Proceedings of the Standing Senate Committee on
Energy, the Environment and Natural Resources
Issue 1 - Evidence - March 16, 2010
OTTAWA, Tuesday, March 16, 2010
The Standing Senate Committee on Energy, the Environment and Natural Resources met this day at 5:07 p.m. to study 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 am calling to order this meeting of the Standing Senate Committee on Energy, the Environment and Natural Resources. I would like to welcome everyone this evening, not only those here in the room but also those who are watching us on the World Wide Web and on the CPAC network. We are pleased to have this opportunity to continue our dialogue with Canadians on the important subject of energy and the development of a strategic framework for a national energy policy.
Before getting into the details, I would like to identify the honourable members of the committee.
[Translation]
My name is David Angus, I am the chair of the committee and I represent the province of Quebec.
[English]
To my left, we have Senator Leo Housakos from Quebec. To his left, we have Senator Richard Neufeld and Senator Larry Campbell from British Columbia. On the other side, to my right — and I am not omitting the gentleman beside me; I will introduce him last — we have Senator Bert Brown from Alberta, the only elected senator. To his right is Senator Tommy Banks, also from Alberta. We have Senator Dan Lang from the Yukon, and another Quebecer, Senator Judith Seidman. To my right, last but not least, is Deputy Chair Senator Grant Mitchell from Alberta. To my left we have our clerk, Lynn Gordon, and our valuable researchers from the Library of Parliament, Marc LeBlanc and Sam Banks.
We are resuming our study in developing a policy that hopefully will enhance and bring forward a much-needed framework for a national energy policy. We left off our study before the Christmas break and are back in action.
In the first phase of our two-year study, we are consulting energy policy experts and major stakeholders, including the provinces and key federal departments, with the goal of better understanding Canada's energy sector. The committee is here to listen and learn, with the goal of identifying issues and opportunities facing Canada's energy system and to discuss policy options.
We are still formulating our plan for this study, so things are in evolution, as they always are with a matter this dynamic. Obviously, with any legislation we receive, our mandate here is that government legislation trumps other studies, private bills and the like.
Welcome to the senator who always makes a grand entrance, and with great reason to do so, Senator Elaine McCoy from Alberta. I am just making introductory comments and talking about how the study may have to adjourn if we have to deal with important legislation.
Nevertheless, it is our hope that we can meet our goal to release an interim report that would serve as a framework for discussions going forward before the summer break. We have urged all stakeholders out there — and hopefully some are tuning in today or will read the transcript — not to despair. This is a long-lasting mandate. It has just been reaffirmed by the Senate.
We will get to everyone in all sectors, whether they are in the alternate energy areas, such as wind and solar, or in the traditional sources. Our intention is to go around the country, in four or five main areas, and take soundings from the folks out there and to hold round-table discussions on the relevant matters. We will hear representatives of the various energy sectors right across the country and hopefully visit other sites and cities firsthand to conduct meetings and, as I said, hold these public hearings.
Today, it is a great pleasure to welcome two witnesses from the Energy Council of Canada. We learned, as we got into our study, that other groups in the country, not the least being the Energy Council of Canada, are working in the same basic area. Of course, being Conservatives, Liberals, non-partisan and even independents, we are frugal and mindful of the need to not duplicate or waste money. We feel that by having you gentlemen here this evening, we might learn how to work together with you and perhaps supplement or complement what you are doing. Eventually, given that we are an official government committee, we might be a better channel for ultimately getting a hearing for the findings that we collectively have.
Dr. Murray J. Stewart is President of the Energy Council of Canada, which he became in April of 2009.
[Translation]
Dr Stewart was previously in this position from 2004 to 2006, following which he was the first executive director of the World Energy Congress, which will be held in Montreal from September 12 to 16, 2010. Dr. Stewart is responsible for the overall program and management of the Energy Council of Canada, support of the World Energy Council as the Canadian Member Secretary, and will ensure the full support of the Energy Council and its members for the success of this World Energy Congress in Montreal.
[English]
I had the pleasure, in preparing for today, of meeting with Dr. Stewart, the president of the council. I can assure you that you will find him and his colleague, John Muir, Chair of the Energy Council of Canada, very interesting.
[Translation]
He is active in the Canadian Electricity Association, the National Electricity Roundtable and the Energy Policy Institute of Canada. Mr. Muir is also director, Canadian Energy Policy with GE Energy. John has over 30 years' experience in the power generation industry.
[English]
Therefore, we are not talking to lay people here; we are talking to experts. We are delighted you are here, gentlemen. We will listen carefully to what you have to say. We have two hours set aside. I know my colleagues will be interested in posing questions. We try to keep it informal here but, at the same time, to use the time in an efficient manner.
I believe, Dr. Stewart, you will start off.
Murray Stewart, President, Energy Council of Canada: Thank you very much for inviting us here this evening. As you will see in our presentation, much of what we have been doing over the last eight or nine months and will be doing over the next number of months certainly aligns with what I see in terms of an energy framework for Canada. There may well be good synergies here.
We will give you a presentation on what we are doing, how we are doing it and a little about who we are and what we do; right now we are doing Canadian energy forums across the country. I look forward to the discussion to see if there are things we can do together as we move forward. At the end of the day, we all want to have a good framework for energy policy in this country.
I will turn it over to Mr. Muir, who will give you an overview of the World Energy Council and our organization and some background to our program on the Canadian energy forums, and then I will take you on a tour across Canada.
The Chair: That will be interesting.
Mr. Stewart: It is a partial tour.
The Chair: You were kind enough to provide us with a series of pamphlets and a summary of each of the fora that you have been holding. Is the program at each one of these regions the same roughly?
Mr. Stewart: It is essentially the same program, yes. We are trying to capture all the key energy issues and priorities in the region. The key is to get it by region before we start spreading too much integration. We are trying to ensure that we capture the key policy issues in all 14 jurisdictions.
John Muir, Chair, Energy Council of Canada: You will see that the structure of each forum follows the same pattern. They begin the same and end the same, but, in the middle, the topics of the two panels that we have for discussion in each case can be quite different as you look across the country because they were picked to be representative of the issues and the topics that are foremost in those areas.
I would like to thank you for this opportunity. As Mr. Stewart explained, it falls to me to give you a bit of the background and context of, first, the World Energy Council and then coming up to Montreal 2010. This is to explain the background of why we found ourselves in 2009 starting down this path of having energy forums across the country to collect this information.
The World Energy Council started in 1923 when the world came together after the First World War to rebuild the electricity grid. Since then, it has grown into a global non-profit membership organization covering all types of energy, with national member committees in 93 countries. It is recognized as the foremost global and inclusive forum for impartial dialogue on our common energy future.
One important output of the World Energy Council is the global studies program, which focuses on current and emerging high-visibility issues facing the global energy sector. Two of these specific studies will be addressed later in our presentation.
I mentioned Montreal 2010; the World Energy Congress is held every three years. It is a premier international, multi-energy forum for participants to better understand energy issues and solutions from a global perspective. It brings together over 4,000 top world leaders in the field of energy, including representatives from industry, government, academia, the NGO community and the media. Canada is hosting the next congress in Montreal in September.
The Chair: Pardon my intervention, but I did pose the question to Dr. Stewart of whether you are a government- financed organization. Could you explain? The council is completely private sector and financed by its membership, is that correct?
Mr. Muir: Yes.
The Chair: Except that some governments are members of it.
Mr. Stewart: We are basically non-political, non-aligned and non-commercial. We are a member organization. The Energy Council of Canada is the member of the World Energy Council headquartered in London. We are one of 93 organizations around the world.
Our members are in Canada, and they are from government, industry, NGOs — you name it, right across the whole spectrum. Right now in Canada, 10 of the 14 governments are fee-paying members, as are the General Electric Company and regulators such as the Ontario Energy Board, oil and gas companies, Hydro-Québec and utilities. We cover a whole spectrum of those that have a stake in energy.
Senator McCoy: What is the number per category?
Mr. Stewart: We have about 100 members. Of those, maybe 15 or 16 would be basically all governments. The exception is Quebec where, in effect, Hydro-Québec is a bit of a surrogate; the same with Newfoundland and Labrador, where Nalcor Energy is the member. In Senator Neufeld's province, the Government of British Columbia's Department of Energy is the member. Probably about 15 or so of the members are government.
Suppliers would make up another 15 or 20 members, companies such as GE Energy, Siemens Canada Limited and people such as KPMG, Deloitte Inc. — supplier service companies. The electric utilities go across the country: Emira Inc., NB Power, AltaLink, BC Hydro, British Columbia Transmission Corp., oil and gas companies such as Nalcor Energy and Suncor Energy Inc. We cover the whole spectrum.
Senator McCoy: Fifty out of 100 are industry?
Mr. Stewart: About that, yes. We also have relationships with all the sectoral organizations. When we look at energy issues, we keep in close contact with groups such as the Canadian Wind Energy Association, the Canadian Association of Petroleum Producers and the Canadian Gas Association. We have relationships with them as well so that we are not duplicating things they might want to do, although we do things quite different.
Mr. Muir: For the congress in September, the theme is "responding now to global energy challenges." This will be addressed under four issues divided up throughout the week.
The first day will address accessibility: Questions around meeting energy demand, the global challenges that we face for those solutions. The second day is availability: What is the right energy mix for long-term stability? The third day covers acceptability: Energy solutions for a living planet — that is where questions about greenhouse gas and other things will come in. The final day deals with accountability: What are the right policies, regulations, financing tools, et cetera to make the industry successful?
Around this congress, many Canadian and global organizations will schedule meetings to coincide. Some that I thought you would be interested in are the Canadian energy and mining ministers meeting, which is now scheduled to follow this on September 16 and 17; the energy members of the 70 state and government members of the Organisation international de la Francophonie; and the energy ministers from the 53 Commonwealth countries. They will be holding meetings just before or after.
When we started looking at these cross-country forums, the first of the energy supply challenges was the enormous changes taking place in the energy sector today. We can look at this as being driven by three dominant factors: the increasing need for more energy production; the need to make our society more energy efficient; and the need to make real progress in reducing the impact of greenhouse gases.
Canada has a rich endowment of energy resources that is very important in driving our economic growth and is one of our most important exports, especially when looking to our neighbour to the south, the United States.
With respect to the environmental challenge in particular, Canada and the United States face a major challenge to achieve the required progress to reduce greenhouse gases and the associated climate change impacts. As we look to balance our energy supply and environmental challenges in a period of rapid change, it is critical for Canada to maintain its global competitiveness.
The Energy Council of Canada has organized this series of Canadian energy forums to define the opportunities and challenges across our 14 jurisdictions and to define the similarities, differences and synergies between these diverse situations across our provinces and territories.
That is a background and overview of why we began this. Dr. Stewart will walk us through a cross-Canada tour of what we have done thus far.
The Chair: One thing that jumps out at me is that 93 countries have similar councils to yours.
Mr. Muir: Yes.
The Chair: Canada has everything in regard to energy and the environment. We are told to understand that energy and the environmental challenges are global challenges. We are encouraged to think multilaterally.
Does it appear that way in your organization?
Mr. Stewart: Yes, it cuts across. However, the situation changes significantly for different countries. Mr. Muir talked about availability and accessibility. That is not an issue in Canada. Basically, everyone in Canada has electricity and access to energy, whereas 2 billion people in the world have no access to energy. Those people are basically picking up sticks and that number is growing around the world.
Therefore, depending on where you are in the world, there are very different priorities. Canada is, to some extent, more concerned, as we should be, with the environmental impact, regulatory aspects and so on. Where you are in the progression depends on where you are in the world. Those 93 countries cover everyone from Canada and a sister organization in the United States to the poorest countries of Africa and Southeast Asia along with Saudi Arabia and so on. We cover a much broader spectrum than bodies such as the International Energy Agency, IEA, or the Organisation for Economic Co-operation and Development, OECD. However, at the end of the day, it comes down to the same fundamental issues, such as balancing supply and environmental issues to increase the economic betterment of everyone in the world.
Senator McCoy: I have a point of clarification about the last slide. You referred to 14 jurisdictions in quotes and then said "provinces and territories." Who is the fourteenth?
Mr. Stewart: It is the federal government along with the 10 provinces and 3 territories.
Senator McCoy: Since you went immediately to the United States, I did not know if it was their federal government.
Mr. Muir: I have one point to add on your previous question.
Under the World Energy Congress studies program, which I referred to briefly, several on-going and repeating studies go through a three-year cycle that looks at the state of energy policy and production in member countries. All of this information is available and updated on a three-year cycle. Mr. Stewart will talk about this. Special studies also are commissioned to look at a particular issue or topic globally.
The Chair: Is all of this information set forth in the website?
Mr. Stewart: Yes. We can also get the reports for you.
Mr. Muir: There is a great deal of information.
Mr. Stewart: Before we go on, I want to cover a couple of points in one of the studies that I gave you, the World Energy and Climate Policy: 2009 Assessment. This study was completed a few months ago and also has an ongoing piece.
We looked at the state of energy policy in about 90 countries around the world to determine what is happening with energy policy. We did not measure them, but rather looked at energy policies as they currently exist. We are doing another study where we are going into more depth to analyze the veracity of the effectiveness of energy policy and even the effectiveness of the country to establish an energy policy. It is not an issue in Canada, but, in many countries, it is an issue whether a country has the capability to develop a national energy policy. It depends where you are around the world when you look at the effectiveness of energy policy.
This slide shows a graph from the energy assessment we published a few months ago. We characterized the world's countries by rich or poor and net importer or net exporter of energy. It provides an interesting aspect when we look at energy policies. Energy policy is driven by which of those four quadrants a country is situated.
I want to point out that Canada is above the line and the United States is below the line. I think you all know that Canada is the only net energy exporter in the G7. In fact, there are very few net energy exporters in the G20. Not many energy exporters exist even among rich nations. Canada has a different approach when it comes to energy on a global basis in terms of how you structure what you want to do. As Mr. Muir said, Canada has a much development and investment for exporting our energy, which is very different from the United States and many of the world's countries.
It is also different when you look at electricity versus oil and gas. When you read some of details of these studies, put yourself in a Canadian context. Some provinces are net energy exporters and some are net energy importers. When you look at global basis energy policy issues, lessons learned can be applicable to Canada's federation. We do this when looking at global studies.
The next phase of this is to look at the effectiveness of Canadian energy policies. We have to go to the sub-national level to look at the provinces and territories. Otherwise, when we look at Canada, we will get the wrong answer. We will go through this as we look across Canada in terms of what we are doing with energy policy effectiveness.
That is an overview of some of the studies that we are looking at.
We have done seven of the fourteen regions of Canada — the fourteenth being the federal government. I will quickly run through the ones that we have done thus far at the 30,000-foot level with a brief preview of where we will soon be when we complete this study by the end of June. As of this morning, we have narrowed down the study in Yellowknife and are still putting together the ones in other northern territories as well.
I will go from east to west, starting with Newfoundland and Labrador.
You have the program for each of our forums in your package. The presenters and people engaged are from government, bureaucracy, politics, industry, academia, NGOs and other industry associations. We have a broad cross- section of people in these forums. Our keynote speaker in Newfoundland was Danny Williams. We have had premiers and ministers largely across the country.
With respect to Newfoundland and Labrador, it is a major contributor of energy to North America. It is a major exporter outside of Newfoundland with tremendous oil and gas developments offshore and much more hydroelectric potential. A key policy issue for Newfoundland and Labrador is how they develop the lower Churchill River.
We can get into a whole discussion on that, but it certainly is a huge block of potential clean energy that right now is not being developed. Again, there are key policy issues there.
The other point to make is that it is also an area with tremendous innovation and technology development for offshore in harsh environments, especially in Arctic environments. When you look at the many things that are happening in the oil and gas industry, we are actually a world leader in technology that is coming from Newfoundland and Labrador. That is one theme that is starting to come out of these, as well as innovation and technology. Almost across the country, we are leaders in different areas of the country when you look at innovation. Certainly Newfoundland and Labrador is harsh-environment offshore oil and gas.
I will not dwell long on these. We can discuss more details later.
Nova Scotia is an interesting province. It is the most carbon-dependent electricity generator in Canada, basically all coal fired. It is essentially an energy island with very little ties to any other province. It is almost the most isolated province in Canada when it comes to electricity. On the other hand, it has much offshore development potential. It also has potential for integration of its energy system, especially electricity. A key issue in Atlantic Canada is how to get far more integration. We found a high level of desire of the Atlantic provinces to do much more integration and bring together their energy policies and developments. That came through clearly.
To go back to Newfoundland and Labrador, one of our panels was the four deputy ministers from the four Atlantic Canada provinces. It was amazing. If you look at the transcripts of that, they were singing from the same song sheet on a general integration basis.
You may be aware what Nova Scotia has just implemented their next tidal project. That is now in the water. They had a previous one a number of years ago, so that is underway now, to look at the technology and other alternative developments.
Again, the theme in the Atlantic region is very much energy cooperation. We will talk in more detail on many of these areas as well.
I could probably spend the next three hours talking about Ontario.
The Chair: Have you covered la belle province?
Mr. Stewart: We have not done that one yet. I can come back after April 20. I will tell you what we will do there; I will give you a preview.
Obviously in Ontario electricity drives energy policy. Even when it comes to natural gas, the main driver is natural gas generation. Ontario is, no question, the most diverse electricity generation province in Canada. It has everything: nuclear, hydro, natural gas, a huge amount of wind development and solar with the feed-in tariff that came through as an off-shoot from their Green Energy Act. Again, it is very much driving this.
Mr. Muir's company is in the wind energy business. Essentially Ontario is putting in as much wind as the grid can handle, and the same with solar. How much they put in is very much limited by the grid, but a huge amount of wind energy is going in.
The Chair: Dr. Stewart, I am setting a very bad example for my colleagues, but this will be the chair's prerogative because the others can ask questions later.
You did emphasize very heavily, when we met, the fact that we are a federation. We have the federal government and all the provincial jurisdictions. Energy and natural resources — at least in a simplistic sense — are provincial jurisdictions, as is the environment. However, a huge federal component exists. Could you just crystallize how you see that, as you did for me, in terms of what business we have playing in this playground.
Mr. Stewart: At the end of the day, at the top level again, to me, an energy framework in Canada is 14 coherent, consistent policies, and each one has certain jurisdictions. Certainly the federal government has regulatory issues. Nuclear is a federal government responsibility when you look at the overall responsibilities there. Interprovincially it gets very much into federal responsibilities.
I will get to international trade later. Trade issues are impacting some of the provinces potentially very negatively in some cases. Again, that is a federal government responsibility.
My personal view — I think shared by many of my colleagues — is that I respect the federation in that we are not approaching an energy framework by changing the Constitution. It is about how to find a way to have all the parties working collaboratively together to achieve clean, sustainable energy but also to ensure that it is an economic driver for every region in Canada. That is what we have to do, and everyone has to have their part.
When I talk about an energy framework for Canada, the word "national" is not there. It is an overall Canada framework, and I consider all 14 jurisdictions as building blocks to that.
The Chair: That is excellent. That is what I wanted you to say.
Senator Lang: As you go through each province, could you point out whether they are a net importer or exporter? That is of interest to us and viewers. This is an education program for Canadians. Maybe we could start with Ontario.
Mr. Muir: If I could just back up and add something.
The Chair: On the federation?
Mr. Muir: Yes. In attending these forums — and I missed just one, so I have a pretty good snapshot — I think people are looking for a framework that will have different substructures but will work together and be reinforced across the country.
People are concerned about the opportunity of these individual plans, if that is the way it went, to work at cross purposes or maybe not as effectively together as they could. At these forums, people often talk about the need to have leadership in a way that will ensure that we come up with a framework that is reinforcing and helpful across the whole federation.
Mr. Stewart: In 1903, Ontario had the Power Corporation Act, and it was established to have Ontario self-sufficient in electricity. That is a history lesson. That persisted until very recently. We just implemented a 1,200-megawatt tie line with Quebec. It is the first time Quebec has integrated power into Ontario. There are tie lines, but in effect Ontario's plan now is not to be totally self-sufficient but to take advantage of clean energy in its neighbours. It has not happened yet, but it is part of the Ontario Power Authority's plans.
We are also looking at Manitoba — a small tie line is now coming in from Manitoba — for the longer term. Right now, Ontario is essentially neutral with a little net import. Natural gas is all imported; Ontario has no natural gas capabilities, just a small amount of oil in Southern Ontario. To get into more detail, Ontario developed a nuclear program many years ago with Ontario-mined uranium. It was developed in Ontario as an indigenous power source. Obviously right now, all the uranium comes from Saskatchewan. Again, it was indigenous, so now Ontario is importing uranium. However, it is still processed in Ontario.
Presently, Ontario primarily is an importer — all of the oil and gas is imported. Electricity is a bit neutral, although it is trending toward more imports than exports right now.
The Chair: Would it be naive to ask whether that is imports from other Canadian sources or from outside as well?
Mr. Stewart: Are you referring to electricity? Quebec is a net importer into Ontario; it has been for a number of years. Now it is much more. The rest is between Michigan and New York State and is pretty well a balance based on time of day and time of season, just because of the nature of the double peaking in Ontario in summer and winter. Actually, in Ontario the summer peak is as large if not larger because of industry and the loading.
Natural gas obviously comes primarily from the West. There is interesting energy policy because of some of the shale gas developments in Pennsylvania. It is being looked at to see whether the natural gas pipeline can actually be reversed to flow north as opposed to over the Great Lakes, down into the U.S. Will shale gas be a better source into Ontario to feed much of the natural gas and natural gas generation that is being built as well? There is shale gas south of Quebec City as well as New Brunswick.
Ontario is probably leading the country in terms of smart grid and smart meters. I live in Toronto and have a smart meter in my house. I have significantly lowered my power bill over the last number of months, running the dishwasher and so on, by arbitraging the time-of-day price on my power, which is from 4 cents to 9 cents. It is a significant difference and a high incentive. Ontario is leading in smart grid and looking at other applications to use electricity for transportation. I think you are aware of some of the incentives in Ontario for plug-in hybrids and electric cars as well, which is more going to the electrification from a policy point of view. I might want to come back to that.
Manitoba, my home, is an interesting province. It has, no question, the lowest cost and lowest emitting electricity grid in Canada, and probably in North America as well. It is essentially all hydro, very low cost, very efficient. It is also developing more hydro. Manitoba is looking at more transmission lines and Bipole 2 being built, so we will get more transmission down the province.
One of the issues is a little trade issue. It is interesting that Manitoba Hydro ships a large amount of power into Minnesota and the Midwest. It does not count as clean energy. It is not part of the renewable energy portfolio in those markets. Again, when you look at large hydro developments in Canada, there is a bit of a trade barrier in terms of getting the full advantage of our clean energy from the large hydro going into the U.S. We talked about that quite a bit in Manitoba. It applies to Quebec as well, and maybe British Columbia.
Manitoba is looking at many things with electric vehicles. Those who know Manitoba know it has a built-in, plug-in car system so you can electrify cars simply. Everywhere you go, including shopping centres, you can plug in your car. You have to find a way to meter it, but the infrastructure is there. They are doing many things in home heating with heat pumps and so on. They are probably one of the cleanest provinces in Canada, and they also have many incentives to be even cleaner, especially in transportation. You probably know the bus company there has many innovative hybrid buses. Many things are happening in transportation, especially with Winnipeg being a transportation hub. A number of interesting things are happening in Manitoba.
Saskatchewan is a province with vast energy resources. Bakken oil has a part of 400 billion barrels of light crude, which is currently being developed. That is two or three times Saudi Arabia, and that is now under development in Saskatchewan. It has huge resources there, and the technology is developing to actually commercialize those.
They are a large producer of natural gas. I am not sure if it has happened yet, as I have not seen the figures, but Saskatchewan is probably just about to surpass Alberta on conventional oil production, just from the way the reserves have gone. They are the number one supplier of uranium in the world. Saskatchewan has done many things to increase their value added on the whole fuel cycle, not necessarily nuclear reactors but certainly more value added in uranium. They are also looking at research reactors in Saskatchewan as well for more value added.
They also have the honour of being the highest per capita greenhouse gas emitters in Canada, with 3 per cent of the population and 9 per cent of the emissions. That drives some of the technology development for carbon capture sequestration. They are also very dependent on coal for their electricity. You have probably heard about Weyburn and the CO2 sequestration for enhanced oil recovery. However, the one to watch is Boundary Dam, which is significant because it will be the first large-scale, commercial retrofit of a pulverized coal-fired power plant that will use the CO2 collected for enhanced oil recovery. This is the retrofitting of an existing power station. Watch that space because that could be a fundamental change in technology if we can clean up conventional power stations without having the full capital turnover of existing power plants. That is underway as we speak. Boundary Dam is in the southeast corner of Saskatchewan. It is not a dam; it is a reservoir, but a coal-fired power plant.
Premier Brad Wall was responsible for key input to the speakers on technology and leadership. He basically talked about innovation. He saw Saskatchewan as being the energy innovation capital of Canada. He was strong on that. He is investing a large amount, even to the point of a policy that any carbon revenues, carbon tax or anything similar stay in Saskatchewan for investing in technology and innovation. He will ensure that that policy is compatible with any federal requirements or any international treaties. He would do that in concert with the federal government, and it will drive technology innovation in Saskatchewan.
I know a number of Albertans are here. Alberta has vast energy resources, including the oil sands, conventional and unconventional natural gas and huge coal reserves. Their electricity is primarily coal-fired, so again we are looking at advantages of carbon capture sequestration, which in Alberta applies to possibly the oil sands as well, as especially here we are looking at one of the largest growth areas in oil production in the world, probably the greatest. Of any country in the world, the oil sands represent the largest growth of oil production.
In your package, I included another study that we released several months ago on trade and investment rules for energy. Interestingly, it was actually produced and published just before the Copenhagen summit. One issue here is that when we look at global discussions and negotiations on greenhouse gases, we are, in effect, looking at an international trade agreement. In the study, some concerns surfaced about how that is happening. Is it really compatible, or should it be, with the existing General Agreement on Tariffs and Trade, GATT, and World Trade Organization, WTO, rules? Some serious unintended consequence may result if we do not ensure global trade deals on carbon do not impact. They have many unintended consequences when looking at global patterns in terms of energy and energy services. That study was led by a Canadian from Toronto, but it was a global study with people around the world.
In Alberta, they are doing a substantial amount of technology investment. It does have a carbon tax. If any of you know Eric Newell from Syncrude Canada Ltd., he now heads up the Climate Change and Emissions Management Corporation. They have over $150 million, give or take, that they are reinvesting in technology development in Alberta. Once again, the same as Saskatchewan, they are reinvesting that in energy technology. It is very much a package there, and they are doing many things in carbon capture and storage as well in parallel with the federal government.
British Columbia is also a jurisdiction with a broad-based carbon tax. It has a huge amount of renewable energy capabilities and natural gas, and obviously the huge shale gas developments in Northeastern British Columbia. You are probably aware that we are now looking as well at British Columbia being an exporter of natural gas, which means a fundamental change in the energy picture of Canada. When we look at shale gas on a North American basis in the U.S. five or six years ago, we have gone from 10 years of proved reserves to now looking at 100 years. A fundamental change has occurred over half a decade in what technology can do with horizontal drilling and fracking of rock. It has created a fundamental change in the energy policy. British Columbia could soon be exporting natural gas to South Korea, which has now invested in Northern B.C. We could be reversing the perception of pipelines. Only a few years ago, we were looking at liquefied natural gas, LNG, facilities bringing gas into British Columbia.
With British Columbia, we talk about northeast energy corridors and transmission infrastructure development. British Columbia now is a net electricity importer, and certainly their policy right now is very clearly that they want to be at least neutral if not positive by 2016.
If you looked at The Globe and Mail this morning, you will have seen some major announcements on clean energy developments in British Columbia, a number of wind and small hydro developments, to develop more clean, sustainable energy generation in British Columbia.
Many things are happening out there. Whether to develop a large hydro facility at Site C is another key policy issue in British Columbia that they are addressing.
The Chair: We are proud of our committee member, Senator Richard Neufeld. He was the honourable Minister of Natural Resources probably at the time this great, what you call, fundamental change was born. He is so humble that I thought I would give him the kudos because he is a very good man.
We do not know you, Mayor Campbell, but we will get to know you.
Mr. Stewart: I give him credit as well because part of the northern development involved a good relationship with the Aboriginal peoples. Many things had to happen to make this work, so I certainly think you have a worthy member here on your committee.
That is where we are so far. Our next forum, where we will get into more detail, is in Montreal.
The Chair: It is significant to note — and the clerk points out — that whereas I mentioned provinces earlier, I meant to include the territories. Of course, those slides highlight the involvement of the Yukon, the Northwest Territories and Nunavut.
Mr. Stewart: Yes. We are going to Montreal next. We are covering climate change, energy and economics, as well as transportation. Quebec is involved with electrification of cars through the Mitsubishi deal. Bombardier is there. Quebec is showing global leadership in terms of electrification and innovative transportation systems.
We are going to Saint John after that, and then we will end in Ottawa on June 15. In between, we are just now figuring out dates to go to Whitehorse, Yellowknife and Iqaluit. We are doing this individually. That is part of our approach. Even though some locations have smaller populations, we are going to each area individually so that we do not lose the key issues before we start looking at common issues. We will probably start in Yellowknife, then Whitehorse, then Iqaluit. Major development issues exist there in terms of pipelines and hydroelectric generation. Iqaluit is even looking at the possibility of uranium mining. Many things are happening in the North that we want to capture and bring together on this project.
Mr. Chair, that is where we are today in a nutshell, and I look forward to any questions, comments or queries.
The Chair: That is fascinating information. We have tremendous interest in what you have had to say. You have done a remarkable job to get so much information into 40 minutes.
I do not suppose it is all that relevant, but one tends to wonder how you will tie it all together. We are wondering already, and we are just getting started. In any event, maybe you could weave that into your answers. I will let the senators have the floor.
Senator Mitchell: Thank you. It sounds as though it is a powerful study, and you have made great progress. It is quite an inspiration to me and probably to each of us.
Some here will say that I sound like a broken record. I will ask about climate change, to which you alluded. One of your four sections deals with those questions. Can you expand on where your study is going on that? Will you be looking at tax versus cap? If you are looking at cap, what thought will you be giving to the scope of a market for credits and offsets?
Mr. Stewart: The simple answer is that we are not really covering that issue. Certainly, I will come back to Saskatchewan. You can see the transcript of Brad Wall's speech. Not in his lifetime will there be cap and trade related to Saskatchewan. It will be a carbon tax, and the money will stay in Saskatchewan. To paraphrase him, he would say that cap and trade is that we are capping and trading our dollars out of Saskatchewan. He said that exactly as I just said it; so again, it depends.
I am not sure that we, as the Energy Council of Canada, will take a position on what is best. We, the same as everyone else, agree that we have to go to a lower-carbon economy. The question of how we get there will be dependent on jurisdictions and on what Canada might do on an international agreement versus what we might do internally in Canada as well. I am not sure there is a one-size-fits-all solution.
Senator Mitchell: When you say that we have to get to a lower-carbon economy, what is driving that? Is that just an appreciation of the science that is happening? Is it an anticipation that that is where governments are headed, U.S. and otherwise? Is it your membership? I would be interested to know that.
Mr. Stewart: It is all of the above, actually. Although I know it is old now, I still personally believe in the precautionary principle. Whether you believe it or not, to start with, it is a good efficiency approach. We should all be more efficient in our energy usage, which reduces CO2. The science exists, but I think we have to go to a lower-carbon economy just from a pure efficiency point of view.
Senator Lang: I appreciate you coming. In many ways, you are covering areas at which we will be looking. This certainly brings into question to what extent we will look at the issues because we do not want to duplicate what other organizations are doing but rather complement what others are doing.
Why have we not heard of you before the last couple of weeks? I am thinking from a public relations point of view. This is part of an education program for us all as Canadians. Obviously, you come with very good credentials. What are you doing for public relations so that the people in British Columbia receive the results of what you have done, as well as those in Saskatchewan and other parts of the country?
Mr. Stewart: That is a very good question. We invite the media to our events and issue press releases, et cetera. We have some media coming and reporting on it, although that is limited. To your point, we are not that visible outside the community. Certainly the provincial government people know about us, as well as industry, NGOs and associations. I would say that the public generally does not know us that well; I would agree with you.
Mr. Muir: To some extent, we have to work within the framework of the World Energy Council. As Mr. Stewart and I have discussed with other parts of the Energy Council of Canada, some major changes have taken place in the leadership and staff of the World Energy Council recently. The gentleman who took over about a year ago has an objective to raise the profile of the World Energy Council considerably. To a certain extent, we have been flying under the radar, partly because we are not a lobby group; we are not an industry association that will make a great deal of noise lobbying for a particular policy.
As Mr. Stewart described, we collect and report on information. We may draw conclusions, but we try not to put it in the context of, to the earlier question, you should do this or you should do that with respect to cap and trade or a tax. We will collect the information, condense it and draw some conclusions of pros and cons but not lobby out there directly for a particular outcome.
Senator Lang: As an observation, perhaps more effort should be made in letting the public know that you are out there and doing this because it is so important to our day-to-day life and our ability to meet our obligations.
The Chair: Senator Lang, this is just a point rising from your question that you might want to pursue, but I understand from my meeting with Dr. Stewart that Natural Resources Canada, NRCan, is a very active member of this organization. Following from your question, why do we not know more about it? They pay a fee to be a member.
You might want to piggyback on that part. It is up to you. I do not want to destroy your line of thinking.
Senator Lang: I want other members to get an opportunity, too. I have two very straightforward questions. When do you expect this study to be completed and you come to your conclusions? Also, my concern is about shared jurisdiction between the provinces and the Government of Canada. We talk about 14 jurisdictions. What can Canada do with the various regions of the country to tie things together?
Do you feel you will come to some definitive conclusions or recommendations that we, as policymakers, can consider to see if we can work with the regions in question to come up with something that is workable?
Mr. Stewart: I will address the second one first. I feel we will come forward with some very good observations that lead to conclusions. I am not sure we will tell you what to do. However, we can show you, coming out of this, what has worked, what has not worked and what could work in terms of leading forward to an energy framework.
I am not trying to pre-empt what we will say, but we will go as far as we can, no question. We hope you will take the report and say, hey, that is what we should be doing; but I am not sure it will be a definitive road map.
As far as the when, the stake in the ground for this whole program is the World Energy Congress in Montreal. At the same time, we are talking about also presenting it to the Council of Energy Ministers in Montreal the day after. Again, there is a good deal of interest from the provinces, and, of course, they are involved in this. In every province, we have had the deputy minister or the minister as part of our program.
Please feel free to get ideas, when you look at our programs, as there is probably a good cadre of folks you will want to talk to as you move across the country as well.
Senator Brown: I think I heard you say that you will be studying some of the economics of different energies. Is that correct?
Mr. Stewart: I do not think I said that.
Senator Brown: I thought I heard you say something about economics at one time.
Mr. Muir: Presentations at the forums address specific subsets of that big question, but we are not trying to pull together a coast-to-coast study in that way.
Senator Brown: My concern on that issue is that an article in last week's Financial Post talked about the different alternate energies, all of which seem to be failing on an economic issue. They take energy from 9 cents to 14 cents all the way up to 80 cents. Solar energy causes much of that.
Another alternate energy is wind, but it produces only a fraction of its potential outcome because wind is undependable almost everywhere. Of course, biofuel has run into the same problems because one cannot depend upon having supplies at a given price. That is my concern.
These alternate energies are showing up in stock markets where their stocks have dropped to a fraction of where they were first put in. You can find the article in the Financial Post, written by Terence Corcoran. It is well worth bringing up and looking at.
Mr. Stewart: With Ontario, the prices you quoted are very much the feed and tariff prices in Ontario. That is what the province has decided to do to enhance renewable energy development. They put in the feed and tariff, so those are the types of prices you are looking at, upwards of 80 cents for solar and 13 cents to 15 cents for wind.
Other provinces have a different way of doing it. British Columbia is looking at this approach as well. Quebec has done it over the years in terms of request-for-proposal processes and power projects. Different provinces have done it differently in terms of what the economics are.
Senator Banks: We can go on for hours with you gentlemen. Thank you for being here. I will try to nail you down a bit or understand you better. You will be a huge and important repository of information of which you will have found out from these conferences and your deliberations in September, but you say that you will not tell us what to do. Do you take positions?
Mr. Stewart: Yes, no question. That we certainly will do, as we have done in the World Energy Council as well.
As an example, if you read the energy and trade, we have taken a very strong position with advice to those negotiating international trade carbon deals: Be careful how you do it because these could be things you must consider in any international arrangement on carbon trading or carbon cap and trade.
Senator Banks: Do you have a position vis-à-vis the choice between cap and trade on the one hand and carbon tax on the other?
Mr. Stewart: Do you mean a personal choice?
Senator Banks: No; actually, yes.
Mr. Stewart: I will go back. The study that the World Energy Council published about a year ago came down very much on the side of carbon tax.
Senator Banks: As do most economists.
Mr. Stewart: In many cases, it is as simple as it is a simple way to do it, and it is a much fairer system.
It becomes very complex with cap and trade, especially nationally, North America versus the rest of the world and even interprovincially in Canada. I do not think anyone has found a good solution to that yet.
Senator Banks: If you are talking about efficiency, a predecessor of this committee not too many years ago talked about the means of efficiency, conservation and all of those aspects, moving toward a less consuming economy. We made the observation then, and I think you have said it implicitly, that one of the ways that we can bring about efficiencies in use, in our view, is to fully internalize the real cost of producing. Our view was that we do not pay anything like the real cost of water or gas or electricity or anything like that.
Would your organization subscribe to a view along those lines?
Mr. Muir: It would be fair to say that in the discussions at the forums where that does come up, it is a common theme that fair pricing is required to create the incentives for people, whether it is to adopt new technologies or change their behaviour. To the earlier point, some new technologies cost much more than the existing technologies, but they will have benefits ultimately to both adopt technology and also to change people's behaviours — whether that is an individual person in their home or an industrial or commercial complex — in order to drive the behaviours that will reduce energy consumption of whatever type it is. I have not heard anyone argue against holistic pricing for energy, taking in all factors.
Mr. Stewart: The key to that is what the carbon value is. If you do not consider carbon, I think you have to look awfully hard to find jurisdictions where you are not paying a market value.
Senator Banks: You can go further up the line than that. It is not just a question of the cost of the carbon that is emitted in the coal mining plant, even if it is crushed or blown or whatever. Operating a coal mine — I am going back a few years — creates a huge pile of slag. Sooner or later, it will cost something. That cost, which is way down the line and someone else will pay for it, is not built into the price when I am buying the coal for my coal-fired plant. Someone else will pay that later, will they not?
Mr. Stewart: No, I think it depends on the industry. In most cases, you will find the reclamation et cetera is built into the price. A good example is nuclear energy. The reclamation or deep depository, whatever the final solution, is built into the price of electricity in Ontario. That part is covered in the same way as with Alberta's coal mines. It is built into the price.
However, carbon emissions are not built into the price anywhere, the atmospheric part of the equation. Everything else you will find is built into the cost.
The Chair: Senator McCoy, you have the floor. I will ask you to speak up as much as possible because I have not heard a word you have been saying.
Senator McCoy: It is because I have not said much. I am taking your implications to heart, as I always do.
The Chair: You are doing fine. Do not spoil it now.
Senator McCoy: I appreciate your bottom-up approach in looking to each of our regions to drive the framework. I hope our committee will take your approach as a role model to do the same.
You have given a wonderful 30,000-foot flyover, as you say, but I am interested in grasping more detail. One statement you made, for example, which I read earlier today, is that Newfoundland and Labrador is a major contributor to the North American energy supply. I did not believe that, so I went and checked it. Maybe I have a different concept of "major." Before I tell you the results of my research, I want to know what you think constitutes a major contributor.
Mr. Stewart: In this context, I am considering Upper Churchill Falls.
Senator McCoy: Which is a potential, is that you are saying?
Mr. Stewart: In 2042, it will be totally under the control of Newfoundland and Labrador.
Senator McCoy: That is Quebec's resource at the moment.
Mr. Stewart: Yes, but it is still coming from the natural resources of Newfoundland and Labrador. The other resource is the offshore oil and gas developments, which is expanding as we speak.
Senator McCoy: That is the one I looked at because I do think of the Churchill Falls electricity as belonging to Quebec; so do they, and so does the premier of Newfoundland, much to his chagrin.
Therefore, I looked up how much oil Newfoundland and Labrador produced offshore. The numbers were from the 2008 energy department statistics. I converted production into megatonnes of oil equivalent because that is how the International Energy Agency reports its statistics. Roughly seven megatonnes of oil equivalent was coming from Newfoundland and Labrador in that year.
Canada as a whole produced 155 megatonnes. The U.S. produces twice as much as Canada and consumes six times as much as Canada produces. Saudi Arabia actually produced 500 megatonnes in 2008.
My difficulty with the word "major" is the context. As a Senate committee, we have always prided ourselves on being clear-eyed and taking into account the context to ensure that we are properly founded.
Mr. Stewart: We have to be careful. I agree with you about the production, but I am also looking at what we got from Nalcor Energy and the other people developing the resources. The planning is for significantly increased production. I am referring more to the potential as well as the current production, also for electricity. Lower Churchill Falls, for example, is a resource presently and not in production.
Senator McCoy: We are beginning to read our own bathtub water, hence the old expression, if we pretend to be something that we are not. When you talk about potential reserves, you have to compare potential reserves around the world.
Canada boasts that we are the seventh largest producer of oil in the world, but when you look at the list, we produce 3.9 per cent. A huge difference exists between the top few producers and Canada. That is apparent from your slide.
We need to be aware that Canada is small potatoes in a global sense. Where we want to go with our production is another question — one worthy of examining. However, we need to know precisely with facts and, it seems to me, not pretend that we are a major source of energy in the world today. That is my little pitch. It does appear as if Senator Lang would like to have that debate as well, and we should.
I have a question about an update on Boundary Dam. They have been sitting on it for two years and have not done anything yet that I have heard about. Can you supply any new information on that?
Mr. Stewart: I can give you an extensive update on Boundary Dam to show you where they are in their time frame.
Mr. Muir: They have recently let several contracts for work related to the project, which shows that they are moving past the study stage and getting ready to spend real money. Anyone who has followed the early stage carbon capture and storage projects knows there are many early mortality issues around projects. Many fall aside. Therefore, it is always good to see when a project gets to the point of letting additional contracts.
They have contracted for the upgrading work for the existing steam turbine generator and have recently selected SNC-Lavalin to do the overall engineering. It was announced about two weeks ago. Those are all positive signs. There will still be many go and no-go decisions as they continue their work, but it is a good sign.
Senator McCoy: The plant was essentially at the end of its life. We are talking about a retrofit, which is to say that we are rebuilding it so that it can continue to produce electricity still using coal. How much of the plan is retrofit and how much is adding a scrubber to capture CO2?
Mr. Muir: I do not know how much money would be needed to upgrade the boiler to allow it to continue in service. If I look at what will probably be spent on the steam turbine generator, auxiliaries and controls, I would guess that 90 per cent is for carbon capture and storage. It may not be quite that high depending on what needs to be spent on the boiler itself, but a fairly small portion of the total project will go to extend the life of the power generation equipment itself.
Mr. Stewart: I recently looked at this with SaskPower while attending a presentation. From the economic perspective, which is also interesting, they claim that using CO2 for enhanced oil recovery, the whole project will be competitive with natural gas combined cycle.
Senator McCoy: Is that because they are basically selling the CO2?
Mr. Stewart: Yes.
Senator McCoy: Are they looking for another revenue stream?
Mr. Stewart: Very much so, yes. It is not for storage; they are actually using the CO2. It is in the same area, so it is also a relatively short pipe line. It is a closed system in terms of the capturing and using it for enhanced oil recovery. They are showing that the economics is literally at par with natural gas. An interesting part is not putting any price on the CO2 emissions of the natural gas.
It is a very tough assessment when it comes to carbon capture because they are not getting any credit for the CO2 emitting from the gas plant.
Senator McCoy: If you do have more details, I would appreciate it. It sounds as though our audience is getting restless, so I will leave it at that. I would also be interested in your observations to compare this to the three pilot projects in Alberta, one of which includes a coal-fired electricity generating plant.
Senator Neufeld: Thank you, gentlemen, for coming. It has been most interesting. I want to flesh out what the senator was talking about a minute ago. You gave us a quick trip across Canada from a fairly high level, and, to use your own words, you talked about potential. Every jurisdiction in Canada has a great deal of potential, but one thing we have embarked on in this committee is to ask what is proven, what is real, where the rubber hits the road — where it is actually happening — and what the potential is to break those two apart.
When you are finished, will you have a report, for instance, on British Columbia and a report on Saskatchewan, or will it be general across all of Canada? Will it be what is proven or what is potential?
Mr. Stewart: I will ensure a distinction will be in there. Certainly, the biggest part of the report will be the 14 sections because they are very important, and we do not want to lose that. That is the data gathering and the intellectual property of what we are doing. Some things are obviously happening between jurisdictions and happening today — tie lines in Ontario, Quebec and so on. Other things are happening in British Columbia.
However, I will ensure that that distinction is clear so that we do not have many hidden futures in here. The main report will maintain the 14 and then go on from that to look at commonalities or situations that could, should or might happen. We want to ensure we do not lose that; it is very important.
Senator Neufeld: We have been very clear in asking the different provinces and territories to actually put in both scenarios because assessing just the potentials can be quite misleading. Nothing is wrong with knowing what those potentials are as they are viewed by each jurisdiction, but what is real is the proven reserve and what can be extracted from that. Therefore, I am glad to hear that.
I can tell you that I am not an advocate of having the federal government have greater jurisdiction in provincial matters. My mind is exactly the other way around. There is good reason for the federal government to be in charge of certain areas and then there are other good reasons for the provinces to be in charge of others. I do not disagree with you that we need to figure out how we can do those jurisdictions a little better.
My history tells me that trade north-south has always been what took place long before east-west ever took place. When you talk about Ontario and Quebec, that is what took place. The U.S. wanted to buy the electricity, and that need built those dams, and that is exactly what happened in British Columbia. It was not because Alberta wanted to buy it; it was because the U.S. wanted to buy it.
That is the history, and you will not break that up because that is the market place, and that is where the transmission lines are. Therefore, I am happy to hear that.
The other thing I truly fear in Western Canada is hearing anyone talking about a national energy plan. I tell you, what took place at one period of time sends shivers up my spine. I am not trying to be political, but it is true. Western Canada really ate it, specifically Alberta.
Those types of things I certainly would not want to see, and I know our chair has been clear about that. We are here to give some advice. If you are doing the same, that is great. Would I be correct in understanding that that is what you will do, Mr. Stewart?
Mr. Stewart: Absolutely; I guarantee it.
Senator Neufeld: Thank you. It will be interesting. I look forward to reading the report. I will actually read the information that you folks put out because it is valuable for us to know it. We need to get the findings to the general public. That is part of what we are doing through trying to have a website and so on.
The Chair: These hearings are public.
Senator Neufeld: Yes. We are trying to get the message out to Fred and Martha about what we use, how we use it and how we can better use it.
Did I understand you to say that British Columbia will become an exporter of natural gas?
Mr. Stewart: You already are.
Senator Neufeld: Exactly.
Mr. Stewart: I am thinking offshore.
Senator Neufeld: We have been for 50 years.
Mr. Stewart: I know that. I am thinking of Asia and the non-U.S. markets.
Senator Neufeld: I just want to be clear because I was thinking, wow, I did not know we were just becoming an exporter; we have been doing it for 50 years.
I want to talk a bit about carbon capture and storage and enhanced oil recovery. You used enhanced oil recovery a bit later. On one of your slides, you talked about carbon capture and storage, or CCS. Those are two different things. Capture and storage is when you send it down and it stays there. Enhanced oil recovery, which is what Weyburn is doing, is actually taking CO2, forcing more oil out of the porous rock up to the surface, and along comes the CO2, and you recycle it.
It is actually frequently confused, Mr. Chair. I heard it this afternoon from other people who quickly talk about carbon capture and storage as being the Weyburn project. It is not; it is enhanced oil recovery, which is the same as much of what is happening in Alberta, other than the one coal-fired plant that will be carbon capture and storage. That is what I understand, if they have the correct geology to do that there. The geology is what dictates whether carbon capture and storage is a possiblity. Do you agree with me?
Mr. Stewart: Absolutley; it is exasperating that "CCS" is becoming an acronym that people are using in the broadest sense. CCS has almost become an acronym even for enhanced oil recovery.
Senator Neufeld: At the chance of you getting upset with me — and I do not want you to — when the information comes from experts such as yourselves, it would be nice if we had enhanced oil recovery at Weyburn instead of carbon capture and storage because CCS is done in different places in the world.
In fact, Northeast B.C. has a large CCS with Spectra Energy. The geology is there, and it is a money thing. If it happens, we will be the largest single point for carbon capture and storage that we know of in the world today. That will change dramatically over time because one way we will get rid of our carbon is by actually storing it in saline solutions deep in the ground. Thank you. I appreciate your information.
Mr. Stewart: Thank you very much.
Senator Housakos: I would like your thoughts on the following. What sectors in the energy sector in Canada are overachieving right now; which ones are hitting their targets? Which ones, in your opinion, are underachieving in meeting market expectations or in reinvesting profits in new technologies and increased productivity? Which sectors have been the best in identifying market demands and meeting those market demands over the last decade? Which ones are on track to meeting market demands and all of the other pressures — environmental pressures — that come into play in the upcoming decade?
The Chair: In other words, give us your report.
Senator Housakos: I am sure you have predetermined opinions.
Mr. Muir: One thing that comes out in the discussion at the forums is — not to be overly critical — that maybe no one is overachieving. As companies talk about their plans to adopt new technologies, make changes for efficiency or cut CO2 emissions, they are confounded by the lack of clarity today about where they need to be in 5, 10 or 15 years. It is a pretty common theme in those discussions that people are delaying making decisions because they do not want to go in the wrong direction, even when you see some of the cap-and-trade proposals that are developing today, whether it is the Western Climate Initiative, the Regional Greenhouse Gas Initiative — RGGI — or others that are in their early stages. Some of those actually have no ability at all to give credit for early adopters. You will hear people talking about not only delaying because they are unsure of where they need to be, but not wanting to do something now to find out that they do not get credit for it. The whole uncertainty is a big burden, and this comes out in the presentations at our forums and in the discussion over the coffee breaks and lunch period quite consistently.
Mr. Stewart: Canada is doing very well on energy efficiency. Look at Ontario, Saskatchewan and New Brunswick where they have tremendous programs in energy efficiency and are really taking leadership roles. British Columbia, of course, probably started it all. In many ways, it is interesting.
To go back to Ontario, when we look at almost the perfect storm in terms of the economic difficulties of closing plants and so on, it is exacerbated in a strange way. When energy efficiency is kicking in, at the same time, much of the demand is disappearing. It has had a double hit in terms of being a generator. Again, many of the programs that have developed over the years are actually clicking in very well.
I did not bring it, but the World Energy Council actually does a global energy efficiency update on a regular basis. Once again, Canada, on a global basis, comes out very well in what we are doing with electricity, insulation et cetera. We have a number of advancements in buildings in Canada. Many of the new structures are very efficient. We are doing those.
Senator Housakos: On the power generation side, are we really responding to market needs, in your opinion, or are certain sectors lagging behind? Take hydroelectricity, for example, was Quebec well positioned in the last 10 years to meet some of the market demands in the Northeast United States, Midwest and Ontario, or does it require more investment?
Mr. Stewart: I guess the answer to that is certainly in the last few years Hydro-Québec has stepped up its investment in new hydroelectric projects. Last week, we saw it had the first long-term power contract into New England. That is a fundamental change in energy because that typically could not happen, as far as I know, until now. Somehow we have achieved, for the first time, a long-term, 25-year contract for significant power into the U.S. as opposed to on a purely short-term basis. This again allows more security or more investment in the large hydroelectric developments in Quebec, and certainly they are doing many now.
Senator Housakos: On a global perspective, which are the countries that are most comparable to Canada? What are some of the international challenges Canada faces in terms of international competition? Are we ready for those challenges, in your opinion?
Mr. Stewart: On a global basis, I have only seen preliminary results, but in terms of what Canada is doing in relation to energy and energy policy, we are right in the top decile. When you consider provincial-federal, when you go into the sub-national level, when you look at what is happening in British Columbia and Ontario in electricity generation, it is not a renewable energy portfolio, but in effect it is.
We will match Ontario to any European country, in many cases, on renewable energy and what is happening today in investment in renewable energy. We can match anyone in the world. Then you couple that with energy efficiency, and it is all clean energy.
To go back to our premise, you have to look at Canada at the sub-national level to see what we are achieving on the positive side. You cannot see it if you just look at a federal government program in terms of supporting wind energy, for example. You have to look at what is happening on a province-to-province basis. In fact, I think you are overachieving. I would say that Ontario probably is now achieving that, in terms of our colleague over here on pricing and whatnot.
Senator Housakos: Thank you.
Mr. Muir: I did not want to end on the pessimistic note that I set with my earlier comment because I agree with Mr. Stewart. In many sectors and many parts of the country, we are doing very interesting things, such as the renewable energy programs that he mentioned. Mr. Stewart also mentioned that Ontario is working the smart grid. Remember that my day job is for General Electric, a big supplier into that industry. We consider the work in Ontario one of the most advanced plans to adopt the smart grid in the world. Many people are doing it, but not many are as advanced in the overall concept and understanding of what they want to do with it.
Many good things are happening. In the framework for the country, we talk about how to leverage the really good stories in places more broadly across the country rather than the individual stories.
Mr. Stewart: Back to the enhanced oil recovery side on the oil and gas, we are becoming a world leader in that as well in the effectiveness of maximizing the oil from our proven western sedimentary basin. Even with that technology, it is not just electricity; it is across the board in many other areas as well.
Senator Seidman: Thank you, gentlemen, for coming. I also very much appreciate your approach and the cross- country tour that surely allows us to better understand the parts before we can understand the whole.
I would like to pursue the efficiency and conservation issue that we started discussing. Specifically, Canadians will play a very large and important role in the future success of any energy policy. I would like to know if, in your cross-country tour and in your program coming up in Montreal, you plan to discuss how we might educate consumers, help them to understand the seriousness of the sacrifices that we will all have to make and what the costs will be for households. For example, what personal responsibilities we will have to take for making these lifestyle changes.
Is this something that will come up in your discussions? Has it already come up in your discussions? I am interested in the whole consumer education program.
Mr. Stewart: Probably not that explicitly, but it is certainly the undertone with programs such as those of Manitoba Hydro or Hydro-Québec. In many cases, that is where you are seeing it. They are right out front with those programs, also with BC Hydro. It is right there.
One other piece on the World Energy Council is that there is also a very public part at Place Desjardins. We are taking it over as an alternate energy public forum. We will be showcasing all sorts of alternative energies,, and it is open to the public. Again, we want to get more visibility and publicity in terms of public engagement.
Montreal is of course a very public place, so we are trying to get more engagement on what is happening in that area. However, I agree that the public is fundamental; the end consumer is fundamental.
Transportation is a good example. When you look across this country at what we are doing in hybrids and incentives for plug-in hybrids, electric vehicles in Quebec, it will take a great deal of education and government support for the public to accept those technologies and to maybe help them along. That is happening in a number of places across this country.
Senator Seidman: Will you not be looking at what works and what does not? Hydro-Québec sends out monthly newsletters with their bills telling us how we can be more efficient, and I am sure other provinces and providers do similar things. Is there any way to tabulate what works best, what actually has an impact?
Mr. Stewart: We have not done that explicitly. However, that is something the World Energy Council does, and we do with many of aspects we look at. About three or four years ago, we did that on climate change on a global basis. We looked at what policies were in place and whether they actually reduce carbon. Many changes happened, but we had to hunt awfully hard to find any carbon reduction.
We are not explicitly looking at that, but certainly it is here. I go back to my Ontario example. I can go on the web to look at what I did in electricity last week, yesterday. I can actually see when we had dinner at home and did not have dinner at home. You can see that on a chart so you can manage your business. We never turn the dishwasher on before a certain hour.
Senator McCoy: Always eat at restaurants.
Mr. Muir: While that is not a core part of the way we have designed our forums in the report, and I know you plan to have many other organizations come speak to you in the future, but to give another industry organization credit for a minute, the Canadian Electricity Association has done a huge amount of research in that area. About two years ago, they did focus group sessions across the country.
I cannot remember which company they hired to pull it together for them. It was average people, questions on efficiency and how they viewed their electricity supply. All the misconceptions that we commonly hear about in that area all came out very well in that study. That is probably available on their website if not from them. It might help with many of your questions in that area.
The Chair: Could you put up the first slide with the circles above the line and some below. You pointed out the differences between Canada and the U.S. I had a couple of questions on that. I may have missed this, but using a phrase that Senator Banks used in an earlier iteration of this committee, we had the really fascinating experience of going to the Organization of the Petroleum Exporting Countries, OPEC, in Vienna, their headquarters. After being frisked 22 times each, we were admitted to the inner sanctum. We were there around the long table with all these sheiks and oil people, and I did not see Venezuela or Algeria, for example. I obviously have missed something of your point because to be in OPEC you have to be a net oil exporter.
Mr. Stewart: You would be a net oil exporter, yes.
The Chair: Are they all on your slide?
Mr. Stewart: All the countries are not there. Sorry, this is only a snapshot of a certain number. This is probably about a third of the countries in the study.
The Chair: The other question that jumped out at me was putting Denmark as a net energy exporter. I was there and saw many references to their coal. They have big coal and big wind, but to whom are they net exporters? They do not import any? Do they do their own thing?
Mr. Stewart: They are a net exporter of electricity to Germany, both coal and wind, especially from their coal-fired power plants going into Germany.
The Chair: I have two more quick questions and then we will go to the second round. We have the time if people are interested.
I did raise this with you when we met privately. Taking a quote from the Minister of the Environment saying that our goal is to have Canada become a clean energy superpower, you said that we are already a clean-energy superpower, which, needless to say, as a Canadian, was in the euphoria of the post-Olympic week. Could you elaborate on that?
Mr. Stewart: In many ways, we are in a sense the second-largest hydroelectric power generator in the world after Russia.
Senator McCoy: How much does our hydropower electricity total in the total world production?
Mr. Stewart: In Canada?
Senator McCoy: In energy production.
Mr. Stewart: Canada? I do not know.
The Chair: Are you stealing my question?
Mr. Stewart: It would probably be about 15 per cent to 20 per cent, but in Canada it is 60 per cent-plus. In Canada, it is primarily hydroelectric, nuclear and then coal. It is the exact reverse in the U.S. They have 60 per cent-plus coal with only about 20 per cent or less hydro. On a global basis, Canada is very clean when it comes to electricity.
The Chair: Where I am going with this is that you have heard that there is another government policy to carry on with harmonization within North America, within this continent, with the U.S. and Mexico and so on, and they talk of this joint clean energy dialogue. Would you have any comment on that? Is that a worthwhile initiative?
Mr. Stewart: Very much so. I am not sure that I am suggesting you cannot have a solution purely for North America. However, it is very important with the linkage and such strong economic and energy ties between Canada and the U.S. that we ensure compatibility. Whether identical, I do not know, but certainly we have to be compatible. I support Minister Prentice's view that the solutions have to be global. The World Energy Council is very much of that view as well, that all the countries in the world need to be looking at the same equivalent solutions to CO2.
The Chair: We have as a guest tonight one of my favourite senators, and he seems anxious to talk, so I would like Senator Campbell to have a question if he would like.
Senator Campbell: I really appreciate that, but having the former Minister of Energy from British Columbia sitting beside you is a daunting position to be in.
The Chair: He is always deferential to the Mayor of Vancouver.
Senator Campbell: I am fascinated by the facts and figures that have been produced here. I do not sit on this committee, but I know it does very good work. I do not actually have a question, Mr. Chair.
The Chair: In any event, you are most welcome to be here.
Mr. Stewart: I believe you are the former Mayor of Vancouver, is that correct?
Senator Campbell: Yes.
Mr. Stewart: Let me then take the opportunity to mention one other global study on which the World Energy Council is embarking called Energy for Mega Cities. The global world trend is that 80 per cent of the world population is now in major cities. This is a huge, continuing trend. It is accelerating, so we have looked at the energy issues of the world's large cities. We started with the super megacities, such as Mexico City and some of the Asian cities, but we recently, to start, included Toronto. By that, I am talking about St. Catharines around to Lake Simcoe, even bringing in Oshawa, Cobourg and so on. We are looking at a population base of 8 million or 9 million people.
We are looking at all the energy impacts, and this gets into transportation, rapid transportation, smart cities and all types of energy sources on heat recovery, combined heating and power. All these things come into play when we look at cities.
To give you a flavour, which is why I come back to you — and we will table the results of this in Montreal — we are looking beyond that. If all goes well, we will come back and pick up Vancouver, Calgary and Montreal as the next tranche of that study to look at the key energy issues around those cities. We may then want to expand beyond that as well. This will certainly be a major part of the study that is just underway now to look at the super Greater Toronto Area, and especially to look at metro links and all that is happening to integrate transportation. It is relevant to energy policy. When you look at your work, you cannot forget about cities. This is a sub-sub-national level. Cities drive so much of our energy usage, especially buildings, which have major energy usage, and transportation as well gets right down to the city state levels.
You can also look forward to that report coming out with Toronto in it. We will compare ourselves to Delhi, Mexico City, London and Tokyo. I am not sure if Hong Kong is in there; it might be. Again, it is sort of a crosscutting. When we look at a city, we crosscut heating and ventilating and transportation and all the different issues.
Senator Mitchell: The price of oil is critical in all of this, of course, for what markets will open, and alternative energy and the economics of that. Are you making predictions or projections about where that will go? As well, do you have some sense of what the volume of shale gas could be and how it will begin to affect oil prices?
Mr. Stewart: I do not think the World Energy Council has a prediction on oil price. We share the view that oil is getting more and more difficult to find in large quantities, but the oil is there. We did scenario work as well. We fundamentally do not see a huge change in the percentage of oil share of the energy landscape over many decades. That is such a huge shift, and we do not see a significant change in that. When we look at scenarios out to 2050, for instance, we do not see a fundamental shift in that.
Senator Mitchell: Part of all this also, as you have mentioned, is what we can sell to the U.S. Some elements in the U.S. have been making a great deal of noise about not buying Alberta oil sands oil and Saskatchewan oil sands oil. Do you think that they are serious about that? Could we actually begin to see our ability to export that product limited? Do you think that they are talking about the environment or, worse within this scenario, that they would be using it as an excuse for protectionism? As shale gas emerges, perhaps they do not want that market cut into.
Mr. Stewart: Again, you should talk to the Canadian Association of Petroleum Producers to answer some of those questions. They have a very strong view on it, I am sure. Gas and oil have to be looked at very differently.
Gas is becoming a more global commodity in North America than it has ever been. I did not talk about it, but look at New Brunswick's LNG import facility. Back to your comment, I do not think 1 in 1,000 Canadians even know that last year we commissioned an LNG import facility that has the equivalent gas coming into Canada as the MacKenzie pipeline. It just happened outside of any real knowledge, effectively.
I will not speak for the oil and gas industry, and I cannot speak for the oil sands industry. Certainly, part of their challenge and what they are actually trying to achieve is essentially that it has the same footprint as conventional oil. That is a solution some of our members are looking at in terms of their objectives.
Senator Campbell: On a point of clarification for Senator Mitchell, Senator McCoy and I were at a meeting over the break. Present was a senior executive of a huge oil company, and exactly that question was put to him. What will the U.S. do if they do not like our oil? His answer was that we have a product, we have a market and we are going to sell it. They do not want it in China. It is a commodity. If they do not want it, that is fine, and you can go find it someplace else in the market.
The Chair: Senator Banks, do you remember when we went to OPEC? The price at that point was in the range of $60 to $70, and it was four or five years ago. The guys who more or less establish the price said that they were not worried and that we should not be worried about the supply, confirming what Dr. Stewart just said. However, we are concerned about the demand going forward and how we should conduct ourselves in developing new extraction modes and efficiencies and trying to keep the price fair enough to reflect supply and demand in a proper way.
Senator Banks: That is what they said. I promise to bring some numbers to the next meeting that will help us and give us comfort with respect to both sides of that equation, just to remind us of what has happened in the past.
I have two quick questions. You mentioned that NRCan is a member of your organization.
Mr. Stewart: Yes.
Senator Banks: Is Environment Canada?
Mr. Stewart: No.
Senator Banks: That is interesting.
Mr. Stewart: The Government of Canada is a member through NRCan, but NRCan is our official member.
Senator Banks: A certain built-in tension exists between NRCan and Environment Canada sometimes, perhaps less so now.
You talked about a new electrical connection being made into Manitoba. For a long time, a problem in this country with electricity, according to some people from whom we have heard, has been the lack of an east-west power grid because one does not exist at the moment. Would that fix anything?
Mr. Stewart: You would have to define an east-west power grid. We do have one, to some extent, where it is logical. We are just starting to expand now between Quebec and Ontario.
Senator Banks: I mean in the West.
Mr. Stewart: Again, someone mentioned the 150-megawatt tie line that was just announced between Manitoba and Saskatchewan. Some other issues exist; for instance, Saskatchewan cannot synchronize with Alberta.
Senator Banks: That is what I meant. You cannot have an in and out, taking into account peaks, because the two systems are not synchronized. Is that in the offing anywhere?
Mr. Stewart: From a policy perspective across the country, there is still a very strong belief at the provincial level to be self-sufficient to a large extent, or to be exporters. In effect, Canada has only three exporting provinces: Quebec, Manitoba and British Columbia, almost by design in various ways. The rest are somewhat islands with tie lines, yes, in that sense.
The Chair: Therefore, hydro.
Mr. Stewart: In effect, yes.
The Chair: Is Alberta not a net exporter?
Senator McCoy: We never went that way. We never built the line down into Montana. Part of it was a market decision because not that many people live in Montana, whereas many people live south of Senator Campbell and Senator Neufeld.
Senator Banks: In the Western provinces, a certain amount of trading off between peak seasons occurs, but it used to stop at the Manitoba border, and now it is coming into Saskatchewan. Efficiencies can be gained from that. When you are using your electrical items at six o'clock, it is only four o'clock for me, so the peak electrical production has to be made at the level to take care of the peaks. If you could squash it down and make it even, then that would be really nice.
Mr. Stewart: In both Alberta and Saskatchewan, if there was new build nuclear in the Prairies, just because of the scale, not one province could absorb a twin anything in terms of a nuclear power plant. That would force the issue of sharing power between at least two, if not three, of the provinces. That is the only place it really came out very strongly, apart from the recent thing you have seen between Saskatchewan and Manitoba and a little between Northern Ontario and Manitoba. That is partly counteracting the shutdown of coal with Atikokan and Thunder Bay. There is a shutdown of power generation there that is covered a little by Manitoba.
Senator Lang: More than 90 countries are involved in the World Energy Council, and you are a member of it. To go back to Senator Mitchell's original question — and someone else alluded to it — the question of supply and the information that is provided to you primarily from countries such as Saudi Arabia and others. Are you satisfied that you are receiving accurate information? In some quarters, some people questioned the accuracy of the information being provided.
Mr. Stewart: The World Energy Council also does a world energy survey on energy resources — reserves, resources, supply, et cetera. I am not sure how to put this precisely, but we, in some cases, have similar concerns. The data we publish in our global world energy survey is pretty good. We are quite comfortable with the information that we publish in that report, including those countries.
Senator Lang: Obviously, that information is so crucial to being able to make a global or a national decision. That is one element.
The other element that you touched on was the question of export. Discussion has taken place about a pipeline — and maybe Senator Neufeld can speak to it — out of Alberta through to B.C. and to Kitimat, I believe it is, for purposes of export. In your study, will you be looking at the prospects of Canada investing in that type of infrastructure so that we can diversify our economy and not be so reliant on the United States?
Mr. Stewart: You are really talking about the oil sands.
Senator Lang: Yes.
Mr. Stewart: In our discussions with all of our colleagues in B.C. and Alberta, I do not think that was high on anyone's priority list. I am not sure if that answers your question, but it certainly did not come across as a major initiative right now.
Mr. Muir: The companies that are proposing the pipeline are strong proponents for it. With respect to Senator Campbell's remark earlier about where the oil market is, they will go, that investment does not need to be made today and would be hard to justify. As long as the existing market is there and accessible, I think those are all plan Bs.
Mr. Stewart: If I am not wrong, the pipelines built, under construction and planned are keeping up with the oil sands development to get that product into the U.S. No gap exists in terms of pipeline capacity versus what is being developed. There have been issues on upgraders; more of the less developed is going into the U.S. and some of those refineries that have capacity. There is a change in dynamics there. Some of the upgraded developments have not proceeded. They may eventually; I do not know.
Senator Neufeld: In response to that, serious money is being spent on a pipeline to take bitumen to the coast and to ship it to China. Large pipeline companies are spending millions of dollars on that as we speak. In fact, I began the process quite a number of years ago to get First Nations as partners so that it can actually be facilitated, not to mix it up with a natural gas line that will be built that way, too. Those things are real, and I think will happen. The industry wants to diversify so they do not have just one marketplace, just as we want to do in lumber. It is exactly the same.
First, I want to go back to Senator Housakos' questions as to whether we are as efficient as anyone else and whether we have built for the future. Maybe I will run this by you to see if you agree with me or can help me a bit here.
Canada basically built up its systems in the 1950s and 1960s, in Quebec, B.C. and Manitoba, all those big projects, to sell to the U.S., north-south, not east-west, and has survived on very cheap energy for all those years and has never really built anything. Now, we find ourselves in the last decade, as we become net importers in British Columbia, in the position of saying that we cannot run these forever and not build and grow the population. Those things are happening. Would you agree with me that that is what took place in a sense?
Second, we are compared to other places in the world. I will use Denmark because our chair used it. I always had Denmark thrown at me as being that wonderful place in the world that builds all that wind energy, and what is the matter with you guys in British Columbia, until I began to understand that Denmark generates between 40 per cent and 50 per cent of its electricity with coal, and it has a bit of a price problem. The last I checked, probably three years ago, residential energy was 38 cents per kilowatt hour. Will you be efficient? Will you turn your lights out? Will you not use as much electricity as someone in Toronto at 4 cents or Quebec and British Columbia at 7 cents? You are darned right you will be more efficient. It is apples and oranges. You have to compare it differently. That question Senator Housakos asked is pretty hard to answer when you consider the other things that take place in the marketplace. Would you agree with me? We can be as efficient as anyone else; we have not had to be because of cost.
Mr. Stewart: I would agree you, without question. You can compare the size of vehicles in Europe and so on. That being said, many good things are happening with respect to energy efficiency in this country, in terms of insulation and housing standards; the basic standards are extremely good. Yes, in spite of 4-cent power in Manitoba, we are doing very well in energy efficiency.
Senator Neufeld: In addition, we do not get credit for the size and population of our country, our weather and what we have to service. It is a bit different from those places. You can plop Denmark into the constituency that I used to represent and lose it. There is a bit of a difference there. The discussion has been ongoing forever and a day and will continue about east-west grids, until there is a market and you want to move it back and forth. B.C. is interconnected with Alberta, in the north and in the south. A large interconnection exists in the south. That is how Alberta exports its excess power, when it does have excess.
Senator Campbell: Can you have all the emails that will be coming in from the Danish citizens sent to Senator Neufeld, please.
The Chair: Gentlemen, on behalf of my colleagues and the committee, we would like to thank you for the hard work you have done to prepare and come here today. We hope it has been as useful and beneficial to you as it has been to us. If you have an Ottawa office here, do you want to introduce and direct my colleagues and me to your Ottawa office?
Mr. Stewart: We have our secretariat here. It is in the office building right beside the Delta Hotel. Brigitte Svarich is our director of operations and Krystal Piamonte is our administrative arm here in our office. We have a very small secretariat, very efficient. As with any other association, our strength is our members. I live in Toronto. I am here when I have to be, visiting you good people here. We enjoyed that. Our services are at your disposal, and the studies and information. Many government people are involved in our studies. Certainly many of your colleagues in NRCan and other departments are involved in the work we do.
The Chair: As the Energy Council of Canada — and you two are the top people — you are the sponsors of the World Energy Congress in Montreal in September. It is taking place in the week before we reconvene here in the Senate. I can assure you that my colleagues and I are all very interested. We are not big corporations. Is there any special accommodation you might be able to look into for us if we wanted to go as observers and not pay $3,000?
Mr. Stewart: May I take that under advisement to answer appropriately?
The Chair: I put it to you because I do not think it is improper, given the nature of the give and take of what we will both try to do.
Mr. Stewart: I will definitely get back to you on that one.
Senator Banks: That is very serious. I suppose most Canadians will not recognize that, and you may not as well, but we cannot afford that. This committee will not be able to have that amount of money approved.
The Chair: It was not facetious. We can add some value, too, and we certainly can learn much. It will be at a time when you are working toward your report.
I say once again, thank you very much.
(The committee adjourned.)