary importance. As I said, two events will be driving our energy transition this century. One is the climate problem, and the other is the increasing energetic cost of our most critical energy sources.
Notice that there has been a significant drop in the energy return on investment for imported oil from 1970 to 2005. Take a look at some of the other energy sources indicated there. The energy return on investment for natural gas is under 20:1. The EROEI for nuclear is controversial, but it is fair to say that, depending on the quality of the ore that is mined to produce the fuel, how you bound the system, whether you include, for instance, decommissioning of the plant or disposal of the waste, your energy return on investment ranges from 5:1 to 15:1 or 20:1, which is more or less what you see in the diagram. As Mr. Layzell said, hydro gives you a pretty good energy bang for joule invested. However, notice that PV solar — photovoltaic solar — does not; and wind, while not bad, is not a roaring success either.
The Chair: Wind is not and will not be, or can we make that follow?
Mr. Homer-Dixon: It depends on another property of wind, which I will come to in a moment in my presentation.
I want to draw to your attention to the band across the bottom of this diagram. It reads "minimum EROEI required." Some scholars would suggest that when, in aggregate, an energy economy falls below somewhere in the neighbourhood of 10:1 or 8:1 in terms of energy return on investment, it becomes unviable; you cannot sustain the complexity of the society. There is not sufficient energy surplus to maintain such things as highly complex cities, institutions and technologies. A debate is ongoing about whether this is true, whether you can actually specify some absolute minimum EROEI that you must sustain to maintain a complex society. However, there seems to be some fundamental reasonableness to this argument.
Let us put it this way: Looking at all the energy sources that you have in your economy, as you slide down the slope from 100:1 to 17:1, which is where we are with conventional oil in North America right now, to 4:1, which is about where the oil sands are, to 1:1, where corn-based ethanol is; as we slide down that slope, we are using a larger and larger fraction of the wealth and capital in our economy simply to produce energy. Therefore, we have less left over for everything else we need to do, including addressing our increasingly serious additional problems, such as climate change.
Climate change will take a large amount of energy to address. We will have to drill deeper for water, desalinize water along coastlines and pump water from newly wet areas to newly dry areas. As we have heard this evening, we will be pumping billions of tonnes of carbon dioxide underground. All of this will take staggering quantities of energy, at precisely the time in human history when we are going through a fundamental EROEI transition for one of our critical energy sources.
Conventional oil still provides 40 per cent of the world's commercial energy and 98 per cent of our transportation energy. It is still the single biggest energy source in the world economy. We do not have a clear plan B, a replacement energy source for this source of energy, as it becomes increasingly expensive.
The bottom line is something that we all realize. Drillers are having to go farther into more hostile natural environments to drill deeper for smaller pools of lower-quality oil. They are having to work harder for every extra barrel, and that is not something that will change. It is a fundamental new reality to which we have to adapt.
The last thing I want to say about this first diagram is that this sort of EROEI shift that I have talked about this evening, when we have seen it in other civilizations at other times, has on occasion led to the collapse of civilizations. You can make a credible argument that what happened in the first 300 years of the current era, the collapse of the Western Roman Empire, was largely a function of the fact that it went through an EROEI shift that it could not accommodate. The empire simply could not generate enough energy in those days — all the energy was generated from food — to maintain its armies, cities, bureaucracies, transportation systems, infrastructure of roads and information transfer across the empire. These are fundamental challenges. Energy is the master resource for our societies, and if it is not available, nothing else is possible.
Let us turn to the next pages of the presentation, and I will draw some conclusions. Now we are looking at the graph entitled "Components of FF Emissions" — FF being fossil fuels. I want to draw your attention to the fact that coal emissions have risen quickly over the last decade or so and now exceed those from oil. This is a direct consequence of the declining energy return on investment of conventional oil. As oil has become scarcer, harder to get, and as China's production has peaked and started to decline — and this is true in many other places in the world — we have found that economies, firms and industries in general are starting to move to coal as a principal energy source and away from oil, in particular, because it has become much more expensive. You can see that this rise in coal emissions is almost exactly coincident with the rise in oil prices. It was driven by the rise in oil prices, and the rise in oil prices is significantly driven by the increasing energetic cost of oil.
To put this shift in context, if you look over the last 200 years in human societies, we see what specialists call a steady decarbonization of our energy sources. As we have moved from wood to coal to oil to natural gas as a principal energy source, with each one of those transitions we have released less carbon into the atmosphere for each unit of energy generated. In the last six years, every single region of the world has started to recarbonize its energy. The decarbonization process has stopped, it has been reversed, and now the carbon output per unit of energy generated is increasing in every region of the world. That is a fundamental shift of great importance for our climate change policy, especially given that it was assumed until as recently as five years ago, and even some prominent people still make the same argument, that there is a natural tendency in human energy systems toward decarbonization, toward ultimately something such as nuclear fusion, which will have no carbon content at all.
I agree with Professor Layzell in that we will be using carbon-based fossil fuels for many decades from now, and we will probably see, for an extended period of time, not a decarbonization of the global energy system but a recarbonization of the global energy system.
Turning to the next two sheets, they outline fossil fuel emissions, actual versus IPCC — Intergovernmental Panel on Climate Change — scenarios. You can see various IPCC emission scenarios going out to 2015. The smooth lines in the background, the red line, the highest of the scenarios is the worst-case A1F1 scenario produced by the IPCC. You can see that until this past year, we were either above or tracking that worst-case A1F1 scenario for several years, and that is a consequence of the increase in coal use around the world.
If you go ahead two pages to the same diagram with one extra red dot — the fossil fuel emissions, actual versus IPCC scenarios — the red dot represents the Global Carbon Project's projection of where we will be this year, 2009. There is a substantial drop, which is a good thing. It is the only silver lining I can see in the global economic crisis. However, it says something grim about the state of affairs if the only way we can get carbon output into the atmosphere down in our world is to induce a global recession or a critical economic contraction.
However, I think we should think about the possibility of extending this trend. Maybe this is an inflexion point. Rather than returning to growth, the way it was before the economic crisis, maybe we can take advantage of the shift and start driving total global emissions downwards with aggressive carbon policy.
Two sheets ahead, you will see essentially the same sheet with notes on it, and the next one is fossil fuel emissions top emitters, greater than 4 per cent of the total. That is simply there to demonstrate the critical driver of this trend, which is China. China is building out somewhere around 1,500 megawatts of coal-fired electrical power every week. That is about 70,000 megawatts per year, which is equivalent to France's entire electrical production on an annual basis.
If the Chinese do not adopt CCS, then everything else that everyone tries to do on the climate policy front is largely irrelevant. The Chinese have to engage on this issue and have to start dealing with the carbon emissions from their coal combustion. They are becoming increasingly reliant on coal because, among other reasons, their principal oilfields are now in sharp decline. For instance, they are starting to build coal liquefaction plants to provide liquid transportation fuels for their rapidly expanding automobile fleet.
I talked about the property of an energy source in terms of the amount of energy you need to produce it. I want to talk about a couple of intrinsic properties of energy sources. On the sheet entitled "Energy Density of Fuel," we are looking at, on the vertical axis, the amount of energy, megajoules per litre, in a particular energy source, and across the horizontal axis are the megajoules per kilogram; gravimetric density versus volumetric density.
An ideal energy source would appear in the top right-hand corner. However, if you want a good transportation energy source, you need high volumetric density because you need to be able to pack a lot of energy into a small space to be able to carry it around in a vehicle.
It turns out that given all the energy sources we know, hydrocarbons such as oil, diesel and gasoline are extraordinarily good transportation fuels. It may actually be the case that what we eventually do is generate hydrogen using some zero-carbon energy source, and we may convert that hydrogen into a hydrocarbon and use it to drive our transportation fuels. However, we would take the carbon out of the atmosphere and simply release it back into the atmosphere in the process of combustion of that fuel.
The last sheet indicates the comparative power densities of production and consumption. This is simply by way of demonstrating that some of the alternatives do not really solve our problem effectively, in particular solar-based renewables. Here we have a comparison of the power densities of production and consumption. This basically means how many watts per square metre you are generating from a production system and how many watts per square metre you are consuming in a particular consumption system.
You can see the solar production systems that are indicated on this diagram are all down at the bottom: phytomass, wind, et cetera. In general, their power densities are relatively low in terms of watts per square metre that they generate. The things we need to power the high-rise buildings, supermarkets, steel mills and refineries, industries and whole cities all tend to be toward the top of the diagram. It basically means that there is a fundamental geographic mismatch between renewable energy sources such as wind, solar and biomass and the concentrated power consumption that we currently exhibit within our industries and our cities. We need concentrated power; we need concentrated energy sources; we need a huge amount of power density in our energy sources. Unfortunately, for many things, wind and solar just will not do the job.
Let me conclude with a few suggestions about where we need to go. I have tried to emphasize here that we face a quite profoundly intractable energy problem, and we do not have clear answers. The rapid increase in the energetic cost of oil is an enormous challenge because oil is so important to the global economy. We do not have an obvious easy substitute. Coal is not a clear substitute because of the carbon consequences of using large quantities of coal. We emit much more carbon dioxide per unit of energy generated from coal than we do from other fossil fuels. The only way to use coal is on a large scale with carbon capture and storage. Most other energy sources, including renewables such as wind and solar, do not provide energy with the particular properties that we need to maintain our modern and complex economies, technologies and societies. This means that our principal aim, therefore, should be to engage in an enormous exercise of research and development involving massive investment for R&D in energy technologies.
We need to make significant advances in four areas. Professor Layzell has already mentioned at least two of these: efficiency and conservation. We can do much without new technologies. However, new technologies might go a long way to making efficiency and conservation more palatable for people in our societies.
As Mr. Layzell emphasized, we need significant research and development, especially in the scaling up problem for carbon capture and storage dealing with our waste carbon from our continued use over many decades of fossil fuels.
Something not emphasized in the previous presentation is that we need breakthroughs in energy storage technologies for renewables. The story with solar and wind would be much more positive if we had good energy storage capacity so that the intermittency of solar and wind was not at such a striking disadvantage to the widespread deployment of those technologies right now. We need better energy storage technologies for electrical vehicles. Storage is the critical impediment to the rollout on a large scale of an electrical transportation fleet. We need better car batteries, to use the vernacular.
Finally, we need to keep our sights on potential game-changing energy technologies, technologies that would offer the possibility of zero-carbon energy. That could literally revolutionize our economies.
Nothing like this will happen fast; there are some possibilities where Canada, I believe, can lead. I mentioned two in particular. One would be underground coal gasification, which offers enormous possibilities in Alberta because there are large, very deep, "unmineable" coal seams that can potentially be gasified. You bring the SIN gas up to the surface, strip out the carbon dioxide and pump it underground and use the remaining hydrogen to generate electricity and export the electricity. Finally, there is enhanced deep geothermal, where you go down several kilometres, heat water to several hundred degrees Celsius, bring it up to the surface and use it to drive turbines and essentially generate zero-carbon energy.
Alberta, and Canada more generally, can be a world leader in deep geothermal. We should be devoting resources there. In questions and answers, we can talk more about the potential problems with geothermal. However, this is potentially a game-changing technology. It would offer zero-carbon energy for every society in the world. It could solve many of the problems that we are facing right now in one significant energy shift.
The Chair: Where are we on that one?
Mr. Homer-Dixon: It is getting a bad rap right now.
The Chair: Is that due to the cost?
Mr. Homer-Dixon: First, let us be clear on what is required here. You have to drill deep, not through sedimentary rock but through igneous rock. It is a different challenge by conventional drilling. However, it is not something that is insurmountable. It is a technical and engineering challenge. In principle, there is no reason why we cannot solve this.
I can give you two recent examples. A few years ago, there was an exercise in enhanced geothermal in Basel, Switzerland. They went very deep. You have to go deep and then go horizontally and fracture the rock because you have to push the water through the rock and then bring it up through the surface because it heats through the fracture zone. When they started "fracking the rock," as they call it, they started generating substantial earthquakes.
The Chair: In Switzerland?
Mr. Homer-Dixon: Yes, in Basel. It was enough that the experiment was shut down. It was completely halted.
More recently, this year, the Obama administration has regarded deep geothermal as one of the most interesting possibilities for new energy sources. Significant funds for deep geothermal are included in the financial relief bill, the $700 billion that was passed early in the year. Some of that funding was supporting a company by the name of AltaRock Energy Inc. in Northern California that was involved in an experiment in an earthquake zone.
When it became widely known, thanks to some articles in The New York Times, that this experiment in Basel had produced earthquakes, the U.S. Department of Energy went back and looked at the original proposal from AltaRock Energy and found that they had not been exactly forthcoming about the Basel experience. The U.S. Department of Energy said that AltaRock Energy could only drill to 12,000 feet and that they were not to "frac" the rock because that was supposed to be the source of the earthquakes. Actually, they had to go deeper.
The Chair: What region of the U.S. was this?
Mr. Homer-Dixon: This was in Northern California. The actual frac zone was somewhere in the region of 15,000 or 20,000 feet. The company was allowed to drill down to that level, but — and this is significant — they reached 12,000 feet and ran into a layer that they could not penetrate. They spent $3 million trying to get through that layer of rock and had to eventually shut down the well because they could not get through it.
There are technical obstacles here, and a recent Massachusetts Institute of Technology — MIT — report elaborated on all the technical details. However, here is the beauty of this potential technology: You are essentially using the heat that is generated by nuclear decay in the core of the earth. That reactor is as well contained as any nuclear reactor within the solar system. It makes much more sense to simply drill down and extract the heat that is right beneath our feet instead of building nuclear reactors on the surface of the planet. If we can work that technology out, we may be able to say goodbye to the global warming problem.
I would like to see substantially enhanced levels of investment in all of these four areas that I have mentioned, but significant "risk-research" dollars on potential game-changing technologies. Most of them will not work. A large percentage of them will not work, but if we can find one or two that do, that is a real breakthrough. It could make the difference for the whole world, and it could provide industries that will bring enormous profit to Canada.
The Chair: That is it?
Mr. Homer-Dixon: Yes.
The Chair: That is fascinating stuff.
Senator Rompkey: I want to return to hydro, if I could. I noticed on the graph that the bang for the buck is not bad; it is right up there with imported oil and firewood. I do not think we should underestimate firewood. Many rural areas in Canada are returning to firewood either for firing furnaces or stoves. Many people are heating with that.
I want to repeat the questions that I posed earlier, namely, what contribution hydro can make to the alternative energy mix. You have said in your presentation that wind, perhaps, will not be that effective in making a contribution. With the amount of hydro we have, what contribution could it make to the Canadian economy, and what do we need to do to allow it to make that contribution?
Mr. Homer-Dixon: I have a huge amount to add to what Mr. Layzell said. However, in terms of interpreting this diagram, you are suggesting by this question that you want to move that hydro ellipse to the right. You want it to make up an increasing share of the total power production for Canada, ultimately for North America, let us say.
The problem with hydro power is that certain physical limitations arise because of the nature of the landscape. You can only put dams that will generate sufficient quantities of power in certain places. Many of the best dam sites have already been used. We could start doing such things as Mr. Layzell suggested, for example, damming James Bay. However, my guess is that it would be unsalable, given the current environmental sensibilities; and in recognition that, in many cases, we make a mess out of these mega-projects and that there are unanticipated consequences that haunt us for generations to come, we could not dam James Bay.
In the United States now, we are seeing a move towards opening up damns — taking them away and allowing the rivers to run free so that fish stocks can be replenished, rather than building more dams.
Some specialists and experts would say that we have probably seen the apogee of dam construction in the world. I think that is probably not true. The exigencies of our energy problem will require us to increase hydro power. We will be using as much of it in as many ways as possible. Much of it may be micro-scale power in smaller rivers and streams with power generation systems specifically designed not to harm fish runs and ruin ecosystems. There is room for research and development in this area.
In answer to your question, ultimately, I am not convinced that hydro will be a huge component in solving our problem. It is a matter of scale. Most people do not recognize the enormous scale of our energy consumption in modern, wealthy economies. Even in areas of North America or rich countries where much hydro power is produced, hydro rarely exceeds 50 per cent of the power needs for a particular region. It might be higher in some areas, such as British Columbia or Newfoundland and Labrador, but it is still a relatively small component. I do not think that we will see that change by any significant fraction in coming decades simply because of constraints on hydro building sites. There may be a few good dam sites left, but most have already been exploited.
Senator Rompkey: Would it be worthwhile to craft a national policy and to invest in this area?
Mr. Homer-Dixon: I think hydro can be part of the story. Micro-hydro may be an important part of the story, especially for distributed power generation in rural areas or smaller towns.
However, rather than focusing on hydro, I would let the market use its distributed intelligence and entrepreneurship. Getting a price on carbon would start to get everyone interested in what they can do to produce zero-carbon energy. If it happens to be hydro for a certain place or region, then suddenly that becomes relatively economically more interesting compared to carbon-based energy sources.
Therefore, as soon as we get a significant price on carbon, we shift the playing field toward a whole range of other energy sources — one of which might be hydro — that do not release much carbon. Then let the market sort out which is right for given jurisdictions, regions, geographical settings and industrial and urban requirements, rather than focusing specifically on hydro and having, in a sense, a hydro subsidization, tax promotion or regulatory regime that only deals with hydro.
The problem is carbon. Let us focus on carbon and hydro will be part of the solution, but probably along with dozens of other things at the same time.
Senator Rompkey: I want to turn your attention to the Arctic and energy resources there. The Arctic has approximately 12 per cent of the world's natural gas and 30 per cent of the oil. However, it is in a hostile environment that is far from markets, and the technology to get it is not proven. We also do not know how much of that will be in our territory.
Mr. Homer-Dixon: That is correct.
Senator Rompkey: If there is some in Canadian territory, what should we be doing about it?
Mr. Homer-Dixon: I could speak at length about Arctic natural gas and oil resources. The estimates you have seen and the statistics you have quoted are largely drawn from the U.S. Geological Survey, USGS. If you look carefully at the methodology used to generate those estimates, they are almost entirely statistical. In other words, they have developed probability estimates of what resources might be in the Arctic basin. In many cases, these are largely independent of any on-the-ground exploration or testing because we have not been able to do it. We have not been able to go there and actually do the seismic testing to find out what might be available. Those resources are entirely speculative at this point.
There is reason to believe that the estimates from the U.S. Geological Survey are wildly optimistic. Maybe there will be resources; maybe there will not. I am sceptical about how easy they will be to extract. We will possibly be drilling in an extremely hostile environment. The ice will not have completely disappeared; it will be mobile; there will be many icebergs, especially off the coast of Greenland, which is one area where there is supposedly a substantial amount of oil and gas. In some areas, we may not be able to explore at all because of higher iceberg flows. It is also possible that climate change may result in much larger Arctic storms that will impede exploration. If we have large finds, how will we get the resources out?
I do not think resources in the Arctic basin will make a material difference to the energy challenge that humankind faces at this point.
Senator Brown: Your presentation is fascinating. If we were to tap into the Earth's magma on a world scale, would not the inevitable action-reaction equation start to take place?
In Yellowstone, they tried injecting water into one of geysers that goes off every 24 hours or so.
Mr. Homer-Dixon: That is Old Faithful.
Senator Brown: Yes. The first thing they produced was what you discussed in California — a whole host of earthquakes.
If we start taking heat from the magma, it seems that sooner or later, it will turn into hard rock as we take heat away from it. The first thing we will lose is our drill bits because the magma is quite hot.
Mr. Homer-Dixon: We would not drill that deep to reach the magma. You drill to the zone just above the transition between the crust and magma from what I understand. It is still entirely solid rock.
This research, again, has a large R&D requirement. However, it may turn out that the worst places that you could engage in these types of exercises are Northern California, Yellowstone Park or the Alps because of the potential risk of earthquakes being that they are tectonic seismically active zones. Obviously, we have much to learn.
In principle, there is something relatively appealing about it. I do not know the statistic, but I would guess that the amount of energy in the Earth's core would exceed human requirements by tens of millions of times.
I do not think there would be any risk of converting magma into solid rock. That heat will be there for a long time. It is constantly generated anew because of decay of radioactive materials in the centre of the Earth.
Senator Brown: According to some experts, we are looking at a major need for much more energy and a way to find it. Your chart showed the quadrillion BTUs per year of a variety of different energy sources.
Has anyone tried to measure the quadrillion BTUs per day that we get from the sun? That would seem to be an inexhaustible source?
Mr. Homer-Dixon: Yes, it is. I am glad you have raised this point.
The amount of radiation that falls on the surface of the Earth is tens of thousands of times more than is consumed by the entirety of humankind on a daily basis.
If you refer to my last diagram, the problem with solar energy is that it is relatively diffuse. At high noon on a sunny day in the Arizona desert, you get about 1,000 watts per square metre. A good PV solar system can convert maybe 200 watts of that into electricity under ideal conditions. The rest of the world, most of the time, will generate much lower wattage per square metre. An enormous amount of energy is delivered by the sun, but it is spread out thinly over the surface of the planet. We tend to use our energy in a concentrated way; for example, in urban buildings. A skyscraper in downtown Toronto will consume thousands of watts per square meter. This is a fundamental physical mismatch between the geographical characteristics of power generation from solar energy, including wind and biomass, and those of the density of our power consumption.
The point is that to solve our problem effectively, we need energy sources that have high energy density, or we will have to reconfigure our societies entirely and spread them out across the countryside. In that way, the energy that they consume would correspond roughly to the amount of solar energy that falls on the region in which they are located. That would mean a dramatic geographical reconfiguration of our societies.
Senator Brown: A former Member of Parliament from Red Deer, Alberta, Bob Mills has been working privately in this field for 15 years or so. At his home in Red Deer, he produces more energy than he consumes. He sells his excess energy to the Alberta grid. I have not seen his home, but I hope to do so soon. He claims that he does that on cloudy days as well as on sunny days.
Mr. Homer-Dixon: I would not be surprised. Our former Finance Minister Donald MacDonald has shown me the system in his house north of Toronto that also generates more energy than he consumes.
For the intermediate period of time going out a few decades while we transition away from fossil fuels, we are looking at 30 per cent efficiency in conservation and 30 per cent renewables — wind and solar — largely for distributed production and in particular for household energy consumption. You need feed-in in tariffs, as we see in Germany and as have been implemented in Ontario, to encourage people to install solar panels on their roofs. It is an expensive outlay and would involve heavy subsidization. You have to make some judgment calls about the larger public good achieved. You will never power an aluminum smelter or an auto production plant with solar panels.
There would be a 40 per cent residual requirement for large-scale, capital-intensive, centralized, grid-distributed electrical production. That means coal-fired plants with carbon capture and storage or nuclear power. It also means electrifying our transportation system. We would have point source production of carbon dioxide in coal-fired electrical plants whereby you pump the carbon dioxide underground, generate the electricity and send it out to the transportation fleet. The current problem is that we have distributed production of carbon dioxide in our transportation fleet. You cannot put a CCS plant on the end of every tailpipe. Let us get all the cars electrified and have the carbon that is produced in the electrical power plants pumped underground.
Senator Neufeld: I will talk about transportation because that is a huge part of the CO2 emissions everywhere. We heard earlier that you could use hydrogen, which has made quite a step forward, although it has its issue of carrying enough to get you far. However, that is an issue with electrification as well.
Mr. Homer-Dixon: Yes, that is right.
Senator Neufeld: How far ahead could electrifying our transportation system be done?
Mr. Homer-Dixon: It could happen very fast.
Senator Neufeld: I do not disagree that we should put less carbon into the atmosphere, but building these cars with batteries might not be the best thing for the environment either, given the basic construction. Would you agree?
Mr. Homer-Dixon: The total environmental impact life cycle assessment on a Toyota Prius does not look very good by the time you calculate the various things that went into it, such as the energy consumption, carbon load, toxic waste, et cetera. You are absolutely right. The committee might want to invite before the committee David Keith, the director of the Energy and Environmental Systems Group at ISEEE. He could speak with enormous knowledge on these subjects.
The Chair: He is on the list.
Mr. Homer-Dixon: Mr. Keith showed me the statistics to support the fact that delivering electrical energy to a wheel in a car is about one fifth the cost of gasoline energy. It is much cheaper. That is why, if you have a plug-in hybrid vehicle, people want to use the plug-in because they can travel from point A to point B, within the range of their battery, for much less cost than they could do it using gasoline. The main problem is range of travel for the charge in the battery.
Could hydrogen solve that problem? Hydrogen was all the rage a number of years ago. Everyone was excited about it. I was involved in a venture capital firm that was supporting the development of hydrogen technologies. Within about two years, the enthusiasm vanished for a number of reasons. Figuring out a way to transport enough hydrogen to do a significant job, such as moving a vehicle long distance from one place to another, was difficult. The storage problem is very hard to solve.
On the chart that I provided to the committee, you can see that even when hydrogen is liquefied, the volumetric density or megajoules per litre of power density in hydrogen is very low. Therefore, it is much less attractive than gasoline or diesel as a fuel because large tanks are required to store sufficient fuel to travel the distances that people are accustomed to these days.
There is a more fundamental problem. When you have hydrogen in your car, you run it through a fuel cell, generate electricity and power an electrical engine. That means efficiency losses. Why not simply put the electricity in a battery, power the electrical engine and remove those efficiency losses. With hydrogen, you are introducing another step between the energy source and the electricity at the wheel. You might as well put the electricity right into the car instead of putting hydrogen into the car and generating electricity from the hydrogen. People realized that fundamentally there was an illogic to hydrogen in transportation vehicles because of that fundamental efficiency loss. It made more sense to use straight electricity.
Senator Neufeld: I appreciate your viewpoints. I have a different viewpoint about hydrogen and what it might do in the future. We have done many experiments with it, not just in British Columbia. Ford, General Motors and Honda are experimenting as we speak. However, the same problem arises, namely, you cannot get far; and it is the same with battery-powered vehicles.
Mr. Homer-Dixon: That is right.
Senator Neufeld: I agree that we do not have a silver bullet. Many different things will have to be done. Currently, compressed natural gas is being used widely in large trucks in the transportation industry. China and the U.S. employ most of the technology that we have developed in Canada. Those things are options for the future and should remain part of the mix. Perhaps folks such as you and other people who do this work will find that silver bullet.
I see natural gas on your chart at 20:1; am I reading that chart right?
Mr. Homer-Dixon: Yes, and probably less for shale gas.
Senator Neufeld: It would be less for shale gas because it takes more energy to get shale gas.
Mr. Homer-Dixon: You drill many holes and use a large amount of high-pressure water.
Senator Neufeld: You have domestic oil from 1930 to 1970, the changes you see there, 100:1 to 30:1. Where would natural gas have been 30 years ago?
Mr. Homer-Dixon: I do not know. I would have to ask the researchers who put this together.
Senator Neufeld: Could we ask you for that?
Mr. Homer-Dixon: This chart is from a report by the Post Carbon Institute that just came out last week; it is the first time I have seen all this analysis together in one place. You are right that it is interesting to watch the trajectories over time. Coal has probably gone up. Coal has an EROEI of somewhere between 50:1 and 80:1. As we have become more efficient in blowing off the tops of mountains and getting the material out of the ground with big trucks, we have probably actually increased the energy return on energy investment. There is no reason in principle why they all have to go down, at least for a while. It would be interesting to know what has happened to natural gas. I believe it has gone down, but I do not know how much.
On the hydrogen issue, I am actually quite agnostic. The problem is range. The problem is energy storage in transportation systems. We might be able to solve that problem with hydrogen or new forms of electrical batteries, or we electrify our roadways so that you do not actually have anything more than a small battery in a car and the car clicks onto a rail in the roadway and you are off. We can solve the range problem in many ways. Let us focus on that rather than what the actual energy source for the vehicle itself will be. It is a research problem, fundamentally.
Senator Neufeld: Many options are available, remembering that all of this energy has to be generated someplace and somehow and distributed some way.
Mr. Homer-Dixon: From a public education point of view, that is important, because most people do not understand that something such as hydrogen or the electricity in a battery is only an energy vehicle not an energy source. Electrical energy has to be generated to produce the hydrogen elsewhere.
Senator Neufeld: You talked about energy storage, which we need to look at. I would suggest hydro is a great storage for electricity because the water can be stored. Almost 90 per cent of the electricity consumed in British Columbia is clean, and it is from hydro and renewables, such as wind. I do not think wind is the answer either, but renewables can be part of it. Opportunities can be found for micro-hydro where there is mountainous terrain. Where I come from, we have that, as do other parts of Canada, and it is smaller and less intrusive on the environment. Would you agree with me?
Mr. Homer-Dixon: I agree with everything you say. The only amendment I would make is that with hydro as an energy storage system, coupled with wind, for example, it all depends on whether you have the elevation, or the geographic circumstances are such that water can be pumped up to an elevation, stored in a reservoir and then used to drive turbines when the wind is not blowing. Many places simply do not have the physical characteristics proximate to areas where a great deal of wind might be generating.
Senator Neufeld: I am not talking about pumping water. I am talking about water running out of the mountains into the reservoir. We do not pump water up.
Mr. Homer-Dixon: You use the wind when the wind is blowing to move water into a higher reservoir, and when the wind is not blowing, you use the reservoir to generate hydroelectricity.
Senator Neufeld: I am talking about huge storage reservoirs. Quebec is no different, and Manitoba is no different. There are those opportunities.
Mr. Homer-Dixon: The problem of energy storage with renewables is a central issue. With hydro, it is almost solved by definition because the energy storage is behind the dam. However, with solar and wind, it is not solved yet. We talk about pumping compressed natural gas into underground chambers, et cetera; maybe ultimately this is where hydrogen will come in. We will generate hydrogen at the energy production site where the wind turbines are located and then burn the hydrogen.
Senator Neufeld: I would like some information on the Basel experiment. I am not unfamiliar with 10,000-foot wells. Could you provide some information on the wells?
Mr. Homer-Dixon: They were down about 20,000 feet in Basel, and that is where they were heading in Northern California as well. The company in Northern California was AltaRock Energy. The New York Times has had two or three major articles on this in the last six months.
The Chair: We should have a session on geothermal. Transportation is such a huge factor in the current situation and with some of these new technologies being discussed. Has a new way to power airplanes been suggested or proposed? I was asked that on the weekend with respect to all this debate that is happening. I have heard most of the ideas but must have missed that. There must be something.
Mr. Homer-Dixon: Air travel is one of the toughest nuts to crack, but I am not someone who believes you have to simply eliminate flying.
The Chair: I said exactly that, that the answer is to stop flying. They cannot make any money in the airline industry.
Mr. Homer-Dixon: Being entirely speculative, our energy prices will go up substantially in coming decades. In real terms, relative to other factors of production, I would not be surprised if we see a doubling, tripling or quadrupling of energy prices because of these two pressures that I mentioned. It will induce a profound restructuring or reconfiguration of our technologies.
I would not be surprised if, by 2025-30, we start to see large quantities of non-perishable, manufactured materials and ores, et cetera, moving overseas by sail. It will be by high-tech sailing boats with the fanciest new fabrics. These will be ships as we have never seen before. They will have sails, but they will be using the most advanced technologies and computers to ensure that we extract as much energy from the wind as possible. We will see large quantities of material moving by sail within two or three decades. We will see a whole new tourist industry in sailboats, where people will take trips to the other side of the planet over periods of months rather than flying in a period of days.
The Chair: Through the Northwest Passage, of course.
Mr. Homer-Dixon: For air travel, my guess is that we will develop something along these lines: We will recognize that hydrocarbon fuels, kerosene in particular, have a certain set of properties that are ideal for air transport, in particular; namely, relatively low volatility and a high power density, as I indicated. To try to get anything approximating a reasonable range with a plane and hydrogen — and I have seen designs of these — an enormous tank sitting over the top of the passenger cabin is required, which would not entice many passengers because of past experience with hydrogen, for instance, the Hindenburg explosion.
My guess is that we will continue to use something similar to kerosene produced through zero-carbon processes. Similar to what Mr. Layzell said, we will generate hydrogen using a zero-carbon energy source and then combine the hydrogen with carbon dioxide from the atmosphere to produce a hydrocarbon proximate in kerosene, and we will use that in our planes. When it is burned, we would simply return the carbon to the atmosphere, so it is essentially a continuous cycle. The key is to find the zero-carbon energy source at the beginning of the process. I would not write off air travel, but it will be much more expensive.
Senator McCoy: You started to answer a question from Senator Neufeld, but I do not think you returned to it, namely, how fast the transportation system could be electrified.
Mr. Homer-Dixon: I am glad you returned to that. Again, referring to David Keith and some conversations that I have had with him, he mentioned — and he was right — that when the internal combustion engine was introduced and the first viable designs for passenger vehicles were available in the late 19th and early 20th century, the transition away from horses to cars, especially in cities, happened very fast; it happened within a period of about 15 years.
He suggests that, given the cost advantage of electricity that I spoke about before, the cost to the wheel of electricity, compared to gasoline, is about one fifth of power delivered to the wheel. If we can solve the range problem, we could see the transition very fast. There are huge economic advantages to going electric, at least with our passenger transportation fleet. Our truck transportation fleet is another story; but with our passenger transportation fleet, the turnover could happen quickly.
I am surprised that hybrid vehicles are making the inroads that they already are despite the fact that they do not offer huge economic advantages yet. Once we see a big economic advantage, the transition could happen fast. So much depends on getting the price signals right. In this case, getting the incentives right for electrical passenger transportation involves solving the range problem.
Senator McCoy: Why would it not be the same for the trucking business?
Mr. Homer-Dixon: I would have to defer that question to experts, but my understanding is that when it comes to the sort of long haul, high power requirements for truck transportation, electrical vehicles are not adequate at that point.
Senator McCoy: Do you think it has to do with the range again?
Mr. Homer-Dixon: It is range and also power; we need huge amounts of torque, which, of course, electrical engines have. In this case, I would have to defer to people such as Mr. Layzell. However, I have seen it referenced that electrification of the truck transportation fleet presents many more problems than electrification of the passenger fleet.
Senator McCoy: I would like to spend some time going over your last diagram to understand it better, but we could do that offline.
We assume that no one does anything unless we put some incentive or compulsion in place. Certainly, that would appear to be the case. No one has done anything serious in Canada about reducing carbon; and all of our plans are about the government making it mandatory in one way or another.
I notice that you have studied this matter from the points of view of cognitive science, social psychology and complex systems theory. I think you are the first person that we have had the opportunity to speak to about that.
How valid do you think that assumption is?
Mr. Homer-Dixon: In getting the economic incentives right — and I will not talk about compulsion — they involve both carrots and sticks. There are economic advantages and disadvantages to acting in certain ways. Economic incentives from a carbon tax or some type of carbon price would make a huge difference.
Right now, in terms of the psychology of the problem, we have many people who want to do the right thing, and they do in many ways, with costs to them. They might buy a Prius, and even with the subsidies and so on, it probably costs them more money up front. Ultimately, it might not even fit their needs well because they are cramped inside; so they pay costs in various small and large ways in an attempt to make a difference.
The problem now is that our ethical impulses are pushing in one direction and our economic incentives are pushing in another direction. Our economic incentives are not encouraging us to go green, yet our ethical impulses are. We need to align the two in the same direction, and then we will get a more vigorous public response.
It is not all about economics. People make many choices because they think it is the right thing to do. However, if you are pushing against economics, it makes those ethical impulses very difficult to act on. It makes it a very steep hill to climb.
You have asked the question about cap and trade versus taxes. I agree completely with what Mr. Layzell said. Taxes are harder to gain, and cap and trade will introduce huge bureaucracies — ironically, because it is generally the preferred approach. However, it is much more burdensome in terms of bureaucracies and institutional infrastructure.
The main thing is that I do not care what is done, but we have to get across to people — and this is stated in moral terms — that they need to pay a price for using the atmosphere as a garbage dump for their carbon, just as we pay a price to use the local landfill for our garbage.
In Fergus, Ontario, I have to go to the local grocery store and buy these little yellow plastic bags for $1.50 each; I put all my household garbage in there and put it out on the curb. That is a user-pay system. Houses that used to generate a dozen black bags of garbage every week are down to one or two; it makes a real difference.
You then start to invoke some of this ethical impulse. People start to think how little garbage can we throw out if we start working on it. It is amazing how many people, especially with kids in their families, have these conversations and have a little game with themselves about how much they can reduce.
You need to get the economic incentives pushing in the same direction as the ethical impulse. If you frame this in terms of paying a price for using the atmosphere as a carbon sink, a user-pay strategy works. Then you can ditch the whole language about taxes and talk about it in terms of user pays.
You need to reframe this problem. It has been framed in such a way that it has poisoned the politicians. I think it can be reframed; it is about how you explain it to people. Then you can start working with people's better nature, instead of their worse nature.
The Chair: Senator McCoy, you have unmasked our first real, live energy shrink here. It is great stuff.
Thank you, sir, for being so thoughtful. Your approach is unique and very instructive to us as we proceed with our studies.
We will now go off air and ask the senators to stay for a few minutes to deal with the budget.
Colleagues, we are considering the supplementary budget that we require with respect to our study from now until the end of the fiscal year. As I suggested earlier, we had a little glitch, but it is not that serious. Many aspects are involved when we go on the road, as we will do, to British Columbia, Senator Neufeld. It is essential to have the translators and all the paraphernalia and equipment that goes with that.
For reasons that really are not relevant, we did not have it in our documentation when we went to the committee. However, we have prepared a supplementary budget. In so doing, we have included several other small things, for example, a provision for advertising, which may be necessary for the local media if we are holding public hearings.
The supplementary asks for about $35,000, which we already warned the committee about the other day. We thought we could do it without having to go through the committee again, but we could not, so I need your approval. Would someone like to move it?
If anyone has questions, Ms. Gordon is here. I will read it: Is it agreed that the special study supplementary budget application for our energy sector study, for the fiscal year ending March 31, 2010, be approved for submission to the Standing Committee on Internal Economy, Budgets and Administration?
If I have that motion and it is duly seconded, then we can discuss it.
Senator Mitchell: I will move it.
Senator Neufeld: I will second it.
The Chair: It is moved and seconded. Who had a question?
Senator Mitchell: It was me moving it.
The Chair: There are no questions. All in favour?
Hon. Senators: Agreed.
The Chair: I see it is unanimous. Thank you very much. It was a great session tonight. I will be absent on Thursday morning but Senator Mitchell will chair the meeting. I will read the transcript carefully the next day.
I want to say to those of you who are still here that I went to the Copenhagen briefing meeting, for a group that is now known as the ministers' advisory group. There were 27 of us there, including CEOs. I was the only lowly political person there, other than one or two of the minister's staff. They were university presidents and high-class people. The minister was terrific, as were the ambassador to the environment, Michael Martin, and the other person from Foreign Affairs and International Trade Canada. I think this thing is on track. It is not just what you read in the newspapers. This government does seem to be seriously engaged and wants to make a difference. Forty professional bureaucrats are in the negotiating team — they were not there — that is going. This is big business, and I will keep you posted all the way along.
(The committee adjourned.)