Proceedings of the Standing Senate Committee on
Energy, the Environment and Natural Resources
Issue 14 - Evidence - November 16, 2010
OTTAWA, Tuesday, November 16, 2010
The Standing Senate Committee on Energy, the Environment and Natural Resources met this day at 5:52 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: Good evening, ladies and gentlemen and colleagues. This is a meeting of the Standing Senate Committee on Energy, the Environment and Natural Resources. We have with us this evening two very learned gentlemen from the hydro power organizations, Mr. Jacob Irving and Mr. Daniel St-Onge.
I want to remind everyone that we have an audience on the CPAC network; we have an audience on the World Wide Web; and we have a similar audience, I believe, on our own Senate dedicated energy website, which is at www.canadianenergyfuture.ca. We are getting out there.
We are trying to continue the dialogue with Canadians on the subject of an energy strategy for Canada going forward, a strategy that would lead to a more sustainable, cleaner and more efficient way of producing energy, not just in Canada but in the world, and in cooperation with all the other industries that together with us are fighting the challenge of climate change, dealing with CO2 emissions and so forth.
In that context, as we have said so many times before, we are great believers that energy is inextricably wound up with environmental issues like climate change and the economy. Of course, the Canadian economy depends very much on an efficient and good system of producing energy.
I am Senator David Angus from Quebec. I am the chair of the committee. My colleague, Senator Grant Mitchell from Alberta, the deputy chair, is not with us this evening. He is being represented here by Senator Sibbeston, who is from the Northwest Territories.
Also here are our two colleagues and very strong supporters from the Parliamentary Library, Mr. Marc Leblanc and Ms. Sam Banks, together with Senator Tommy Banks, my predecessor as chair of this committee. Also present are Senator Richard Neufeld from British Columbia, Senator Bert Brown from Alberta, Senator Judith Seidman from Quebec, Senator Robert Peterson from Saskatchewan, Senator Daniel Lang from the Yukon and Senator Paul Massicotte, the global senator from Quebec, and Manitoba originally.
We are delighted to have you two gentlemen with us tonight.
Mr. Jacob Irving, President, Canadian Hydropower Association, has over 10 years of experience as an association manager and a government relations specialist. I believe he has been instrumental, with Senator Neufeld, in establishing a hydro power caucus on the Hill here in Ottawa. That is a very good development, and we are very interested in working with you in that regard.
Prior to his position at Canadian Hydropower Association, Mr. Irving was the executive director of the Oil Sands Developers Group, OSDG, where he acted as spokesperson for that association with a wide range of stakeholders in the energy field in the industry, including municipal, provincial and federal governments and Aboriginal groups.
[Translation]
He is accompanied by Mr. Daniel St-Onge, Managing Director, Marketing, Brookfield Renewable Power Inc. I suppose Mr. St-Onge is also a member of the Canadian Hydropower Association?
Daniel St-Onge, Managing Director, Marketing, Brookfield Renewable Power Inc.: Absolutely.
[English]
The Chair: Welcome to you both. I understand Mr. Irving is the principal speaker. They furnished us with very interesting documents — a little catechism here.
[Translation]
The document is entitled Five Things You Need to Know about Hydropower: Canada's Number One Electricity Source.
[English]
There is also a bigger brochure, Hydropower in Canada: Past, Present and Future. I believe you have also given us a deck here. It looks very interesting. Thank you very much for being here and for the good preparatory work you have given us. Over to you, sir.
Jacob Irving, President, Canadian Hydropower Association: Thank you to all honourable senators assembled for the opportunity to come and present to the committee.
[Translation]
After my presentation, I will answer questions in both official languages. However, as English is my mother tongue, my presentation will be in English. My colleague Daniel St-Onge can also answer questions in French or in English.
The Chair: Francophone senators on the committee are more fluent in English than we are.
[English]
Mr. Irving: Afterwards, if there are any questions for either of us, Mr. St-Onge, as a representative of Brookfield Renewable Power Inc., is a valued member of our association, and they have a long experience in developing projects across Canada. I am sure we will be able to have a good conversation with some direct input from their personal experience.
I have handed out some material to follow along the conversation. I intend to speak for about 20 minutes to outline the presentation. I thought we could talk first about the Canadian Hydropower Association and let you know who we are and what we do, and then get into some hydro power facts that are important to guide our thoughts when we think of hydro power in Canada, North America and globally.
I will talk about what we see as the hydro power advantage. There are some distinct advantages that we are fortunate to have here in Canada. Then I thought we could talk about some of the issues we face in trying to develop more hydro power and to bring more clean, renewable energy to Canada and North America. Finally, I will talk about the untapped potential, to let everyone know that hydro power is alive and well in Canada and that our potential is quite strong. It will be interesting to talk about that.
At the end, I will summarize, conclude and move to questions. Hopefully, I will leave most of our time for questions and answers afterwards.
The Chair: That is very good, sir. Just one little thing: You and I were talking earlier and you mentioned favourably our report entitled Attention Canada! Preparing for our Energy Future and how we tried to focus in on a vocabulary, if you will, so that people who read our report will understand a bit about what we are talking about.
When we hear "hydro," there is a feeling that it is hydroelectric — the big projects out there. However, I understand that it is much more than just that. Is it, when you say "hydro power"? I know you will put it in perspective, but it means run of the river and tidal. Does it mean a whole lot of other things, too?
Mr. Irving: In our presentation this evening, we will talk mostly about conventional hydro power, in the sense of storage hydro power — so hydro power with reservoirs and dams and run-of-river hydro as well, as you mentioned. That is where the majority of my members focus their attention.
I know presentations have been made to the committee before about tidal and ocean power, as well. A lot of that future technology would work on some of the same principles that apply to the conventional hydro power that we have in Canada. I will focus more on conventional hydro power in our presentation.
I am happy to have the time to do it because Canada is a real pioneer in hydro power. We are a global leader, a global pioneer in this technology. We are a current leader in it as well. We have the potential to be a superpower in it going forward. Even in the most conventional forms of hydro power, there is exciting opportunity and growth available. We will have a good chance to discuss those.
We have been following the work of the Senate with interest. The interim report has been helpful in guiding energy literacy in general, which we all know is very important in Canada.
Canada is fortunate to be a net exporter of all different forms of energy. It is incumbent upon us as Canadians to be increasingly energy literate, because we have so many options at our disposal. We have such a bright energy future, it behooves us to understand our options better and to figure out how they fit in with each other and how they can best serve the country and the world, much like you mentioned in your opening remarks.
The Chair: We are curious about one other thing. We are influenced a great deal by Senator Neufeld, but those of us who come from Quebec know that it is the big thing in Quebec. We read in the newspaper of states passing laws to say it is a clean source of power. We always thought it was a clean source. You will probably be able to explain to us why some states try to argue it is not and actually have laws saying that, so that we cannot export power as a clean energy source to those states, if I am accurate on this.
Mr. Irving: That is a conversation we can get into. As a developer, Mr. St-Onge can shed some light on it as well. Brookfield develops hydro projects in both Canada and the United States as a private developer. There are some interesting components when you start talking about the international aspects of hydro power, on which we can spend time.
The Chair: Without further ado, you have the floor.
Mr. Irving: To give you a quick overview of the Canadian Hydropower Association, we have over 45 members across Canada. Together, our membership represents over 95 per cent of Canada's hydro power capacity. When we say that we speak for hydro power at a national level, we are confident in that regard. Our members include some of the larger developers, with whom you are familiar. From the province of British Columbia, Senator Neufeld's home province, BC Hydro is a member. We have Manitoba Hydro, and we have Hydro-Québec, of course, from Senator Massicotte's part of the country. Together we represent the interests here in Ottawa of those developers. We have developers, generators, producers, manufacturers, engineering firms, organizations and individuals, so we have not just the generators but also those involved in the supply chain of hydro — the companies that help provide the turbines, the construction equipment, and the consulting, engineering and environmental expertise for the projects.
Our mission is to promote the technical, economic, social and environmental advantages of hydro power. We like to do this in advocating its responsible development and to meet our present and future electricity needs in a sustainable manner for Canada and, increasingly, for North America.
I will give you some quick facts about hydro power. In the spirit of energy literacy, sometimes it is not recognized or fully understood that 60 per cent of Canada's electricity comes from hydro power. That makes us one of the cleanest electricity-generating countries in the world. We are definitely the cleanest and most renewable electricity-generating country of the G8. Canada has reason to be proud when it comes to the clean and renewable nature of the energy we produce in the country. Hydro power is a big part of that. It represents 97 per cent of Canada's renewable electricity in general. I know you have heard from new forms of renewable electricity in Canada as well, such as wind and solar, which are important emerging forms of renewable electricity; but it is good to step back and remember that of the current renewable generation in the country, 97 per cent is hydro power.
The Chair: Sorry to interrupt, but you are operating under various assumptions of your own. Is this statistic, 97 per cent, based on an assumption that nuclear is not a renewable source of electricity?
Mr. Irving: Yes; renewable from our definition would mean that one does not need to consume non-renewable fuel sources.
The Chair: Does the use of uranium rule out calling nuclear renewable?
Mr. Irving: Yes. That is an important distinction. Definitions here are important.
The Chair: They are key, and you can do a lot with numbers. I am trying to get the perspective.
Mr. Irving: We will have a graphic representation a little later on that shows the percentage and where it comes from, so it will be even clearer for everyone's information. That is a good point.
To give some global context for Canada and hydro power and where we place in the world, we are the fourth largest in the world in terms of installed capacity. Our total installed capacity of hydro power generation across the country is 74,000 megawatts. The number one in capacity in the world is China; number two is the United States; and number three is Brazil. Canada is number four in installed capacity.
The next fact talks about generation. We are the third-largest generator in the world. Although we have the fourth-largest installed capacity, we generate the third-largest amount. The reason for that in many cases is because we have a large amount of reservoir storage hydro in Canada, which gets called upon a fair bit wherever it is located. The system operators value it for its flexibility, dispatchability and reliability. Our hydro power in Canada is used extensively because of the nature of it.
The Chair: The 355 terawatts per year is what?
Mr. Irving: That means 355 terawatts a year are produced from our 74,000 megawatts of installed capacity, and about 40 terawatts a year of that 355 terawatts total are exported to the United States. You can see we are a net energy exporter as well in hydro power. This makes us the third-largest generator in the world. For a country of our population and size, our reliance on and use of hydro power are fairly significant.
Also, every terawatt hour that is sent to the United States generally will help displace about half a million to a million tonnes of carbon, especially if those clean, renewable hydro power electrons are displacing coal- or natural gas-fired generation in the United States. We have a positive impact on the fight against climate change in that regard. It is a very important piece to consider.
Earlier, you mentioned economics. It is also good to know that each terawatt hour that we send to the United States generally means about $100 million in revenue back to Canada. It is important from both an economic and an environmental standpoint.
Just to delve into the Canadian context further, we are a world leader on the hydro power stage. It is partially because we have a 129-year history in Canada. We are pioneers in this technology. In fact, Ottawa, as many of you may know, is the birthplace of hydro power in Canada. The oldest water wheel for electricity was at the Chaudière Falls complex just a stone's throw from this very building. The first water wheel for electric lights was in 1881. Although that has been decommissioned, I am told there are facilities from 1891 that are there, being operated, still producing energy here for this community today.
You can see this is something that we invested in early and that has guided much of our development throughout our history as a country. This means that we have planning, engineering and technical expertise. Again, we are world leaders in this technology, which is something that sometimes gets forgotten. It is always good to remember.
Of course, as part of our history, we are strongly regulated. We are regulated both at the provincial level and at the federal level, which is not always the case for other forms of electricity generation.
We understand regulation. I often like to say that we are mature in a regulatory sense. We understand the use of it, we operate within it, and we understand the societal dimensions of our operations and what it means at both the provincial and the federal level.
This is the graphic representation I mentioned earlier, to help give some context on power in Canada and around the world. On the right there is a pie chart that tells you how Canadian electricity is produced: 60 per cent from hydro power, as I mentioned before; 26 per cent from combustible fuels, which would be natural gas, coal and other forms of thermal generation; and about 14 per cent from nuclear, as you mentioned, senator.
The Chair: Are you saying that biomass and all these new alternatives are negligible for the purposes of the graphic?
Mr. Irving: It is hard to make them show up on the pie chart. However, there is growth in all those areas. One important thing to mention about hydro power is that our form of energy is actually an enabler of those other forms of energy as well, which we can talk about later.
Senator Neufeld: I am not one to correct you, but with regard to generation with biomass, the forest industry, which is huge all across Canada, generates a lot of electricity using waste wood, which is not in your numbers. This is quite significant in B.C. and in Quebec as well, but it does not show up in these numbers, and that is clean energy also.
For your purposes, you include nuclear here, 14 per cent. It is clean in one sense, but in that it uses a renewable resource, uranium, in the hydro power world it is not clean; is that right?
Mr. Irving: Yes.
The Chair: That is just confirming my point.
Senator Banks: When you burn wood, there is an emission.
Senator Neufeld: There is. Let me take that a little further. The tree will absorb through its life as much carbon as what it will emit, so it is a net zero.
Mr. St-Onge: Biomass is renewable. It will decompose and emit methane. That is why it is considered renewable.
Mr. Irving: The conversation here is instructive, and something that is good to focus on is clean and renewable. What do these terms mean to people? It is important even in our own discussion to set that for ourselves. From our perspective, from a hydro perspective, "clean" usually revolves around air emissions. We define "clean" in terms of greenhouse gas emissions for climate change.
The Chair: Renewability — talk about that.
Mr. Irving: That is the clean side. The renewability side, for us, is that it is a source of energy that works with natural processes that occur as part of the life cycle of the planet. You could say hydro power works in a passive sense with water. As long as rain falls and as long as it travels through rivers and over elevations, you have hydro power. Hydro power works with the hydrological cycle, making it renewable.
The Chair: This gets to my earlier point, though. You do have to disrupt the environment and the habitat when you are building the dams and when you are doing the gathering system. I think that is partly the answer for those states in the U.S. that say, "No way. You have disrupted 48 Indian bands, and you have done this and that, and this is really bad stuff."
If you could give us — if they exist — reasonable and believable defences to those allegations, we would love to hear them.
Mr. Irving: Certainly, there is an environmental impact with hydro power. As we often say, there is no perfect form of energy development. However, I am usually quite confident in saying that, on balance, for Canada in particular, hydro power is arguably the best form of energy for us to develop.
The environmental impacts that are well known and associated with hydro power have to do with water control in the riverine system, as you mentioned, where you are sometimes putting in a storage facility, a dam or a barrier, and in association with that, you may be creating a new reservoir or a new lake-like habitat where previously there was none. That is of strong ecological concern to many, including our developers. There are run-of-river systems that are put in the middle of a river, and they will have an impact on whether a kayak can pass through the river and on fish and fisheries and their ability to breed and move up and down the river. As you said, these are well-understood challenges with hydro power development that will sometimes cause controversy in different markets.
From our side, as developers, we are often strongly regulated in that regard, in the ecological sense. The federal and provincial governments are all interested in trying to ensure that when we disrupt any of these rivers to create power, we are doing it in a way that can be mitigated and in a way that can ensure the ecological health of the system. A constant improvement track and approach is applied to us through regulation.
The Chair: You should keep in mind that as a committee we have been subjected to an analysis of the Navigable Waters Protection Act. We will not deal with that now.
Before you leave those two pie charts, I have another question: Knowing Canada and knowing the resources that we have and the potential, let us say nuclear is found to be too expensive and it does not fly. Do you envisage an all-blue pie ever in Canada? Is it feasible?
Mr. Irving: That is a good question. That might be a little bit in the realm of speculation for me. Would I like to see something close to that? I think I can say yes.
The Chair: Would you be dreaming in colour? We love blue here, some of us. My wife likes blueberry pie.
We are told, when we are looking at a smarter grid, an east-west grid, that there is this no man's land between Western Ontario and the other side of Manitoba. From our point of view, we are interested in nuclear, obviously, but we do not know; we are about to learn. We are going to Chalk River on Thursday to find out what a reactor looks like.
Mr. Irving: That is a good question. In fact, you are touching on the potential question. We have 74,000 megawatts of installed capacity in Canada. We have determined, through study — and we have it represented in the slides later on — that we have the undeveloped potential of 163,000 megawatts of additional hydro power, so more than double our current installed capacity.
The Chair: That is an additional 163,000?
Mr. Irving: Yes, more than double our current capacity. That is again a representation of conventional hydro power, as I would call it, run-of-river storage, inland hydro power across Canada. There are other forms of hydro power that are more difficult to project or to quantify in a forward-looking sense, and those would be pumped storage, tidal, ocean and the like.
You asked about our potential. We have more than double our current capacity ahead of us that we could potentially tap into. There are many challenges to get there, but when you think that Canada has 9 per cent of the water on the planet stretched over the world's second-largest land mass, it stands to reason that we have a lot of hydro power potential within this country, and we have not touched it all yet.
Senator Banks: On a point you raised, chair, I know we have leapt ahead, but looking at the capacity, I want to be sure of what I understand you to have said. I am looking at the chart on page 13 of your piece. Correct me if I am reading this wrong, but it looks like we have a potential capacity of generating 163,000 megawatts, of which we now generate 74,000 megawatts. Is that correct? There are 25,000 megawatts more in the works, but piled from top to bottom, that is the 163,000 megawatts, is it not?
Mr. Irving: Yes. It is.
The Chair: You are saying it is not additional but would be total.
Senator Banks: I am just asking that question.
The Chair: I asked that as well.
Mr. Irving: You are jumping ahead. I usually save this slide for last because it is the most exciting information I have to convey in many ways.
Senator Banks: We do not fool around, Mr. Irving.
Mr. Irving: I should not have sent an advance copy.
Quickly to your question, we have this stacked as 74,000 megawatts is our current capacity across Canada, and then think of the 163,000 megawatts as a total. This is why we are using dark green and light green. Of the 163,000 megawatts of undeveloped potential, that light green 25,000 megawatts you see represents the projects that our members are currently pursuing that are being publicly discussed. Another piece of documentation we sent you takes that 25,000 megawatts and breaks it up across the country.
Senator Banks: For the total potential, we would add those three figures together?
Mr. Irving: No. The total potential would be 163,000 megawatts.
Senator Banks: Thank you.
Mr. Irving: The reason they are stacked together is to give you the idea of the scale of difference. We currently have 74,000 megawatts. If you look at the green above, that shows you where we could go, so it is more than double as you can see just visually or graphically there.
To close off on these pie charts, one thing that leaps out graphically is that we have a large percentage of hydro. When you look at the way the rest of the world derives its electricity, you can see we are almost the reverse of the global way of producing electricity. The largest source around the planet comes from combustible fuel, and hydro is comparatively small. Here in Canada we are the reverse of that. Honestly, in my position I find that not enough people know, appreciate or talk about that, especially when trying to talk about Canada's reputation as a provider of clean energy. We are a hydro power leader, and our source of energy is renewable. It is also non-emitting of greenhouse gases as well as sulphur dioxide and nitrous oxide, the other pollutants associated with combustible fuels.
That leads into the hydro advantage. We were talking already about how it is clean, renewable and low-emitting. I repeat that a lot, but it is important to fix in people's minds that we have a well-established technology that can lead in the fight against climate change. Canada has a huge potential to be a big, important player in this fight.
It is also reliable and efficient. We are touching on that given its history. Here in Ottawa we have hydro power facilities over 100 years old that have been producing hydro power happily and reliably for over a century. It has unique operational flexibility and is dispatchable. I know it is a bit technical and the like and often hard to underline for everyone, but what hydro power brings to the table in any electricity grid or any electricity provision system is that it is immediately dispatchable, meaning that you can turn it on and turn it off immediately. If you are a system operator and are trying to draw on electricity from a variety of sources, some coal-fired generation, some nuclear generation, some wind generation, having storage hydro power is incredibly important because these other forms have issues in terms of how dispatchable they are. You want a source of power that you can immediately turn on and off to help you shape the load that the others are delivering, and hydro power in Canada does that and is one reason we have one of the strongest and most reliable electricity systems in the world because we have such a strong hydro base.
If you ask any system operators how much they appreciate having hydro power as part of their mix, they will tell you probably even more glowingly than I do of its benefits.
The Chair: You have been following our hearings and our study so far and so you know we have been told things like there is a lot of leakage of electricity from the transmission system and otherwise, and also that you cannot, subject to what you just said, store electricity. In other words, you can have the water power built up in the dams, and when it is released through the apparatus the electricity is generated, but then it has to go to the use source, does it not, or else good-bye Charlie?
Mr. Irving: That is what this form of renewable power brings — storage. If you had large giant batteries, if you think of a cell phone battery or a battery you put in your flashlight, that is stored energy, but it has its limitations. We do not currently have large batteries like that to fuel an entire city's needs of electricity or the like.
The Chair: Senator Neufeld took us right into a big secure room and showed us a battery the size of this room that can feed the whole city. Is that right senator?
Senator Neufeld: No. It will keep the system that was there operating for a number of days so they can still dispatch electricity if something goes wrong. That was in BC Transmission Corporation's operation site and is really for internal uses. They also use diesel.
Mr. Irving: Storage is a huge question, and any advances made in that regard are generally positive. As is, for large-scale electricity supply, hydro power is the only renewable source that has storage capacity. As you say, it is stored in the form of water, and essentially when you run water through the turbine, it creates electricity immediately. If you have it shut off and are not using the water and storing it, you open it up and use it. It turns on and off very quickly in that regard, but the other interesting thing to remember is the efficiency of it.
The reason we are confident in saying it is stored electricity even though it is in water form is that when you run it through a turbine it is over 90 per cent, up around the 97 per cent energy efficiency rate, which means that power of water translates 97 per cent into electricity. This is why you can say that it is like stored electricity in many ways.
Mr. St-Onge: Many hydro plants are considered as a battery to restart or reboot a transmission system. We call that black start capability: If you lose the grid, hydro plants will start injecting into the system to restart the grid.
Senator Brown: You were talking about storage. Is there some hydroelectric system somewhere that uses large pumps? When they are not putting all the electricity out for use, do they use big pumps to take it back up over the dam again?
Mr. St-Onge: At Brookfield we own a pump storage facility in Massachusetts jointly with EMRA, Emera Energy Services Inc. It is a 680-megawatt facility, and during off-peak hours we bring the water up the mountain. We have two reservoirs, one at the bottom and one at the top, and we generate during on-peak hours.
Mr. Irving: Pump storage is an interesting technology. In Canada I believe there is one facility, and it is associated with Niagara Falls. The reason for it is that, as Mr. St-Onge is saying, pump storage consists of a reservoir on the top of a hill or a mountain and a water reservoir on the bottom. During peak periods you flow the water downhill and create electricity, and it is quite lucrative and you get a good return, but the difficulty is then you have to put the water back up, and in using energy to pump the water back up, in many cases there is a net energy loss. However, you produce the electricity during peak hours and then in the evening during the off hours you use cheaper electricity, the electricity that is in less demand, to pump the water back up again. It works that way.
Mr. St-Onge: As a rule of thumb, we usually use about 30 per cent of the energy we produce at the pump storage facility.
Mr. Irving: In the Canadian context, it is something interesting and worth looking at, but I think one reason we like to talk largely about existing storage hydro is that we have a large portfolio or a large asset base that we can work on that is just traditional storage in the sense that naturally there is a reservoir up above draining into a river down below. We have a lot of geography in Canada like that which can provide that and not run into that energy-loss issue. It would produce electricity in a more efficient manner.
In the United States, you hear a lot of talk about pump storage. That is partly because there is a general feeling in the United States, from my understanding, that a lot of their greenfield hydro power potential is not as available to them as it is to us in Canada. In Canada, we have huge undeveloped potential by comparison. It is an interesting one for sure.
We have already talked about base load and peak power and how hydro can respond to both the base load and the peaks because of its operability. Hydro power is also multi-purpose. These water control measures are used for power, but they are often used for many other reasons as well. They are used for irrigation, for flood control and for recreation in some cases.
In Ontario, for example, which is one of the older parts of the country established earlier, only about 8 per cent of the dams are for hydro power. Often when you think of dams, you think of hydro power right away. However, only about 8 per cent of them in Ontario are for hydro power in the province; the rest are for irrigation, flood control and other purposes like that.
In the United States, not to speak too much on their behalf, but from what I know, their development profile is very much focused on powering existing dams. In the United States, only 3 per cent of their dams are used for hydro power. The vast majority, over 97 per cent, are used for other reasons and do not produce any power. They are looking seriously at powering their existing dams.
It is an interesting source of energy that has a long and strong history and can be developed more. People sometimes take it for granted or do not necessarily know or think about it.
The Chair: Another senator has joined us, Senator Dickson from Halifax, Nova Scotia.
Mr. Irving: To continue on with the hydro advantage, it is the only renewable with energy storage capacity. We talked about storage. It enables variable renewables, such as wind and solar power. This is the important point. As the newer forms of renewable electricity enter the grid — solar and wind power, which are very important for fighting climate change and introducing renewable power to Canada — the difficulty is that they are variable.
They follow natural systems in a passive way, in the same way hydro power does. In the case of solar, power is produced only when the sun is shining. In the case of wind, power is produced only when the wind is blowing. Integrating these kinds of forms into a sophisticated grid can be challenging because you have to shape that load. That sounds like jargon, but I think there is understanding around the room about what that means.
If you are bringing on wind, it is good to bring on that clean renewable source; but if all of a sudden it drops off, how do you insure there is still an even provision of power to everyone? Often in cases in Canada, you can turn to that hydro power storage facility and turn it on right away; the power keeps going and no one is the wiser.
That is how we back up. That is how we enable these other forms of generation to come on to the system. We are clean and renewable in our own right, and we also help other forms of clean and renewable energy come on to the system. We are a powerful tool in the fight against climate change in this regard.
The other point that I always like to make is that we also have the opportunity to make electric vehicles clean and renewable. That is an important dimension to consider.
Currently, the end use for fossil fuels, oil in particular, is largely for powering personal vehicles and other types of vehicles. If we are able to bring on more and more electric vehicles, then we are able to conserve more and more of that non-renewable resource and employ more and more of our renewable resource in Canada. The idea is that if you were to replace a fossil-fuel-powered vehicle with an electric vehicle, you would want to ensure the electricity powering that new vehicle comes from a clean and renewable source because otherwise —
The Chair: You take away the benefits.
Mr. Irving: Why bother is almost the question. The good news for Canada, as a country that could adopt more electric vehicles, is that we do have that untapped clean renewable potential to make sure our electric vehicles are clean and renewable. To me, that is the something exciting that I think can guide people more toward hydro power and an understanding of what it can do.
It provides a competitive, stable electricity price, and it has proven itself to be the best long-term investment that any jurisdiction can make in providing electricity. In Canada, British Columbia, Quebec and Manitoba all enjoy some of the least expensive electricity rates in North America. Each of those provinces is over 90 per cent fuelled by hydro power.
It is true that many heritage investments were made some time ago that they benefit from today. However, in hindsight, there was wisdom in choosing hydro power, and the present benefits are realized through it.
Hydro power can be expensive up front. Often patient capital is required to build it. However, if you do build it and you take the time necessary to have it paid back, you have a facility that can run up to 100 years producing power. It is a great long-term investment in that sense.
I also like to mention that it did help build Canada's strong industrial base. Track the development of hydro power across Canada and you can track industrial development across Canada. There are regions in the country whose economic base was founded on hydro power to begin with — and industries, as well. It is important. In many ways, I would contend it is as much a part of Canada's development and history as the railroad, the seaway system and anything else.
Quickly to the environment, I think we have covered much of this. There are zero air pollutants associated with hydro power because it is water running through a turbine. There are no emissions. There are zero water pollutants; we use the water passively. We do not consume the water or change it; it runs through a turbine and it produces electricity. We produce zero toxic waste as result of this, and we are ultra low in greenhouse gas emissions.
In fact, we are comparable to wind power on a full life-cycle basis. In some cases, we have lower emissions than wind power projects, depending on which ones you want to compare.
It is important to mention that some of our members have engaged in studies on reservoir emissions, which I think I alluded to or people have talked about. In the Canadian context, a recent scientific study was unveiled at the World Energy Congress in Montreal this past September. I know Hydro-Québec was involved in it. It was a peer-reviewed scientific study, working on one of their storage projects from design to implementation to end operation. Greenhouse gas emissions were considered throughout the entire project and were measured and evaluated scientifically. It confirmed what many thought before but the science was not there to prove, that our emissions may spike at the very beginning of a new hydro power project, but they quickly drop and then become the same as a natural lake over time.
This is an important piece of information for people to understand. Our reservoir emissions are quite low and keep us on par with wind as far as greenhouse gas emissions, GHGs.
The Chair: At the outset when they are higher, what causes these emissions?
Mr. Irving: Often there will be methane associated with it, if there is decomposition of vegetation. In the process of creating a new reservoir, vegetation is destroyed, and it releases methane. Thereafter, it becomes more of a lake ecosystem; and from there, it tapers off and normalizes.
From the climate change perspective, we have addressed much of this, but in talking about climate change, I am often struck by the fact that many people think climate change is a new problem, or at least it has gained notoriety relatively recently. Those who understand it know it is actually a well-established problem. It has been building and compounding since the Industrial Revolution. Many people think that if it is a new problem, it must therefore need new technology. We must therefore go to new and different forms of energy to combat it.
What is actually the case is that it is a well-established problem that can best be attacked and solved with a well-established technology — hydro power. It is not something people gravitate toward necessarily — it is not top of mind — but it is important to realize that climate change is a well-established problem, and it is best addressed with our well-established technology that we are pioneers and leaders in, hydro power.
Again, we help integrate the new renewable forms of energy. Therefore not only are we a key solution to help fight climate change, but we can also help Canada adapt to it.
Credible science tells us that we may see a 5 per cent increase in precipitation in northern parts of our country as a result of climate change. That means we will need more water control. We will be turning to our existing hydro assets to assist in flood management and the like. That is something that those assets can do.
Also, in planning our projects, we can look at where water will fall in the future and better design our projects as part of that. It is not just making clean energy; it is also mitigating the effects of climate change that could very well occur.
Of course, we have issues in realizing our untapped potential and realizing our development. Many of them do boil down to regulation at the provincial and federal level. It can be complex and uncertain for our developers across Canada. At the federal level, the pieces of legislation that concern us most will be the Fisheries Act, the Species at Risk Act, the Canadian Environmental Assessment Act, Migratory Birds Convention Act, and the Navigable Waters Protection Act. We are also looking at a private member's bill, Bill C-469, the proposed Canadian environmental bill of rights, which is making its way through the other place, and we will be making comments on that tomorrow.
The interplay of these federal acts with provincial acts adds up to some pretty lengthy delays and uncertainty. It can take eight to fourteen years to complete a hydro power project in Canada, regardless of its size or type. Our members report this back to us. If all goes well, it takes eight years; if things do not go quite so well, it can take up to fourteen years. If you compare that to three to five years to complete a thermal electric project in Canada, you can see there is a strong difference in terms of competitive position. It takes almost twice and sometimes almost three times as long for us to build a hydro project compared to a thermal project, which by and large is not renewable and does have issues around emissions, both greenhouse gases and particulate. It is important for everyone to consider.
Just to end on the untapped potential and leaving time for additional questions, again we have 163,000 megawatts, more than twice our current capacity, available in all provinces and territories. That is important. Again, when you think of Canada and water dispersion across the country, we have a lot of potential everywhere.
Currently, we are working on approximately 25,000 megawatts of the untapped potential. I have handed out a list to everyone that breaks down the projects as to where they are located and being looked at and pursued. In terms of economic impact, these translate into over $50 billion of investment over the next 10 years. That is quite substantial. For people and communities and jobs, it means more than 150,000 high-value, direct jobs associated with these projects.
On the other side of the page is the map we were discussing. It gives you the total of untapped potential and current installed capacity, but it also gives you the provincial breakdown. There are some interesting notes or highlights to point out. The one that I often like to point out, probably because I am from Alberta, though I am living in Ontario now, is that Alberta has over 11,000 megawatts of undeveloped hydro power potential. Ontario has 10,000 megawatts. I often think of what I call energy stereotypes that exist in the country. It is often thought that certain forms of energy are more exclusive to certain parts of the country and other forms of energy are more exclusive to other parts. When you look at this, you see that Alberta's untapped hydro power potential is similar to Ontario's. One could speculate many reasons why that is, but at the base of it, east to west there is strong potential across the country to meet the challenges of both climate change and economic development.
Finally, how do we unlock the Canadian hydro power potential we have been discussing? First and foremost, we can put out some general thoughts and ideas. We feel that a climate policy is required. We believe that a price on carbon or incentives would help clear through some of that regulatory challenge I was discussing. We have eight to fourteen years of development time based on regulation, and we are always interested in trying to streamline or rationalize that regulation, but we also understand why it is there and we are very mature in that sense. We conform to it and work within it.
If we want to try to clear some of those hurdles, a price advantage for hydro power that would come through a carbon price would help unlock our potential. Whether that happened at a national level, a continental or an international level, we feel it would really help us in this competitive imbalance that we see.
Again, more official regulatory processes will always help everyone in project development.
Finally, as I was alluding to earlier, the greater adoption of electric vehicles powered by clean and renewable hydro power throughout North America is an important future consideration. If we can turn over our fleet of hydrocarbon-burning vehicles more and more to electric-powered vehicles and power those through hydro power, we have a chance to lead a clean transportation revolution. Canada has the ability to underwrite that with its hydro power potential.
In summary, hydro power is one of the cleanest, most affordable and reliable electricity sources available. It is renewable. We need to work together to ensure it is developed so that we can meet our needs for today and tomorrow and do it in a sustainable way. A forum like this and the opportunity to engage in a project like the one the Senate has taken on is precisely one of those things. I am very thankful for the opportunity to speak to you and glad to see there is still time for questions.
The Chair: Thank you to both of you.
In the absence of the deputy chair, let me take a couple of questions at the beginning. Is the 163,000 megawatts an absolute number? I am intrigued by the fact that we are ranked fourth after China, the United States and Brazil, yet we are the largest per capita consumers of energy in the world. We have this incredible natural resource. I have a problem thinking you could cap it at 163,000. Could it be higher than that?
Mr. Irving: Yes. As you imagine, it is always difficult landing on the right number when you are speculating into the future of what can be developed and what cannot. We call this technical potential in terms of what we think could be achieved with current technology and practices, transmission constraints, all of the different factors that we have built in to essentially give a credible number of what we think is honestly achievable in Canada. You can, of course, cut that number down more when you want to add social acceptability, environmental concerns, or whatever the economic considerations of the day are. That number can go down.
The question you are asking is whether that number can go up. I do not have a complete, full-blown theoretical number for you, but yes, it could be higher if any of those variables changed in favour of hydro power or if it became increasingly socially acceptable or if advances were made.
The Chair: Regarding how to unlock this potential, whether it is 163,000 megawatts or another number, you have put three items there. We are working on the second one. I do not think you would get any argument about its being cumbersome. If it takes 25 years to get a project up and running, we have a problem.
The last one strikes me as requiring a transplant of personality somewhere. If I am wrong about this, you will say, but from what we hear about electric vehicles, you have it there because that is a demand-side thing. If you can create greater demand, that will then force greater efficiency and production and ultimately more supply. It is simple economics.
Mr. Irving: Yes.
The Chair: The idea is to create greater demand for clean electricity. That is why you say that if we are going to have electric cars, make sure we do not negate the benefits by having a dirty source of power. We hear that these electric vehicles will only go so many miles an hour, and this and that. We do not know. We have not yet brought in the electric vehicle people. However, I went to the Copenhagen conference and rode around in one.
How realistic is the third item?
Mr. Irving: It is interesting, because it is about trying to introduce a new product into a well-established infrastructure. We all know we have a well-established infrastructure for fossil-fuel-consuming vehicles. The other part about fossil-fuel-consuming vehicles is that, as I often put it, you get a maximum 25 per cent efficiency in your internal combustion engine, and that internal combustion engine is consuming oil, which is a non-renewable, precious and valuable resource.
I often think about that as I drive into work, that here I am going to and from work, burning at 25 per cent efficiency, and I am burning something that is very powerful and that does certain things that other forms of energy cannot. Oil is an important strategic resource, and Canada is blessed with having large reserves of that, as I know you have heard in this committee as well. However, using oil at a 25 per cent efficiency rate to get to and from work gets to be not helpful or beneficial. If you are driving your electric vehicle to and from work, you are using renewable electricity.
The Chair: At what speed?
Mr. Irving: I do not know the upper limits of the technology, but many of the new-generation cars that are coming out can reach better speeds and have a longer range. I am confident the range anxiety that is associated with electric cars can be overcome.
I put it this way: In my own lifetime, cellphones, which I am sure all of us here are carrying, went from being non-existent to being ubiquitous. Everyone has one. Cellphones also went from being about the size of a brick to being about the size of a business card. Why? Because people liked them, there was a demand for them, and they caught on. Then there was a real economic prize for anyone who made cellphones to make them more energy efficient, to make the battery smaller, to make the cellphone more powerful and efficient, to make the device use electricity in a more efficient way and to increase the charging time on the battery.
There are all these different ways to improve. Rather than focusing on any of the current limitations of electric vehicles, I think it is important to gather some optimism for the potential of electric vehicles.
I had the privilege of attending the World Energy Congress this past September. There was a lot of discussion about other forms of energy and about the technology associated with shale gas and shale gas coming on and being a potential large contributor. There was a lot of talk about carbon capture and sequestration and what it can do to make fossil fuels cleaner in their development.
These are all ideas that are based on future technology. I felt there was a strong amount of optimism for both those technologies. It is always exciting to see people optimistic about these pieces.
Then I would talk to people about electric vehicles, and I would find that they would immediately start talking about all the challenges and limitations with them. My answer to them was, "Sure, there are these difficulties with electric vehicles, but at the same time, I suppose carbon capture, sequestration and shale gas technology are slam dunks, right? Those will happen for sure, but electric vehicles are hugely challenged."
The only thing I would say is that electric vehicles currently do exist. They are real technologies and they are being implemented around the country. They are being piloted and tested, and the opportunity for them to improve is out there.
This is a long way of answering the question, but yes, I do believe that if we can make that kind of revolution and change, it would have a huge potential effect on greenhouse gas emissions, especially in Canada, where transportation is one of our top sources of emissions.
The Chair: This begs many questions. I will turn to my colleagues now, but I would love to debate that one with you.
Senator Neufeld: Thanks to both of you. You have been explained this issue very well to us.
On page 6 of your slide deck you combine hydro and nuclear. Seventy-five per cent of our electricity is generated from clean sources. I will give you a suggestion rather than a question. I almost think that your organization has to start talking more about that. We will, as a Senate committee. However, similar to what the Canadian Association of Petroleum Producers has finally, shall I say, realized, which is that they cannot keep their head in the foxhole all the time, your organization needs to stand out and talk about what you have and how clean it is.
When I was a minister, people used to say, "Why do you not build any wind power in British Columbia? What is the matter with you? Look at Alberta. They are building wind power. Look at Europe. They are building wind power. Why do you not do it in B.C.?" It was because we had 90 per cent clean power already. There was not a great need.
That is just a suggestion to you, but I think you have to reach out to Canadians more and let them know just how good we actually are, because we are very good. We tend to focus on the negative rather than the positive. You guys can start talking about the positive.
I am interested in the Ontario flood control. Is there a possibility? I know we have done this in British Columbia with flood-control dams on the Columbia River, where we generated small amounts of hydroelectricity. The Hugh Keenleyside Dam is one. Is that possible in many of those dams in Ontario? If it is possible, can you tell me why it has not been done? I go back to Ontario's problems in trying to figure out what they are going to do over time. That is a history I will not repeat, but it is a long history of how to generate clean electricity.
Mr. Irving: That is a good question, and there is another association that is better poised to answer. The Ontario Waterpower Association has more expertise than I. In my conversations with them, I learned that 8 per cent of dams are for hydro power in Ontario, and that is about 260 dams. There are another 300 dams that were producing power but that were shut down during the 1950s and 1970s as different forms of generation were brought on. Hydro power was actually backed out to accommodate new and different forms of generation that were being tried at the time. Many of those dams remain unpowered. They have facilities in them, but they are not producing electricity. On top of that, there are all the irrigation dams and the like that could be powered up as well. Why they are not is the same question I asked myself when learning about this dynamic.
Part of the reason is that a good number of these dams or facilities are on private land or are privately owned. They are part of a farm; they have individual operators. A smaller-time operator looking at this dam on his or her property and saying, "I would like to turn on power for myself," is looking at eight to fourteen years of regulation. Again, this regulation adds up. Large and small projects alike can face this kind of difficulty. In that sense, to a private owner it can start looking more like a liability than an asset. Much of this regulation can add up to disincentive, and it is a difficulty.
Senator Neufeld: I will disagree with you a little bit because I think Ontario Hydro is paying 80 cents for feed-in tariff for solar. Eighty cents is $800 a megawatt. If these small dams are on private land, farmers and others can generate some extra revenue by building. I do not know about Ontario, but I know that in B.C. it takes a long time to get a large hydro project finished; but the East Toba project, which is generating today, from start to finish took less than five years. I think some smaller ones can get through the process a little easier. Fish was not an issue because most of our run of the river is above fish. I do not know in Ontario if there are issues around fish. That is just a point of view.
Would that 168,000 megawatts you talked about incorporate any of that kind of thing in Ontario? How do you estimate that? Is it similar to how you estimate oil and gas reserves? That sounds pretty good to me.
Mr. Irving: No, that 168,000 megawatts does not include those non-power dams we were talking about. This is a new future I have discussed with the Ontario Waterpower Association. We are trying to wrap our heads and arms around that to get that kind of number.
I am not an expert in Ontario, either. My domain is the federal level. However, my understanding of the feed-in tariff program you mentioned, the 80 cents for solar, is that similar rates were not offered for hydro power. Some smaller-scale hydro power was given some incentive but not at that scale or amount. Mr. St-Onge might answer that.
Mr. St-Onge: It is about $130 per megawatt hour — much less than solar. Also, regarding developing the other sources, the easy sources have been tapped, and it is extremely complicated. It is a very long process. It is a mature regulatory environment, so it is difficult, and a developer needs to have the economics working and the patience to develop over 10 years with all the risks associated with it.
Senator Neufeld: I was only using the feed-in tariff for solar to make an example that they are willing to pay $800 for solar. Paying $150 for hydro is quite a difference at the meter for the consumer.
Mr. St-Onge: Most of these dams and river systems are far away from the transmission grid, so we need to factor in the cost of integrating these, the cost to build the transmission infrastructure to reach them.
Senator Neufeld: That is pretty basic across the country in the electrical system.
You said there would be an advantage for hydro if a carbon tax were applied. When you figure that out, do you actually calculate all the carbon tax that would be involved in building the dam, the whole system, everything, like taking the coal to Korea to build the generators to bringing them back and all that stuff? Is it basically what they call in the oil and gas industry "well to wheel"?
Mr. Irving: Yes, full life-cycle assessment. The best full life-cycle assessment would consider the concrete it takes to make a dam and include all of those different factors built in, because when you look at it up front a lot of industry is put into building one of these facilities, but then when you amortize it over the 100-plus years, that is where we think the calculation needs to be understood.
Senator Brown: Have you done any work on tidal generation of power? It seems like an almost unlimited resource if you can control the tides in the Bay of Fundy and places like that. It is never ending unless the moon decides to get out of orbit.
Mr. Irving: Our association does not focus on tidal or wave. I think you have had representations from the association that does specialize in that piece.
What you are saying is the potential is there, and it is interesting and new. Canada has the longest coastline in the world, I believe, so just think of that and of the potential. One thing I know about tidal and wave and the like is that there does not seem to have been a settling out in technology yet for how it would necessarily be deployed. There are many pilot projects in that phase. We are trying to figure out how to do it and where to do it; it is still early stages, I think. However, if you can tap into the right technology and deploy it in the best way, the potential would be significant for Canada.
Senator Brown: I have one comment on the kind of dams you were talking about in Ontario. I think small flood-control dams are subject to silting; I do not know what their life would be, but it will end when the silt gets to the pumps. I read something on China's Three Gorges Dam in National Geographic. Apparently it is one the largest if not the largest hydroelectric power thing in the world, but it came with some really bad things. Tens of thousands of peasants were flooded out of the areas flooded by the Three Gorges Dam. It is not without its problems, too, and I guess that is why we have 15 years to look at where we are going to site some of these things.
Mr. Irving: I would not be able to call myself an expert on development in other countries. I know pieces, probably much like you do. I do know that in the Canadian context, much of our robust regulation helps ensure that our projects are done in the most sustainable and socially conscious way possible. One reason we could be proud of the way we develop hydro power is that we remain focused on constant improvement in the way we approach things. Every new project has a new possibility to do things even better in community relations, social acceptability and the like. Our members take that very seriously an it is a distinguishing feature of Canadian hydro power. We can be cautiously proud of the way we do things.
Senator Banks: I will re-ask your question, Mr. Chair. If this is so wonderful, why is everyone not doing it? There is no such thing as generating energy by any means that does not have a downside. Whatever you do has a downside of some kind, but I think most Canadians would agree that if we had our druthers, and all things considered that we know now, it would be nice to have an entirely blue pie. We had it for a long time in Alberta, where Senator Brown and I are from. Before our relatively recent industrial development, the hydro output of the Ghost Dam and Kananaskis Dam was a much higher percentage than shows up now.
You say it is sitting there and is profitable. There is no particular shortage of patient capital that I can see, because in other forms of energy development, some of which are not proven as this one is, there is no shortage of patient capital. It takes a lot of patient capital to explore for oil wells because this one will not have anything in it and that one will not have anything in it, whereas you are dealing with a proven technology: If we build a dam across this valley, there will be a lake behind it and we will make electricity.
I am assuming that capital to build it is not a problem. Is that a correct assumption?
Mr. Irving: I think capital to build anything is always a bit of a problem.
Senator Banks: By comparison with other things?
Mr. St-Onge: There is hydro development across Canada in most of the provinces, so, yes, many of these projects are currently in different development stages. You must understand that the demand has not increased over the last years because of the recession, and an internal demand is needed to justify these projects.
Because of the volatility of the marketplace, you will not see projects being developed on a merchant basis in Canada. We need to have power purchase agreements to support such developments. That is true also with wind development.
Many requests for proposals for long-term contracts have been targeting wind development over the last years. Also, the interconnections with the U.S. are limited. Even if Canada develops massively the potential here, we will not be able to export that power without new interconnection capabilities.
Senator Banks: Would that not follow as a matter of course? If there is an insatiable appetite someplace and an inordinate supply someplace else, someone will build a pipeline.
Mr. St-Onge: You are right. I will explain how it works with the different renewable portfolio standards in the various states — why it is so hard for hydroelectricity to be recognized in the U.S. — because it is renewable; there is no doubt about it.
In the U.S., the wholesale transactions and interstate energy transactions are the jurisdiction of the federal government, with an oversight by the FERC, the Federal Energy Regulatory Commission. The retail side of this industry, the consumption of energy, is the states' jurisdiction. Each state is very protective of its jurisdiction, and a little more than half of the U.S. states currently have renewable portfolio standards.
They have targets. Most of them are mandatory, but several of them are only on a best-effort basis. That means that over a certain period of time, they need to acquire renewable energy to supply their load. Usually it is about 20 per cent by 2020, as a rule of thumb.
The difficulty here is that each state has a different definition of what is renewable. Of course, it includes the current picture of the generating profile of each state. It is used as an economic development tool. They do not want to pay a premium for Canadian power when they can invest for projects within their states. That is why it is being confused.
It is very difficult to have a common definition across the U.S. Also, states with a lot of thermal and cheap power from coal do not want to pay a premium for buying wind from jurisdictions outside of their states.
Because of that, it is difficult to have a commitment to build power lines. These portfolio standards impose a penalty if you do not buy the percentage that is targeted. However, there is no commitment long term. They do not oblige the utility to procure on a mid- to long-term basis to justify these investments.
Therefore, Hydro-Québec is struggling with new lines. Obviously, it wants to sell a lot more in the U.S., but it needs to find a long-term buyer first. That is part of the equation.
With all these different definitions of renewable, it is difficult to reach a common standard for the entire U.S.
Senator Banks: There is a state that says that hydro is not a renewable energy; is that right?
Mr. St-Onge: Some accept hydro, but they put constraints on it. You need to be on line after 2002. You have also a maximum capacity — five megawatts, twenty-five megawatts. They accept the concept of it, but they put limitations on it.
Senator Banks: They are not saying that hydro is not a renewable energy; they are saying you cannot use this much of it, right?
Mr. St-Onge: They do, but then there is a very strong lobbying effort by the wind developers and coal and all these forces together. Obviously, they want to limit access to it.
Senator Banks: I will finish with a rhetorical question. If a state says that hydro is not a renewable energy, what does that state regard as renewable energy?
Mr. Irving: There are apparently states that regard future clean coal as renewable, according to their definition. There are scientific definitions and there are political definitions. I think most everyone here understands how those interrelate. That is the world Canadian hydro power lives in.
That said, there are examples of states that do recognize Canadian hydro power as fully renewable. One of the important news items of this summer was that the state of Vermont recognized Canadian hydro power in all of its forms as being 100 per cent renewable, to be included in its renewable portfolio standard.
Mr. St-Onge: Again, some standards are voluntary, and it is a best-efforts basis.
The Chair: It was that new legislation in Vermont that got me asking the question of what was it before. Then I found out there are many other states that have laws like that. We think what triggered Vermont was this kindly little neighbour to the north called Quebec and long-term contracts that they need to collateralize these new projects. It all comes together. I think your answer is very helpful.
Senator Seidman: Senator Banks has covered my territory, because I did want it go back to the U.S. issue. Being from Quebec, it is a pretty big issue for us.
You have talked about how large hydro does not qualify as a renewable energy source because of definition issues. If we can continue this subject and try to understand a little better, are you having any luck in convincing U.S. states to standardize their definitions or to look at the science issues and come to terms with it?
Mr. St-Onge: I do not think it is a matter of science. Definitely in the northeast, there is momentum now that we are trying to gain and build upon. Massachusetts is supportive too, and Maine has already a pretty decent amount of hydro generation. We own several plants in Maine, actually. The northeast is definitely friendly to hydro power.
The big issue here is that the wind producers do not want to see a large amount of hydro swamping the market, seeing the price reduced for the renewable energy credits. It is more a political battle than an economic or a scientific one.
Senator Seidman: Are you saying the major challenge is the political one?
Mr. Irving: Yes. That is a safe way to put it. We need to be able to make the case for Canadian hydro power across North America. Yes, we have this undeveloped potential; yes, there are all these inherent benefits associated with it. We have the expertise and the technology; why is it not flourishing more than the train of logic would lead you to think it should be?
We can get into a number of reasons, but, again, it is the supply and demand piece. Canada has a fair bit of hydro power development. We are net exporters of it. If you look at it from that perspective, you could look at it in the sense that we have a fair amount to deal with our own domestic needs. That is why we are able to export it, in fact. How do you grow this huge supply that is sitting there?
To me, the few basic concepts are if Canada could back out existing forms of generation that arguably are less clean and less renewable and create a favourable environment for hydro power to step into that void, there is an opportunity for hydro power to grow. That is one option.
Senator Banks: Is that why you want carbon credits?
Mr. Irving: Within Canada and across North America it would be the same thing. If we had an opportunity to sell more Canadian hydro power in the United States because they wanted to get a handle on their greenhouse gas emissions, it would present an opportunity to grow that 163,000-megawatt potential. If electric vehicles were adopted en masse and in a way that ensures we power them with clean renewable electricity and not make the mistake of just powering them with non-renewable dirtier fuels, then that would be another opportunity to plug in more hydro power. We have the supply. There is a demand issue that we have to work on together to figure out.
Senator Seidman: I will continue to pursue that. You made it sound very easy, but a question comes to mind: Why are we not 100 per cent hydro power? You talk about demand issues. As consumers, we have all experienced brownouts and grid incapabilities. We all have been told to run our washing machines in the middle of the night because the demand for electricity during the day cannot be sustained. That clearly is a negative expressed to consumers. How do you respond to that? It is a big issue that might dampen the enthusiasm to move forward.
Mr. Irving: Building for peak consumption is one of the difficult issues in our industry generally. Human consumption patterns are such that we follow the workday. We get up and consume energy strongly in the morning getting ready for work. We go off to work and come home and have dinner. We have spikes in our consumption that follow our daily patterns. Generally, yes, if you want to run your washing machine in the middle of the night and you have a smart meter system in your grid, you can realize some benefit from doing that. When you run your washing machine at the same time everyone else runs theirs, you pay the higher price.
These questions come back to many of our hydro power generators. A generic hydro power generator in Canada — a Crown corporation model, which would include Hydro-Québec, Manitoba Hydro and BC Hydro — receives its revenues at the end of the year, and it has to decide how to spend those revenues. Those corporations all have one single shareholder — the people of the province. That is the way they often put it. They have one shareholder, and that shareholder is the people of Manitoba or the people of Quebec or the people of British Columbia. The corporations get revenue at the end of the year and have to decide where it will be spent. Will it be spent on building new generation projects, which are expensive and capital intensive? Will it go into general revenues of the provincial government to defray the costs of building hospitals or schools or other things? Or will it go into trying to reduce existing electricity rates by defraying them through various means or programs? These decisions are faced by these different producers.
Carving out the ability to build new generation facilities with that money is not necessarily easy when domestically we have stable competitive prices and producers have to make the case to build more. To what end? For export. Well, often there are political considerations. That is another facet of the way hydro power is developed in Canada. That is the politics from our side of the border, I would say.
Certainly there are profits to be made and profits that can be returned to people through their provincial governments. A strong model is played out that we have become more used to, but it will not necessarily happen that way all the time. It gets a bit complicated in that respect.
Mr. St-Onge: I concur with you.
Senator Seidman: I will leave that for now.
Senator Lang: I have a couple of questions. I noticed in the information you provided to the committee a list of hydro power projects in various stages of planning — roughly 23,000 megawatts. Are any of these projects under construction? If so, how many are there, and where are they located?
Mr. Irving: I do not have it broken down like that, so I would have to get back to you with more classification.
Senator Neufeld: I could answer for B.C.
Senator Lang: I ask the question because I want a sense of how many were authorized and being built with the understanding that they would provide power in the next short while.
Mr. Irving: I would call these projects that are being openly discussed in public. They have had some level of announcement, and there is some level of expectation in the public domain that they are being looked at and seriously considered. Of course, they are all on the continuum from being conceptual to being worked on currently. There is a full spectrum of stages, but that is the threshold piece. They are not entirely speculative; they do not exist only in someone's imagination. They have been discussed and announced, and some work is being done.
Senator Lang: On page 11 of your presentation, under "Addressing the Issues," you have regulations pertaining to hydro power in Canada. You listed various acts with which you have to comply in order to proceed with any of the projects that you have outlined or any future projects.
Have you developed positions that you could put forward vis-à-vis the Fisheries Act and what changes you would like to see in order to assist your efforts while meeting your environmental responsibilities? The same applies to the Canadian Environmental Assessment Act.
Do you have positions, and have you put those positions to the federal or provincial governments to see whether you can resolve them to meet your desired timelines?
Mr. Irving: Yes. That forms much of the day-to-day work of our association located in Ottawa. We connect with the various departments, at both the bureaucratic level and the political levels. We have developed strong position statements on the Fisheries Act and the Species at Risk Act. In many cases, we have reached out to other industries and collaborated with them. In the case of the Species at Risk Act, which has just gone through its five-year mandated review, we managed to have some environmental groups support our position. It is a positive thing that these reviews of environmental legislation have built-in review periods. This fits with the wisdom that this new legislation is stepping into an entirely new realm of governance. It is good every so often to step back and look at what the intended and unintended consequences of these pieces of legislation have been. For the Species at Risk Act, we managed to build a coalition of both industry and environmental groups to come together and make a concerted case for how the act could change to the benefit of both the species at risk and the development of clean renewable energy.
Senator Lang: Could we have copies of these positions that you have taken?
Mr. Irving: Yes. I can do that through the chair, I believe.
The Chair: You could do that through the clerk; it would be great.
Mr. Irving: They are formal submissions. Some are in the works, and some are completed. I can get you the completed ones, and I can keep you up to date on the ones that are in the works.
Senator Lang: I think that is important because there may be issues there, and perhaps we could recommend at the end of our study that we meet some of the obligations that are obviously important to the study.
Mr. Irving: That sounds like a great idea.
The Chair: Thank you, Senator Lang. That is an excellent idea.
Senator Massicotte: Thank you both for being here. Most of the questions have been asked, so I will ask you a personal question, Mr. Irving.
You talked about and used definitions to highlight the importance of water-based hydro storage. You put great emphasis on that and used your definition to ensure that it is special and how it is done, and so on. I notice you are the executive director of the Oil Sands Developers Group. How do you reconcile that presentation with the oil sands? To use your definition of how saintly you are, the other one does not look good. How do you reconcile that personally?
Mr. Irving: That is an interesting personal question.
I do come from the oil sands. I have been in this position for a little over a year. I was in Fort McMurray three years prior to that. My honest view is that Canada is blessed with various forms of energy. We are a net energy exporter of oil and hydro power. We are one of few lucky places on the planet that can lay claim to being a net energy exporter of all different forms. We have two strong energy pillars in Canada. One is our hydrocarbon pillar, our oil and gas reserves; the other one is hydro power. I am quite fortunate to have had the opportunity to experience working in both.
There are more commonalities and similarities in many ways than differences for these resources. As a net energy exporter, our challenge is that we have currently more than enough of all of these forms of energy to satisfy our own domestic needs in Canada. Arguably, even with population growth we will have quite enough to satisfy ourselves for quite some time. We are energy rich in the purest definition. The challenge is how to share the energy with the rest of world through trade into the United States, our closest and most logical trading partner, and throughout the world as well. That is the similar challenge.
Our challenge vis-à-vis Canadians is that we must all consistently work on our social licence to operate. We need the support of Canadians in developing the surplus that we have. That is a common challenge. No form of energy gets a free ride from Canadians, ever. Canadians are vigilant in their defence of their environment. They are quite sophisticated in their understanding of how different energy options mix. They want to make sure that we are all developing these resources in consort, as best as possible. I think there is great opportunity for Canada both in its hydro carbon resources and in its hydro power. That is how I reconcile them.
Senator Massicotte: Now I know why they hired you. You are a good skater.
Mr. Irving: Those who are extremely blessed have that much more responsibility put on their shoulders. Canada has this to offer the rest of the world. We must figure out how to manage it to our advantage and to the advantage of others, taking the time to do energy studies and to talk to Canadians and raise energy literacy. To stay vigilant on the question is incredibly important.
Senator Massicotte: Thank you.
Senator Peterson: Thank you for your presentation. I am somewhat familiar with the uranium industry. I understand regulatory control, so I was kind of surprised to hear you say that you are faced with rigorous regulatory controls. Can you give me an example of that?
Mr. Irving: Whenever we are regulated, we are automatically regulated at both the provincial and the federal level; some other forms of energy development are not. They will be regulated sometimes strictly at the provincial level. That puts some rigour and some additional expectation into the process. Also, the environmental assessment that hydro power must experience is quite strong and sophisticated.
The difficulty we have overall, coming back to that, is again that rigorous eight to fourteen years compared to three to five years. I think that is where that word comes from. Also, the amount of detail expected of us is something we must manage quite strongly in our development track.
The other difficulty is the duplication and uncertainty. I think it comes back to that. Actually, this ties back to a question from Senator Neufeld. There are some examples that do break that mould. It is not eight years, but five, or it could be shorter. There was an example in Ontario recently where they managed to get the project done faster than they ever thought. It was along the basis that they have to bring the case to the regulators and make them see the logic of it and have them not enforce the regulation perhaps as strongly as it is enforced elsewhere or in other circumstances. That means that yes, you can make a good case for a hydro power project and get it streamlined and pushed through quickly based on its merits and based on whom you are working with and whoever is applying the regulations, but it is not consistent across the country. The good news is that in this case is they did manage to get a quicker project, but it does not mean that it will happen the same way on the other side of the country.
Senator Peterson: On your potential hydro capacity, I notice you indicated the possibility of a fivefold increase in Saskatchewan, where I am from. How much of that is dependent on new technology for efficiency in transmission lines and grids and that sort of thing?
Mr. Irving: All of them are dependent to a certain extent on transmission in various shapes and forms. However, I cannot say that I can give you the precise drill down on that and how much of it would be required for new transmission, et cetera. All of that is included. Those additional features need to come to bear to bring on that additional capacity everywhere across the country.
As for technology for hydro power generation itself, there are always opportunities to improve, and we do improve all the time. Some of the technical advances — for example, fish ladders, fish friendly turbines and some of the pieces designed to help mitigate some of the ecological impacts that we take seriously — are important to increase acceptability of the project and to ensure social licence is obtained. That is some of the new technology we must ensure we get right to build our capacity.
Senator Peterson: In Saskatchewan again, it is obviously in the north. You are getting a long way from the end user. The further away, the more difficult it is for you.
Mr. Irving: In our existing capacity, that is part of our story in Canada. Many of our huge hydro power reservoirs are far from load. The James Bay complex is over 400 kilometres away in the northern boreal forest. Planning had to be done and investments made in transmission for that to come to market. That is an issue across Canada.
In general, when you look at the situation across Canada, it is interesting. We talked about having come from the oil sands in the past. When you look along the meridian line across Canada and see the energy investments, such as Churchill Falls, James Bay, much of development going up in Manitoba around Thompson for hydro power, and the oil sands that is on that same line, Site C for hydro power is not too far away.
Many of our different forms of energy and natural resources that are increasingly in demand come back to a pattern of development for Canada of the law of diminishing returns. Canada is well-poised in that sort of environment not just for hydro power but for all forms of energy. The story for Canada in the future is that we will be going further north and further afield for all types of resources. That will be a common challenge for everyone. Whether it is building more pipelines, more roads or more transmission, those issues will continue to be a challenge for us to be able to do and do responsibly.
Senator Dickson: I want to follow up on something Senator Peterson brought up: technology. Having recently read several articles, I will not ask you to comment on this one, but you may want to read it afterwards. It is in The Atlantic, about why the future of clean energy is dirty coal. Unquestionably, coal globally will be us, whether you have read the article or not.
My question comes back to technology. According to my recent reading, the United States has an agreement with China insofar as technology is concerned. Do you have partnerships with China or Japan, particularly China, or are we satisfied at home with what we have?
Mr. Irving: I cannot claim to be an expert on the global supply chain for our projects. I do know there are partnerships, and it is an international industry. There are strong partnerships with other large hydro-producing nations — China, Brazil, the United States. There is interconnectivity for Canadian companies, and Canada has an opportunity to compete and to grow in our engineering expertise and perhaps in fabrication as well.
Senator Dickson: In that context and coming back to battery-operated vehicles, in Osaka there are 114 universities, corporate research institutions, including overseas researchers working in the field of nano-materials, environmental issues, et cetera, plus the electric car.
Is your association monitoring what is happening there? Does Brookfield have investments in Brazil and the U.S? Have you gone global, and if so, where?
Mr. St-Onge: Yes, we are a global asset management company. Fifty per cent of the asset base is in the real estate business. We own real estate properties across the globe on several continents.
Senator Dickson: Do you have any in China?
Mr. St-Onge: No, but recently we teamed up with Chinese investors in one of our funds. It was a significant contribution, $1 billion. We also have hydro power generation, which is about 30 per cent of the operating side of Brookfield — 166 plants, 90 per cent being hydro generation. We have currently operating windmills in Canada and projects in the U.S. We have a portfolio of investments in different assets, in port, in the mines and timber businesses. It is pretty well developed.
Senator Dickson: Are you interested in early-stage investing — a high risk, probably — in tidal in Nova Scotia?
Mr. St-Onge: We have different funds that are specialized; one actually is specialized in new technologies.
Senator Dickson: Are you doing investments presently in Nova Scotia?
Mr. St-Onge: That is a good question. I have to check with our friends in Toronto who manage these funds.
Senator Dickson: What about Muskrat Falls and the new hydro developments in Newfoundland? Are you in those, out of those or interested in those?
Mr. St-Onge: We have a general interest. It is a complex file and projects. Obviously right now the big issue is transmission and access to the marketplace. We are not involved currently in developing the projects on any fronts, but we have a general interest. They are now trying to establish a right strategy to reach the appropriate markets, and once that is done, if we are contacted, we will consider any opportunities.
Senator Dickson: Are you interested in examining the 500-megawatt new transmission opportunity between New Brunswick and Nova Scotia? Are you interested in investing in that particular transmission line?
Mr. St-Onge: We have an interest in New Brunswick. Our interests are very preliminary. There has been a change of government, as you know. No comments there; we will participate. Our CEO, Richard Legault, has been invited to participate with the commission to define the long-term energy strategy in New Brunswick. His testimony I believe will be on December 17. We are evaluating opportunities. It is a very good business partner to us, and if there is a joint opportunity, we will definitely consider it.
Senator Dickson: I hope you will invest in that.
Mr. St-Onge: I love the Maritimes.
The Chair: I am sure you will have a lot of investors from Nova Scotia for Brookfield. One of our former colleagues, Senator Trevor Eyton, is well-known to your company.
Mr. St-Onge: Absolutely.
The Chair: I was glad Senator Dickson asked Mr. St-Onge about Brookfield because he more or less came along in his capacity with his firm being a member of the Canadian Hydropower Association. Looking at the documentation I have in front of me, I see your company is interested in clean energy power or the development of energy from clean sources that are not exclusively hydro; is that correct? In other words, are you involved in nuclear?
Mr. St-Onge: No. Just to come back to your initial statement, we do not pretend to understand and to be expert in many renewable resource generating types. Hydro is definitely our bread and butter, and it is the main generating technology that we are very comfortable with. We are pioneers in that field and we focus on hydro. We do not spread our energy and investment in other sectors that we do not fully understand or where we are not comfortable with the risk profiles. The decision has been made not to be involved in the nuclear sector. It requires a specific set of skills.
The Chair: You said a decision has been made not to be involved in the nuclear sector?
Mr. St-Onge: I would not say about the future, but right now we are not considering investing in nuclear assets. Our focus is in the sectors where we are comfortable and that we know well. We are expert in managing hydro assets and wind projects. Even wind is a young venture for us, but hydro is definitely our main area of expertise that we know how to manage and operate.
The Chair: I am reading that you have been in business for over 100 years, as an active power, an active player. Is Brookfield Renewable Power Inc. a wholly owned subsidiary of Brookfield property management, or is it a division thereof?
Mr. St-Onge: I will send you information about our corporate structure. We are part of BAM, Brookfield Asset Management, the corporate holding, and from that holding there are various companies. Brookfield used to be the real estate company's name. We used to be called Brascan for the association of Brazil and Canada. In the 1890s, a group of wealthy Canadians invested in Brazil in different public resource sectors, such as transportation, transmission, railway systems, and several businesses in Brazil, so that is why the company carried the name Brascan for several decades. We wanted to have a common name across the companies, and three or four years ago it was decided to use Brookfield as the common identification of the company.
We do have 100 years of operation. Some of our plants, like the one in Masson, which is very close to here, were built in the 1930s.
I would like to extend an invitation to you to visit that plant. It is a 100-megawatt hydro plant, and you could also visit our trading floor in Gatineau, if you want. We have over 200 people working in Gatineau.
The Chair: What is the deal in Gatineau?
Mr. St-Onge: We have a trading floor and an operating control centre. The headquarters of the Canadian operations group are in Gatineau, so we have a control room for all our assets in Canada. They are remotely controlled in Gatineau by our operations group.
The Chair: Are you trading megawatts?
Mr. St-Onge: We do not actually trade. Brookfield is very conservative. We do not speculate on power. We try to optimize the revenues for the generation we have. We have an extensive trading floor in Gatineau where we sell the generating output of our facilities across North America. If you want to visit, you are welcome.
The Chair: You are very kind, and you may be surprised.
Mr. St-Onge: I knew the risk before I extended the invitation. We can combine the two, a visit to the trading floor and a visit to the Masson hydro generating facility, if it is of interest to you, Mr. Chair and members.
The Chair: Mr. Irving, I want to thank you very much, sir, not only for your appearance here but also for the preliminary work you have done in getting to know us, getting us briefed well in advance and recruiting and bringing one of your prominent and esteemed members from Brookfield.
[Translation]
Mr. St-Onge, thank you for being with us this evening.
[English]
I want to conclude by reminding the senators here who are going on the field trip at 7:30 a.m. on Thursday in lieu of a hearing here that at 7:15 a.m. the bus will be at the Senate entrance of the Centre Block, and we will be going to Chalk River. We will see the National Research Universal, NRU, reactor and get an idea of what isotopes are and what the refurbished nuclear reactor is all about to help us with our learning curve in the energy business.
If there are no more questions, I want to thank everybody, and the meeting is terminated.
(The committee adjourned.)