Proceedings of the Standing Senate Committee on
Energy, the Environment and Natural Resources
Issue 19 - Evidence - February 28, 2011 (afternoon meeting)
HALIFAX, Monday, February 28, 2011
The Standing Senate Committee on Energy, the Environment and Natural Resources met this day at 1:58 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: The Standing Senate Committee on Energy, the Environment and Natural Resources reconvenes its special fact-finding hearings here in Halifax, Nova Scotia. From the Halifax Regional Municipality this afternoon we are very privileged to have with us three of the main players in the organization — Julian Boyle, Energy Auditor, Infrastructure and Asset Management; Mary Ellen Donovan, Director, Legal Services and Risk Management, which is obviously a key role; and Wayne Anstey, Acting Chief Administrative Officer and Deputy CAO Operations, Chief Administrative Office. Welcome to you all.
We just finished an interview with The Halifax Chronicle Herald and I can tell you we said we are very impressed with what we have heard so far today. The mood seems to be very bullish here in Nova Scotia, and I think you guys are in the catbird seat. You have wonderful sources and alternative sources of energy and are participating in the national dialogue that we on our committee felt a couple of years ago was so essential; it seems really to be happening.
From your perspective running this great town, we would love to hear from you, so you have the floor. How are you going to proceed?
Wayne Anstey, Acting Chief Administrative Officer and Deputy CAO Operations, Chief Administrative Office, Halifax Regional Municipality: I will go first and then I will turn it over to Mary Ellen, who will delve into the meat of our presentation, and then Julian will be here at the end to help answer any detailed questions that Mary Ellen and I might not be able to answer.
The Chair: Tremendous.
Mr. Anstey: To open up, I would like to thank you for inviting us here today to speak on this topic. Halifax Regional Municipality, HRM, takes issues relating to the state of our energy system very seriously. From our perspective, we believe that the future should move away from the current centralized energy system, which in Nova Scotia is so reliant on foreign energy sources, towards a more local, economically and environmentally sustainable distributed energy — energy that is flexible, energy that builds local capacity and resiliency. Doing so will not only support the province's environmental goals as laid out in the Environmental Goals and Sustainable Prosperity Act, EGSPA, but hopefully will also grow our economy in creating jobs for Nova Scotians.
Our presentation will first tell you a bit about what HRM has been doing towards moving us to this future state, and then we will discuss some of the challenges which we face before providing you with some recommendations for the committee to consider. At this point, I would like to turn it over to Mary Ellen Donovan, our Director of Legal Services and Risk Management, who is also one of our energy champions.
Mary Ellen Donovan, Director, Legal Services and Risk Management, Halifax Regional Municipality: Thank you, everyone, for this opportunity. I will start off by departing from the script, which is always a good place to start, by picking up on what the premier said this morning and indicate to you that I think we are part of the Nova Scotian buckshot approach. You will hear a number of other approaches to addressing the "negawatt" issue that we have been privileged to be a part of and we thought we would try and share with you today, followed by where we see the federal government might be able to provide us with some assistance in what we are doing in this part of the country.
We wanted to start off putting forward the question of why energy matters to the Halifax Regional Municipality. One of the many reasons why it matters, not only those that you have already heard today, but also the fact that HRM residents spend $1.5 billion annually here on energy.
The Chair: HRM being Halifax Regional Municipality.
Ms. Donovan: Not corporately, but the community of the Halifax Regional Municipality in its totality. The residents and the businesses here collectively spend $1.5 billion annually on energy.
The Chair: Does that include Dartmouth?
Ms. Donovan: Dartmouth, yes. Right out to Ecum Secum and right down to Hubbards on the southern boundary. Of that $1.5 billion, approximately 60 per cent to 70 per cent of that leaves the local economy, and for that matter the Canadian economy, and therein, of course, is the problem. We are highly reliant, as you heard earlier today, on foreign coal for electricity and foreign oil for heating and transportation. That is $1 billion worth of wealth leaving this community. That level of spending on oil and coal is not good for the environment and it is not good for business in this community. Of course, with the cost of fossil fuels on the rise, we can only expect that $1.5 billion number to rise.
What is this community doing to forward our vision of a new energy system and to help Nova Scotia move away from its current unsustainable energy model? We have been trying to change our energy demand. The municipality itself corporately is a large consumer of energy in our buildings and through the use of our equipment. Over the past seven years, we have undertaken many projects to reduce that demand. We have invested $10 million over the past four years, resulting in approximately $2 million annually in savings. That is a return on investment of 20 per cent. You cannot argue with that.
I would like to mention at this point that one of our biggest projects, the installation of a geothermal field with the associated technology at Alderney Gate in Dartmouth, which is a cluster of five municipal buildings including the ferry terminal immediately across the water and is at the ferry terminus in Dartmouth, at that location we installed a large geothermal field to implement a system of geothermal and district energy. Now that project, which was a major project of 90 bore holes involved in that field moving to a depth of 90 feet, could not have happened without the partnership of the federal government. In our view, Alderney 5 was an example of energy done right. It was also an example of intergovernmental cooperation and the impact that it can have on our local community. We are very grateful for the assistance of the Government of Canada via the TEAM, Technology Early Action Measures, program on that, and we are also grateful on other energy efficiency projects for help via the Federation of Canadian Municipalities and Natural Resources Canada's Office of Energy Efficiency.
Now that was a large project for the municipality, but not all of our projects are on that scale. We are currently undertaking retrofits with respect to over 40 of our corporate buildings and we have also made minor investments that have had fortunately major impacts. We had anticipated doing a slide show, but since that is not the case, I will just speak to the point. One of our smallest cost projects — although small, it is mighty in impact — involves your typical Coke/Pepsi vending machines that are ubiquitous. We had a small acquisition of $250, just a little device, not really much bigger than this microphone here, which would save something in the order of $250 per year in power out of a total consumption for that machine annually of $500. Close to 50 per cent of the cost of energy could be reduced and saved by the use of this little device.
As Allan Crandlemire noted just before lunch, of course those savings are permanent. It is a very effective, small little device, and it is amazing the impact these decisions can have. As I note in the presentation for anyone who is following along, those machines are individually responsible for four tonnes of CO2, carbon dioxide, emissions annually. With 3,000 such machines in the municipality, they consume $1.5 million approximately per year in power. With this device costing only $250 up front in capital cost, the community can save as much as $330,000 a year. Those calculations are based on the fact that a lot of the machines are pop machines and you can save approximately 50 per cent to 60 per cent of the power. For machines with chocolate bars and those kinds of condiments, the savings are not nearly as significant. They are more in the order of 25 per cent, but we have done the calculation on average and have shown you that, in just a small little device like that, there can be those kinds of savings. Just think what might happen if Coke and Pepsi took this even further right across the country.
We have also undertaken other projects that started small but are really beginning to grow, and that includes LED lights for traffic and street lights. Right now, we are almost 100 per cent converted. This community has in the order of 260 intersections that have traffic lights. We are close to 100 per cent converted to LED. If not now, then I think minimally by the end of the year that will be the case. We have just begun with street lights. We have approximately 40,000 of those in this community and, hopefully, by the end of the year we will have 2,500 or 3,000 of those converted. We put up some signs this weekend to tell the community, "This is an LED light" because, of course, a lot of the community does not recognize an LED light, a street light, when they see it. That is also part of our marketing effort to have people become more conscious, which is a very important feature of what we are all doing here in making the community much more conscious of our consumption of energy and what we can do about it.
We are not here just decreasing our own demand; we are also using our areas of jurisdiction to move towards a more distributed energy system within the community. We are undertaking some district energy projects as well as renewable energy projects, aiming to utilize our local resources to create energy in our own community.
These projects include solar installations. We had a chance over the lunch hour to give Senator McCoy a heads-up with respect to this topic. With respect to our own corporate buildings, we have recently installed 60 solar panels on the local police headquarters on Gottingen Street, just a few blocks from here. From there, we are going to pipe energy across the street to what is the main pool on the peninsula known as the Centennial Pool. We also have installed geothermal on as many as seven different projects, more than any other community in Atlantic Canada. We are very proud of the fact that we did an installation a number of years ago; an engineer from Montreal came to us with a project in which he installed a significant amount of gas collection piping within a closed landfill, and we are using that collection system to generate electricity. The two megawatts of electricity that that landfill produces has reduced greenhouse gases by over 100,000 tonnes per year.
Finally, we are engaging our citizens in this energy transformation. We believe that one of the greatest value-added aspects that any municipality can offer with respect to our energy future is being a direct link to citizens and empowering them to take action themselves. We believe that our Community Solar Program is an innovative approach to empowering those same citizens. That program aims at decreasing, or eliminating, the barriers to the adoption of new technologies by allowing citizens to pay for those technologies on a once-per-year addition to their tax bill until paid off. The genesis for this project was, in spite of the fact that the incentive programs from both the federal government and the provincial government were quite generous, there was not a huge take-up of those programs, which was quite surprising. We took a look and tried to figure out well, why not? That is where the design of this program came from; we tried to hit what we thought were the barriers in the take-up of those incentives.
We are in the process of developing this pilot project, which we hope to launch later this year. The province was extremely helpful in providing us with some enabling legislation that, municipally, we needed to support this program, and that was provided in the fall. This project strictly involves hot-water solar heaters and no other equipment, just that single-unit type. If all goes well, we are looking at a cost of $500 per year to the homeowner for the installation of these panels. That is a problem for many people, so what we are looking at is that the savings of that same program would be of an equivalent amount of $500 per year. In other words, no net cost to the consumer so that, hopefully, all homeowners would be in a position to take advantage of this program regardless of income levels.
Eventually, once the capital cost of this device is paid back, the energy savings will then go to the pocket of the homeowner, which is where they should be.
We are hoping as well that this has no net cost to the municipality either. In the end, the municipality is taking on a number of roles. We will front the financing and we will secure that; it will be a lien on the person's property, so it is secured from the taxpayer's perspective. Other taxpayers are not subsidizing anybody else. The interest in the program has been absolutely amazing, and the press have been helpful in that in that they attended all the open-house sessions and provided a lot of valuable publicity. Seven hundred homeowners signed up on the first night, so it was really quite impressive, and 1,600 homeowners have signed to date. We, of course, have limited capital dollars to apply to this program. It is the situation with any municipality. We have limited the program initially to 1,000 homes or somewhere between 500 and 1,000 homes. I do not know. Mr. Boyle would have to speak to that.
Why do we think this program has met with such positive response from the public? First of all, it is simple. The municipality takes on all of the administrative costs and risks by contracting with the installers, organizing the rebates that are to be had from the various agencies, and we make sure that there is good quality control of the end product. Of course, these units often are affixed to a person's roof, and most homeowners are nervous about having somebody come in and drill holes through their roof because of the potential for leakage. We think that the municipality can add value and remove that concern for the homeowner.
We think the response to this program has shown that there is a huge appetite amongst the public for renewable energy in the community, but that the complexity of such projects and the start-up costs are some of the biggest barriers to adoption by homeowners. In other words, your standard average Halifax family has neither the time nor the expertise, let alone the financial capital, to take on these initiatives by themselves.
The municipality hopes to also be using other tools within its jurisdiction to create a framework for widespread solar use. We are hoping that through the innovative programs that I have just mentioned, the municipality can mitigate those barriers and ensure uptake in the future.
As a final note on this topic, I would like to point out that, as part of our research behind this program, we became aware that there were 800 solar panel installations in 2009 I think it was, in all of Canada. Two hundred of those were in Nova Scotia, which was impressive, given it was 25 per cent, hitting above our weight line. We happen to also have the world's oldest solar hot-water panel manufacturer in our local industrial park in Burnside in Dartmouth. They have been in business for over 30 years. We have a flourishing solar industry locally, and what is being reported back to us by industry is that this is boosting their business. The media attention that has been provided through the advertising on this program has brought a lot of business to the local business community. We hope to expand this program in future years. You never know what the future will bring, but there appear to be some opportunities with respect to photovoltaic and, as well, solar panels that provide direct heat to heat your home rather than simply heating hot water. We have no reason to think why this model could not easily be replicated in other communities, in other municipalities across the country. There is nothing unique about the Halifax Regional Municipality with respect to this project.
What we are hoping from this project is that it keeps money and jobs in the local economy, and as well, grows that economy. We are hoping and expecting that somewhere in the order of 40 to 50 jobs will be created in the solar industry directly as a result of this project. We hope that the industry will gain valuable experience, increasing their efficiency and capacity, and creating the competitive advantage for our solar industry in North America.
It is always useful to understand how energy projects get financed. That is always a big question when dealing with these kinds of issues. Corporately, one of the things we have found has made a real difference is that we have created a funding mechanism whereby the savings we have corporately experienced through existing energy projects are recycled back into a reserve fund to support future projects. Rather than having to go cap in hand to the CAO on every single project — and the CAO is then wrestling to find in a difficult budget scenario the money for what he may believe is a great project, but of course the budget challenges are always difficult to manage — the reserve fund, which is dedicated for this purpose, creates some predictability as to what money might be available for projects. We found that it has made a real difference. This is the brainchild of our current CFO, chief financial officer, Cathie O'Toole, and to her goes a great deal of credit for having designed this.
We would like to offer up that municipalities have direct or indirect jurisdiction over 44 per cent of Canada's greenhouse gas emissions and energy use. We think we are in a position to help deliver on what this committee's objective is, but we need to be empowered to act both legislatively and financially. As I noted earlier with respect to our solar project, one of our very first steps in that project was we had to go see the province to get the enabling authority to be able to provide financing to the community for this type of project.
As you all know and as you heard about some of the other big projects that this province is involved in, these are long-term projects, they are capital intensive and they require underwriting. The capital intensity of these projects creates, in our view, the greatest and biggest barrier to innovation by municipalities in this area.
As I mentioned at the beginning, we have been able to take advantage of certain federal government programs. Your phase 1 report refers to a number of them. We very much are supportive of those programs and have been able, corporately, to take advantage of them. We hope to see those programs or something akin to them continue into the future.
Because of the capital-intensive nature of any of these projects, we envisage the future to be one where we would continue to be partners with both the provincial and federal governments in achieving our collective objectives. We conclude today by recommending to this committee that the government look at ways of empowering municipalities to be innovative through both legislative changes and financial innovation. We heard, of course, both Rob Bennett and the premier talk about the prospect of a federal guarantee for the Muskrat Falls project in Newfoundland. It is that kind of financial innovation that we think is very necessary; there is no one approach and there needs to be a lot of flexibility on that front. We are hoping that some of that flexibility will be structured through direct federal funding programs between municipalities and the federal government, and similarly on the provincial side, we are hoping for direct funding programs between the municipality and the provincial government.
With that, I would leave you with the thought that, by empowering municipalities, you are empowering citizens and business to act. I think we have proven that in the various projects we are engaged in here in this community, and we look with great interest at the recommendations that will come out of your cross-country endeavour. Thank you.
The Chair: Thank you very much, Ms. Donovan and Mr. Anstey.
Are you going to talk as well, Mr. Boyle?
Julian Boyle, Energy Auditor, Infrastructure and Asset Management, Halifax Regional Municipality: I will try and answer it. I think Mary Ellen can probably cover a lot of the ground.
The Chair: We will start with Senator Dickson, our Halifax member of this committee. Actually, it is Truro, is it not?
Senator Dickson: Yes, it is, but I have an interest in Halifax as well.
The Chair: It is a good place, too.
Senator Dickson: I must compliment His Worship, Mayor Kelly, and the council for the encouragement and standing behind the executives of the municipality in bringing forward this very exciting and innovative approach to energy conservation. I am surprised, pleased and look forward to what the future may hold with respect to new and creative ideas. The one idea I would like to follow up with you relates to transportation. Has any thought been given to Metro Transit and the conversion for bus transportation to gas-fired engines or natural gas? There are government programs available for that and we have had presentations as well, and it seems to me that Halifax, being a leader in other areas, could move forward insofar as the transportation sector was concerned.
Mr. Boyle: We have made a lot of investments in transportation over the last five or ten years, a significant amount. It is a good news story for the municipality. There has been about 5-per-cent growth in the uptake of public transit. That being said, we have looked actually at other alternative fuels. We were one of the first municipalities to use biodiesel in Canada. We used in some years up to 2 million litres of biodiesel, which was coming from a local fish oil waste source. We have investigated natural gas. We did that prior to the gas system distribution here in Nova Scotia and the economics did not work out five or six years ago, but the cost of gas is significantly different now, so it is something we are looking at revisiting for sure.
Senator Dickson: The second and last question is legislative changes. Mary Ellen, do you see any legislative changes at the federal level that could be brought about that would assist you in some of your new ideas and innovations that you wish to pursue — for example, the national building code? I understand that Nova Scotia at the provincial level is coming forward with some amendments to the building code insofar as it affects the province of Nova Scotia.
Ms. Donovan: A number of those came into effect recently, but there is unquestionably more to be done. For example, one was raised this morning with respect to lights on all night in commercial buildings where there is no one in attendance at those locations. Something needs to be done with respect to having the codes designed so it is easier to turn those lights off. One of the biggest issues is it is not easy to get all those lights off; there is more that could be done. Again, going back to what was mentioned this morning, I too returned from India two weeks ago and there, like in London and Costa Rica, it does not really matter where you are, whether it is a First World country or a Third World country, you go into the hotel room and have to put your card in in order to get the lights off. Again, that is a potential national building code change. Yes, I think there are lots of opportunities along those lines that could be very cost effective to implement because, when you are building the building for the first time, there is really minimal cost associated with those — but big impact.
Senator Dickson: From my perspective, we welcome all your suggestions, so you may wish to follow up with written proposals to the committee insofar as legislative and policy changes at the federal level that could be considered.
Thank you, Mr. Chair, for giving me the opportunity to ask the questions.
Senator Mitchell: Yet another inspirational presentation in Halifax. It just seems so simple to do this and, yet, almost no jurisdictions seem to be doing it. I am not diminishing the amount of effort you put into it, but I hope you get my meaning — that it is so obvious to do it. I had two questions. It does not seem that right up front there is anything particularly in it for the city government. Is the theory that, if housing costs are reduced because energy costs are reduced and if business costs are reduced because energy costs are reduced, then this is a more competitive place for businesses to come and to stay and to hire people to come and to stay? Is that it? It is that easy?
Ms. Donovan: Absolutely. What is good for the community is good for the municipality, and as I pointed out earlier, we are saving corporately $2 million a year on the investment that we have undertaken to date. You cannot argue with that kind of investment. In other words, what we have tried to do with all of the projects that we have identified to date is try to make sure that there is a really good rate of return, and amazingly, there actually is. There is a business rate of return in investing in these projects.
Senator Mitchell: Normally we hear that solar power is so expensive that it takes absolutely forever to recoup your costs, particularly in a residential situation, even if you ever could. You are saying that you can break even right away. How is it that, if it costs $500 a year, you can save $500 a year? Is that strictly related to the current costs of the energy that you are displacing, or does that accommodate some subsidies or buy-in tariffs?
Mr. Boyle: A lot of people associate solar with solar power, but actually — I would not say the Lada of solar technology — it is the Chevy of solar. It is solar thermal, so it is looking to displace only the domestic hot-water-use part of your energy bill. About 30 per cent of a typical homeowner's energy use in their home is actually for hot water, dishes, washing, showers and that kind of thing. That is a tried and true technology. It does not need exotic PV, photovoltaic, kind of technology or materials to develop. Those are hopefully going to come in the near future. There is a real big market for solar thermal that, quite frankly, is not being addressed and it is cost effective even in today's energy cost climate.
Senator Mitchell: I think you alluded to the need for, or a place for, federal support in this kind of initiative. Certainly, you get certain kinds of provincial support, such as legislative. What did you have in mind that a federal level of government could do?
Mr. Boyle: Very much along the lines we heard this morning where, for example, the solar program is being enabled because the up-front capital is being financed by the municipality. We have access to cheaper capital and the private sector. We are not looking for commercial rates of return. We are looking to really work through, for example, the Federation of Canadian Municipalities, FCM, because we have an interest rate of 3 per cent to 5 per cent that can finance that up-front capital cost and then spread out the payments. It mimics the savings in today's cost of energy, so that interest rate, the financing costs are really critical in these large-scale projects.
The Chair: It is interesting you were saying, Mr. Boyle, about the difficulty of people buying into solar. Although there was passing reference this morning, I made a note that one of the alleged alternate sources of energy, solar, was hardly mentioned. In the book, they talked about sort of integrating the portfolio of energy. Was that an oversight? We are finding in our travels as well that solar is probably the least hyped, not maybe that it is not getting a lot of investment; I just cannot say.
Mr. Boyle: I think this speaks to one of the reasons why the municipality needs to be involved because we are looking at this solar thermal project as the starting point with the homeowners. We really want to influence new construction so that homes are solar ready. You can design passive solar homes that are net zero now. With sun exposure, you have a concrete thermal mass whereby even people in Canada can heat their homes for free if it is designed through an integrated design concept. These are all kinds of steps and evolutions that we need to take as far as engaging and educating the public and industry to work towards more of those directions.
Senator Lang: You were speaking about the different projects that you have undertaken and obviously have been successful. At the same time, you are looking for perhaps financing and this type of thing from the federal government.
In the last number of years, and I believe it was the FCM who really went to work with the federal government about transferring the gas tax to municipalities across the country, that is a substantial amount of money that the federal government has arbitrarily transferred to the municipalities. Is this some of the money that you can access for these types of projects?
Mr. Anstey: Theoretically, yes. Up until this point, we have not been using that source of revenue. Basically we keep our eye open on any federal, provincial, FCM or other programs that are geared directly towards energy issues, and as soon as we know the criteria, we are all over it to try and get whatever money we can from those sources. To date, with the human resources we have to put these things forward, we found that those programs have met our needs. One of our concerns is that those programs that exist now do not dry up, that the federal government still continues to recognize it is important to put development money out there, and in our case in particular because the province has its issues financially. Mary Ellen mentioned the fact that we would like it to be a situation where we could access the money even if the province was not there to do the traditional one-third matching program, because we generally find that we are in a better position to utilize the money than they are. I just wanted to go back to one of the issues that was raised about solar, and it relates to a lot of these projects. The thing you have to keep in mind is the cost of electricity and the cost of heating a home, whether it is by electricity or oil in this province. It is generally more expensive. Our electricity is much more expensive here than in most parts of the country. We do not have much in the way of hydroelectric, which tends to keep the cost down, for example, in Quebec or Newfoundland, and to a large extent in Ontario, as well. We do not have access to that much of that relatively cheaper, energy. We are importing coal and importing oil and that is what we are generating our electricity with, so it tends to cost us more.
Senator Lang: Mr. Chairman, I will not belabour this, but I believe Ms. Donovan mentioned the business rate of exchange — I think that is the way you termed it — from the point of view of getting a return on the money that has been put into whatever the project was. In this case, it was the solar thermal heat for the hot-water heaters. It would seem to me, and I will make this observation, we are fast approaching, if not exceeding, $100 a barrel for oil; it is probably minute by minute on CNN if we were watching it right now, and the costs obviously are going up and it would appear they are going to stay that way. That would seem to me to be a great incentive for any one of us individually to take up on some of these programs ourselves individually and put our own money in to meet those objectives, with some guidance from the municipalities and representatives such as yourselves. Maybe you have an observation to make about that.
Ms. Donovan: Absolutely. Although the situation is being exacerbated by the increasing cost of oil and of course the instability in the Middle East, nevertheless the economics have been there for some time for the average homeowner to invest. That is what got us thinking, "Why is the community not doing that?" If you think about it, the average person does not know anything about solar panels; they do not know how they are installed; they do not know where to buy them. In the past, we have calculated that the average installation cost for two panels, which your average home requires, was in the order of about $8,000 locally here, somewhere between $7,000 and $8,000. For the average person, that is difficult money to come up with. That was where our program was — try and deal with this up-front capital cost, deal with the incentive programs, because we administratively can gather that money up and not leave it to each individual person to figure out what the story is, how you access it, how you fill out the form and who you mail it to, that type of thing. It was those barriers that we were trying to help the homeowner with, and the result has been tremendously positive.
Senator Neufeld: You have taken on some pretty good initiatives and you are to be commended for that. I appreciate your presentation. In your own governance, could you not also take some steps to actually limiting the size of homes that are built? I am talking about new ones — that you actually cannot go out and build new subdivisions until the in-fill has taken place within your community; that you could actually look at programs and say, "If you are going to build a new house, this is the maximum square footage you can go to and it is going to be solar ready for solar hot water"? Can you not do those things yourselves, or do you have to be authorized to do them by the provincial government? I think you can do them yourself. The second question is why have you not done them?
Mr. Anstey: I guess some of those things you can theoretically do. We do them in terms of trying to create density rather than sprawl. Our municipal planning strategy does encourage building closer to the core. We have a boundary line, which is really our serviceable boundary, where we will not extend central services out beyond that. As a result, if somebody wants to build outside the core, it has to be on on-site services, it has to be a very large lot, so that is a disincentive to people building. It is having an effect. A very large percentage of our new construction is taking place inside that boundary, which is when we adopted the plan five years ago, that is what we wanted to do.
With respect to mandating that you have to have solar, for example, or limiting the size of houses, you are the lawyer. I am a retired lawyer. I guess we might be able to do it. It would seem to me it would be a more politically challenging law to put into place. A man's home is his castle; he likes to be able to build what he wants to build, and maybe the trick is not to necessarily limit the size of the house, but to encourage people to build in such a way that it is energy efficient, as Julian has said. I do not think it makes much difference how big it is. If you situate it properly, if you have the right exposures and that, you can probably heat it no matter how big it is.
Senator Neufeld: I guess that is true to a sense. Some of this stuff is unpopular, but in many cases, the province I come from, it was always asked of senior governments, "You do the unpopular stuff because it makes sense and we will just administer it and actually point a finger at someone else and say they made us do it." You have taken some good steps already, and with some success you say, and that is great. That is to be commended. Is there something that you could move further on and actually do those things?
Mr. Anstey: Yes, there are some and, for example, we have five sewage treatment plants where we are looking at possibly extracting heat from the effluent of those plants in order to create district energy. As well, there are a couple of public-private partnerships being looked at now in downtown Halifax, which would see heat generated from steam and then circulated around the province, or around the downtown, including for the new convention centre, assuming the funding comes through.
Ms. Donovan: Just to pick up on the size question and to support what Mr. Anstey is saying, I do not think the problem is size. I was in a building in Sweden a couple of years ago and the developer was showing us around. It was a brand new apartment building, probably about eight stories in size, of course in a similar climate to the one we have here, and there was no heating cost to that building because of the design of the building envelope, and the orientation of the building and how they put the components together. As a throw-away since I am here, the other thing that I thought was interesting from a Canadian perspective where we have a big wood industry similar to Sweden was that it was not a concrete building; it was an all-wood building, and they had amended their fire codes to allow for this design, but it had equivalent modern-day fire-code standards built in, but just in a different way. That way, they were supporting economically their wood industry and, at the same time, getting a cost-neutral piece of construction from an energy point of view.
Senator Neufeld: To take that a step further, the building code here could actually change to adopt some of those practices, and maybe you are right — let them build as big as they want, but have a building code in place that reduces the cost of electricity and oil or whatever they heat it with. That is something, too, that you could do — again, probably not always that popular.
One last question: What did you do with your gas tax money?
Mr. Anstey: It is part of our general budget.
Senator Neufeld: Part of general revenue?
Mr. Anstey: Yes.
Senator Brown: What materials are you making these solar panels out of for hot-water heaters?
Mr. Boyle: They are mostly made out of copper and glass. They are manufactured locally here.
Senator Brown: Do they have the capacity to heat water 24 hours a day for a family, or are they hooked into a water heater that already has either electrical to it or oil or some kind of burner?
Mr. Boyle: Part of the kit would be a storage tank, so you would charge it up during the day and utilize that whenever you needed it. If it happens not to be sunny, it has to tie into your existing system, whether that is oil or gas or electricity, one way or another. They work in harmony with existing fossil-fuel sources.
Senator Brown: Some of them are hooked up to another heat source at the same time?
Mr. Boyle: Yes.
Senator Brown: Do I understand they cost $8,000?
Mr. Boyle: That would be the average installation for a family of four or five.
Senator Brown: You said they use copper, which does not need ultra-violet protection. I have seen them done with black tubing and they do not last very long because plastic does not take to sunlight too long.
Mr. Boyle: I could not get into the specifics of the manufacturing technique but, yes, there are special coatings on the glass to absorb much of the sun's energy and there is an evacuated-tube type, as well. I just described the flat-panel type, but there are a couple of types of solar thermal technology that have gotten better over time as the materials have gotten better, but the general principles of them have not changed in decades.
Senator Brown: Do you have a plant that manufactures them in Halifax?
Mr. Boyle: I think about 50 per cent of the actual Canadian capacity is here in Burnside.
Senator McCoy: I think what we are hearing is there is always a scale question when you are talking energy, and what scale do you apply your analysis to, but more particularly, how do you get things done? It seems to me that the municipalities are the ideal scale to actually implement many of the transformational practices that we are discussing, and I think that is what you are illustrating here. As a preface to that, what I am also curious about, is you found that even with all the interest in the world and you got the right scale, people were not taking up on some of the programs that were available until you became the catalyst in the agent. Did you do some research around that or was it a trial and error? I know myself and the committee members are fond of saying, "Oh well, if we only price energy. Should there be a carbon price? This will drive everybody to do the right thing." It is very important, but it does not happen until somebody comes along and makes it happen. There are other barriers.
Mr. Boyle: Our research is basically by doing it, but we have come across the research since we have started doing and feeding back and it supports what we have seen on the ground in the trenches, that 50 per cent of the homeowners who signed up for the solar program said they would finance it. It was not just the up-front capital through the property-tax financing scheme. There are more barriers people have to implementing renewables and making changes, and they need to go to trusted, independent, unbiased sources of information, and that is difficult for a homeowner. We have been quite surprised by a lot of the things that have come out of the project's initiation. We anticipated some of them; some of them we did not, and it is not just about the money. There are some more tools and levers that we have to get comfortable using to get people to make changes on a large scale.
Senator McCoy: You have written all that down somewhere? Have you got a nice little checklist of things that we can adopt? When you talk about recommendations, part of it is by saying, "Here is the real world and this is what works."
Mr. Boyle: We are doing a lot of knowledge transfer actually within our municipalities right now.
Senator McCoy: Can you share that with us?
Mr. Boyle: We sure can.
Senator McCoy: That would be very helpful for our study as well.
There are also other things you have done, for example, which is something we might carry back to the federal government because of the, as you say, physical plant and fleets and equipment and so forth. I am intrigued by the carry-over provision of the reserve fund. I dare say the federal government does not have that in operation, so that might be another useful thing to carry back. I am also intrigued, though, and I know you are promoting sustainable communities because I was here in October and saw the presentation. I am intrigued with what you are doing, as I am quite sure that you have inter-agency complications. I remember the one from Surrey where there was a community of higher density being proposed with technologies of lower cost, and the fire chief and the chief of engineering responsible for sewers said, "Sure you can go ahead and put those sustainable practices in, but you must also, first, keep all the roads as wide as two fire trucks, and, second, yes, you can have a natural sewage system to drain the rainwater, but you must also have a built sewer because otherwise somebody will sue us." The sustainability community was really knocked off the drawing board because it became like double-engineered, therefore too expensive. That is a graphic illustration of inter-agency competition for obeying the rules. Do you have any experiences you can share that show a pathway through so that some of these new practices can be adopted?
Ms. Donovan: Locally in one of our own projects, which has not got off the ground, as we were working through it, we certainly ran into that issue. A different set of facts, but one where the energy sustainability decisions would lead you in one direction, but the condo liability issues kept you on a traditional track, and you had the condo regulators requiring a double system. No one is going to build a building with two systems. If you have to build two, you are going to stick with the traditional because that is what you are being compelled to build. Our way through that was to engage our local Department of Energy and say, "This is a provincial issue. You need to rationalize this. You need to figure out a way through it." Of course, being a lawyer engaged in legislative change on a daily basis, I am always looking at, "What is your legislative opportunity to manage that problem? Do you take the liability off somebody's plate so that they can move forward, get rid of the barrier?" To me, that is always something you need to look at, which often the community does not look at as one of the solutions to your problems.
Senator Peterson: I would be interested to know about your implementation process. You come up with these ideas, "We are going to do this, we are going to do that." Do you have to get the public to buy in or do you just go to the politicians and say, "Here it is. Enact it." How does it work? Or do you work together with the politicians to encourage the public to buy in?
Ms. Donovan: Every project would have its own process. We have good fortune in that, being the municipality, we engage with the public in a structured way all the time, normally through the planning processes, development processes. We have tremendous experience in engaging the public, and not only I suppose with the planning projects, but also with major capital infrastructure works. We have that experience. We bring that to the table and we transfer that experience into these projects. I think we know how to engage the public; we seem to be reasonably successful at that, but that only works if the political masters believe in what we are doing, and so they are a critical component to this. They have to vote the dollars as well, and they are the ones who have to communicate with their public and be convinced themselves that it is a worthwhile endeavour and good for the community. So, yes, you need to discuss these things on multiple fronts, often all at the same time.
Senator Peterson: What would be an average timeline to do something? You develop it and you throw it out there. How long would it take? Six months, a year, two months?
Ms. Donovan: It depends upon whether you need legislative change. If you do not need any legislative change, then of course your timeline is a lot shorter. The solar project is as complex as any in that it needs financing, which has not been nailed down totally yet. It needed public buy-in, and so we had six major community meetings. It needed legislative change; we got that. I would say we are not even a year into that project yet.
The Chair: I think that does it for this panel from the Halifax Regional Municipality. Thank you all very much, Ms. Donovan, Mr. Boyle and Mr. Anstey. This has been very, very interesting, and I subscribe to what some of the senators said; we are very impressed with what you are doing and keep it up. Good luck.
Next we have a large panel — from Fundy Tidal, Dana Morin, President; from the Municipality of Cumberland, Keith Hunter, Warden; from the Cumberland Regional Economic Development Association, CREDA, Shawna Eason; from the Town of Parrsboro, Raymond Hickey, Chief Administrative Officer; from the Town of Springhill, Mayor Allen Dill; from the Mi'Kmaq Rights Initiative, Twila Gaudet, Consultation Liaison Officer; and from the Union of Nova Scotia Muncipalities, His Worship, Billy Joe MacLean. He has been sitting here since breakfast time. What a guy. Mayor of Port Hawkesbury. Billy is going to go first.
We have a very impressive group here, and I apologize if you find it a little awkward all being together, but I think it will work out. We have done this before. You have been all sitting there patiently, so you are into the sort of cadence of what we are trying to accomplish here. I hope you have the vibes from us that we have been extremely impressed by what we have been hearing here today, and that Nova Scotia seems to be at, if not the leading edge, pretty darn close to it.
I mentioned Mayor Billy Joe MacLean, who is an old friend of ours, and he has been here since, I think, eight o'clock this morning. You have heard everything, Your Worship, and you get to go first.
His Worship Billy Joe MacLean, Mayor of Port Hawkesbury, President, Union of Nova Scotia Municipalities: I would like to thank the Standing Senate Committee on Energy, the Environment and Natural Resources for inviting the Union of Nova Scotia Municipalities to provide a perspective on the role of municipalities in developing community energy systems, and to outline some of the challenges and barriers we face in implementing these systems.
On behalf of all municipalities in Nova Scotia, as president, I would like to say that we see this hearing as a very important initiative and we are happy to provide a municipal perspective on community energy systems in the province.
If I may take a moment because it is not often I get the opportunity to thank somebody for a friendship, but Senator Dickson and I have been friends for 30 years and he is a very well-known Nova Scotian, well respected in the province and especially in Truro, and I would just like to pay tribute to a great man for our province.
The Chair: Hear, hear! We echo that and thank you on behalf of Senator Dickson.
Mr. MacLean: I am very pleased today to see some of our municipal colleagues represented as witnesses, including HRM, Cumberland County, the Towns of Parrsboro and Springhill, as I feel a continued collaborative approach will be required to meet Nova Scotia's energy needs and renewable energy targets. I cannot help but mention that the Cumberland County proposal in terms of making pellets from hay, is a very, very exciting future initiative and I want to compliment them on it before they begin.
The Union of Nova Scotia Municipalities, UNSM, is a not-for-profit organization mandated to represent the provincial interests of all municipalities in Nova Scotia. There are 55 municipalities in Nova Scotia consisting of 31 towns, 21 rural municipalities and three regional municipalities like Halifax and Sydney. Total membership is 438 elected officials represented through the three caucuses, rural, towns and regionals.
Municipalities have direct or indirect control over approximately 44 per cent of the greenhouse gas emissions in Canada. Municipalities are key to achieving local, community-based energy initiatives, since they have sufficient influence on the development and land-use decisions. Municipalities are the order of government that is closest to the citizens and most able to engage residents and businesses in implementing local energy projects.
In 2007, UNSM created its municipal sustainability office to work with all 55 municipalities to address priority sustainability issues such as energy conservation and greenhouse gas reduction. In 2009, the UNSM and the province of Nova Scotia entered into a memorandum of understanding on climate change, which lays out a framework for working together to meet the challenges and opportunities related to climate change. In 2010, 49 municipalities have completed their energy emission inventories and the audits to reduce energy consumption in their municipal operations.
Currently, UNSM is working with the province on a number of initiatives including: the Wind Energy Development Plan project in the District of Shelburne and Cumberland County; the wind energy toolkit with the Department of Energy; and the model Climate Change Action Plan to help municipalities reduce energy through their daily operations.
The Renewable Electricity Plan includes capacity for 100 megawatts in community-based projects under the Community-Based Feed-in Tariffs, COMFIT, a program for the 300 megawatts of new, renewable energy needed to meet the 2015 target of 25-per-cent renewable electricity supplied. To qualify for COMFIT, projects must be at least 51-per-cent owned by municipalities, First Nation communities, cooperatives, not-for-profit community economic development corporations or universities.
May I just say municipalities often have limited access to capital to make long-term investments or the cost of acquiring capital is too high, even when payback periods are relatively short. At the present time, there is a $3-billion core infrastructure deficit in the province of Nova Scotia. Municipalities have constraints on borrowing. Many are at, or close to, their approved borrowing ratios because of doing infrastructure projects at the present time. Municipalities cannot borrow to invest in assets they do not own.
Municipalities can develop partnerships with the private sector to undertake large capital energy projects. These partnerships can be used to stimulate the market and allow industry to demonstrate its technology, which would lead to subsequent projects. The federal government could provide tax advantages for green energy projects and continue to support grants and loans by agencies such as the Federation of Canadian Municipalities for feasibility studies and capital costs related to the development of green energy projects and systems.
The Strait Area, if I may refer to that, is where my home area is. It is the deepest harbour in the world and has an ice-free port all winter. We have the largest super tankers that come in and out of that harbour without assistance. We just finished a study. It is a $135,000 to $140,000 partnership initiative among the Town of Port Hawkesbury, the Municipality of Richmond County, Enterprise Cape Breton Corporation, the Strait-Highlands Regional Development Agency, and the Nova Scotia Department of Economic and Rural Development. It examines capturing waste heat at the Point Tupper pulp mill to heat water, which would then be distributed through a district energy system by a network of underground pipes. Interested businesses, institutions, facilities and residential units along the pipe system would be eligible to apply to have their property connected to the district energy system used to capture the waste heat.
If I may explain just for a moment, it is called NewPage Corporation, which used to be Stora Forest Industries, and they dump millions and millions of gallons into the harbour each year or each day in terms of hot water. They have to put cooling towers into the plant to cool water down to meet the environmental standards in order for them to do that. We want to capture that water, bring it up to the community and reduce energy costs. Of course, the higher the price a barrel of oil goes, the better chance we have of pulling it off. We do have a problem in a town of 4,000 with having some large clients, but we are working on it and it looks very promising.
Many municipalities in Nova Scotia lack the capacity to develop large-scale community energy projects. They typically lack technical skills to deliver the large-scale energy initiatives; the human resources needed to develop proposals and apply for funding; and the knowledge and/or business case to demonstrate the benefits of community energy systems to sell projects to their council and constituents.
The UNSM is working with Nova Scotia Energy to help build capacity within municipalities to take advantage of the opportunities presented in the renewable electricity plan through training, workshops and the development of resources. Municipalities can form partnerships with developers and consultants to provide expertise and financial resources to undertake large-scale, renewable energy projects. Municipalities can partner to develop a bundle approach to share the risk and financial burden.
This is about a bundle approach. It reduces the amount of investment required to start large-scale, renewable energy projects. It reduces operating and maintenance costs per megawatt. Costs would be spread out over a number of municipalities. Bundle procurement allows municipalities to negotiate better equipment and service prices, higher guarantees for financiers, lower lending costs, and lower insurance costs per municipality.
In conclusion, municipalities can effect energy sustainability as a regulator, facilitator, partner, program deliverer and educator and, therefore, have a key role to play in the development of community-based energy systems. However, they do need financial and capacity-building assistance to take on large-scale, renewable energy projects. UNSM encourages support from government, utilities and developers for all municipal energy projects in Nova Scotia as they become valuable learning opportunities.
If I may take this opportunity, I am the mayor of a town of 4,000 that has been the leading edge in social development in our community and the best in the country. We were the first applicant for the FCM Green Municipal Fund, a group of which we speak very highly except for all the paperwork we had to do for about four years. They have reduced all of that paperwork in the last year or two to make it a little bit easier.
I am very proud to say that we did build a facility in my hometown of 4,000 worth $20 million, and it is a combination recreational/cultural facility that has gyms, walking tracks, arenas, convention centres, art galleries and other cultural components, along with the town offices and recreational offices. It is a one-stop shop for all community people.
The reason I bring it up is that we won seventh-best building in the world picked by Businessweek magazine. In fact, I should tell a funny part of that story. I was sitting in the mayor's office one day and I got a call from Boston from Businessweek magazine and this guy said his name was Albert Cruickshank. He said, "Are you the mayor of Port Hawkesbury?" I said, "Yes." He said, "I am," whatever he was, "for Businessweek magazine and I am happy to inform you that you have been selected as seventh-best building in the world at your civic centre." Now, I know a lot of people and people will sometimes call you with funny things and I said, "Can we backtrack a little bit? Your name is what?" He said, "Cruickshank." I said, "Well, I'm Frank Sinatra. Who the hell is calling?" But as a result, it was real. We were awarded the honour and we are very proud of the fact that we have done that.
Recently, we have a 600,000-tonne biomass project that was approved by Public Utilities, which is outside the boundaries with our pulp mill. If you put the combination of the biomass project, our building and this 4,000-town population along with the district energy systems we see coming forward — and we also have about 16 miles of walking tracks. We are recreation crazy in the town we come from and I am very proud to say that.
We must, though, if we are going to attract people into central systems, do something about our tax. There is an imbalance. We are not getting into that today — with rural in terms of urban development and central services. You touched on it today, my friend. I am glad you did.
Anyway, saying that, Mr. Chair, I want to thank you. I was elected, by the way, in 1962. I think I am older than the lady in Ontario in terms of office, or getting close to it, and I have enjoyed every moment and every year. I have spent some time in the provincial government and municipally. These people you see here are very dedicated, loyal devotees to public life in our community and I compliment them for it.
I want to thank you for inviting us here.
The Chair: Your Worship, thank you and we understand you may have a family engagement shortly, in which case, rather than hear all these witnesses, I am going to allow a few questions to you before you depart because I believe you would like to get going.
Mr. MacLean: Thank you.
The Chair: Colleagues, I do not even have a list, but I will let Senator Dickson and Senator Mitchell start, and I will give you one question each because I thought he gave a pretty amazing presentation.
Senator Dickson: Your Worship, you have demonstrated, not only through your presentation, but the actions that under your leadership have been undertaken and brought to fruition in Port Hawkesbury are largely due to your perseverance and your experience in politics. I must compliment you on the civic centre because there is none other like it in the Maritimes, I can assure you. Probably, Prince Edward Island is getting close because they incorporated a racetrack, so I should not give you a new idea because it will cost the federal government more money.
In what way could the federal government, through a policy perspective, help further a region such as yours or some of the other municipalities in Nova Scotia that are of comparative size to your own?
Mr. MacLean: I really believe that municipalities our size are struggling for survival. Some of my colleagues here would maybe shoot me, but I think we have to have some sort of reform, first of all, to do things for ourselves. I am always a great promoter of that in saying, if we are going to survive and we want things from the government, we have to show leadership and to make change.
I think if there was some sort of pool of money available to small municipalities in rural areas of Nova Scotia that had a lot of energy and wanted to do things, but are restricted because of their funds, and a half-decent interest rate, a longer-term payback, to partner with people because we must own 51 per cent; sometimes, because of our smallness and uniqueness in Nova Scotia or any other municipality across the country, our share even then is very difficult. We have to really do a lot of innovative things to raise our share.
I think it is some pool of funds in some way and I say this because, federally, there seems to be certain dollars for certain things, but energy is such a very important factor and we in our area — and I must say, we are all getting to that age — senior citizens are having a desperate time trying to meet the cost of energy and oil, electricity bills. I think if the Province of Nova Scotia and the federal government would set up some kind of a pool where the monies that we save we can put towards relieving some of the pressures on those people, we would be doing a great thing for Canadian people.
Senator Mitchell: The Community-Based Feed-in Tariff, COMFIT, is it funded by the province and how much does it pay per kilowatt hour or does it work like that?
Shawna Eason, Cumberland Energy Officer, Cumberland Regional Economic Development Association (CREDA): It has not been set yet. It is not set.
Senator Mitchell: It has not been set?
Ms. Eason: We will hear in April.
Senator Mitchell: To which forms of energy will it apply?
Dana Morin, President, Fundy Tidal Inc.: There are five different feed-in tariffs for communities. One is for small wind, one is for larger projects and wind, combined heat and power, small hydro and small in-stream tidal. Today, besides being here, is an important day as the announcement of our final draft tariff rates, which on April 4, will go to public hearings for finalization. Those rates have gone up and down in the last two months, up and down, down and up, and today, we will find out where they are settling out, and for your interest, I can forward that along if you want to know the latest.
Senator Mitchell: That was a great presentation. Thank you. I actually had two, sorry.
The Chair: Does anybody else have a question for His Worship MacLean?
Senator Peterson: I have a quick question. I am from Saskatchewan. I am impressed with the number of non-profit organizations that are in this area. I thought Saskatchewan held the record on that, but I do not think so any more. It is wonderful to see. I am quite impressed by it. When was your Union of Nova Scotia Municipalities formed? How old is it?
Mr. MacLean: It was established in 1905. It is over 100 years old.
The Chair: Then, would you like to take your leave?
Mr. MacLean: Yes, I would. By the way, there was a death in the family, very close to me, in the last few days and I am rushing home for that. There is also a Strait Pirates junior hockey playoff tonight so I have to see that. Then we have to face Springhill and we are finished.
Thank you, Mr. Chair, and one conclusion: Cape Breton has been picked as either first or second, New Zealand was next to it, as the best and most beautiful island in the world. I would like to invite all of you come summer, not this time of year, to come down and enjoy our hospitality. We have great people and great music. Thank you.
The Chair: Thank you very much. We will be coming to that number seven building there to see what it is like. All the best, sir.
Colleagues, Mr. Morin is the next speaker, and we are anxious to hear what he has to say.
Mr. Morin: Thank you for inviting us here to speak today. My name is Dana Morin. I am with Fundy Tidal Inc. — I wear two hats here today — as well as the president of a community investment fund and past president of eight other ones. I would say there are two hats, but actually, the community is simply the material that all of my renewable energy projects are made out of.
We have talked about the renewable electricity plan this morning and this afternoon and the adoption of community feed-in tariffs to support our vision, not only in Nova Scotia but across the country and internationally, that communities have a role to play in our energy solutions. A hundred megawatts has been reserved for communities. We just discussed five different feed-in tariffs. I would like to point out that this notion of a community-based feed-in tariff is a world first. There is an attempt in Ontario through the Green Energy Act to have something similar, but it only goes up to 49-per-cent ownership which, therefore, is developer-centric, not community-centric.
The plan also calls for a small-scale tidal tariff, as well as we will hear later in the afternoon, a larger feed-in tariff for large-scale tidal projects. Both of those, again, are world firsts in feed-in tariffs for tidal energy. Nova Scotians are in the news lately.
We have heard that there are five or six eligible proponents. Our definition of what a community is, of course, includes everybody, but it is most certainly our First Nations, our municipalities. There is something special in Nova Scotia called a community economic development investment fund, CEDIF, or a community development corporation and it is the latter that I will focus on with my colleagues at the table representing those other areas quite well.
About 10 years ago, the Province of Nova Scotia understood that we had a problem with equity to invest in projects and an access to capital to start new businesses. The result of that was the development of a particular program to provide incentives for Nova Scotians to invest locally. The CEDIF program is a result of basically $660 million a year in our savings — it goes into RRSPs — leaves this province and less than 1.5 per cent of that is invested back in Nova Scotia. To turn that tide, the government has put together a regulatory process and an incentive, which includes provincial tax credits and eligibility under RRSP savings to invest in local eligible businesses.
There are some advantages to communities to having such a program, especially after 10 years of learning the hard way how to do it right, and a big part of that is how to govern ourselves, organize, be accountable, have financial instruments to bring together good community folks to do that. After 10 years, there are some 48 community investment funds around the province, although I am here to speak about energy.
It is important to note that around the province, groups of people pool their resources and have invested it in some of the finest world trade coffee, my local funeral home, the farmers' cooperative down the street, and lately, I am seeing biomass and other related energy projects coming to fruition. How we choose to put our money to work in each of our different situations is as wide and as varied as the people in the room.
There are, since 2003, a group of CEDIFs, community funds that are focused on renewable energy in the province and we have heard of them as the Scotian WindFields, comprising eight separate companies around the province, each with its own board of directors and shareholders from that region, some of them with well over 200 members of their community.
The WindFields are separated into various municipal units, counties, and from within that, they have initiated a variety of direct projects on their own or invested in companies in Nova Scotia involved in renewable energy. I will not list them all. I would like to try. Renewable Energy Services Limited was mentioned in the Port Hawkesbury area. We did mention the wind towers that are up there as a result of community investment. Spital Hill in Colchester-Cumberland is now erecting turbines based out of the communities' investment. Shear Wind Inc., one of our largest projects in the province, also includes local investment. The largest Digby wind farm down on the neck that just launched was also begun by community ownership and money.
Out of this model of pairing community investment funds with creating an operating company as we call it, we in the community, we are not the engineers, we do not have the expertise on the solar panels and the tide and these things, so we create a company with an expertise to do work for us and to bring projects for us to work on in our communities.
Out of that, the last couple that were formed, the Sustainable Islands community investment fund and Fundy Tidal, were all focused — the next part of this conversation — as an evolution of these types of things.
Fundy Tidal Inc. is a marine energy developer. It is not just tide, but wave and offshore wind are a part of that mandate. We formed in Westport, Nova Scotia — pretty well as far from here as you are going to get except going to the other end of Cape Breton — Two Ferries if you have been there. If you have not, the lobster is on us. We would love to have you.
Grand and Petit Passages were identified as one of the seven or eight locations in Nova Scotia that have the best tidal regime. Minas Passage, we will hear of later in the afternoon, is probably the largest jewel in the crown, but Digby County itself comprises three of those major locations. It is from within that community that we formed Fundy Tidal Inc. by those community proponents and experts that had begun the other community funds to directly make sure that that was developed by the people in the community, and that socioeconomic benefits remained in the community at all possible cost.
Around the province, as with Scotian WindField Inc., we serve to partner with all communities on projects that they may have, including from Cape Breton all the way to the other end of the island. We have a particular focus on Digby County. I will say I am not from there originally, but I sure love that place. If you want to build an industry in tidal energy — your infrastructure, your ports, your manufacturing, your experts on the water from aquaculture to fisheries — we have a unique and special place and we seem to have garnered great support in the last couple of years to make that vision come true.
We have some great partners; as we say, "Go big and stay home." There is always opportunity to leave the province and explore renewable energy and we have chosen to stay where we are at. We have partnered recently with a company in Eastport, Maine, after signing the agreement between the province and Maine on renewable energy. Ocean Renewable Power Company in Eastport — we were there last week — have developed a device that we intend to put in Petit Passage as soon as we complete our regulatory processes.
We have also partnered with a separate technology from landlocked Alberta, originally for rivers that will work in our tidal regime once we customize it and bring our special sea-related expertise to bear. All of our manufacturing support services, supply chain, restaurants, all the rest are purchased locally and will support that. The two projects that we are considering, both two megawatts in size to begin, represent about $40 million in investment into our communities and the jobs that are there.
I did not come to ask for much today. I feel that both federal and provincial parties have passed some fine policy and legislation that has supported us to get here today with announcing community feed-in tariffs. However, we could do more given more. Our main problem in Nova Scotia is our grid. That is not unlike other provinces, but particularly distributed energy generation that is far away from the main line and far away from our coal seems to be where all the wind and tide energy is — out in the extremities. Under this new law, we have about a hundred megawatts that we hope to put on distribution, which is far less than we have resource to do so. Our new estimates in Digby County on tide are at least 50 megawatts and there are at least a few more megawatts of wind. However, we are trapped down there, in a good way, to bring that resource either back to the mainland of Nova Scotia or out of the province.
This is not a new issue in Nova Scotia. Our transmission system is under upgrade. I appreciate the federal support in announcements just recently of some substantial upgrades to our transmission to enable us to import power. I would seek the same support to enable local-generated power to stay within the province as part of that solution.
The other area that continues to plague all of my friends in community energy is access to equity and, more importantly, to debt. Small projects, good-at-heart folks that they are, often do not merit attention at the bank or if they do, receive very high rates. Whether you are a municipality, First Nation or a private corporation like ourselves, without that debt, it certainly reduces your return on investment and often makes it impossible to start a project. Wind is doing better, tide at this stage is not a debt-attracting vehicle.
Finally, from a federal standpoint, we have been very fortunate to be receiving a great deal of support in research and development in tidal energy and instream, both federally and provincially. Our universities are one of our strongest assets here in Nova Scotia and, further, research and development into that sector would take us a long way. I would point out, due to my special interest in socioeconomics, that so far, our R&D, research and development, monies have gone into the sciences and we are interested in looking at the economic side for communities. Where are the funds for my guys in the sociology department, the political science department, legal and other areas? In the end, it is all of us working together that provide a solid economic solution.
With that, I thank you for your time and for listening.
The Chair: Thank you very much, Mr. Morin. That is a big bite that you have under your wing there.
Mr. Morin: Only 11 slides, though.
The Chair: Where is Westport? You say it is the furthest place from here other than sort of the —
Mr. Morin: If you head due south through the Annapolis Valley towards Digby County —
The Chair: It is near Yarmouth, in that area?
Mr. Morin: Just across from Yarmouth, almost, there is a peninsula that comes down called Digby Neck.
The Chair: On the Fundy side?
Mr. Morin: It is. If we go down the north mountain of the Annapolis Valley, it eventually gets cuts off and ends in two islands, so the very last island after Two Ferries.
The Chair: I was supposed to be visiting there and had to cancel, but we are rebooked. I do not know whether you know Senator Gerald Comeau.
Mr. Morin: We do.
The Chair: He is deputy leader in the Senate on the Conservative side, and he lives right there, does he not?
Mr. Morin: He certainly does and it was mentioned before I came here to find out what he was up to when you would be in the area.
The Chair: He is doing well and he asked us to check on you as well. He says it is pretty impressive stuff.
Keith Hunter and Shawna Eason are next. I think you are going jointly present — the Municipality of Cumberland and the Cumberland Regional Economic Development Association.
Keith Hunter, Warden of Cumberland County, Municipality of Cumberland: Thank you very much, and it is a pleasure to be here to present before you today. The Cumberland Energy Authority is a partnership comprised of the Municipality of Cumberland, the Town of Parrsboro, the Town of Springhill, and the Cumberland Regional Economic Development Association, which is the regional economic development association for all five municipalities in the County of Cumberland.
The regional energy strategy for Cumberland County — and when I say Cumberland County, it is not just the municipality of Cumberland, but the whole geographical area of Cumberland County, which is maybe not quite as big as Prince Edward Island, but almost.
The Chair: Is that up in the north corner of the Bay of Fundy near New Brunswick?
Mr. Hunter: It is the first county you reach when you cross the New Brunswick border. The provincial information centre is there, right inside our borders.
The Chair: When I was a wee boy in 1942 down here, I had to memorize all these counties going around, Guysborough, Hants, Kings and so on. I can remember knowing where they were at the time, but 70 years later, it is not so easy.
Mr. Hunter: The regional energy strategy for Cumberland County focuses on attracting and promoting renewable and alternative energy development, as well as identifying investment and attraction opportunities within the three municipalities. Our goals are to position and promote Cumberland County as a strategic location for investment and attraction in the renewable and alternative energy sector that increases renewable and alternative energy capacity, including Fundy tidal power, wind, mine water, geothermal, solar and biomass.
One of our goals also is to increase the understanding of options for the development of the Springhill mine water geothermal resource. We also want to promote energy efficiency, and we want to be consistent with our existing strategic, environmental and planning objectives throughout the Cumberland County area.
As you know, climate change causes significant adverse impacts to the environmental and human health, which brings additional cost burdens to federal, provincial and municipal governments. The regional energy strategy is intended to influence and inform many aspects of municipal planning and sustainable community development for the next 10 years to 15 years, based on broad goals of community sustainability through increased energy security, economic development, environmental protection and health.
Implementation of the strategy will aid mitigation of climate change on a local level, and it will also help Nova Scotia and Canada meet greenhouse gas reduction goals and renewable electricity generation targets — particularly to meet Nova Scotia's renewable energy regulations, which call for an increase in electricity generated by renewable energy to 25 per cent in 2015.
Supporting pillars of the strategy to achieve these goals are investment and attraction in business in the area; an internal education and awareness program; a public outreach and education strategy; and we want to lever, of course, support from funding and collaborative programs.
The other person who is going to help deliver this today — or I guess I am helping her deliver — is Shawna Eason who is the Cumberland Regional Economic Development Authority staff person and she will give you an overview of why we, as a county, want to be a Centre of Excellence for renewable energy.
Ms. Eason: My part of the presentation will describe an update on our regional energy strategy. There are slides that accompany it.
As part of the regional energy strategy, we had a lot of the renewable alternative energy baseline established by a consultant and various maps created for us to have an understanding of where we stand right now and where we can potentially go with renewable energy. As you can see, we have a renewable and alternative energy baseline map created by the consultants, showing, commercially, what renewable energy generation we have currently in our county; it comprises wind, solar, geothermal, some wood, and those applications throughout our county.
Further, we have a wind energy potential map that was created to show what areas would be good for wind energy development at a large-scale level. We have a lot of high potential wind energy sites in Cumberland County, so we are very lucky with that.
We also have a tidal energy potential map created that shows different tidal energy potential mapping areas. Parrsboro has partnered with us as well, with the Fundy tidal project down their way.
The solar energy potential map shows that, surprisingly, Cumberland County is a hot spot for solar energy, something that the committee did not realize when we first started out on this project. Unfortunately for Halifax, we are a lot sunnier down our way. Well, it is pretty good.
We also considered commercial forest growth. That would be from a biomass perspective.
From there, we had a risk benefit analysis completed by the consultants to help us map out what renewable energies we should start looking at first, based on different criteria. We are a small group, so tackling all of them at once would not be very feasible. Some challenges to development were outlined and many recommendations were made. An implementation plan was developed, and several action items were outlined — I think about 50 to 60.
The mine water geothermal resource is something particular to Springhill, the town that used to have mines underneath. They have all flooded and now that warm water is sitting there as a potential. It works the same way as regular geothermal; you tap in to the actual mines instead of just to ground water. The higher heat in water makes it a higher capacity, so it is more efficient to run geothermal off these resources.
There are some slides to explain how the system works. In the first slide, on page 7, you can see that many different wells have already been drilled to date — the community centre, Ropak, Surrette Battery, the Springhill firehall, and there is also the Springhill loop supply system. You can see how the town on the right, with all their streets, overlaps where the mine wells are. When you zoom out that picture, you can see that the Town of Springhill has a lot of mine water potential. They have only tapped into the upper workings at this point. It extends right past the town boundaries into the Country of Cumberland, the municipality itself. That is just the number two workings. There are many others under that as well that would extend further.
The Town of Springhill recently obtained a special mineral lease of the Springhill geothermal resource area through the Department of Natural Resources; that is on slide 9. You can see the very large area which they now have the leasehold for; that would be any of the mine water resource in that area.
We have had some recommendations to do a terms of reference for a technical investigation of the resource, so that is another study to be done for mine water. Monitoring plans were also created as part of the regional energy strategy to keep monitoring our progress through this.
We worked with a small group to start doing strategic planning. We created six priorities using the risk assessment. Development of wind energy was one that came out. We are working on the creation of a wind energy development plan with funding through the Union of Nova Scotia Municipalities. It reviews potential wind farm locations, investigates rezoning areas for wind development, and reviews land use bylaws for the development of wind power. We are having more detailed maps created for Cumberland County that will give a better understanding of our wind resource. It is not only for large projects, but also might be helpful for community projects that come along down the road.
We have conducted several community education and consultations. In August, we had five open houses throughout the county and talked to citizens, and had them fill out a two-page questionnaire to give us an idea where we should go with wind. We are also looking at a policy of having a percentage of those revenues from a large-scale wind farm development to be used towards community energy and sustainability projects.
We are looking at geothermal energy, mine water in particular, and it is our second strategic area. They have obtained a special mineral lease, as I have said, and we are looking at further scientific study to determine the capacity and the sustainability of the resource. We are looking at temperature and chemical analysis of the mine water, tracer tests, modelling and that type of thing.
We would like the further development of a green industrial park within the Springhill area and that would be based on using mine water, geothermal energy, to heat and cool the buildings located in that industrial park.
We are also looking at the development of tidal energy. We are involved with the community liaison committee through FORCE, Fundy Ocean Resource Centre for Energy, regarding the development of the large-scale tidal energy project in the Bay of Fundy off of the coast of Parrsboro. We are looking at spin-off opportunities related to tidal energy and at potential benefits associated with the upgrading of transmission lines and infrastructure to handle that tidal energy coming to shore.
Next is the development of solar energy. Out in Cumberland County, we have a local company that designed a Solartron Concentrator, which is a different technology than solar flat panels. It still heats hot water, but it is approximately 200 per cent more efficient than solar flat panels and uses less space for the equivalent temperature you would reach. It looks like a large satellite dish. We recently installed one at the county building, right on the main road, which has created a lot of buzz; it is really good to help offset their greenhouse gases and reduce their costs for heating. We received funding from the ecoNova Scotia for Clean Air and Climate Change trust fund to help with that project.
We are also looking at other specific funding programs, tax incentives, and anything to encourage decision makers to undertake life-cycle cost analysis when evaluating solar energy in their projects. We are looking at the possibility of approaching solar thermal companies, establishing purchasing incentive agreements potentially for the Cumberland County area, and hosting information sessions so that citizens can have a better understanding of how solar energy might work and fit into their lifestyle.
Another pillar of this is municipal sustainability practices. We want to integrate sustainability into municipal operations and development practices. We want to conduct outreach and awareness programs. The municipalities themselves will be adopting the "walk the talk" philosophy, starting with the Solartron Concentrator to show leadership at the municipal level; and reviewing policies and bylaws to make sure they are consistent with the strategic priorities. We are looking at creating a plan for 10 years down the road. The municipality will be in a greener area.
With respect to strategic organization, as we have mentioned, we are close to finalizing an inter-municipal agreement between all three municipal units here at the table. This is something I believe has not been done yet, and that will work towards creating the Energy Authority we mentioned before. We are all working together for that. We are reviewing the structure of this Energy Authority, things such as revenue sharing, equity, organizational structure, and trying to work together on that.
Mr. Hunter: In conclusion, the Municipality of the County of Cumberland, the Town of Parrsboro, the Town of Springhill and the Cumberland Regional Economic Development Association are taking progressive steps to position Cumberland County as a hub for the development of green energy, energy efficiency and energy conservation. We have a unique opportunity to partner with the federal and provincial governments to make a difference in our world. The chance of success in mitigating climate change is extremely high when we all cooperate to achieve common goals.
Thank you very much for allowing us to present here today.
The Chair: Thank you, Mr. Hunter and Ms. Eason.
Next we have His Worship Allen Dill, Mayor of Springhill and, as I mentioned earlier, Raymond Hickey, Chief Administrative Officer with the Town of Parrsboro, representing the Mayor of Parrsboro.
Is this the area where the big coal mines used to be — Anne Murray — and we hear all the songs about that area?
J. Raymond Hickey, Chief Administrative Officer, Town of Parrsboro: That is the Town of Springhill where the geothermal is situated. Mayor Dill can probably expand on the geothermal, and why it is so much more advantageous to use the mine water than it is to use regular geothermal.
The Chair: Did you want to say a few words on that?
His Worship Allen Dill, Mayor, Town of Springhill: Yes, I would. Thank you for taking the time to hear us. It is a pleasure to be here. I go back quite a while when it comes to the mine water, and Springhill has been involved for some 25 years in developing that. However, there was never the political will, if I can put it that way, to really investigate what we have.
The general thickness is between 1.4 metres and 3.3 metres and it goes under the surface — the depth of flow is 30 degrees.
The Chair: Is that where the coal mines used to be or is that in a different geological —
Mr. Dill: No, it is right under the town and the mine water has filled it completely; number 2 is down to 1,320 feet, sloping as it goes down.
Senator Lang: Is this ground water that just goes down?
Mr. Dill: Yes, it is ground water and surface water and mostly it is there. As for the actual background, we have a loop system already in operation of three businesses. The town has operated that since 1989. We have our new community centre — sorry Billy Joe is gone, I would have a comment — for which we also got the Green Municipal Fund and, basically, we use the mine water for that. It also provides for the ice; we have no other source of heat or anything in the community centre.
The deepest well so far is 380 feet. We can go down to almost 1,400 feet. I think the temperatures there are 50 degrees. Our engineer is predicting we could go down to 1,300 feet. He estimates that 120-degree-Fahrenheit waters would be a plus.
We have engaged a partnership with the community college. They have drilled two wells. They are offering the first course in refrigeration in mine water and we are looking for a Centre of Excellence in learning of the mine water.
I believe there are only 44 mine sites in the world that are actually doing something — who knows how many mine sites there are — and this water goes down.
I can only talk about savings from what we know and that is the community centre. We can honestly predict and show that we save $80,000 a year. We have not had the ability, financially, in drilling wells to put down the technology so that we could monitor the actual temperatures and the water flow. Now, Mother Nature does lower the levels at times. Last year was the first time since 1989 that we saw a decrease, but that has come back and the mine water is over the height.
We have a miners' museum there where you actually go underground and you can see the water as it is circulating.
What we need through the study is to determine the longevity and the actual temperatures so that we can say to industry what can be done. Along with that, there is also the extraction, hopefully, of methane gas that could be combined. What we are trying to do there is combine all energies to make it a Centre of Excellence in energy.
It is really exciting. It is a matter of understanding the technology. It is so simple, but yet, it is costly to have that technology; it is important that the correct signatures are on there to say, yes, it is sustainable, and the longevity is the key.
We have two industries, a plastics plant, Ropak, who are actually saying they could not be in business if it was not for that, and also, Surrette Battery. They operate their wells privately whereas the town has other wells that it supplies.
The Chair: That is fascinating.
Mr. Hickey: The big renewable energy initiative in Parrsboro is the offshore tidal. More water flows through the Minas Basin than every river in the world combined, and it has about as much power contained there as, I think I heard, about 30 nuclear power plants. It is something we hope to see developed. It would be fantastic for the entire province and we are working with our neighbouring municipalities to hopefully see that developed as well as possible, so it is the spirit of cooperation in the area.
The Chair: Parrsboro is on the Atlantic side, is it not?
Mr. Hickey: No. If you look at the map on page 3 —
The Chair: Yes, that is where I am looking.
Mr. Hickey: At the bottom of that map, right in the middle, you can see little Parrsboro there.
The Chair: Right, and then the Minas Channel.
Mr. Hickey: Yes.
The Chair: Is that the upper part of the Bay of Fundy?
Mr. Hickey: Yes.
The Chair: Very good.
Colleagues, we have one other witness on the panel. Twila Gaudet represents the Mi'kmaq Rights Initiative and she has presented us with a very fulsome brief.
I want to congratulate you because you have also taken the trouble to translate it into French for us, which is normally our case in Ottawa. We like to have them in both languages, although we have not been using our simultaneous translation very much today. But having said that, you are here to tell us about your own experiences and messages, so over to you.
Twila Gaudet, Consultation Liaison Officer, Mi'kmaq Rights Initiative: Thank you very much, Mr. Chair, and honourable senators. I would like to thank you first for welcoming us here today and for the opportunity to present our views before you with respect to the involvement of the Mi'kmaq community in the energy sector.
I should say that our office name, Kwilmu'kw Maw-klusuaqn Negotiation Office, essentially means we are seeking consensus and we are the administrative body on behalf of the 13 Mi'kmaq chiefs who essentially make up the Assembly of Nova Scotia Mi'kmaq Chiefs.
While the Government of Canada, the Province of Nova Scotia and the Mi'kmaq of Nova Scotia share the goal of green energy, it appears we may differ in our perception of the path to reach that goal. While the government aspires to reduce overall energy consumption with more environmentally sustainable renewable energy technologies, the Mi'kmaq of Nova Scotia know we can play a key supportive role in assisting the province to achieve our common goals.
Through the Made-in-Nova Scotia process, the Mi'kmaq of Nova Scotia have a unique consultation process by which to address issues that may affect Mi'kmaq rights and title. This process is outlined in the terms of reference for a Mi'kmaq-Nova Scotia-Canada consultation process recently ratified by the three parties on August 31, 2010.
Essentially, the process had undergone a three-year trial period for three years prior and, following a collaborative revision process, the document was ratified by the 13 Nova Scotia Mi'kmaq chiefs, representing the Assembly, the Premier of Nova Scotia, who is currently the Minister of Aboriginal Affairs as well, and the Minister of INAC, Indian and Northern Affairs Canada. The expectation is certainly that Canada will honour its commitment and its constitutional duty to consult with the Mi'kmaq of Nova Scotia on energy issues which will impact our communities.
The terms-of-reference document clearly states:
The consultation process under this Terms of Reference is available whenever Canada or Nova Scotia wishes to conduct consultation on the record and with prejudice with one or more Mi'kmaq Bands respecting established or asserted Mi'kmaq Aboriginal or treaty rights, including consultation in respect of a decision or activity concerning Crown land, water or a natural resource.
The Parties intend that the consultation process under this Terms of Reference be the preferred choice for consultation by Canada and Nova Scotia with the Mi'kmaq of Nova Scotia.
Currently, we are involved in a number of consultations with the Department of Energy and, while we develop this relationship built upon the constitutional duty to consult, the fact remains that despite best efforts, the ability of our Mi'kmaq communities to participate and contribute to the green energy initiatives are limited.
The Chair: When you say the consultations are with the Department of Energy, is that the provincial Department of Energy?
Ms. Gaudet: Yes.
In October 2010, the provincial Department of Energy enacted the Renewable Electricity Plan. The plan outlines the provincial approach to achieving their commitment of 25-per-cent renewable energy by 2015. The concept and principles which underlie this initiative are in accord with long-held traditional perspectives of the Mi'kmaq, which prompt respectful and careful usage of all resources.
While the Mi'kmaq are generally supportive of the plan, there are critical concerns related to this initiative which arise from the unique challenges facing our communities. Currently, our Mi'kmaq communities are ill positioned to take advantage of installation of energy-saving technologies and, similarly, have little way of financial capital or access to invest in renewable technologies or the business ventures that could take advantage of the important emerging trends and opportunity.
In addition, our communities are met with numerous challenges in securing education, training and employment retention in this sector. Nova Scotia has 13 Mi'kmaq bands, several more communities and shared lands. The Mi'kmaq have inherent rights to lands, waters and natural resources, and through peace and friendship treaties, have never ceded land or waters in the province. The Mi'kmaq in Nova Scotia have never surrendered their rights, which extend to the extraction of natural resources. The Mi'kmaq of Nova Scotia strongly believe in conservation of our natural resources and conclude that it is, therefore, essential that this interest be considered through co-management of our resources.
Never having ceded or surrendered rights to our land, it is necessary that all projects involved consultation with the Mi'kmaq to ensure that each party's interests and concerns are dealt with early in the development process. This consultation should occur in accordance with the consultation terms of reference, and in addition to this, Mi'kmaq ecological knowledge studies should be completed for any renewable energy projects.
While these studies are used as a tool in our consultation process, there are opportunities for Mi'kmaq youth to mentor, train, participate and learn from the collection and analysis of that data.
As any energy-related legislation will have consequences to our Mi'kmaq communities and impacts on rights and title, it is imperative that meaningful and adequate consultation take place under the terms-of-reference process. Within that process, there are opportunities for the Mi'kmaq to engage early with proponents and develop impact benefit agreements, which we are currently working toward having as a legislative requirement. These agreements have the potential to create employment, training and long-term employment opportunities for the Mi'kmaq.
To encourage potential economic partnerships and benefit opportunities, potential renewable energy applicants and developers must be required to engage the Mi'kmaq of Nova Scotia, including in the development of mutually-agreed impact-benefit agreements and Mi'kmaq procurement set-asides. These agreements will essentially facilitate the co-management of resources and will help to ensure that the Mi'kmaq of Nova Scotia's business interests are well positioned to be active participants in the economic development of this industry in the province.
The assembly has since commissioned a Mi'kmaq renewal energy strategy to provide a clear, concise roadmap on how to be fully engaged in the industry, and to encourage our communities to move toward a more energy-conscious and energy-secure future. This strategy will be built on a few core principles that pertain to all our bands and people. These include transparent participatory planning, broad and equitable inclusion, and access to benefits and opportunities. The strategy will also focus on, and leverage, a limited number of practical strategic priorities for large-scale renewable energy, community-scale community renewable energy, and opportunities for energy efficiency.
A critical element in developing this future for our communities is to be meaningfully consulted on renewable energy policy and the evolving regulatory environment. It is important that we be explicitly considered so that we can legitimately participate in the development of the renewable energy industry as this is critical to improving our economic condition.
In order for this to occur in a meaningful fashion, the provincial government needs to recognize our unique circumstances, so that the policy outcomes and programs mitigate rather than exacerbate our vulnerabilities.
In Nova Scotia, our difficulties to involve our Mi'kmaq communities in the energy sector are shared by other First Nation communities, but they are also unique to our geography and our history. Our strengths and challenges differ and an approach that does not allow for this autonomy and for the development of innovative solutions cannot thrive.
This being said, we wish to make clear that the assembly is committed to working in partnership with the province toward our renewable energy future. We must only insist that we are part of that future, and have the opportunity to build relationships and development agreements that allow for Mi'kmaq youth not only to be educated and trained for green energy — long-term employment — but also to be involved in the research required for the development of safe and environmentally sustainable Mi'kmaq energy projects. Special consideration should be given so that emerging Mi'kmaq companies, or companies with Mi'kmaq partnerships and participation, are incented to be part of the development of the renewable energy and energy efficiency industry. For example, the province should support specialized capacity-building measures, such as training and development funding and process allowances such as extended timelines, all necessary to strengthen the viability and competitiveness of new Mi'kmaq ventures. We must insist that the partnership be built upon a foundation recognizing and responding to the circumstances and challenges faced by the Mi'kmaq of Nova Scotia.
In conclusion, should proponents engage early and develop partnerships and impact-benefit agreements, and should the province consult early and properly, there are a number of potential opportunities for Mi'kmaq youth to pursue employment opportunities in a number of areas related to the energy sector as well as natural resource and environmental issues.
The Chair: Thank you very much. That was very comprehensive.
We assume you have agreements in place with all these gentlemen surrounding you here and everything is going well.
Ms. Gaudet: We are working on it.
The Chair: Colleagues, we have heard from a variety of witnesses here. We will proceed with our questions to all of you and my colleagues can choose who they are addressing. Senator Dickson, you are the first batter up. This is our Nova Scotia Senator, Fred Dickson, from Truro.
Senator Dickson: Needless to say, I am very supportive of Cumberland-Colchester County, living in Colchester County in Truro, and Cumberland County is near and dear to my heart, and particularly the tidal energy project there. I have that high on my radar screen. I direct a question to Shawna for a moment.
I was looking at page 11 of your presentation and I was listening as well very attentively to Mayor Dill and Mr. Hunter, who I have known for many years. I was wondering about the rationale as to why tidal energy would be number three rather than number one.
Ms. Eason: They are not in any particular order.
Senator Dickson: Did you have any discussion as to how you would rank them from the point of view of benefits to the community or size? It was an excellent presentation, by the way.
Ms. Eason: Thank you.
Senator Dickson: I believe there is a tremendous future for tidal power.
Ms. Eason: We did have a risk benefit analysis created where we looked at cost and benefits and that sort of thing at the time, but we also went by what projects came up at that time.
Senator Dickson: Sure.
Ms. Eason: The Wind Energy Development Plan project came up from UNSM. They made available some funding to create that Wind Energy Development Plan, so we jumped on board there and applied for that funding. We have both tidal energy and geothermal on our radar. It just depends which projects come forward, what is happening at the time, and what we can work on at one point in time. We know it is really important. It is very high on our radar. We are trying to figure out where we best fit in that scenario as municipalities and what we can really do with that, and when things come up, we are really ready to jump on board. They are not in any order; I just picked and started writing them down.
Senator Dickson: Oh, it was excellent. I am very impressed. It was an excellent presentation.
The second question relates to First Nations rights, or alleged rights or whatever, and I have some understanding of that process. In the context of Fundy Tidal, are you close to reaching agreements and what is the extent of your anticipated involvement there?
Ms. Gaudet: There has been some engagement and we do sit on a number of committees that have some input with respect to research initiatives and such; we hope to further develop that relationship in the future.
Senator Dickson: To be more specific, when it comes to the Lower Churchill project, at least with one group of First Nations there, an agreement — or heads of agreement — has been signed. I am curious, when it comes to the Fundy tidal projects, how close are you to signing heads of agreement?
Ms. Gaudet: Not close yet.
Senator Dickson: Not close yet. The projects to which Mr. Morin made reference, are you negotiating agreements in any of those projects?
Ms. Gaudet: We are working toward that. It is taking some time and I suspect it will take significant time to develop such agreements.
Senator Dickson: Do you perceive an opportunity for First Nations to invest in these developments?
Ms. Gaudet: That is part of the challenge, senator. It is certainly the challenge to raise capital within the Mi'kmaq communities. It is definitely an impediment. With respect to the feed-in tariff rates, we hope that that may help assist Mi'kmaq proponents should they wish to develop projects. We encourage the province to look at an Aboriginal adder, which will hopefully help that as well, but there are a number of different things we certainly need to work toward.
Senator Mitchell: As your presentations evolved, it struck me that you are really living proof of what is another one of many opportunities in this area of renewable and alternative energies, and that is that the kind of energy projects you are considering really lend themselves so perfectly to rural development and sustaining rural communities. Instead of building one big plant next to Toronto or Edmonton, where I am from, you can spread this economic development that is sustainable throughout rural communities, farmers and so on. It has that benefit as well.
I would just like to mention, Ms. Gaudet, and you are probably aware of it, but former Prime Minister Paul Martin has developed a very robust program for supporting, in particular, youth Aboriginal entrepreneurs, with a large pool of money and educational services to assist in financing and educating them. I do not know if you are aware of that, but if you wanted to talk to me, I can give you his contact information.
Mr. Morin, I would like to know about the economics of tidal. I was struck earlier today when somebody said it was about $45 per megawatt for coal, and $120 per megawatt for something else, and $400 per megawatt for tidal. I know we can get to economic quickly if we start doing it, but what are the figures and when do you think it gets to be relatively competitive?
Mr. Morin: The word "competitive" is relative as well.
Senator Mitchell: Yes.
Mr. Morin: Competitive to coal and fossil fuels, probably never. Compared to other renewables is another issue. The feed-in tariffs are specifically created to enable us to reduce those costs through efficiencies and experience over time and, in a small way, at the beginning. Right now, the capital costs and more so the operating and maintenance costs are still high and projected to be high because we are entering into some new areas.
There are two feed-in tariffs and it is the same as wind, small scale, inherently, you do not get the economies of scale. The smaller initiatives are more costly. We will see with the feed-in tariffs for our larger transmission projects — which we will hear later this afternoon — where those will lead, but in the beginning, the costs will be higher and it is a great deal of money and work, and on the other side is the community economic development guy. It is a great amount of work in my community and I do not feel bad about that.
Senator Mitchell: Yes, exactly. Mr. Hunter, at one point in your presentation, you said that we need a partner in the federal government and I noted here, "To do what?" I would love to hear a list of what they could do. There are those who will say, "Well, if you are doing all these things already, why do you need the federal government?" I would not be one of those people. I think if you can get leadership that is working, why not broaden it? What could the federal government do to assist and facilitate what you are doing?
Mr. Hunter: The list is very short: Money.
Senator Mitchell: Money as in cash money or money as in loan guarantees?
Mr. Hunter: Either. We are looking for cash money, but loan guarantees will work. The old one-third, one-third, one-third that we used to live by is pretty well going by the board here in Nova Scotia, because the provincial government is saying they just do not have the money. In order to develop any of these initiatives that we have, we need money. Municipalities cannot do it alone. We have the property tax as the basis for our income and we cannot put a big tax burden on our residents just to develop these. I think in the long term, with the provincial and federal governments' initiatives to go green, we want to be there and we want to be right with them and partnering with them to produce green energy. As I mentioned in my presentation, health has a lot to do with it, energy conservation has a lot to do with it, and we certainly do not want to be emitting as many greenhouse gases as we are. Yes, we need money and we need money from both provincial and federal, but the provincial seems to be drying up.
The Chair: It sounds like the new hockey arena in Quebec City.
Senator Neufeld: Further to Mr. Hunter's comments, when you say you need money, are you not building these projects to actually get some revenue out of them? When you say you need money and the one-third, one-third, one-third is not around any more, I guess there are two questions.
Are you saying the federal government should give you 70 per cent and you are one-third or are you looking at half and half, 50-50, or maybe 70-30 or those kinds of things? Second, when you say you are maxed out in your tax in your communities, that you cannot build these projects without federal government funding them, are you not building them to actually have a revenue stream and make some money? Is that not the idea?
Mr. Hunter: We are but it is going to take an initial investment to get them off the ground. For instance, in the geothermal in Springhill, we want to create an industrial green park. We have to attract industry to go into that green park to use the low-cost energy. That is the way we bring our business in. In order to develop the geothermal park, we have to have funds to start with. In the long term, and I mean a very long term, all the municipalities that are involved will benefit by increased tax revenues, but that is a long way down the road and we need money up front in order to start these projects.
Senator Neufeld: The second question is to Mr. Morin. The five different types of generation for which there are feed-in tariffs, if I remember correctly, you said those prices have gone up and down, but today you will find out what the price is. Was there an anticipated amount you wanted or was there a price set before and that is being renegotiated now? I do not quite understand that part.
Mr. Morin: There is a long process to establish rates during hearings through the UARB, Utility and Review Board, here in Nova Scotia, which consists of questions and answers and evidence and information requests from consultants handling that. Wind, and other areas besides tide, are more easily accessible to best practices, other jurisdictions, actual budgets and running costs, and so much easier to gather up a going rate — if I may put it that way — whereas tide is more difficult — and to draw upon international evidence of capital costs, operating costs — to come up with a spreadsheet. I think wind has gone fairly quickly and we have large organizations in Canada and many proponents in Nova Scotia involved in wind that could provide input into that process.
The process did involve a draft rate being published for all five categories and further evidence was provided and countered, and some of the interveners in that process questioned the assumptions made across the board and further evidence was gathered. In the case of tide, it dropped about $0.15 when we completed that process based on many different factors as we "trued up" the numbers, if I may say so, and also some misunderstanding. You will notice that, out of this list of eligible proponents, the First Nations and community corporations are actually taxable entities and, in the beginning, there was a misunderstanding that these were all, as I will call them, non-profit or non-taxable entities engaging in renewable projects under COMFIT. There were some changes based on the assumptions.
Senator Neufeld: Do you know what rates were out there to start with? What did they say for wind to start with?
Mr. Morin: There are two classes: one is small and one is for larger-scale projects over a megawatt. I believe, although I did not look closely, about $0.13 is in keeping for these larger wind projects and something substantially higher for 50-kilowatt projects, which are quite small in wind and do not have the economies of scale. I do not want to quote you right now. I think it was in the twenties, perhaps, for that particular rate.
Senator Neufeld: For winds, small hydro and small in-stream tidal, could you get those numbers? Actually, you will know today what the numbers are so, for our committee, if you could get those to the clerk.
Mr. Morin: Certainly.
Senator Neufeld: We would much appreciate that, right, chair?
The Chair: Yes, indeed.
Senator Neufeld: And, secondly —
Senator Lang: This is his fourth one.
Senator Neufeld: — or fourthly, I guess, according to my friend here beside me, when you sell the power, if you get a feed-in tariff, who buys that and is it a guaranteed rate over a certain period of time? What happens after that? I am familiar in British Columbia with our feed-in tariffs. I know how they work. Tell me how this one works.
Mr. Morin: I might not be the best one to answer that question, but my understanding would be the feed-in tariffs guarantee us access to market, which is the first in the province that we can actually have a power purchase agreement. In the end, it is Nova Scotia Power that purchases that power. What I might call — it is not a subsidy because it is not — the increase over the regular price of power, I believe, is in some way supported by the government.
Senator Neufeld: You contract with Nova Scotia Power — or the communities do, whoever bills it — contract for "X" amount of megawatts or gigawatt hours of electricity?
Mr. Morin: Correct.
Senator Neufeld: On probably a yearly basis, and they have a number that —
Mr. Morin: It is expected to be a 20-year contract, like most power purchase agreements. We have to distinguish three very separate participants in the 300 megawatts: 100 is for independent power producers, 100 for Nova Scotia Power and 100 for community groups. They have very separate processes that are just about to be put in place, similar to Ontario, a renewable energy-administrated office, an actual group of people that will — in the past, you directly dealt with Nova Scotia Power in your RFP, request for proposal, process and now we will go through, I will call it a third party, who will administer that process for independent power producers and community feed-in tariffs. It is a very new system here in Nova Scotia and just being developed as we speak.
Senator Neufeld: The ability to get financing, then, should be relatively simple and straightforward. If you have a 20-year contract with Nova Scotia Power to buy your electricity, and it is probably at an escalated rate over those 20 years, the financing should not be a problem. Am I correct?
Mr. Morin: That would be the theory that, once one has a power purchase agreement, financing through equity and debt is much more readily secured. In the end, you have competing interests for that equity and debt, be that Ontario and also within Nova Scotia for other forms of energy. Our oil and gas company has, I believe, a return on investment of about 13 per cent, so even fossil fuels themselves may appear to be a better investment than renewables. Just on a flat, "Where should I put my money this year?" it is based on this. Also, the time to return on investment, out of our group of feed-in tariffs, tidal will take longer to actually build and implement, perhaps wind two years, before you have revenue, so we have a little longer period before there is payback as well, and that does not sit well with some investors.
Senator Lang: I would like to refer to the pool of capital through what you refer to as the CEDIF fund and your RRSP, registered retirement savings plan. How are you getting investments in that fund? Perhaps just give us a short overview because that is another way for capital, right?
Mr. Morin: Certainly, one of our main vehicles in Nova Scotia would be me and my friends, my parents and the folks in the community pooling their capital together. I have been involved in 17 different offerings, raisings of cash over the last seven years. Each time, it is different, in a different community with a different group. Right now, it is RSP season. March 1 is tomorrow, so there has been a flurry of activity in the last 90 days.
This is the time of year that our group here in Halifax, which is called Chebucto, is out raising money. Actually, there have been 15 groups out raising money for the last 90 days. We are not Fundy Tidal specifically. We are in next fall's window for raising money at this time. In the past, we have availed ourselves of that vehicle.
Senator Lang: At which you have been successful.
Mr. Morin: Certainly. There is one group that has taken somewhat of our lead, and I believe you will hear from them later through Seaforth, is Watts Wind Energy, also doing a wind project. It just raised, I think, $1.5 million. Our folks from Colchester-Cumberland WindField Group, I think, raised well over $800,000 last year towards their local project on Spital Hill. It is a very effective medium, but it is as good as the board of directors, their credibility, and the passion of the people in your community.
Senator Peterson: Ms. Gaudet, on the matter of the Mi'kmaq, you referred to their inherent right to water, land, et cetera, and the extraction of natural resources. Is that based on signed treaties?
Ms. Gaudet: That is based on peace and friendship treaties in Nova Scotia.
Senator Peterson: Which have been accepted by everyone or is that still part of the negotiation?
Ms. Gaudet: No, no, it is —
Senator Peterson: Basically, the negotiations you are doing are all based on a duty to consult?
Ms. Gaudet: Yes. There are actually two parallel processes. Certainly, the Mi'kmaq Rights Initiative piece of our logo refers to the ongoing negotiations that are working towards implementation of Aboriginal treaty rights, while a parallel process is also going on with respect to the Crown consultation with the Mi'kmaq.
Senator Peterson: Yes. The reason I ask you is because on natural resources, really, they now belong to the provinces.
Ms. Gaudet: Yes.
Senator Peterson: But on the other, I presume you are negotiating with the federal government?
Ms. Gaudet: Yes.
Senator Peterson: You have all these going at once?
Ms. Gaudet: We do.
The Chair: At this stage, I think we will have to terminate this panel. I want to thank each and every one of you for your thoughtful presentations through your written submissions as well as your viva voce comments. Thank you all very much indeed.
Senators, we now welcome our next panel. I am sorry for the delay. I know I see some of these faces have been here nearly all day. I hope you are finding it as interesting as we are. I hope the weather is not going to cause you as much inconvenience as it has caused us. We are not going to New Brunswick now. We will be going maybe eventually, but certainly not this afternoon or tonight.
Who would be presenting first? Ms. Abreu? Very good. This is the Atlantic Canada Sustainability Energy Coalition.
Catherine Abreu, Regional Facilitator, Atlantic Canada Sustainable Energy Coalition: Thank you for inviting me to speak with you today. I will be beginning with opening remarks and my colleague, Brennan Vogel, will present afterward with a more Nova Scotia-focused perspective. I will be talking on the regional scale and then we will take questions and Gretchen Fitzgerald will close out our panel.
The Chair: What about Mr. Simpson? You do not want to leave him out in the cold.
Ms. Abreu: No.
Jamie Simpson, Coordinator, Forestry Program, Ecology Action Centre: I am mainly here to answer any questions on biomass issues.
Ms. Abreu: We expect him to take many questions.
The Chair: It does not take many questions?
Ms. Abreu: No, we expect him to take many questions.
The Chair: We are going to ask him about bio-coal and biochar, like Arctic char.
Ms. Abreu: My name is Catherine Abreu. It is a phonetic pronunciation. It is Spanish, not French. I am speaking to you today as the Regional Coordinator of the Atlantic Canada Sustainable Energy Coalition, and we are an alliance of non-governmental organizations in each of the Atlantic provinces, working regionally to prevent the worst effects of climate change by supporting responsible use of our energy resources.
I am also speaking to you today as a young person at the beginning of my career. In 40 years I will be 65, so that means through the most productive years of my life I am going to be experiencing the impacts of climate change and the repercussions of the decisions that you, honourable senators, have already made, as with the defeat of Bill C-311, and the decisions that you will be making on Canada's energy future during this process.
The Chair: We hope you will be looking after our grandchildren for us and making sure they are well looked after.
Ms. Abreu: Yes, I hope to do so, and I hope to have the supportive context to take care of your grandchildren in.
Today I want to make two key recommendations to the federal government. The first is to prioritize energy efficiency and renewables, and the second is to address the repercussions of NAFTA's, North American Free Trade Agreement, proportionality clause and focus on responsible domestic use of our domestic energy resources.
I suggest the work of the committee genuinely acknowledges the fact that the fossil fuel industry is currently benefiting from decades of subsidies that have allowed it to get a systemic foothold in our economy.
Government intervention heavily subsidizes the fossil fuel industry in Canada, favouring rapid expansion of polluting fossil fuel megaprojects such as the tar sands, and subsidies to fossil fuels artificially lower energy prices to encourage wasteful consumption, exacerbate energy price volatility by blurring market signals, and undermine the competitiveness of renewables and other low-emission energy technologies.
In Atlantic Canada, this is just an example of a regional fossil fuel subsidy. P.E.I.'s recent energy accord effectively subsidizes the consumption of the ratepayer by freezing electricity rates over the next two years, and P.E.I. taxpayers will now bear the responsibility of fulfilling Maritime Electric's guaranteed rate of return.
My first recommendation is that we put the brakes on our current system, and that we shift that momentum to the emerging energy efficiency and renewable energy sectors. We do not use our energy resources as efficiently as we could, and that limits the productivity of our economy. The Council of Energy Ministers' collaborative process on energy efficiency has encouraged most provinces to consider efficiency in building codes and in lighting and appliance markets. Yet, the federal government seems to place greater emphasis on things like carbon capture and storage than on national reductions of carbon emissions through comprehensive energy efficiency programs.
The Chair: We are trying to change that.
Ms. Abreu: Great. Keep on keepin' on.
Efficiency programs in Atlantic Canada, for instance, are losing a considerable amount of momentum right now with the federal government's decision not to expand and extend its ecoENERGY program. I am going to make this point, and I think it has actually been reflected by our impressive municipalities' presentations, that local and regional efforts need continuity and federal support if they are to have the kind of far-reaching impact that they intend to.
The transition to renewable energy in Canada has to be deliberately engineered on the front end to ensure that we have maximum progress in a minimal amount of time, and that the renewable fuel sources and technologies we invest in provide the most intelligent solutions to our energy dilemmas for years to come. What that means is that we need to pin our future on the very best innovation and science that is happening today and avoid quick fixes. This is where the example of biomass comes in. It is an Atlantic Canada example of the long-term vision that is required to get the transition right.
The federal government recently gave funding to biomass energy projects in Nova Scotia. Unfortunately, carbon reduction is not assured with either of these projects and they will likely increase carbon emissions rather than reduce them. The science is clear that forest biomass is not an inherently clean and green electricity source.
We would like to recommend that the committee investigate the science on forest biomass energy, and recognize that forest biomass energy is not a carbon neutral source of energy. We respectfully contend that the federal government should avoid funding renewable energy projects whose contribution to emissions reductions is so questionable.
My second recommendation begins with the assertion that meeting our domestic energy requirements and developing Canadian approaches to meeting our GHG, greenhouse gas, reductions targets should be the top priorities for the Canadian government. In my opinion, too often Canada is fixated on being an export-oriented energy source for the United States and scapegoating American policies for our lack of leadership on responsible management of Canadian resources.
I encourage honourable senators to take the story of natural gas in Canada as a precautionary tale of what should not happen with renewables. Natural gas is a much lower GHG emitting fuel source than conventional fossil fuels, and it is often touted as an ideal transition fuel in the move from oil and coal to renewable energy. Yet, Canada currently exports 63 per cent of its natural gas to the United States, and that really severely limits the positive impact that gas can have in our general fuel mix.
NAFTA's proportionality clause compels Canada to continue its natural gas sales to the U.S. at the same rate as they were exported over the previous three years, even if those exports result in domestic shortages. I think the committee must take a hard look at Canada's energy trade relationships. Addressing Canada's obligations under the proportionality clause will have great relevance for the recent deal struck between Newfoundland and Labrador and Nova Scotia to develop Lower Churchill.
As you have heard today, the Lower Churchill project is currently defining much of the renewable energy discourse in Atlantic Canada. The project will initially provide about 800 megawatts of hydroelectricity to the region and it could eventually provide up to 2,000 megawatts. We will need federal leadership to ensure that this resource is used responsibly. Already much of the enthusiasm over Lower Churchill revolves around the potential for export to New England.
The Chair: Around what?
Ms. Abreu: The export to New England, the potential for exporting the hydroelectric power to New England. We just cannot wind up in the same predicament with hydroelectricity that we are in with natural gas. That is because Atlantic Canada has a disproportionate reliance on coal and oil. Upon guaranteeing that energy from Lower Churchill actually remains in Atlantic Canada, our next greatest challenge is to ensure that it is just one step in an integrated strategy to get the region off fossil fuels and on to renewable energy.
We cannot just swallow hundreds of megawatts of new energy into our overall consumption. We have to leverage the hydroelectricity as a flexible fuel source to load follow other renewable energy sources like wind. Federal investment in energy infrastructure within in-between provinces will be necessary to making this scenario a reality.
To wrap up, in Canada's energy future, federal mechanisms to support transition away from greenhouse-gas-intensive energy sources will be essential. Putting a price on emissions with a cap-and-trade system or a carbon tax should be at the heart of the federal strategy, and finding useful ways to direct federal funds into programs that prioritize energy efficiency and the growth of renewables is key.
Atlantic Canada, my home, is already suffering the impacts of climate change. Provincial governments here spend millions of dollars every year to deal with severe coastal erosion, flooding, and changes in our groundwater resources. These impacts are only going to worsen as time goes on. Any attempt to delineate the future of energy in Canada must be primarily occupied with avoiding catastrophic climate change. We need to establish clear goals for reducing overall greenhouse gas emissions at a scientifically relevant rate. We need to develop policies to drive those goals, and we need to install mechanisms to track and report progress toward them. To do this, we are going to need strong leadership and it is my hope that the framework you honourable senators will develop during this process will engender that leadership.
The Chair: Thank you very much. It is a very thoughtful presentation. I am glad you think we are honourable. I gather your colleague does not think the same, but we will let you talk anyway, Mr. Vogel, and we will listen carefully.
Brennan Vogel, Energy Coordinator, Ecology Action Centre: Thanks very much for listening, and it is great to have the attention of the Senate committee. My name is Brennan Vogel. I am here representing the Ecology Action Centre, Atlantic Canada's leading environmental voice for over 40 years, and I am the climate change and energy coordinator. I have a bachelor's degree in environmental studies from the University of Waterloo, and a master's degree in international development from St. Mary's University with a focus on climate change adaptation and Canadian development and cooperation.
I am also here before you as a very concerned citizen of this country, as well as this planet, and as a parent with two young children. I understand that you are here today seeking feedback with regard to developing a vision for Canada's energy future, and how this federation can collaboratively move forward on an economic development and job creation pathway that is sustainable with some leadership from the federal government. I commend you for your efforts to do so, but I have some serious concerns.
I implore you not to lose sight of the big picture. Canada is playing a dangerous game with the global climate. We are not on course for reducing our share of global greenhouse gases, and a failure to do so will result in unequivocal ecological change to the planet.
Today, I wish to share with you some frank practical advice on how you can better support climate change mitigation through strategic energy initiatives here in Nova Scotia in supporting a transformation to a low carbon future. However, I would like to start by sharing some thoughts and opinions with regard to the legitimacy of your interest in developing a plan for Canada's energy future, based on some startling recent evidence.
Currently, Canadians paying attention to the politics of climate change do not believe in the legitimacy of the federal government's leadership. Dramatic changes are required if this popular perception is to change. Ultimately, obtaining the social licence to move forward with a strategic vision for Canada's energy future requires serious changes to the way the federal government interacts with other levels of government, as we have heard today through the municipal presentations, as well as with Canadian citizens. This consultation is a small step in the right direction, but let me offer a few current examples that are of some concern from Canadian civil society.
First, according to the latest data from Environment Canada, Canada as a nation is not on track to meet its 2020 greenhouse gas reduction target of 17 per cent below 2005 levels. Even if the federal and provincial governments were to successfully implement all the current and proposed greenhouse gas emissions reduction policies, Environment Canada — the federal government agency responsible for the environment — has predicted that, as a nation, we would still be at least 30 per cent above our stated Copenhagen greenhouse gas reduction goal.
Second, in comparison to other countries in recent decades, a lack of federal support for renewable energy innovation, energy efficiency and conservation, stringent regulation and enforcement of greenhouse gas mitigation targets, or even developing a climate change plan that is consistent with the leading science despite repeated legislative attempts to do so, is frankly quite appalling and entirely unacceptable.
Third, the entirely undemocratic Senate defeat of Bill C-311 does not give any indication that, in developing a vision for Canada's energy future, you have recognized the non-negotiable overarching priority. It is not about economic growth, it is not about jobs, although certainly these aspects are important. Simply put, the priority is this: Canada's economic and energy future must be sustainable; it must be within the context of the leading climate science and the fundamental need to reduce greenhouse gas emissions more than 80 per cent by 2050 to avoid catastrophic interference with the global climate; and this requires dramatic action and changes to the business as usual that this country is currently exercising.
It is hard for me to envision Canada's energy future without making a call for you to, at a minimum, maintain and improve the nominal amounts of support that the federal government has shown for energy efficiency conservation, renewables and greenhouse gas regulations thus far, and some serious changes are required.
Here in Nova Scotia, the province has kept the 1990 Kyoto base year for greenhouse gas reductions with a goal of 10 per cent below 1990 levels by 2020. Achieving this target requires federal government support in the form of resources to transition to a low carbon society. Three-quarters of our greenhouse gas emissions in the province come from two sources. Half comes from one company, Nova Scotia Power, the monopoly electrical utility that relies 80 per cent on an economically, socially and environmentally unsustainable imported fossil fuel supply in the form of coal. A quarter comes from our transportation sector, due to an unsustainable dependency on imported oil to fuel our vehicles. Obviously, the rapid transformation and integration of these two systems towards a low carbon development pathway is imperative. Nationally, the electricity sector accounts for 17 per cent of greenhouse gases with 75 per cent of these emissions coming from coal burning. Certainly, Nova Scotia's disproportionate reliance on coal burning is a key way that you could assist this province in moving forward towards a low carbon future.
Here and now in 2011, citizens of Canada expect and demand more from elected officials and appointed leaders whom we support with $0.90 of every tax dollar. A series of fundamental changes to business as usual are required to restore belief in the leadership of this country if a vision for the future is to carry any weight or legitimacy. Frankly, it is the provinces and the municipalities of Canada that are leading the charge on addressing the issue of climate change, even though they lack the adequate resources or federal support and leadership to do so.
At every opportunity, the federal government should be relegating the task of climate action to provinces and municipalities and backing it up with the financial resources to do so. Municipalities are carrying the bulk of the load in changing energy use and transportation patterns, as we heard earlier today, and they are under-resourced to do this. An opportunity that you could use is to strengthen the gas tax transfer. This mechanism should be fundamental to strengthening Canada's energy future and mitigating greenhouse gas emissions. The gas tax transfer already provides a proven method to transfer financial wealth from the federal government to the municipalities where it is needed the most. Ensuring that municipalities are enabled and accountable for implementing their integrated community sustainability initiatives is a fundamental part of building a resilient adaptable society in this country. Serious gaps remain, but opportunities for expediting and improving this process are clear. Leadership from Ottawa is required.
On the issue of coal, Dr. James Hansen of NASA has offered that the quickest and most effective way to rapidly reduce greenhouse gases is to phase out coal burning for electricity by no later than 2030. Here in Nova Scotia, the earliest retirement date of coal burning electrical plants is proposed to be 2025. There is no provincial policy or plan to phase out coal burning through fuel or import substitution. Carbon capture and storage is an unproven technology and it does not reduce the province's energy and security. Coal burning carries a heavy price with environmental health risks. Respiratory disease such as asthma and cancer, acid rain, mercury contamination of ecosystems and human health are a few of these consequences. Nova Scotia has a gap in information pertaining to the health impacts of coal burning, yet as a province, we carry the dubious distinction of having the highest cancer rates in Canada, while lung cancer is the number one cancer killer here in Nova Scotia. Is there a connection in these phenomena? Without the leadership to provide the adequate information, we simply do not know.
Provincial electricity rates have increased to 30 per cent in the last five to six years due mostly to an increasingly volatile international coal market. As a province with low to modest incomes, the reality of choosing between heating or eating is a shocking consequence of rising electricity prices. Energy poverty is a reality in Nova Scotia and it is driven by coal dependency.
Meanwhile, shareholders at Emera are making windfall profits on the backs of Nova Scotians and there is no mechanism to ensure that people come before profits.
The federal government has proposed regulations that could and should lead to the closure of coal burning electrical plants starting in 2015. Ensuring the ability of Nova Scotia Power to make up its lost baseload generating capacity of 304 megawatts at Trenton Unit 5 and Point Tupper, the two plants that would be eligible under these coal regulations, requires federal support to strengthen, first and foremost, the Nova Scotian electricity transmission and distribution grid, as we heard earlier today. This is required to support more renewable electricity supply from the untapped onshore and offshore wind potential as well as other Nova Scotian sources of low carbon renewable electricity, such as solar and tidal energy. Transforming to the utilization of natural gas in Eastern Canada within the Eastern Canadian electricity sector by providing incentives to retrofit coal burning plants to natural gas could be an instrumental part of this transition to a low carbon electricity sector. Protecting the already limited and over-exploited offshore natural gas from further international export, as my colleague pointed out, could further support domestic utilization of this transition fuel within electricity generation. Providing incentives such as a national cap-and-trade system for carbon could create opportunities for Nova Scotia to be a leader in transforming the provincial electricity system by inducing incentives to retire Nova Scotia's coal plants as soon as possible. This is a strategic low-hanging fruit advantage for the province and the country as a whole, but it requires federal movement to make it happen.
Strengthening Nova Scotia's regional transmission capacity is required to import and balance the intermittency of a growing renewable electricity system at a regional level. Strengthening and supporting energy storage research and development to further balance the intermittency of the renewable supply is required. For instance, this is things like compressed air energy storage as well as pumped water technologies that can further enhance the capacity to build sustainable electricity systems by capturing renewable energy when it is available and storing it for when it is needed.
Providing greater technical and resource support to proven renewable technologies, such as solar, photovoltaic and solar heating, will be a long overdue and welcome change from both the federal and the provincial governments.
Providing further home energy incentives, such as the continuation of the EnerGuide program, or other means of reducing end-use energy demand for space and water heating through better efficiency and conservation means will be a useful direction for federal initiatives. Further codes and standards are also required for appliances, homes and so on.
Providing social security to the growing numbers of vulnerable energy poverty populations adversely affected by rising electricity prices will be a welcome initiative, and assessing the environmental health risks associated with coal burning are required.
In about 40 years from now, if I am lucky I will be 71 years old and my children will be in their early 40s, and I hope to look back on today as a moment where I was reassured that the federal government of this country was legitimately taking action to reduce greenhouse gas emissions through transformative actions to our currently unsustainable energy systems, our electricity system, our transportation system and our oil and gas infrastructure. Currently, I do not feel that way. Obviously, the opportunities to not be left behind or on the sidelines as the world moves towards a low carbon future are abundant. Identifying the gaps, barriers and opportunities for improvement I do not think is very difficult. Frankly, it has mostly to do with political will and strategic leadership.
To conclude, using your analogy from the discussion paper, as a nation, I do not think that we are currently following the puck or even really anticipating where it is going.
The Chair: Thank you, sir.
We will now hear from Gretchen Fitzgerald.
Gretchen Fitzgerald, Director, Sierra Club Atlantic: I am the Director of the Atlantic Canada chapter of the Sierra Club Canada. We certainly appreciate this opportunity to present to the Senate Committee on Energy, Environment and Natural Resources.
Sierra Club Canada is a member-based organization that empowers people to protect, restore and enjoy a healthy and safe planet. Sierra Club Atlantic is involved in a broad range of activities, and our major efforts are in the areas of energy and climate change, healthy communities, sustainable economies, protection of wild spaces and environmental education.
In surveying the landscape of Canadian and provincial leadership, this committee, I feel, is in a unique position in Canadian politics, making explicit links between our ability to create energy, save energy, steward natural resources and protect the environment. This is the type of holistic approach that is needed to guide Canada in order to seize the opportunities of a new energy future, and it has been very impressive today to see how many people are starting to seize that future.
In particular, our region with its vast renewable energy resources and various jurisdictions needs federal coordination to ensure that our grids, transportation systems, energy generation and energy efficiency systems are linked so that we can reduce our greenhouse gas emissions and maximize the benefits to local communities.
You will note in the handout I circulated a projection of what this location will look like if we do not deal with climate change. We will be three blocks closer to the high-water mark, and if we fail to react responsibly to reduce the effects of climate change, the effects could be even worse.
As my colleague has pointed out, such an opportunity was missed when the Senate in an almost unprecedented move killed Bill C-311, the climate change accountability bill, without debate after it had been passed by the House of Commons. Recent polls show that Canadians still have an appetite to move on climate change. A poll released this past month shows that 80 per cent of Canadians still believe that there is a scientific basis for the climate change effects and that 65 per cent of Canadians feel that the federal government has a great deal of responsibility — that is you — a great deal of responsibility to tackle climate change.
We recommend that this committee re-examine its role in producing Canada-wide rules and responsibilities regarding climate change to reverse the appalling record of failing Bill C-311 and failing Canadians.
My second topic has to do with how we deal with mines and mine tailings in this country. Currently, Sierra Club Atlantic as part of the Sandy Pond Alliance is fighting to protect a freshwater lake in Newfoundland called Sandy Pond. Sandy Pond is a unique ecosystem, home to prize winning trout that have evolved independently in that system for over 10,000 years. We are questioning the legality of changes made to the metal mine effluent regulations, a regulation under the federal Fisheries Act, to list water bodies in this country as waste dumps for mines.
When this change in regulation was proposed in 2002, the mining industry and indeed several departments reassured the environmental community that this exception of listing lakes as waste dumps was needed just to accommodate old mines and grandfather them in. However, since the change was created, 11 lakes are up for destruction and 5 lakes have been approved to be destroyed.
Since our court case was begun, a mine project in British Columbia was rejected by a federal environmental assessment process. The Prosperity Mine would have involved the destruction of Little Fish Lake and portions of Fish Creek. Indeed, Department of Fisheries and Oceans scientists have shown that our ability to compensate for the destruction of fish habitat by creating artificial new habitats is a flawed concept. The environmental assessment panel for the Prosperity Mine project in British Columbia stated that the project would result in significant adverse environmental effects on fish and fish habitat, on navigation and on the current use of lands and resources for traditional purposes by First Nations and on cultural heritage and potential to establish Aboriginal rights or title. It is our contention that the ability of mining projects to be allowed to destroy freshwater bodies forever is not in the interests of Canadians.
We recommend that the committee commission an immediate report reviewing the implications of this change in the federal Fisheries Act with a view to protecting our shared aquatic heritage.
The final area that I want to speak to you about today has to do with oil and gas development in the Gulf of St. Lawrence. The committee's report on offshore drilling, prepared in response to the disastrous spill in the Gulf of Mexico last summer, found problems with preparedness of the offshore industry to deal with oil spills. It referred to offshore oil and gas as a highly risky and costly business. In addition, your report found that the rules about technology required and money set aside to deal with disastrous spills are conflicting and confusing. Indeed, we are very concerned that the cap on liability for a spill in offshore Newfoundland and Nova Scotia is $30 million. Meanwhile, BP has set aside $20 billion to deal with the spill in the Gulf of Mexico.
You called for a review of offshore petroleum boards to deal with the potential conflict of interest when it comes to promoting this industry while regulating for environment and safety. This conflict was also highlighted recently by Commissioner Robert Wells, who produced the report after the tragic crash of a helicopter servicing one of Newfoundland's offshore projects.
Last week a junior oil and gas company, Corridor Resources, registered its intent to carry out exploratory drilling in our gulf, the Gulf of St. Lawrence, without implementing your committee's recommendations. The company has stated they expect to begin to drill as soon as next year. Given this tight deadline, the review that you call for in your report cannot come too soon. Why do I say this? I have got ten reasons, and those are just off the top of my head.
First, the Gulf of St. Lawrence is a semi-enclosed sea, six times smaller than the Gulf of Mexico. The Gulf of St. Lawrence is referred to by the harvesters around the gulf as "the pond". It is described by Department of Fisheries and Oceans as an inland sea with a distinct ecosystem. Assessments of endangered species in the gulf have shown that cod populations there are in endangered. The gulf is home to the endangered blue whale. Indeed the area where drilling could take place is known as the "blue whale highway." It is also home to the threatened beluga whale and many other unique animals, all interconnected in a system fed by the mighty St. Lawrence River.
Second, counter-clockwise currents have a tendency to go around the gulf, along the shore lines, rather than out towards the Atlantic. This makes the gulf very different from offshore areas off of Newfoundland currently under development. Although water mixing varies depending on the time of year, it can take up to eight months for the Gulf of St. Lawrence to fully flush itself out. If a spill were to happen, it could be retained there for quite some time.
Third, the proposed drilling prospect is in the Laurentian Channel, and this is the main vein of the gulf's circulatory system. Any pollution from this location would enter fast moving water that feeds into this counter-clockwise current, heading for our coasts.
Fourth, Gulf of St. Lawrence spills will reach land. The oil and gas lease that is furthest from shore is called Old Harry. It is only 70 kilometres from the Magdalen Islands, 80 kilometres from the Coast of Newfoundland and 120 kilometres from Cape Breton. For reference for the committee, if you flew in here to Halifax, which I assume you did, that is only about twice the distance to the airport. It is not that far from the Magdalen Islands. Being within proximity to the coast and virtually land-locked by five provinces, a spill in the Gulf of St. Lawrence will almost always hit land. This claim is supported by simulations conducted by the David Suzuki Foundation. Four out of four simulations hit land, and Newfoundland was the most affected in their simulations.
Fifth, we have a flawed regulatory structure. The current regulatory structure cannot be applied to a body of water shared by five provinces. Currently there are two offshore petroleum boards for Newfoundland and Nova Scotia which were developed for the Atlantic Ocean installations where shared jurisdiction is not an issue. Boards are in theory jointly managed between the federal and provincial governments. With the Canada-Newfoundland and Labrador Offshore Petroleum Board, there are three seats to the federal government and three seats to the province and one tie-breaker. The federal government allows the province to take the lead when things are not decided.
The current framework applied to the gulf where there is a shared jurisdiction would mean potentially up to five petroleum boards over 500 kilometres of water. The lack of an integrated approach to a single body of water in addition to being uncoordinated and ungovernable defies basic ocean management principles.
Senators should note that the Department of Fisheries and Oceans manages fisheries in the gulf as a shared resource, treats the gulf as one ecosystem. Why should oil and gas be treated differently?
Sixth, petroleum boards are in a conflict of interest position. In the offshore safety helicopter inquiry, the Honourable Robert Wells found the Canada-Newfoundland Offshore Petroleum Board was in a conflict of interest position. By both promoting income generating projects and presiding over its safety and environment, the board defied the basic principles of governance.
Reason number seven is lack of information reported by oil companies. Currently oil companies operating in the East Coast of Canada self-report. They monitor their own spills and they record the environmental effects of those spills. They do not have to disclose those effects associated with their operations because they are protected by third party confidentiality clauses of the Atlantic Accords. This is simply unacceptable.
Eight, there is no way right now to keep track of cumulative environmental effects. By that, I mean the effects of multiple projects and activities in the gulf. In the Gulf of St. Lawrence, there is no way to keep a record of these effects for several reasons. There are knowledge gaps, a lot of them, and if we do not know what is there, how do we know what we are losing? Second, Department of Fisheries and Oceans is currently engaging in a process to encourage integrated management in the gulf. This process is far from being complete. If these knowledge gaps are allowed to persist, we will have no way of attributing environmental damage caused by oil and gas in the gulf.
Nine, we cannot rely on being compensated, even if such compensation could mitigate impacts on things like endangered species. On the East Coast there are no compensation plans in place. There is no environmental fund in the case of a spill. In fact, on Canada's East Coast these companies are protected by a liability limit of $30 million. It is simply unacceptable when you think of the scope of what a disaster like the Gulf of Mexico spill could cause.
The tenth reason is renewable energy and its definite potential in the gulf. There are a lot of other renewable resources in the gulf, with over 3,000 marine species and an abundance of renewable jobs such as fishing and tourism. The gulf region actually supplies one-half of the GDP that Canada gets from its marine environment every year. It is a substantial contributor to the Canadian economy. In the event of an oil spill like the one we recently saw in the Gulf of Mexico, these renewable resource sectors could be placed at risk.
In closing, we recommend the committee call for an immediate moratorium on oil and gas exploration in our Gulf of St. Lawrence. The committee should also insist the findings of its own report on offshore oil and gas drilling be implemented before drilling is allowed to occur in our gulf.
Finally, no development in the Gulf of St. Lawrence should be allowed until the five provinces involved, as well as Aboriginal interests, can come to an agreement regarding how to manage this shared common ecosystem.
The Chair: Thank you, Ms. Fitzgerald. We have had a long history of people from Sierra Club before us, and we always get very wise and useful and responsible input. My first years on this committee were characterized by regular almost monthly appearances by Elizabeth May. I think she was always invited by former Premier Buchanan. I do not know whether she was a Nova Scotian, but she certainly held herself out as, and so you are in a good tradition there.
Unfortunately, however, we had allocated 45 minutes to this group and they are now at 55. There will be no question period except for the one questioner who indicated he had some questions.
Senator Neufeld: You talked about natural gas being a transition fuel. We export 63 per cent of our gas to the U.S., and the U.S. is our largest trading partner. Of our trade, 80 per cent, I think it is in fact a little bit more than that, is with the United States. I mean we cannot just say, "We do not want to have any more of that" because somehow we have to pay for all the things on the wish list that come to the table.
We have had recent testimony stating that right now the U.S. imports about 12 per cent of their natural gas needs. They consume about 23 trillion cubic feet. These numbers are not exact, but relatively close. In about 20 years, they think, with the advent of shale gas, they will be supplying all of their own needs, except maybe one per cent.
Would you agree with me that we have to continue on? There are huge resources of shale gas in Northeastern British Columbia, some in New Brunswick, some in Quebec, I think all across Canada. We need to continue to look to natural gas as a transition fuel, and to look at shipping it to Asia as LNG to take the place of coal? Would you agree with that even tentatively, because you said it was a transition fuel?
Ms. Abreu: I would fundamentally disagree with that. The extraction methods that are generally associated with shale gas are unquestionably deleterious to the environment. The regulatory framework that currently exists in Canada in regard to those extraction methods is not developed enough to safeguard our environment in the event of shale gas sourcing and extraction.
In terms of our export relationships with the United States, my point is not necessarily that we need to stop being an energy exporter. My point is that we need to prioritize fulfilling our domestic energy needs before exporting. We cannot do that given the proportionality clause in NAFTA right now because the moment that we enter into a trade relationship with a trade partner in North America, we need to continue that trade relationship. We cannot change our minds, we cannot be flexible about it, given the changing situations in our country and our shifting needs.
Senator Neufeld: We do not have time for a discussion, but I totally disagree with that statement. I mean, if we do not have natural gas, we cannot get it, we cannot deliver it to the U.S. There is a whole bunch of factors.
Mr. Vogel talked about the need to move toward solar and tidal energy. Today we have heard I think tidal is $450 a megawatt, right? Solar, we have been given figures of $300 to $400 a megawatt. You are telling me that people cannot afford the electricity rates now. How will they afford it if we actually get to that point without going to the federal government and saying, "You have got to pay more?" The federal government is only us, all of us at this table, all of the people in the crowd. I mean, that is where the taxes come from.
Mr. Vogel: That is a very fascinating question, and I would just refer you to the subsidies that the oil and gas industry enjoys on an annual basis. I believe it is in the nature of $1.8 billion. Is that not correct?
Ms. Fitzgerald: One point four.
Senator Neufeld: The question is —
Mr. Vogel: If I could finish, please?
If we are subsidizing oil and gas, and coal for that matter, to the tune of $1.4 billion a year and you are asking about how to make solar and tidal technology, which is low carbon and part of a strategic vision for this country, maybe it is time to re-examine how to level the market playing field by looking at the way that the federal government subsidizes different kinds of energy technologies.
Senator Mitchell: Those were very powerful, very intense presentations. I do not want to be condescending in any way, but we have not had a great number of people from your generation, maybe more from Mr. Simpson's generation, so it is powerful to hear that, and thank you very much.
Ms. Abreu: On that note, I would encourage you to seek out members of my generation more regularly.
Senator Mitchell: Exactly, yes.
The Chair: We are on Twitter.
Senator Mitchell: Yes, we are on Twitter and we are looking for input. I want to say — I am not going to be partisan — I was the sponsor of Bill C-311.
The Chair: Not in the Senate.
Senator Mitchell: Not in the Senate.
Not everybody in that house voted against that bill. I was the sponsor of Kyoto Bill C-288, which we did get through because it was a different majority/minority situation at that time. Both bills were about the same; one was Liberal, one was New Democrat.
The problem with those bills, with all private members' bills, is that they cannot initiate money and so they cannot really do what needs to be done. Government bills are where the power lies. They would you to put money into subsidizing renewable energy. You cannot do that with Senate bills or private members' bills that come from the other side. I share your frustration, believe me.
I am interested in the argument about subsidies to the energy industry. I come from Alberta. I am concerned about climate change. My colleagues are absolutely sick and tired of me talking about it, but I am not stopping. I have seen the study, I have seen the $1.4 billion, although that would not go very far in subsidizing solar, unfortunately. It is just not that much although it seems like a lot.
My question is this. Have you got data that show that governments actually write cheques to oil companies in the same way that they do when they subsidize renewable energy? It is different when the subsidy is really a reduction in what might otherwise have been a royalty, because the royalty is a moving target anyway, or is a reduction in what otherwise might have been collected as taxes, as in the capital cost allowance reduction for mining operations like the oil sands? Could you answer that?
Finally, speaking as an Albertan with respect to transitional fuels, natural gas, it is interesting that it is seen as a transitional fuel in Eastern Canada to solve the problem of coal fired plants. It is natural gas that is producing all of the emissions in Alberta in the oil sands, which is the poster boy or the Darth Vader of environmental problems. I agree that it is a transitional fuel, and I think it has to be used in many different ways to make that transition, but let us not pick on Alberta all the time — and you are not — it has got to be done across the country.
Could you just give me some insight into subsidies?
Ms. Fitzgerald: I think the Climate Action Network has done a really good assessment of where that number comes from, and some of it is corporate tax cuts, it is true, but others are literally money going into that industry to support it and its activities.
Senator Mitchell: Carbon capture.
Ms. Fitzgerald: Yes. We would be happy to provide a detailed list of where that number comes from.
Senator Mitchell: I would love to see it because I want to use it, but it is not quite as powerful as someone writing a cheque. That is the problem with it.
Ms. Fitzgerald: At the same time, I think it is our responsibility now to encourage good things and discourage things that are going to affect us negatively. That is the role of the federal government, and as the recent poll shows, that is the type of leadership they are looking to you folks for. That is what real leadership is, actually.
Senator Mitchell: Absolutely. That is great. Thank you.
Mr. Vogel: If I could just answer the second question with regard to natural gas. It is important to keep in mind that the utilization of natural gas resources in Western Canada to create synthetic fuels has a double impact in terms of its climate change greenhouse gas emissions. Utilizing a transition fuel to create synthetic fuel, which is then burned in our cars and so on, is problematic. In particular, the approval of the Mackenzie Valley Pipeline, which I understand will make a pit stop in Fort McMurray before going on to provide natural gas as a transition fuel to whatever else, vehicles or home heating, is really quite despairing.
Senator McCoy: It would be perhaps more useful if we just had a side conversation around that because some of the facts need reinforcing. We are all slightly off key on our representation today about what is happening in the oil sands and the resource uses there. Some things are evolving. We are just not quite hitting the right point. Let us leave that discussion to one side. It is not quite on point and it is not really reinforcing what you have presented at all.
The Chair: Thank you all very much. Those were very interesting submissions.
I would like to welcome our next panel. Charles Cartmill is the President and CEO of LED Roadway Lighting. We understand you are a great entrepreneur and you have a tremendous product. Seaforth Energy, it seems to me in another life I did legal work for that company, but I am no longer practising law. It is a great Scottish company, though. Grapell Bioenergy Limited, Orville Pulsifer, and you have two engineers with you, right?
Orville Pulsifer, President, Grapell Bioenergy Limited: Yes, sir.
The Chair: Messers McCabe and Swanson, one of SOBENCO Engineering, the other of LST Engineering Limited. Welcome to you all.
Charles Cartmill, President and Chief Executive Officer, LED Roadway Lighting Ltd.: There are packages being distributed and in the packages you will find a copy of the presentation in English and French. There is also a bound copy of a Nova Scotia pilot study that was completed in 2009 by an independent engineering firm.
Then there is one page on a more accurate calculation of job creation, if you manage to persuade the federal government to implement some of these policies I am recommending.
The Chair: We heard from the Halifax Regional Municipality. They seem to be on board.
Mr. Cartmill: They are well on the way.
The Chair: You do not need the feds.
Mr. Cartmill: There is one South Street case study.
Maybe I could just start with the slide presentation. I will just flip through and outline some of them. I will get into the environmental benefits and economic benefits later. There is also a soft copy available of all this documentation.
We are looking for support for Canadian made street and area lighting conversions at the federal level. That is the first project we are looking for, some kind of policy that will drive adoption of the technology through federal departments like DND and Parks Canada. The second project we would like to see is an upgrade of all federal street and area lighting specifications to LED. Then we would like to see a conversion program. A little further on, you will see the projections on the kind of savings, dollars and environmental benefits, to be had with the Canadian 4.3 million street lights. We would dearly like to see a federal buy-Canadian program for federal, provincial and municipal street and area lighting which would match the Buy America Act. The U.S. has basically blocked us out of shipping any product from Canada to any municipality or state in the U.S., and we have been forced to set up assembly in North Carolina, which drives our costs up by 15 or 20 per cent and gets rid of the profit.
The Chair: Will you just take a moment and tell us about your company? Is it a private company, a public company?
Mr. Cartmill: It is a private company. I have several companies. This is the one I spend 99.9 per cent of my time on. I want to describe the technology briefly, and then there is a slide on the company, and I will give you a little bit of the history. But I have been in the lighting and energy business for approximately 40 years and 38 years in my own businesses, of which I have several that are electrical and energy related.
We have developed a unique product, and you will see that it is actually the best in the world. We have documentation to support that view. I have it plugged in, if you finish up here before morning and you want to see how cool it remains. Operating a cool product is the secret to getting up the efficiency of the LEDs.
What is unique about our approach? We knew the LEDs would last 20 years, so I started an electronics business in Amherst. I bought a 55,000 square foot building nine years ago — no government money, no bank money, no employees, no customers, no brains a lot of people would say, but anyway we started up with myself and the plant manager. We are now 130 people, and it is a very successful business.
We built it as an electronics business and we aggressively pursued research money while we pumped everything we could into growing it as an electronics business because I knew LED fixtures were going to be a very different animal from the tin bending that lighting fixtures were going through with the old technology. That LED fixture is primarily an electronic product. You have LEDs which give off the light and they are a semi-conductor, and then you have the Achilles heel, the weak link, which is the driver or the power supply we use to drive the LEDs. So we knew the LEDs would last 30 years. For 20 years they will produce a great quality and quantity of light. We decided to design the entire system so it would last 20 years. We call it a satellite because it is up on a pole, out in the environment. We really want it to last for the 20 years so we can eliminate that continual four year maintenance of changing the bulbs. It is very expensive to change bulbs on street lights, because you generally need somebody watching the traffic and you need two guys in the bucket truck. Depending on where you are it costs $200 to $500. There is a lot of savings in maintenance, but more importantly it is the kind of energy savings that really drive this approach.
Having been in the lighting business for 40 years we knew there was a base light level that you needed, and it is the North American IES, Illuminating Engineering Society, RP8 recommended practice standard.
We worked with Nova Scotia Power for two and a half years to design a product that would be suitable for their types of applications. We built at our facility one of the first RoHS compliant manufacturing lines in the world; that is, reduction of hazardous substances. They were really being driven in Europe, and it has helped us in our export business to Europe as we grew our electronics.
Not until 2007 did we manage to access some research money, which was through ACOA's Atlantic Innovation Fund, and it took us about a year and a half to develop the product. We started our commercial production in May of 2009.
If you could just flip over to page 3, I want you to look at the top chart. There is very fine print down at the bottom. This is a chart that comes right out of a Department of Energy gateway study in New York City for the Department of Transportation. The first column represents the largest manufacture of LED roadway lighting in the world, and they save 28 per cent energy while meeting this IES standard of lighting. Not all the fixtures in this chart do, but we do. We save 51 per cent energy savings over the incumbent, the high pressure sodium. We are 32 per cent more energy efficient than the company that owns the U.S. market.
At the bottom of that page you will see a picture of our plant. Now we have two other facilities here. We have a business office, and we have a research and design centre in Halifax. All our product is totally designed in Nova Scotia, all made in Amherst. We buy castings from Quebec. We get lenses and louvers from the Montreal area, and most of our electronic products come out of Montreal. This is a real true Canadian designed, developed, and manufactured product.
If you turn to page 4, and I am just highlighting some of the things I wanted to mention. An announcement was made last week. This is the kind of thing that we would like to see at the federal level. The provincial government announced the conversion of all their highway lights to LED roadway lights. They wrote a very generic specification which was relative to performance and energy savings. We were successful on that tender and you can see from this top slide there is a savings to the province of $6.9 million over the life of the product. Our product has been out now for almost a couple of years, and we have independent data. We use the same labs that Boeing, Lockheed, IBM and Hewlett Packard use to calculate mean time between failure and reliability. We are very confident and all our field trials are proving our technology to be very reliable.
You will see below the environmental benefits. I will give you an example on Canada next, but you will see an annual average of 62 per cent energy savings, 1992.9 megawatts, the equivalent of 3,225 barrels of oil per year. Keep in mind this is going to be for 20 years. It is equivalent to taking 316 cars off the road. Greenhouse gas reductions amount to 1,553 tonnes per year. The old technology contains mercury, and every four years those bulbs are changed and sent to the landfill. We eliminate them. Our product is totally environmentally friendly and totally recyclable, no mercury, no lead, no cadmium.
The City of Amherst has totally converted, so we are thankful to them. Number two refers to one of the first regions to adopt the technology. We were advised that we are receiving the contract award for LED lighting for the Confederation Bridge. The complete bridge to P.E.I. will be converted to our product. We were selected after running trials on all the best products in the world — Phillips, GE. We have also just recently received a substantial order from the Prince Edward Island Department of Highways.
Now, on the next page, five, you will see average wattage.
The Chair: Page six I think in most of ours.
Mr. Cartmill: Okay, maybe I have an upgraded one. The Canadian, I will refer to the title then. You are looking at —
The Chair: Life Cycle Prosper Nova Scotia.
Mr. Cartmill: Oh, Life Cycle Prosper Nova Scotia. That was page four. What do you have for your page? Five, okay. I have an upgraded one, I guess. You have seen the Nova Scotia one. If you can flip to the Canadian example.
The Chair: Life Cycle Cost Savings?
Mr. Cartmill: Yes.
The Chair: Possibly 4.3 million street lights.
Mr. Cartmill: Yes, that is right, and $8.5 billion.
The environmental benefits you will see below are very substantial. These numbers are low. We have recently released data from U.S. Department of Energy tabulating the number of street and area lights in the United States, and if you correlate it, we are probably about 20 per cent low with our 4.3 million number. You can see the kind of savings. This will pay for itself. It is a matter of getting around the initial capital cost and setting the financing in place.
The economic benefits are shown on a separate page in your folder. We just used a general number here. We said about 7,500 jobs annually. Then we set about calculating a more exact number looking at the hours to assemble and install fixtures, and the actual number is more like 8,600 jobs annually. Now that is just Canada. The market is $500 billion, and it will convert in the next one to ten years. You will see some of our installations coming up.
Flip to your page 7 and you will see the installations. This list is a little old. We did this in about 19 months. I have been to most of these places. You can see the installations in Canada and the U.S. We can add to that Australia and South Africa. We have people visiting us weekly.
The Chair: Where does it list your frequent flyer points?
Mr. Cartmill: I am Elite, I can tell you that.
I just want to give you some idea. These people would not be buying our product if we did not have the best product in the world, especially in the U.S. The interesting thing is that we are finding that the poor countries are moving a lot faster than the rich countries. We have absolutely been overrun by opportunities in Mexico as a result of the United Nations Climate Change Conference, which I call the COP conference. Mexico has $1 billion from IDB, a third of it for roadway lighting. I was in Panama a couple of weeks ago. We are meeting again with the mayor of Calgary at the IDB board meeting. He has committed to relighting all 314 parks with our light. We are in the middle of a huge opportunity in Colombia, which all sprung out of the COP conference follow-up trips. We have been in Mexico for weeks. We are getting just absolutely wonderful reviews everywhere we go. The sad thing is that it is the poor countries that are going first. The second people moving in this direction are the Europeans, and we are getting great uptake on our product there. I was listening to the discussion about feed-in tariffs. Europe has a carbon reduction commitment and municipalities that do not meet it must pay. In the U.K. it is £12 per tonne. If you are looking at carbon trading, in Europe it is at an all time low of about 11, and it has been up to 18. There is an added incentive to convert.
I have some pictures here. You will see South Street in Halifax on page 8. There is a picture of our plant. We converted the outside to 62 per cent energy savings. We wanted to put a local flavour to this. If you look at the Mazda dealership, 81 per cent energy savings, and we show the before and after. It looks a lot better after.
Mr. Cartmill: You have the strait crossing. On page 11 you will see a solar installation in Dubai. Our light is so efficient and has such great distribution that in solar applications we can save every fourth pole. Those poles with the battery and inverters are sold for about $4000 each. We have received orders for solar from Australia, Hawaii, Florida, and we are just coming out of our prototype stage. We are working on big projects in Mexico and Jamaica.
If you look at the last page, we are a member of the Clean Tech Coalition, which has recently made a submission to the finance committee and are looking for policy on several of the issues that I raised on my first slide. They have also recently made an application for the recommended change in R&D process. But that slide will give you a little background on the Clean Tech sector. That group of companies hopes to have 20 of its members at $100 million by the year 2020.
The last slide says it all. Unfortunately, when the bill comes due our generation will not be around, and 60 per cent of the rivers in Nova Scotia are already dead. I am a salmon fisherman and I have to go to New Brunswick to really have an enjoyable time. I have very little time off and I want to be sure I have a good time.
The Chair: Or Quebec.
Mr. Cartmill: I have been to Gaspé many times, but I have never been successful there.
I have been working with the federal government. Last month I had meetings with policy advisers at Natural Resources, the ambassador of climate change for Canada and Mr. Flaherty. I really had a good session with him. Any help you could give us to create policy for energy efficiency would be very much appreciated.
The Chair: Are you the only shareholder?
Mr. Cartmill: I am the majority shareholder. NSBI is a shareholder and several of the employees, all of the plant management have been given shares and they own a pretty substantial part of the business. That is the way I try to run the business.
The Chair: Is it Nova Scotia or federal?
Mr. Cartmill: Totally Nova Scotia. I live in Halifax and the plant is in Amherst. I used to live almost all my time in Amherst even though my home was in Halifax, but it is pretty well balanced now.
The Chair: We will move next to Mr. Barry of Seaforth Energy.
Jonathan Barry, President, Seaforth Energy: I am speaking to you from a professional perspective as President of Seaforth Energy with strong interest in renewable energy options. I am also speaking to you personally as a father of four young children aged seven through 12, so I care intimately about what happens on policy in Canada and how we are going to transition to future generations.
I will start with slide two and tell you quickly about our company. We are a small private company located here in Dartmouth and held through multiple shareholders, including all employees. We are uniquely qualified to comment on renewable energy because we are a wind turbine manufacturer here in Canada. We have the leading and the largest installed base of 50 kilowatt wind turbines in the world. We export around the world. We are also Atlantic Canada's, and certainly regionally, the largest renewable energy system integrator. We work with a variety of different solar systems and here in Nova Scotia primarily with solar thermal systems, which I know you heard quite a bit about earlier in the day from the City of Halifax.
I will give you a commentary based on what we see internationally and locally in Canada. On renewable energy policy on slide three, we are seeing in our travels around the world, economies transforming themselves. We think Canada is in a great position to transform itself. We have lots of natural resources, and those natural resources can be used to transform ourselves and take a leadership position in renewable energy. We have heard a lot of talk about transitional fuels et cetera, all of which I am supportive, but we have to be able to pay for them. Things have to make economic sense, but we have to take some long-term views and some long-term investment for our future and our future generations. One thing today that I look for from a policy perspective and that I see around the world is that long-term view and long-term investments, and they are happening.
Slide four looks at the Canadian policy. I pulled some statistics from HSBC. In our business in manufacturing our biggest competitor by far is China. There would be no question that wind manufacturing and the investments in our industry being made by China are staggering. Their ability to come up the curve and be competitive with us on a proven product that has been around for quite a while is happening at a rate that is almost hard to comprehend. So they are throwing billions of dollars at wind, and specific to our industry, small wind. In our industry, it is critically important for us to be able to compete as we go forward.
I will talk mostly about wind manufacturing today. Canada has lots of wind companies, and small wind companies specifically, but what we do not have is a lot of policy specific to small wind. We are doing a little bit better on large wind, and we have seen some of the provinces taking action. We have not seen much yet on the small wind front.
The Chair: What is the difference between small and big? You refer to the Digby installations as big wind. Is that correct?
Mr. Barry: Yes. I included some additional information in the slides, and if you go to the slides in the included attachment you will see a range of wind turbines and where ours fits. Ours is a 50 kilowatt turbine. It would be something that a farmer would put in place or that would service roughly ten average homes in Canada with electricity. It would be used by commercial operations, industrial organizations. It would be used mostly in rural areas.
Remotely, it would be used for wind-diesel hybrid solutions. In India the big play for us is rural electrification. They might put $80 billion around electrifying rurally. They would not build a grid like we have. They would build combined wind-diesel and solar systems to electrify the villages all around India. That is the type of market opportunity that we would be pursuing.
The Chair: You are not in the business of operating these wind farms, you are in the business of manufacturing the infrastructure, the moving parts?
Mr. Barry: We manufacture but we know what we are doing in wind, too. Our business partners in the Seaforth group of companies run, manage, build, develop and operate wind farms. My partners have built and managed from conception the Fermeuse wind farm in Newfoundland, which is one of the highest producing wind farms in the world for Vestas. We understand wind from the big turbines all the way through to our size turbine.
The Chair: We read some article that was given to us by our researchers, I think, saying there is some composition or rare earth — I do not know what it is — used in the mechanism of the turbine.
Mr. Barry: Composites of the blade.
The Chair: Is that causing an issue?
Mr. Barry: Yes.
The Chair: Could you tell us about it?
Mr. Barry: Causing an issue?
The Chair: I am not sure.
Mr. Barry: Sorry. Is that what you said, senator?
The Chair: Yes, I heard there might be an issue or a problem there, but I do not know.
Mr. Barry: If it is, I am not aware of it. We manufacture our own blades here in Nova Scotia, and we do use a composite material, but it would be a very "common" set of composites and if it is environmentally unsafe I am unaware of it. It would be in practise amongst all the blade manufacturers around the world.
The Chair: Yes, it was more I think in the mechanism, not the blade. Senator Dickson is familiar with it.
Mr. Barry: I will go to slide five. In small wind manufacturing specifically what we need to grow is no different from every small Canadian corporation. We need capital. We need R&D support and educational leadership, and we need something of a local market for our products. It does not mean we are sitting here with our hand out and we know things have to be paid for, but something of a local market helps create that virtuous circle of education, R&D and capital so that you can be successful in exporting. That is really what we are looking for. We want to export. We are not looking for dollars from here or from Canada alone. We are looking to export. We understand that is the way to create growth.
Slide six: As I referenced before, we have half of the world's leading small wind manufacturers right here in Canada, which is quite a statement. We have what I will call a tenuous supply of capital. Most of us in Canada have resourced capital from outside. We have been successful in Nova Scotia primarily in raising capital. One of our competitor companies but friends in Western Canada has raised a reasonable amount of equity. However, it has been a tough go for any of the small wind manufacturers in terms of raising capital.
We have excellent R&D support in Canada, and we believe all the programs have helped us. We have been able to leverage much of them, and I would encourage the government to continue that type of support. What we do not have, as I said before, is a strong local market for our turbine. I am proud to say that Nova Scotia with its COMFIT and community based feed-in tariff, which I know you have heard about several times today, is the leading example of a province taking a leadership position to help one of its own, to help grow the small wind industry and to create some capacity in wind, which is a resource that Nova Scotia wants to leverage. We certainly hope that program will help our organization and help the small wind industry to grow.
There is an initiative that has been put forward by CanWEA, the Canadian Wind Energy Association, in an August submission to the federal budget committee on the remote northern wind initiative. I draw your attention to this program because it is a good one that, in my view, will help us export, plain and simple. A program like that helps us to create the combined wind, diesel, and solar hybrid systems that we can sell around the world to places like India and others with rural electrification programs. That would be our primary interest in it.
I will flip over to slide seven and Seaforth Energy and what we are doing. We have deployed a lot of projects in Atlantic Canada and taken a leadership role in many of them. We have put forward some of the largest and most innovative solar thermal projects right here in Nova Scotia. We are proud of what we have done and people from all over the world want to see us and talk to us about those projects. We are working on R&D. We work with Dalhousie University here. We work with the University of Waterloo. We are an Industrial Research Assistance Program, IRAP, recipient. We certainly take advantage of the SR&ED tax credits. We are doing an NSERC grant. We do a lot of R&D. We are hiring. We hire young students and luckily for us they love to come and work for us. On the point about having senators talk to younger generations, that is one group to which we seem to be strongly appealing.
I am happy to say, Senator Mitchell, we are able to pay a lot less to stop them from going out West to work in the oil patch. We are lucky.
We export most of our products. They go outside and that is what we like and what we want to continue to do. Our product is uniquely Canadian. You can see from my list that the content of our product comes from across the country. I can say that in comparison to any other manufacturer in the world, and even our competitors in Canada, no manufacturer has the Canadian content that we do, plain and simple. On the one hand, it is great and we are proud about it. On the other hand, with countries like China coming up we really need to get productivity levels up and we have to watch our costs like a hawk to stay competitive.
I might add on slide eight a comment on the Atlantic Region. I know you heard from the premier this morning and probably lots of folks talking about the Atlantic Region. As far as I am concerned, and this is probably a more personal comment than professional, the advent and potential of Lower Churchill coming online, combined with wind power constitutes a huge long term, critically important initiative, not only to foster renewable energy but to create energy security and sustainability for our region. If this committee has any influence, I strongly recommend that you influence that policy and do all you can to see that come to fruition. I believe that would be an absolutely critical piece of infrastructure to put into place for, not just Newfoundland and Nova Scotia, but the whole region.
Nova Scotia, as I said before, is investing. They have taken a leap. They are investing in their long-term energy security. They are making the transition now. They are putting programs and policies in place to support the transition to renewable energy. I am proud of what Nova Scotia is doing, and they are taking a leadership position everywhere.
I would like to comment to our friends in New Brunswick and to the Senate committee on the national level, because this is a national issue as well as a provincial issue, that Point Lepreau and some of the other issues endemic to generating in New Brunswick and the debt crisis that plant is creating and the projection of that debt crisis onto our future generations is scary to me. It is scary for my kids. I would ask you to do something because that is a crisis that is absolutely unequivocal. It is coming like a freight train. They are propagating forward a set of costs that have to be borne by somebody, and it will be borne by the future.
I will close with a couple of comments on policy. If I could give you one policy recommendation, and I know from Senator Neufeld's comments, in particular, that everyone has a hand out looking for money and there is only so much to go around. The one thing that we have seen make the biggest difference in the countries where we are most successful is feed-in tariffs. Help the provinces, be it Alberta, Newfoundland or Quebec, with feed-in tariffs in the areas that they want to focus on. Whether that is wind, geothermal or whatever it happens to be, I think that would be the single, most potent policy you could put in place to help in the adoption and transition towards renewable energy. Aside from that, the R&D programs that the government has are excellent. I love the support and I would say keep going. A program like the Canadian Innovation and Commercialization Program is the right idea, even though we were not successful. I do not like the way we were evaluated, but I still say the concept is sound. Getting the federal government to use its money to buy products and services created by Canadian companies is the right idea. We already talked about the NoRWIP.
Thank you for taking the time to listen to us today.
Mr. Pulsifer: Mr. Chair, you and your esteemed colleagues have been very patient with all of this today and congratulations should be offered in that area as well.
I come to you as a layman. I own a farm in the Musquodoboit Valley about an hour from here. I inherited it almost by mistake so the learning curve to become a farmer from a communications business where I was is almost straight up, and there are many rungs that I have not achieved yet. Having said that, I am very impressed with the grass fuel pellet initiative, which is now in its third year of a process of developing an entire new industry in the Maritime area, Atlantic Canada and beyond. We believe the grass fuel pellet initiative is one of the quickest, easiest, most cost effective ways to reduce fossil fuel usage for space heating.
We tried to put together a two-page flier which in two minutes or less than three minutes reading would give you the who, why, what, where, when of our objectives. I refer you to the back page, three milestone destinations. They are simplified as follows: One, we must have owners of unused fields actively growing. Two, we must have quality manufacturers and they must be able to grow and thrive as time goes on, and, three, we must have customers who believe in the product and who feel comfortable with it. Those three elements have to rise in unison, not one and then two and then three, to lift off at the same time.
I became involved in this endeavour because of a very simple thing. I have a wood lot of several hundred acres. I came to find that pay day for my wood lot was every 40 to 50 years. At 75 that takes on new meaning. Then I looked at grass fuel pellets and a small pay day, but a pay day, occurs every year. I do not know about the other parts of Canada but I have never heard of a grass failure in the Maritime area. So it impressed me that we should pursue that further.
What is the capacity? I will quote you a figure which I believe has been compiled by the Province of Nova Scotia, so we might as well stay with similar figures. They indicate that about 40,000 hectares of run down fields in Nova Scotia are available, which, if they were in grass fuel production, would have no bearing on the cost of food whatsoever. Bear in mind, these fields are now sitting there doing absolutely nothing, earning their owners not one cent. They are not even helping to pay taxes. There is a tremendous resource that we see that can be brought together.
What does 40,000 hectares represent? I am still back in the prehistoric times at acres, but if we multiply by 2.2 it will wind up at approximately 88,000 acres. This industry, for several years, has pretty much been unanimous in the proposition that a two acre field should heat an average home for a year. If that were the case, we would put two into 88,000 and wind up with the full potential, if it were developed to the ultimate, of heating 44,000 medium-sized square footage homes a year.
This product is as perpetual as you can get. I have never heard of a grass failure. I have heard of problems with bugs in my forest lands and fires and I do not know what, but we think this has a tremendous capacity, particularly for rural areas where these farms, our farms, many of them, are slowly going downhill. That is a tragedy. It has to be stopped at some point in time, and we see the grass fuel pellet initiative as a message of hope for a lot of farms in the Maritimes and way beyond Maritime and Atlantic Canadian borders.
If you look at the development that could occur in just about every rural community where there is very little income and very little employment, it is a message of hope for all of us. That is why we are here before you today, sir.
The Chair: Can you just describe this pellet and how it is made up? Is it just lumps of grass? What is it?
Mr. Pulsifer: Yes, basically. I will answer your question in a bit of a roundabout way.
On April 23, 2009 we put on a one-day seminar on growing grass for fuel pellets. We assigned 50 chairs feeling that that was more than adequate for the meeting. This was in Truro, Nova Scotia, an hour north of here. To our surprise over 130 people showed up and they spent the whole day talking about making something like this. It looks similar to a wood pellet, but it has different burn characteristics. Perhaps one of the more helpful things I could do is introduce my two colleagues, Mr. Andrew McCabe and Mr. Harold Swanson, who have spent years of their lives and a lot of their personal income and wealth in developing the machinery and the combustion systems that work specifically with grass fuel pellets, and that has been a labour of love. I hope that they will be eventually honoured in some museum for the wonderful public-spirited work that did, and these are the two gentlemen. I hope you will question them as you see fit a little later on.
In any event, we are privileged to talk about this because we have had a lot of trouble getting profile. This is not a glamorous subject, grass fuel pellets, for some reason, but it has a lot to be said for it. It can create new employment, obviously, it can create long-term employment. It can increase farmer and land owner cash income. It can restore land presently doing nothing. I digress for a moment to tell you about one field that I have, and those of you familiar with fields know that goldenrod is not a wonderful product. It is a weed. We found with my outstanding crop of goldenrod, we could make fuel pellets, and they are just fine. They are not perfect, but they are still very good.
The Chair: Do goldenrod fuel pellets give you hay fever or anything?
Mr. Pulsifer: No, not after it is pelletized.
The Chair: Did you bring any of these pellets with you?
Mr. Pulsifer: No, I did not. I should have brought some. I guess we have been staring at them so long that we assume everybody has seen them.
The Chair: I am curious.
Mr. Pulsifer: It is about the size of this pencil, about an inch long and light brown in colour. Folks confuse this and say, "Grass do you smoke that?" Yes, you do smoke it but you smoke it in your furnace. It has been an interesting product to bring on line. We see the tremendous possibilities that this product has to replace imported fuel, to strengthen Nova Scotia's buy local movement, to help increase economic activity in declining rural areas, and to offer new Canadian made combustion systems, not just in the Maritimes, but also this same technology that these gentlemen have innovated with and invented and produced — furnaces are in operation, some of them now for three years — has application right across the country, and indeed possibly in the U.S. as well.
Cornell University has done a lot of studies on grass fuel. Yet they themselves have not discovered, to the best of my knowledge, what these gentlemen discovered several years ago. This is technology that they do not seem to know about or if they do know it they are not much caring. There is a huge area out there that we need to look at, and it is not simply Nova Scotia of which I am speaking.
This is an industry that is at a point of launch which is most exciting. Why am I mentioning that? The launch is not going exactly swimmingly and the reason is very simple. As you know a helicopter or any aircraft uses a lot of energy to get airborne. Once it is airborne, it uses far less energy. That is what is happening with this industry, and why we are here today delivering our message of hope. We are not here looking for huge amounts of money, but we do know that government has to be involved.
Not many years ago I was working in marketing and communications with a client who was attempting to put a $40 million project together. They were working with banks from Toronto and American cities and so on, and they were having trouble because the banks almost universally, usually in the first meeting said, "Where is government support of this initiative?" That lack of support sends a message to the banks that says, "Oh, I am not sure we should be involved with this." It is a strange anomaly but that seems to be what happens. That same thing is occurring here.
Government can help. Among the ways government can help is to offer short-term incentives for people to take on this new burn system. Bear in mind that no one will buy a furnace if they are not sure there will be fuel by which to heat. It is a chicken and egg proposition, and part of that can be overcome by governments, with some of their public buildings taking on grass fuel burning. We were very close to that position a year or so ago but somehow it got stamped on at the eleventh hour. We have been up to the altar several times but we just have not quite got to the "I do." yet. That will come, but it can come a lot faster if government is interested and approving of this new industry.
That is about all I can tell you. We think it has a tremendous future. These gentlemen have done a superb job of putting new technology and innovation to use. If you wish to question them, please do because they have the experience that I do not with hands on from day one. We will take questions as you wish.
Senator Brown: Mr. Cartmill what are the materials in your LED lights, and are there any trace metals?
Mr. Cartmill: There are not. The semi-conductors and LEDs are made out of rare earths. The gallium and things like that are a different type than what we are using. The body is all aluminium and the metal clamps are stainless, 316 stainless, and the printed circuit boards are all aluminium as well.
Senator Brown: Is the outside not glass?
Mr. Cartmill: The outside is an acrylic, the lens part of it.
Senator Brown: How old is your company?
Mr. Cartmill: This one is, well I started it, I bought the building in 2002 and C-Vision and LED are combined into one now. I built the electronics business and when I accessed research money we started the LED business which was 2007 and in January of this year — it makes no sense to have two audited statements given the costs — we put the two of them together, so really nine years.
Senator Brown: How do you say that your product will have a life of 20 years if you have not actually produced for that long?
Mr. Cartmill: There is an internationally accepted reliability standard called SR332. You provide an independent lab, and in our case it is a company called T-Cubed in California. If you go on their website you will see every major company in the world listed there - GM, Phillips, GE. There is an accepted process for measuring the temperature of components at certain distances from your product and also looking at the life of components. The commercial drivers have a commercial capacitor that has a life of 28,000 hours. We use aircraft grade that has a life expectancy of 110,000 hours, so the 20 year life would be around 80,000 hours. Everything we are doing is top quality aircraft, automotive grade, and if you get a chance to put your hand on that fixture it is so cool. The thing with LEDs, the cooler you drive them, the more efficient they are. We have definitely the coolest fixture in the world.
Senator Brown: I am actually familiar with LED lights. I just wanted to know where you were coming from with the 20-year expectancy.
I have a question for the gentleman who has the grass pellets. It is nice to talk to people who are producing products and not just hurling harsh words at us. We had a few of those a little while ago.
You said two acres could heat a home for a year. I wanted to know about the transportation part. What would that volume weigh?
Harold Swanson, President, LST Energy Limited: The pellets are made the same as wood pellets.
Mr. Swanson: It is delivered by a vacuum truck. I have one heating an apartment in Pictou, a three-bedroom, two unit apartment, for $300 a month. It was costing me $900 a month for oil last winter. This winter it would be more if it was still on oil.
Senator Brown: What I was getting at was can you tell me the volume or the weight or both?
Mr. Swanson: A tonne of hay comes out a tonne of pellets when it is off the field, after it comes through the machine.
Andrew McCabe, Owner, SOBENCO Engineering: Just to take your question a little further, your density of processed fuel is about 40 pounds a cubic foot. Two to 2.2 tonnes of pellets are equivalent to a thousand litres of heating oil.
Senator Brown: That would do a home for how long?
Mr. McCabe: If you look at a typical 4,000 litre heating season, you are looking at eight to nine tonnes.
Senator Brown: Would it be possible to burn it in a wood stove?
Mr. Swanson: It cost me two-thirds less than oil. It cost me less than two-thirds heating with oil, and my dream with this is to get farmers back to work. Rural Nova Scotia is going in to an awful decline — young people leaving the farms, moving out West and all this hay going to waste and it is in our own backyard.
Senator Neufeld: Mr. Barry, you say the smallest windmill you make is 50 kilowatt; is that correct?
Mr. Barry: Yes.
Senator Neufeld: What would it cost be to buy a 50 kilowatt and set it up?
Mr. Barry: The rough installed cost, and I will make it specific to Nova Scotia, though generally speaking, we are installing them in Saskatoon and Regina right now — is $275,000 to $300,000. Of that, $175,000 would be the manufactured turbine plus the tower. If you have your 80 per cent of Canadian content in the manufactured product from that, $100,000 would be what I would call local. That would be your local foundation, excavating, geotechnical engineers, your electrical contractors. Roughly one third of the installation would be done by local contracting. I contrast that specifically with large wind manufacturers, which bring most of their expertise from away. You do not see anywhere near the degree of local capability, capacity, and content when the big wind guys come in that you do from a small wind side.
Senator Neufeld: With regard to your one wish to convince provinces to have feed-in tariffs, I put one in British Columbia that, as long as it is green, under 10 megawatts, you can tie in. That is the last negotiated price. That has been there for a while.
Mr. Pulsifer, you referred to far lower greenhouse gas emissions. Far lower than what?
Mr. Pulsifer: Pretty well any fossil fuel, but again I would defer to these gentlemen because they will also have views on this.
Mr. Swanson: You get 1.2 particle emissions per hour off hay. I have an oil furnace on one end of the apartment, and a hay furnace on the other. When you look at the chimney from the hay furnace you cannot see anything in the air. When the oil furnace kicks on you know it is running. You can see it. EPA standard is 5.7 particles emission. An outdoor wood stove is way up there. It is around 47 to 50. It is environment neutral. No carbon comes off it.
Senator Neufeld: Mr. Cartmill, LED lights are great. I love them. I have some at home. It is just that they are so expensive for a homeowner. I looked at putting a yard light on my garage a while ago. I forget the wattage, it was not very big, but the price was $175 a bulb. It is tough to buy them at that rate. They are cool, they shed a good light, it is a great product. When do you think the price will come down?
Mr. Cartmill: Twenty years. You need people who can appreciate life cycle costing. Prices are dropping. I have another company that represents every lighting product Phillips Lighting makes, the largest company in the world. Last month they released a binder full of new LED products, and the pricing has come down substantially. I think we are starting to hit a bottom, but you know it is all relative to your energy rates. In places like Nunavut they are paying $0.50 a kilowatt. The estimate I showed of $8.5 billion in Canada is based on a 10-cent kilowatt rating.
When you travel abroad they know you are going to get help at home. The main point I would like to make — I heard it here earlier from the clean energy coalition — is with regard to the big question, "What have you done at home?" Federally we have received no support, nothing for LED technology. It pays back. Federally we are seeing American products less superior. This company that I talked about has an energy saving that is 28 per cent less than ours but they are being specified on federal projects. We have a mechanically better product, better looking product, better energy efficiency, and yet we cannot even go in and bid any of their federal jobs. Part of the reason is that we are relatively new, and people in the bureaucracy will never take a chance. It is their life, their livelihood, and I understand that and that is why we need policy. After you have a proven pilot we need policy that will support the bureaucrats in order to adopt the technology. Fortunately, we are getting that here in the province of Nova Scotia, on our product at least.
Senator Neufeld: That is good and I know that Fort St. John, my home town, is using it. You cannot get anything moving in Ottawa, but in the rest of the country I think we can.
Mr. Cartmill: Red Deer has put out a tender on our exclusive technology for 500 and they are going to convert.
Senator Lang: I direct my question to Mr. McCabe, or at least one of the three in respect to the grass pellets. Can these pellets be utilized in the pellet stoves that are made today?
Mr. McCabe: Generally speaking, the free-standing pellet stove market in North America has been designed around wood pellet industry. The wood pellet industry has significantly less ash properties. The grass pellet industry does require a specific appliance geared towards being able to handle the ash issues.
Senator Lang: Just following up on that then, the present wood pellet stove as we know it today has to be converted in order to burn these pellets?
Mr. McCabe: Let us say 90 per cent of them would not be successful in burning pellets. Ten per cent of them would be somewhat successful, but you would not generally convert. Taking it a little further, the grass pellet industry I think as we are looking at it is more towards commercial application.
Senator Lang: You are talking a large incinerator or a pellet stove?
Mr. McCabe: More commercial than residential I guess is a better way of putting it. Something that has a boiler application,
Senator Lang: It sounds to me like you have to organize with the province to convert one or two public buildings to prove that in a two-year period what it can do to be able to say to other purchasers, whether it be the federal government or the municipalities, that this would be worthwhile.
Mr. Swanson: Our furnace is in the Department of Agriculture in Truro, the engineering building. I has been two years and they are very pleased with the way it performed. They are building a new innovation building in Truro and they are asking us to tender on the furnace for their building.
Senator Lang: Going back to the pellet and how you make it, what do you use? Is it a large generator that you put the grass in to convert it to these pellets?
Mr. Swanson: The pellet industry is not new. The pellet industry was originally developed for the feed industry, and it was then adapted to produce fuel for the wood industry. It does not matter if it is wood, grass or whatever. To pelletize it you break it down into a small homogeneous particle, something that has gone through a three or four millimetre sieve in a hammer mill. It has to have the right moisture content. It is basically put into a press where it is extruded under pressure through a multi-holed die, and as it cools the natural binding particles within the hay will then set so it holds its shape. It is not rocket science. It is not sexy to say the least. It is pretty low tech and in all honesty is probably one of the reasons it does not get a lot of exposure. It is basic. To reiterate what Mr. Pulsifer was saying, the real simple part of it is that it is home-grown fuel. Within a small community the raw product is grown. It can be processed and it can be consumed within a 50- or 100-mile radius. When you look at that 40,000 hectares or the equivalent of the 40,000 homes, if we use a real dollar-a-litre retail price, that is $160 million that has stayed within the individual community. If the product was the equivalent price to oil it would still be a benefit to Canada. It would still be a benefit to communities because the money stays here.
Mr. Pulsifer: The machinery these two gentlemen have invented is not exactly identical. One may be tailored a little more to one market. Another may be tailored a little more to another market. But you have a situation where you can cover off. What these two gentlemen have done will cover off urban domestic, rural domestic, commercial in both areas, so there are configurations that allow this to have a very wide exposure among potential users.
Senator Mitchell: Mr. Barry, it is remarkable that you compete with China given some of their competitive advantages. How do you do that? What is the key? Is it the transportation differential?
Mr. Barry: We are just better. Our turbines have been around quite a long time. Actually it originated in the National Renewable Energy Laboratory in the U.S., if you go all the way back to the 1970s and the first oil crisis. Anyway, it has been through multiple iterations. We in Nova Scotia came to the technology in a round-about way through two of our founding engineers who cut their teeth on a lot of dollars over the last 15 years in the wind energy industry.
It is because of longevity and the way it is constructed. We lovingly call it a farm tractor, and the original design spec. is still used. Because ours has run for so long for so many years under so many hours it is hard for a new product to come up and unseat us. A new one, generally speaking, will have problems. These are like cars. It takes seven years to develop a car because you do not know what will happen to it over time. The turbine is running literally millions and millions of miles when it is spinning. You can only test it through time and that is our advantage.
On my point about cost structure, we cannot be sitting on our laurels hoping that our productivity or our sales will go up enough to be able to compete on a steady basis with China. They are just coming too fast and their cost structures are too low. We have to be able to make some here and make some there and at least get to an average cost structure that makes sense.
Senator Mitchell: You mentioned the importance of being able to export and one of your points was that you need to have some local market to build the economy of scale or at least to perfect the product. What is the value of the Canadian dollar doing to you now? How big a problem is that?
Mr. Barry: Because our content is Canadian it is actually hurting us. Some of our competitors who are also Canadian but source products in Germany or China have an advantage because they are buying with a stronger Canadian dollar. For us it is actually hurting for sure.
Senator Mitchell: If a government accepted what you were saying about feed-in tariffs, how much do they need to be per kilowatt hour to give your industry the boost it needs and how much in total do you think that program would cost annually?
Mr. Barry: I will give a specific example. In Nova Scotia, the rate just came out as we were talking about it. It is $449 per megawatt hour. That is community based, assumes communities will participate, and it is harder for them to raise financing, et cetera. It is also based on what I would say is the inherent cost structure we have in the small wind industry, because we have not been able to hit any sort of economy of scale.
What is it today? It will be in that range if you want to foster development, adoption, et cetera. It would be competitive, as Mr. Cartmill was saying, in remote communities where you have the high cost structure such as where diesel is your primary kilowatt hour contributor. What do we think it can get down to? We can half it. The cost structure in China is less than half of what we are.
Senator Mitchell: What is it per kilowatt hour now?
Mr. Barry: The feed-in tariff in Nova Scotia will be $449 per megawatt hour, $0.44.9 per kilowatt hour. The cost is spread across the rate base. The cost to the rate base in Nova Scotia is capped at five megawatts. The cost to our rate base will be measured in three digits of .0012, if I remember it correctly, per kilowatt hour once fully deployed.
Senator Neufeld: What is the life of one of your windmills? You said it goes millions and millions of miles, so are we talking five years, 10 years, 30 years?
Mr. Barry: Thirty-year design life. We have some that are coming up on 20 years.
Senator Neufeld: It is like nuclear.
Mr. Barry: It is a long design life. If you take care of them it is like anything. It is a moving machine. People sometimes think you can put them up and say "Hey great, I have a turbine,." but it does not work that way. It is like your car. You have to check it out, oil it, make sure the brakes are still working.
The Chair: Gentlemen, I thank you. We were very interested in what each of you had to say. We all want shares in your respective businesses and we wish you good luck in developing them.
Colleagues, we welcome as our next witnesses from Fisheries and Oceans Canada, Kenneth Lee, Executive Committee Co-Chair, Fundy Energy Research Network, Executive Director for Offshore Oil Gas and Energy Research, and from Fundy Ocean Research Centre for Energy (FORCE), I see Mr. John Woods, Chair of Board of Directors, and Doug Keefe, Executive Director, and from Atlantis Resources Corporation, Joseph Fison, Director of Corporate Development.
Kenneth Lee, Executive Committee Co-Chair, Fundy Energy Research Network (FERN); Executive Director, Centre for Offshore Oil Gas and Energy Research (COOGER), Fisheries and Oceans Canada: I am the executive director of the Centre for Offshore Oil Gas and Energy Research, a national centre of expertise within Fisheries and Oceans Canada. I am here today in my capacity of committee co-chair of the Fundy Energy Network. My involvement in the Fundy Energy Network is born out of my role of executive director of the Centre for Offshore Oil Gas and Energy Research.
Fisheries and Oceans established the Centre for Offshore Oil Gas and Environmental Research in 2002 to coordinate the department's nationwide research into the environmental and oceanographic impacts of offshore petroleum exploration, production and transportation. With increased interest in emerging technological developments, the mandate of the centre was expanded in 2009 to include ocean renewable energy, i.e. conversion, energy conversion from tide, wind and waves.
Renamed the Centre of Offshore Oil Gas and Energy Research with a secretary office based at the Bedford Institute of Oceanography, the centre seeks to improve scientific knowledge, identify priority research needs, coordinate and implement collaborative research efforts to improve the quality of science and minimize research duplication by fostering collaborations with other government research agencies, universities and industry partners.
Due to recent renewed interest in tidal power within the Bay of Fundy by federal, provincial and state agencies, the demonstration and evaluation of in-tidal stream energy technologies is now underway. Multi-disciplinary studies are now supported by Canada's Clean Energy Fund, Fisheries and Oceans Canada, Natural Resources Canada through the ecoENERGY Technology Initiative, the Nova Scotia provincial government through the Offshore Energy Environmental Research, and offshore energy technical research associations and industry such as the Fundy Ocean Research Centre for Energy, which you will hear following me.
In 2008, the Bay of Fundy Tidal Energy Strategic Environmental Assessment was completed, which identified a number of environmental issues related to marine energy extraction that needed to be resolved through research and monitoring. In order to address those issues, the assessment recommended the creation of Fundy Tidal Energy Research Committee to coordinate efforts to address environmental and technological challenges of tidal energy developments in the Bay of Fundy.
There is recognition of the need for an objective, coordinated and collaborative research approach to address the significant ecological, socioeconomic and engineering uncertainties and challenges associated with tidal energy activities in the Bay of Fundy. The concept of the Fundy Energy Research Network was established at a tidal energy research priorities workshop held at the Bedford Institute of Oceanography in October, 2008, at which time a steering committee was formed with members of academia and the government research sector.
Under its terms of reference, the main roles and functions of the network are: to identify and provide guidance on emerging and priority issues related to tidal energy proposals and developments, facilitate research collaboration and information exchange among government scientists, academia and tidal energy developers; to address environmental, socioeconomic and engineering issues and challenges, enable the creation of research teams capable of obtaining funding to support collaborative research and the training of the next generation of highly qualified people; to enhance communication and cooperation among those involved in tidal energy research and development; to develop and maintain productive relationships with regional, national and international groups involved in tidal energy research; and to communicate information and research progress through meetings, seminars, conferences, reports, the network's website and other forms of public presentation.
The membership of this network is free and it is open to all researchers involved in tidal energy research including but not limited to universities and colleges, federal agencies, provincial agencies, environmental non-governmental organizations, consultants and private sector interests. The benefits include access to the network's registry of experts, research activities, project database and an information library. There are also email updates on activities related to tidal energy research in the Bay of Fundy. Of course, there is research collaboration, communication and information and sharing of support services. Opportunities contribute to development and direction of activities that advance tidal energy research, increase regional research capacity and inform both tidal energy developers and regulators.
The Fundy Energy Research Network currently employs one full time staff member and is governed by an executive committee comprised of Dr. Anna Redden, who is the Director of the Acadia Centre for Estuarine Research, Acadia University. We have targeted subcommittees comprised of members of the academic, federal and provincial government, and private sector tidal energy research communities. With focus on the Fundy region, they have been established to direct activities to advance tidal energy research in four areas: hydrodynamics and geophysics, which is led by Dr. Peter Smith, Ocean Science Division, Bedford Institute of Oceanography, Fisheries and Oceans Canada; biological and ecological effects, which is chaired by Dr. Graham Daborn, emeritus professor, Acadia University; engineering challenges, chaired by Dr. Mohamed El-Hawary, professor at the Department of Electrical and Computer Engineering at Dalhousie University; and socio-economics, which has two co-chairs, Dana Morin, President, Fundy Tidal Inc., and Kay Crinean, President, Maritime Tidal Energy Corporation.
The network currently receives operational funding support from Fundy Ocean Energy Research Centre for Energy. The network's office and coordinator are located at Acadia University, which provides both in-kind support for office facilities and administrative assistance.
With the hiring of a coordinator in June, 2010, and the launch of our website in October, 2010, our network is rapidly establishing itself as an independent, impartial, non-profit organization for the objective of fostering Bay of Fundy tidal energy research capacity, collaborations and information exchange.
John Woods, Chair of Board of Directors, Fundy Ocean Research Centre for Energy (FORCE): I am here today as Chair of the Board of FORCE, the Fundy Ocean Research Centre for Energy. Joining me is Doug Keefe, our Executive Director.
On behalf of Doug and myself and the rest of the FORCE board and staff, I would like to thank you for the opportunity for allowing us to speak today. We are happy to join the conversation I know you are having in Ottawa and around the country on how to move towards a cleaner energy supply for the country.
As we understand, we are one small piece of a much larger puzzle. Clean energy means a diverse energy supply with a range of options to balance and complement each other, including hydro, wind, biomass, solar, and our personal favourite, tidal.
During the next few minutes, I would like to provide the committee with a summary of the unique tidal resource here, what FORCE is doing and how Nova Scotia and Canada are well positioned to begin an industry here.
In 2006, a California based study identified the Bay of Fundy as potentially North America's best site to harness tidal energy, both because of its size and its close proximity to the existing grid. About 160 billion tonnes of water flow into the Bay of Fundy each tide, more than four times the combined flow of every freshwater river in the world. Many have heard Fundy has the highest tides in the world, but what is most important in the tidal business is speed. Our site is fast, very fast. Some of the assessment research underway right now suggests that there may be up to 8,000 megawatts of potential energy in the bay. The most recent model suggests 2,000 megawatts can be safely extracted. Those are attractive numbers to a province with a peak demand of around 2,300 megawatts. That demand is mostly met for now with imported fossil fuels, and as this committee understands, that needs to change.
Just as important as our clean energy resource is its proximity to the existing grid. It is close, and that is critical. New transmission infrastructure is expensive. Put our resource and grid together and you have a very compelling location on anyone's list worldwide. How compelling? Let us look at FORCE for a moment and who has come to test their technology here.
FORCE is Canada's test centre for in-stream tidal energy technology. FORCE acts as a catalyst to industry, providing both onshore and submarine transmission cables. FORCE is also a watchdog, providing environmental monitoring to all devices at its test site in the bay. In-stream technology works something like a windmill under water, powered by the movement of the tide.
FORCE's test site in the Minas Passage has attracted four of the most advanced technologies in the world. I have a personal interest in saying that because my company is partnered with one of them. Make no mistake, these are all serious contenders. They are Nova Scotia Power, with its open hydro; Alstom, using Clean Current Power Systems technology; Atlantis, working in partnership with Lockheed Martin and Irving Shipbuilding; Minas Basin Pulp & Power, that is me, with Marine Current Turbines.
All of these partnerships have both Canadian and international content., When Nova Scotia Power deployed its open hydro device at FORCE in 2009, it became the first large scale tidal turbine deployment in North America. The turbine was built in Ireland, the gravity base was built here across the harbour in Dartmouth. They successfully removed their device after a little over a year's experience in the water and they are just beginning to look at the data now. One thing they have stated publicly, the initial resource estimates seem to be low. In fact, they believe it is potentially twice as powerful in the Minas Passage than we originally thought. That may make engineering more challenging, but it also makes the economics of our site much more compelling.
Those economics are not based only on the power of our resource or the calibre of the companies that have invested in the project. There is also the potential to start a tidal industry here at the ground floor. We see this as an enormous opportunity for both Nova Scotia and Canada. We have a world class research community in a province with more post-secondary institutions per capita than any other region in North America.
We also have a world class marine industry here composed of over 300 companies with years of experience supplying and servicing Nova Scotia's offshore oil and gas projects, Cohasset, Sable, and more recently, Deep Panuke. Many of those companies work in the marine energy environment all over the world. Their skills are directly translatable to the tidal industry, and they have already been put to work identifying the site, testing, monitoring the environment, towing equipment, building a gravity base, pioneering new research.
Atlantis will build much of their device here. Alstom will fabricate their device in Quebec using its growing Canadian supply chain, including new suppliers in the Atlantic Provinces. Minas Basin Pulp & Power will fabricate a large portion of our turbine generator right here in Nova Scotia. IT International Telecom, a company based in Quebec and Nova Scotia, will install subsea cables this summer. They will create spin-off work for other operators as they mobilize, transport and install 11 kilometres of cable, a cable that is being fabricated, as I speak, in Italy.
There is significant engineering construction work underway at the onshore site. The observation building is complete. We are now preparing to build a substation and 10 kilometres of overhead transmission line to transport power to the Nova Scotia grid.
Mr. Chair, this is just work on the capital construction side. FORCE is also engaged in significant activity on the environmental monitoring and research side, including collaboration with the offshore energy research associations and the Fundy Energy Research Network, as just described by Dr. Lee. That includes assessing the resource, understanding what effects these devices may have on the environment, and keeping a close eye on the migration patterns of fish and other marine life in the area.
If we can move through the test period with a number of technologies that prove to be both safe and viable, I believe Canada can emerge as a world leader.
That brings me to my last point. We know we have a lot of work to do. This is a new technology. There are still challenges to overcome to ensure we can deliver power reliably, safely and economically. While offshore companies have vast experience working in deep water oil and gas plays, we have a long way to go to develop that same level of expertise in fast running tidal sites, also known as tidal races.
We also know we have the resource, skills and the political will, both from Nova Scotia and Ottawa. It is not just money. Through the Marine Technology Roadmap Exercise, the federal government sees a potential supply chain that flows from the Bay of Fundy right across the country, where up to 80,000 megawatts of tidal power lies in wait for all Canadians.
We have the right incentives. The province has committed to a stakeholder process that will result in a feed-in tariff for tidal energy. The province has set caps on greenhouse gas emissions and has created aggressive renewable energy targets. We have attracted first rate technologies. We have the infrastructure, thanks in large part to support from NRCan's Clean Energy Fund, ACOA, ecoNova Scotia and Encana Corporation.
When FORCE installs the submarine cable this year, we will have a total of 64 megawatts of cable capacity on our test site. That moves Canada to the front of the pack in terms of total capacity worldwide, more than any other tidal test site in the world. Next year as each of the four devices go into the water, that cable will allow them to begin delivering clean, renewable power from the Bay of Fundy directly into Canadian homes, a real project delivering real results.
Mr. Chair and members, on behalf of FORCE and our partners, thank you.
The Chair: Thank you, sir. Are there any other pilots on this research in North America?
Mr. Woods: There is a small one in Maine. Their technology looks like a paddle wheel with U.S. stripes.
The Chair: Right.
Mr. Woods: Looks like that, and it is a small unit.
The Chair: Are you the only game in North America, or anywhere in the world?
Mr. Woods: Correct, but we are cooperating with Maine.
Senator Neufeld: In the world?
The Chair: Are there others in the world?
Mr. Woods: There is one in Northern Scotland, Orkney Islands, in the Scapa Flow area on the Isle of Edie. Actually, we started by modelling theirs and we think that our model and our approach has leapfrogged them. We are ahead of them, we think, on the site.
Senator Neufeld: There is one on the West Coast of British Columbia.
The Chair: That is what I was getting at. There is?
Mr. Woods: I am sorry. Yes, that would be a small unit.
Senator Neufeld: It is a small unit.
Mr. Woods: Yes, of course. Dana Morin was in earlier this morning. It has the same technology as on the East Coast.
Mr. Woods: The Race Rocks camera is going in our site.
Joseph Fison, Director of Corporate Development, Atlantis Resources Corporation: I am delighted to be here with the FORCE team on behalf of Atlantis Resources Corporation embarking on this major tidal energy project for the province and for Canada.
I have got a couple of slides which are amongst the pile of papers you have. I am conscious I am the last speaker at the end of a very long day, so I will keep this brief and to the point.
It is well documented that Canada is blessed with exceptional marine energy resources. In the Bay of Fundy alone, it has been estimated that there are over 5,000 megawatts of tidal current resource. That is enough to power about 5 million Canadian homes.
Tidal opportunities also extend to a number of sites in British Columbia. If even a fraction of this resource is tapped, it represents a very substantial contribution to Canada's energy mix.
Atlantis is one of the world's leading global marine renewables companies with commercial tidal energy projects in Europe and also in Asia. Our focus is on generating reliable, commercially viable power with economics that compare competitively with other renewable technologies. Working with world leading technology company, Lockheed Martin, and province hero, Irving Shipbuilding, we believe that our technology and project experience can meaningfully accelerate the adoption of commercial scale marine power in Canada.
Atlantis has been developing tidal turbines for over a decade now. We have deployment experience in Australia, Asia and in the harsh waters of the Pentland Firth next to the Orkney Islands that we were just talking about. The turbine design that we intend to deploy in the Bay of Fundy next year is the product of this extensive experience in open ocean locations worldwide.
We have designed our AK-1000 turbine to generate one megawatt of predictable power. That is enough to power about 1,000 Canadian homes per turbine. It will be designed to withstand the harsh conditions anticipated to be encountered in the Bay of Fundy and will be completely submerged. Atlantis tidal turbine systems are expected to cause zero harm to the environment and environmental performance and impact will be monitored throughout the duration of the project. Our dedicated environmental assessment team works closely with consenting bodies and stakeholders in all of our key markets, and we have experienced deployments in ecologically sensitive and delicate locations worldwide.
We plan to deploy our device next summer using the maximum amount of local Canadian content. Assembling the device at Irving Shipbuilding's Dartmouth facility, we will transport it by sea to the FORCE facility, where it will be grid connected and energized. By building this local capability today, the province will be well placed to support further development in Canada and beyond.
Adoption of marine power should not only be seen in a domestic context. Nova Scotia has the ability to create a centre for marine power excellence to underpin an export market opportunity to supply turbine systems and technical personnel to the growing international marine power market.
That is a key point. The benefits of tidal energy can stretch well beyond just where the tide is. The creation of a viable marine power industry will create jobs and provide regional economic stimulus, making efficient use of skill sets and competencies in the province.
As we progress beyond trial deployments and towards commercial arrays, a major local supply chain will be required to support developers such as us. Benefiting from experience in economies of scale, the industry has the potential to serve markets across the Americas and beyond. Of course, this requires the right policy signals and the Nova Scotia government has been forthright in its support to date of a suitable feed-in tariff for tidal energy that sends the right long term signals to companies contemplating investment in the region.
I would like to conclude with a view of what has been achieved elsewhere and what Canada may look forward to with the right policy support. Atlantis currently has two major commercial projects under development, totalling about 600 megawatts of commercial tidal energy. In the Pentland Firth in the north of Scotland, Atlantis' major end project is the world's largest at 400 megawatts. Construction is due to commence in early 2013, less than three years after the development of the first AK-1000 turbine in Scotland last August.
In Gujarat, India, the Mundra Project is Asia's largest at 250 megawatts, conducted at the behest of the state electricity utility. Construction is due to commence in 2012, with Atlantis as exclusive supplier of turbines, just two years after Atlantis began investigating tidal resource in the region.
Backed by major utilities in their respective markets and underpinned by long term feed-in tariff mechanisms, these projects will bring predictable, renewable power to hundreds of thousands of homes in the UK and in India. Together with our partners, Lockheed Martin and Irving Shipbuilding, and with the right government support, we firmly believe that Canada can be next.
The Chair: Dr. Lee, you are the federal government research facility that works as part of the federal government in the Bedford Institute?
Mr. Lee: That is correct. I am with the Department of Fisheries and Oceans as a research scientist.
The Chair: Are you all involved in the same endeavour or are you all working independently of each other?
Mr. Lee: No, the idea with our group, with FERN, our energy network, is to bring together industry, private sector and government scientists to express our concerns about the energy, to look at the challenges and try to work together to foster collaborations with a common goal of resolving issues, environmental issues, and moving the industry forward.
Doug Keefe, Executive Director, Fundy Ocean Research Centre for Energy (FORCE): FORCE started life by purchasing $400,000 worth of sea floor data from the Bedford Institute of Oceanography that allowed us to locate the site in the Minas Passage. The model of FORCE is one of "coopetition." There are four technologies working together. Its goal is to reduce risk by sharing information. We share all the common information. The proprietary information, of course, stays with the technologies.
The Chair: Your organization, you Mr. Woods and Mr. Keefe, are independent of each other in terms of ownership and so forth? I am trying to get a sense, because you have FORCE in your literature and you are FORCE. I understand Dr. Lee's role.
Mr. Keefe: I am with Minas Basin Pulp & Power. We make brown paper out of recycled cardboard. We have got a paper company now moving into tidal energy. We are sponsoring one of the technologies.
The Chair: You would be a user if it works out.
Mr. Keefe: Correct.
Mr. Woods: Perhaps I could explain the corporate structure of FORCE.
The Chair: That would be helpful.
Mr. Woods: FORCE is a company limited by guarantee. It is a not-for-profit public purpose private company. It is an incorporated company under the Companies Act of Nova Scotia. A company limited by guarantee, instead of issuing shares, has members, so it is really like a co-op. The reason that we opted for that structure is that we would have the berth holders, the four that you have heard of, as members of the company but on the day that they complete their demonstration and move on, we did not want them holding equity in the company; they should go, they should not actually own the real estate, nor should they be allowed to play a dog in the manger role of trying to keep competitors out. They are only members as long as they have an entitlement which is granted by the province to demonstrate a turbine there. The only permanent member in FORCE is the province itself. At the end, when FORCE has done its work and it is wound up, its assets would be similar to a charitable trust and would be given to a like-minded organization, perhaps a scientific research body.
The Chair: You are competing technologies sharing info and data. Will one ultimately win out and be the operator? I am trying to get to the conclusion.
Mr. Woods: No, in a perfect world all four prove to be successful, and then the province now has a choice of opening the further development and allowing these technologies to compete against one another.
The Chair: I see the map here on Atlantis, and I did have a lot to do at one time with Shelburne Ship Repair. It was a facility that was more or less out of business. Did you folks acquire it to have as your base? Is that how it works?
Mr. Fison: We are looking at using Shelburne as a support facility for operations and maintenance as we transport equipment to the site. We see that as a great opportunity, among many others, to regenerate the local economy in a way that is consistent with our commercial goals.
Senator Lang: Mr. Woods, you said in your opening comments that research underway right now suggests there may be up to 8,000 megawatts of potential energy in the bay and the most recent model suggests 2,000 megawatts that could be extracted safely. Further on we talk about the prospect of 80,000 megawatts of tidal power.
Mr. Keefe: The Nova Scotia project got underway with a California based study done by EPRI. Subsequent to Nova Scotia getting underway with ours, NRCan then did a national look at marine energy, both wave and tide. That subsequent work is referred to in the 80,000 megawatts, and a significant part of that is in the Hudson Bay because they have high tides, as well, lots of water moving in and out. Of course, the balance would be on the West Coast. Between the three oceans, I guess, and our coast, it would be 80,000. Those are the NRCan estimates.
Senator Lang: So for the purpose of our discussion on the Bay of Fundy, we are speaking of 8,000 megawatts possibility?
Mr. Keefe: Correct.
Senator Lang: With 2,000 safely extracted at this time with your knowledge of the technology?
Mr. Keefe: Right. The two models we referred to, one is owned by National Research Council of Ottawa, the other one is owned by Acadia University here in Nova Scotia. It is the Acadia model that is suggesting 2,000 megawatts.
Senator Lang: My understanding is that just under $40 million has been invested between industry and the two levels of government. Is that correct?
Mr. Keefe: Our FORCE project at the moment is about $30 million in common demonstrations, so building the cables, the transmission. Another $70 million from the technologies.
Senator Lang: Do we have a total up to this point?
Mr. Keefe: If we had a PowerPoint slide, it would show the project now stands at $102 million.
Senator Lang: That includes private investment as well?
Mr. Keefe: Correct. All in, everybody's contributions.
Senator Lang: It is time we got a megawatt out of this quickly.
Mr. Keefe: That is what we intend to do.
Senator McCoy: I have a real curiosity. There is picture in the lower right hand corner on the monitoring and research page. There is no number. I do not know what that is.
Mr. Keefe: That would be an example of bathymetry. Bathymetry is a sonar system. This shows sand deposits on the floor of the Bay of Fundy, just like a desert; because there is so much energy, it scoops the sediment off the bottom and in some cases it deposits it just like a sand dune, and that is what you are seeing there.
Senator McCoy: What is the purpose of that?
Mr. Keefe: It shows that we cannot put turbines there. We need bedrock. It is also an example of what the technology has allowed us to do in the last few years, which you could never do before.
Senator McCoy: You could not map that out before?
Mr. Keefe: They have been doing it, I think, since 1965. Maybe Mr. Lee would be a better speaker, but we have raised the bar and spent more money on it with the Bedford Institute's assistance.
Mr. Lee: National Resources Canada has done some of this work characterizing the bottom to make sure that if they are putting anything down there they are working on a stable platform. It is for safety of the operations as well as the efficiency of the operation.
The other area that we are quite interested in is looking at sediment transport within the water column because as you take energy out of the Bay of Fundy, you can change the sediment characteristics, so you may have sedimentation in different areas of the bay. We are not only looking at what is happening today with the pilot programs, but trying to predict what would happen in the future if we actually went into a commercial scale operation. We are looking at those long-term future environmental impacts.
Senator McCoy: You have four turbines, basically, on test or about to be deployed? You have pictures of those, and they all look a little different. Are they commercial size?
Mr. Keefe: The technologies are shown on four different slides. The first one would be Alstom. Do you see that one?
Senator McCoy: I have Nova Scotia Power first.
Mr. Keefe: Let us find that one, then.
Senator McCoy: This is the one that came from Ireland?
Mr. Keefe: Correct.
Senator McCoy: Yes, I blogged on that a few years ago.
Mr. Keefe: That has a name plate rating of one megawatt. If you go to the next unit, the Alstom unit, and that is the Clean Current technology out of British Columbia; that is one megawatt as well. The next one is the Atlantis unit, rated at one megawatt as well. The next one, the Marine Current Turbine, that is over two megawatts, on its way to three megawatts.
Senator McCoy: Is that the size that you would be using? Would you be using a number of them if you went commercial in the Bay of Fundy, for example? You could not have 2,000 of them down there.
Mr. Keefe: If you use that one, yes, it would be like that. There are a number of sites in the Bay of Fundy.
Senator McCoy: You could have 2,000 of these?
Mr. Keefe: Or 1,000 units that are two megawatts apiece, or 500 kilowatt units depending on the site. We are in the infancy.
Senator Lang: You do not envision one big unit?
Mr. Keefe: No. You would envision fields of them, much like wind farms.
Senator McCoy: Where is the generator?
Mr. Fison: Depending on which slide you are looking at, the generator is in the centre of the nacelle. You have the blades and then you have the generator in the centre of the device. Very similar to a wind turbine in terms of how it functions, although there are a number of aspects which are different.
Senator McCoy: That is where your magnetic coil is, et cetera?
Mr. Fison: That is correct.
Senator McCoy: Then you have your cable connecting to the grid.
Mr. Fison: Then you export the power onshore and onto the grid, very much like you would from an offshore wind farm.
Mr. Woods: If you could turn to the Minas Basin Pulp & Power slide with the three routers, it is the same approach. Those blades are flooded. The wind turbine on land is a hollow blade; these are flooded. In our case, the stress on those blades is equivalent to a 400-kilometre an hour wind. You cannot use above ground wind technology below water. It is a different approach.
Senator McCoy: Different fluid mechanics or some such thing.
Mr. Woods: Water is 800 times denser than air.
Senator McCoy: Do you actually anchor them down there?
Mr. Woods: Ours will be pinned to the ocean floor by piles. Others have a gravity base.
Senator McCoy: You talked about bringing them up. Is that just for research purposes or would that be part of the design? You would have a maintenance program and would actually bring them up onshore into the shipyard, or is that getting a little ahead of things?
Mr. Woods: Over the page, you see "Deployment and Recovery"?
Senator McCoy: Yes.
Mr. Woods: The left one is the OpenHydro unit sitting inside a barge with a hole in it. It is like a square donut. They have deployed and recovered that one with this barge on the back of a tug.
Senator McCoy: For what purpose?
Mr. Woods: To service it. In this case, it has been damaged, so it is on its way back to Halifax where they will repair it.
Senator McCoy: That is what would be envisaged, having sort of a deep sea diver go down and do the annual maintenance or whatever?
Mr. Fison: Speaking on behalf of Atlantis, certainly our turbine is designed for "diverless" intervention and a 20-year lifespan with regular maintenance, which can be done without divers.
Senator McCoy: Do you have numbers? I am intrigued by your supply chain reference, for example. Have you built out numbers on that? Do you have that kind of projection that you could share with us or through the clerk?
Mr. Fison: I am sorry. Your question was in terms of number of turbines?
Senator McCoy: No, supply chain basically. I am interested in how this builds out from beyond the device and then you start to get your service industry, your parts industry, et cetera.
Mr. Fison: What we found in India and in the U.K. is that, because tidal turbines are considerably smaller than wind turbines because water is denser than air, you can construct, assemble and transport locally. You do not need to have a special facility many thousands of miles away and ship them by sea. We found that by using local content, it works well for us commercially and it creates an industry wherever we deploy devices; for example, in Scotland and now in Canada.
Senator McCoy: It would not be such a benefit from an export point of view, but it would be from a local economy point of view?
Mr. Fison: I believe it can be of benefit for both, actually. As you build a supply chain, as is happening in Scotland and India and can happen in Canada, you actually get to a point where once you have enough scale you can produce devices more efficiently and more cheaply than other locations. Therefore, there is an ability to build an export market, as I was saying, potentially for the Americas or beyond, if the right stimulus, the right impetus is put in now.
Senator McCoy: We have heard the projections today of $450 a megawatt hour today tidal; are you anticipating that that will go down if it were in commercial operation?
Mr. Fison: I am happy to take that question. I am sure FORCE will have a few words to say about it.
Certainly what we have seen with other technologies, for example in the wind industry, is that as the technology matures, the feed-in tariff, the subsidies can be reduced pretty quickly.
We would fully imagine that to happen in the tidal industry. Indeed, working with Lockheed Martin, we are aiming for parity with offshore wind or better within a few years. That is our commercial objective as a company. I am sure our competitors have their own objectives. This is very much about providing market pull to the industry. Having that feed-in tariff, that provides the market pull and enables the investment in the Canadian economy, and as that investment is paid off in deployment and in the build-up of supply chain, you have a natural reduction in the need for subsidy over time.
Senator McCoy: I suppose I should have asked. Do you actually agree with that number, $450 a megawatt hour today?
Mr. Woods: Tidal is working through the small scale right now. The first straw man came out at $0.78 a kilowatt hour, $780. The next version came out at $0.64. As to the new ones out today, I am guessing it is not substantially lower than the $0.64. That is the small one. The large ones, as Mr. Fison has said, we have to get there. Taking off the FORCE hat and putting on a developer hat," I believe that tidal energy has to get to the $6 million a megawatt line or the ratepayers cannot afford to pay for it.
Senator McCoy: That is what, $0.06 a kilowatt?
Mr. Woods: That would be a $0.17 or $0.18 kilowatt hour at this point. The cost of fuel is going up and sometime it crosses, so at that point it is commercial. How do you tweak that and get it down? That is just a Minas opinion.
Senator McCoy: Fair enough.
Senator Lang: Could I just follow up on cost here, if I could, just while we are on this? You are going ahead with two projects, one in Scotland and one in India, and you have some numbers here, and one is going to be 400 megawatts, the other one is going to be 200 megawatts. Obviously technology wise, you are satisfied you have the generator that you can utilize, right?
Mr. Fison: Yes.
Senator Lang: What will the cost be? How much per megawatt from the point of view of the purchaser or the one who is paying the electrical bill?
Mr. Fison: The Scottish project is costing £2 billion, so $3 billion. That is for 400 megawatts. The India project comes in at about $500 million for a 250 megawatt project.
Senator McCoy: Let us do it on a kilowatt hour basis, can we?
Mr. Fison: I mean in terms of pricing per kilowatt hour depends on the resource that you have in the particular locations. That is something that needs to be assessed. It would need to be assessed in Canada, as well.
Obviously I cannot give you a per kilowatt hour number until those resource numbers are proven. In terms of a broad objective, our intent is to be on a par with offshore wind or better than offshore wind, and it is that competitiveness with other renewable energies that is our goal as a business.
Senator Mitchell: Mr. Woods, you used a figure that had $6 million in it, and you translated that to $0.17 or $0.18 a kilowatt hour. How did you get there? Usually it is just by dropping zeros.
Mr. Woods: Our business model at this point looks like we should be able to reach $6 million a megawatt and we should be able to have this unit run at 65 per cent capacity factor.
Senator Mitchell: Even at that $6 million would come down to$0.60, and 65 per cent of that would be $0.40, not $0.18.
Mr. Woods: It is a spreadsheet that is 275 lines long. I can give you the top line and the bottom line. Nova Scotia is under siege with electricity rates. If we cannot get there, you cannot win.
Senator Mitchell: You have got to get to $0.17 one way or another.
Mr. Woods: Right. Come back in a year and it will be another number.
Senator McCoy: There will be more than one rate. What is the average selling price per kilowatt hour of electricity in Nova Scotia?
Mr. Woods: Minas, we are on the large industrial rate and we pay $0.07. You average coal, hydro, natural gas, put it all together.
Senator McCoy: What do you pay at home?
Mr. Woods: Eleven cents.
Senator McCoy: That is residential.
Mr. Woods: Yes.
The Chair: After 11 hours in this room, everybody deserves a medal. Thank you for your participation, your documentation. It has been most appreciated.
(The committee adjourned.)