EDMONTON, Wednesday, November 30, 2011

The Standing Senate Committee on Energy, the Environment and Natural Resources met this day at 8:30 a.m. to study the current state and future of Canada’s energy sector (including alternative energy).

Senator W. David Angus (Chair) in the chair.

[English]

The Chair: Good morning, colleagues. Good morning, Professor Hrudey. Good morning everybody who is sharing these deliberations with us. This is an official meeting of the Standing Senate Committee on Energy, the Environment and Natural Resources.

Today we find ourselves in the capital of Alberta, the great City of Edmonton, as we continue our trip around Western Canada talking about energy. This is a study we have been engaged in since June 2009, and we are nearing completion with a view to having a report some time in June of 2012.

This morning, we welcome Dr. Steve Hrudey, who is a professor emeritus at the University of Alberta and who received a doctorate from the University of London in 1979. He is today in the Faculty of Medicine and Dentistry, Division of Analytical and Environmental Toxicology, Department of Laboratory Medicine and Pathology.

Dr. Hrudey has a D.Sc. in Environmental Health Sciences and Technology from the University of London. He is a fellow of the Royal Society of Canada and a fellow of the Society for Risk Analysis, and has authored many works.

His biography is in extenso in our binders, and as time is very tight this morning, I would urge everybody to keep their questions crisp.

I see we are in a much tighter and more intimate surrounding today, which is great. I cannot say how much we appreciate your coming out so early in the morning, Dr. Hrudey, and I apologize for a little bit of confusion. We did have a relatively surprise visit from two ministers, so we got here after 12 o’clock this morning.

Anyway, we are bright-eyed and bushy-tailed and very engaged in our subject matter, and we believe we are going to hear from a slightly different perspective what you have to tell us this morning, so we are all ears. After you give us your opening statement, we will have questions for you.

Perhaps just very quickly, I am David Angus from Montreal, Quebec, and chair of this committee. Grant Mitchell is the deputy chair. He is from Alberta. Tom Banks is an Alberta senator, the predecessor as chair here. We also have Senator Massicotte from Quebec and Senator Sibbeston from the Northwest Territories, Senator McCoy from Alberta, probably well known to you, a former minister here, and Senator Bert Brown.

The others at the table are very valued staff and assistants from the Library of Parliament and the clerk of our committee.

Steve E. Hrudey, Professor Emeritus, University of Alberta, as an individual: Honourable senators, I greatly appreciate this opportunity to share with you the findings of the Royal Society of Canada Expert Panel on Environmental and Health Impacts of Canada's Oil Sands Industry as you conduct public hearings across Canada.

Specifically, the report I will speak to bears on the following two elements of your mandate: (b), environmental challenges, and (c), sustainable development and management. I wish to focus my evidence before you on three matters: one, the genesis of and conduct of our expert panel; two, the distinctions between advocacy and evidence; and three, introduction to some of the main findings of our expert panel relevant to your mandate.

To the first point, the Royal Society of Canada was founded in 1882 and serves as Canada's national academy of arts, humanities and sciences. In 2009, the Royal Society launched a new initiative whereby our Committee on Expert Panels selected four new challenging, controversial topics at the initiative and sole discretion of the Royal Society.

We were the first of the expert panels to report on December 15, 2010. These new expert panels have been totally funded from Royal Society of Canada resources, and all expert panel members volunteered their time to these efforts as a public service.

Our panel took no position on the merits of the oil sands industry and we did not seek to convince anyone of anything about this industry. We sought only to assure that whatever views Canadians and their leaders may reach about this major industrial development would be based on an accurate understanding of the available evidence about environmental and health impacts and to identify gaps in our knowledge that need to be addressed.

The Royal Society of Canada panel was created October 2009. It solicited input or identification of relevant evidence from 58 identified stakeholders, First Nations, environmental groups, industry, and municipal, provincial and federal government departments, from November 2009 to the end of January 2010.

We quickly realized on putting out the call for submissions that many groups wished to meet with our panel or me as chair, but we lacked the resources to provide a process that would allow equal access for all interested stakeholders. Hence we denied direct access, phone or in person, to any stakeholder, instead requiring all communications concerning the panel to be with the chair via mail or email.

Second, the mandate we adopted for the expert panel required us to draw a clear distinction between advocacy and evidence, particularly given the contentious nature of recent public discourse about the oil sands industry. We made it clear to stakeholders that we were only interested in receiving evidence, not advocacy, and any submissions had to be available to the public.

We received 27 responses to our 58 invitations to stakeholders to provide evidence. Of course, we supplemented the submitted evidence substantially with our own search for evidence in the publicly accessible literature.

Our justice system has evolved a rigorous distinction between advocacy and evidence, allowing only lawyers to advocate regarding what the evidence should mean to the verdict of the judge or the jury. Expert witnesses who resort to advocacy in such proceedings are rightfully admonished or their "evidence" is discounted.

Administrative tribunals, including regulatory panels, holding public hearings often allow blurring of the distinction between advocacy and evidence. The media, which provides the window for the public on such matters, apparently prefers advocacy over evidence, likely because it provides much better copy.

The Chair: Advocacy is a gentle word.

Mr. Hrudey: Third, the substance. I have provided you with the executive summary of our report in English and French. Clearly, it is not possible for me to address all the contents of the 22-page summary, but I can assure you that it adequately reflects the substance and contents of our 440-page report.

Given the time constraints, I will advise you that the report addresses a valuable history and environmental context of the oil sands, provides individual chapters on greenhouse gas emissions, air quality, water quantity and quality, land reclamation, public health and externalities, liabilities and impact assessment.

Finally, in an attempt to focus the complex and diverse material spanning many disciplines into a form that would be useful to Canadians, we developed 12 questions that we believe capture most of the critical issues and debates surrounding the environmental and health impacts of the oil sands industry. We do not claim to answer all of these questions, only to provide a clear set of statements about the available evidence that bears on each question, and that is contained in the executive summary that you have been provided.

Because of the time constraints, I will deal with only one issue in my presentation, but I am happy to answer questions on any aspect of our report.

Question 8 was this: Does oil sands development cause serious human health effects in regional communities? The driver for this question was the considerable media attention given to claims of excess cancers in the largely Aboriginal community of Fort Chipewyan being caused by oil sands contaminants. We concluded that there is currently no credible evidence of environmental contaminant exposures from oil sands reaching Fort Chipewyan at levels expected to cause elevated human cancer rates. More monitoring focused on human contaminant exposures is needed to address First Nation and community concerns.

This conclusion stands in stark contrast to the four attached slides illustrating the advocacy by Hollywood, a CBC documentary and a research publication of the U.S. government’s National Institutes of Health.

We made our finding on this controversial topic because, in order for oil sands contaminants to be causing excess cancers in Fort Chipewyan, over 100 kilometres from the nearest operating oil sands plant, those contaminants would need to reach residents by some exposure route, either air, water, food or direct contact.

There is ample evidence from which to conclude that neither air nor water provide the required exposure route. There is enough evidence on food to make the cancer causation claim for this community of up to 1,200 residents implausible, but we recommended additional contaminant exposure monitoring by all possible exposure routes to deal with the obvious distress that the ongoing claims of excess cancers are likely to cause in the community.

I have included four slides illustrating the advocacy. The first one is from Hollywood. This is a documentary from a web page. The documentary was nominated for an Academy Award. The synopsis says:

I will refer to bullet 3 from an investigation conducted by the College of Physicians & Surgeons of Alberta into the crusading doctor, which concluded that he made a number of inaccurate or untruthful claims with respect to the number of patients with confirmed cancers and the ages of patients dying from cancer.

The college made it clear that the doctor's advocacy for the people of Fort Chipewyan has never been and was not a matter of concern for either the complainants or the college. They had no problem with him advocating on behalf of his patients. It was a question of the accuracy of the claims that he was making to the media.

The CBC documentary, Tipping Point: The Age of the Oil Sands, which was played on The Nature of Things, is described on the CBC website as:

I only point out that they mention our Royal Society report on their website. Unfortunately, it is nowhere to be seen in the documentary, which I found interesting.

In terms of evidence on this point, I quote from a letter by David Schindler and the authors of the article that is referred to in this lead-in:

Finally, the four slides on the U.S. government-funded research institute are kind of interesting. After our report was released, I was interviewed by a science journalist funded by this journal, Environmental Health Perspectives, which is run by the U.S. National Institute of Environmental Health Sciences. It is the top-cited journal publishing environmental health research. It produced the paper that I have shown the slide of, "Alberta's Oil Sands: Hard Evidence, Missing Data, New Promises."

There were numerous errors in this article. I was given a copy to review before it went to publication. There was an error on almost every line. I provided that feedback to the journal; it corrected almost none of them.

The thing that I am drawing to your attention was that, among the photographs they used, there was the usual picture of the ugly landscape, which is accurate, but below that is the caption:

Then at the bottom:

I wrote to the editor after this was published and said, "This is crazy. Do you folks not know what causes lung cancer? The best available evidence is 90-plus per cent of lung cancers are caused by tobacco. The other 10 per cent are caused by air pollution, and if you are going to claim that air pollutants from oil sands are causing these cancers, should you not find some evidence of that?"

In any case, after months of emails back and forth, they actually revised the caption to this photograph to say:

On the website, there is a button that you can push that will actually explain the fact that the caption is revised. You would never know it unless you knew what I know, but the revision they put in is:

To which I say, so what is the photo there for anyway? What does it have to do with our report? Absolutely nothing.

In closing, I invite you to review our findings and draw your own conclusions about these important matters. There are clearly major impacts arising from the oil sands industry, and it is essential that regulatory agencies are directed at assuring Canadians that this industry operates in an environmentally responsible manner.

To make sure that we focus on achieving that requirement, it is essential that misleading myths, no matter how widely believed or repeated, do not distract us from doing what must be done to protect our environment and public health.

The Chair: Before we go to questions, I draw to the attention of my colleagues that some further biographical material is attached to this presentation that is much more pertinent than the one I read earlier.

Professor, I am a lawyer myself, and I like the way you argue.

Professor Hrudey spent 13 years as a member of the Alberta Environmental Appeals Board, the last four as its chair. He was the first non-lawyer to hold this position. All three other chairs are or have been judges, two of Court of Queen's Bench, one of provincial court.

During this period, Professor Hrudey served on 36 public hearing panels, 19 as chair of the panel. He also conducted seven mediations with five successful, two of which involved more than 10 appellants.

In addition, he has testified six times before the Legislative Council of Western Australia or Senate committees in Canada, so our witness this morning is not only highly educated in the matters that he discusses, but also learned in the art of advocacy, of distinguishing the wheat from the chaff and of setting the record straight when these people, as he has very politely described them, other kinds of advocates, are putting out the wrong message.

I am a Canadian first, not an Albertan, but there are a lot of Albertans on this committee, and as Canadians first, we have been horrified to find how badly maligned this resource in this province has been.

I often mention my experience in Copenhagen in December 2009. It was the worst week of my life. I was a lonely Canadian, wearing my maple leaf, maligned everywhere I went. There was no defence put up either by provincial or federal governments or by industry, and we were 25 good citizens that Jim Prentice put together. We were walking around lost because we did not know how to put up a defence, so it is great to have you share with us this material.

Senator Mitchell: Professor Hrudey, we appreciate this greatly and your reputation precedes you. We certainly have not been disappointed.

To follow up on what the chair has said, I saw a headline in the Globe today saying that China decries Canada's bad example on climate talks. Can you believe that? But it does underline the problem.

We see very clearly the distinction you are making between facts and advocacy, but at some level, somebody has to start advocating for us, and it is not enough for Alberta to do it because the world does not see Alberta as speaking for Canada. It is essential that Canada does it.

I would ask you just to comment on that. How does Canada make that case? Clearly we have not made it adequately. What can we do to make it adequately?

Is it not the case that Canada must actually be doing something nationally of consequence with measurable results before it has credibility in making that case to the world?

Mr. Hrudey: Well, I think the first thing to do is to put out there what has already been done. I think the image of oil sands development of cowboys raping the environment is nonsense. We have done a very poor job, both Alberta and Canada, in letting people know what really has been happening.

Our report was very critical of both the Alberta and the federal governments and of industry for any number of specific issues, and our attention needs to be directed to resolving a number of those environmental issues.

However, that is not the stuff that is grabbing headlines. There is nothing uniquely horrendous about oil sands development versus any other form of natural resources recovery.

I do a lot of work in Australia. Australians do not reclaim their mines. In fact, I have a coffee table book that I brought back, at some expense and weight, called Mining Landscapes of Australia. It has these big, colourful pictures of all of these holes in the ground, and that is essentially the way they leave them.

I was giving a presentation before a group of U.S. visitors that came to Alberta yesterday, and one of them mentioned that they do not reclaim their open-pit mines.

Canada's process of dealing with this kind of resource extraction needs to be spelled out. We need to tell people what the actions have been. However, governments and industry have been largely asleep at the switch.

In my own view, the things that have driven this media option for Greenpeace and similar organizations, not unlike the baby seals, is the visuals. The spread in National Geographic in 2008 was a big player in that. National Geographic is a very credible organization that people trust.

The pictures did not lie. It is not a pretty sight; but no surface mining operation in the world is a pretty sight.

The claims about the cancers are still being reiterated around the world. I just learned yesterday of an opinion piece produced by the Commonwealth Advisory Bureau of the University College London entitled Throwing Petrol on a Fire: The Human and Environmental Cost of Tar Sands Production, and it starts off by saying:

Canada's tar sands are widely considered to be the most destructive industrial project on earth . . .

This is from a learned institution, in fact the one where I got my degrees. There will be a response.

The third thing that clearly played right into the hands of how modern media is done was the duck oiling incident in 2008 on the Syncrude tailings pond. I think those three events catapulted oil sands into an international media star for people who wanted to make an issue of it.

In essence, I am not a media expert, but it seems to me that you have to play the game the same way that the people who are getting these kinds of stories out there are playing it, and if Alberta and Canada are incapable of doing that, the industry has to do more than just take out ads on television during "Hockey Night in Canada" to show me how good a job they are doing. I would like to see substance out there.

Senator Mitchell: Not to be cynical about this, but you almost get the feeling that there are those who could make this case who say, "Who cares? They are going to buy our oil anyway. They have to buy our oil."

What are the consequences if this reputational risk continues to compound because we are not answering these attacks nationally?

In Copenhagen, Canada was nowhere, and Alberta can do what it wants. It can yell and rant, but as I say, it is not Alberta that speaks for Canada. It is Canada that speaks for Canada, and the world wants to see a credible Canada.

What happens if we go to Durban and Canada does not do anything? What happens if this continues to happen? What are the consequences for Canada internationally? Maybe it does not matter. They are going to buy our oil, so who cares?

Mr. Hrudey: You are going outside my area of expertise, obviously, but as a citizen, I am certainly not happy with being treated like I am some kind of environmental pariah.

It is outrageous for anyone to say this is the most environmentally destructive project on the planet. That simply shows that those people are either chronically stupid or they have never been anywhere.

We actually included that as one of our 12 questions for which we got a little bit of negative feedback. Why would we put such an outrageous statement in there? We put it there because it is a title of a report put out by Environmental Defence Canada, which is where a lot of this stuff comes from, and I have lost track of the number of times I have heard reporters on the CBC repeat it.

I think it is unfair to Canadians to allow that kind of misinformation to dominate. But how best to counter that is not my area of expertise.

Senator Mitchell: One of the points I think you made in your oral presentation was that there really is not an impact on cancer, and one of the issues in that regard would be somehow something that would cause cancer would have to be delivered, and that is just not happening.

However, there is the concern with the tailings ponds that if they are not dealt with quickly, they could burst, they could leak, they could deliver in that way. What would the tailings ponds deliver, and what is the risk of those tailings ponds rupturing?

Mr. Hrudey: Well, fortunately, and not a moment too soon, the most vulnerable tailings pond has been reclaimed. Suncor's Tailings Pond Number 1, the original Great Canadian Oil Sands tailings pond, which was right on the Athabasca River with 300-foot high dikes, was emptied of its mature fine tailings in I believe September 2010.

That content has been transferred to other places, so it is not completely resolved, but it is no longer sitting along the banks of the Athabasca River where a severe flood might pose a risk of washing it out. It is basically a big pile of sand now, and that was the one that we worried about the most.

The other tailings ponds are somewhat further removed from the river. They do not pose the same kind of contamination risk.

Clearly, if one of them were to be breached and that content allowed into the river, it would be a major environmental disaster. It would probably wipe out fisheries for a few years. It would pose a serious problem in terms of water supply for downstream communities.

The likelihood of that is very, very low. Of the things that we are concerned about in our report, it was below the radar, frankly.

Senator Banks: Thank you again, Dr. Hrudey, for being here again. I think this is the third time you have appeared before this committee.

With the chair's hoped-for indulgence, I want to leave the present matter but stay with a matter of much concern to this committee: water.

You were a member of the environmental expert panel that advised the government on the establishment of clean drinking water for First Nations, which resulted in Bill S-11, which the government has taken back, as I am sure you are aware.

I was among those who vehemently opposed that bill, not because of the stated intent but because of the way it went about it. That bill ignored several of the important recommendations that your expert panel made to the government with respect to safe drinking water for First Nations and how to go about it structurally and institutionally and in terms of the governance over all.

Have you heard anything further with respect to the government's intention to pursue not the bill but the matter of safe drinking water for First Nations and, for that matter, for everybody? The problem is exacerbated in many ways on First Nations, but clean drinking water is a problem everywhere.

Mr. Hrudey: I testified, along with Grand Chief Stan Louttit, on March 1 before the Senate Committee on Aboriginal Affairs when Bill S-11 was still alive, and we made a strong appeal for a different approach.

Frankly, the key to providing safe drinking water in Aboriginal communities, as it is in any community, is a focus on competence of the people running the systems. It is not a question of just buying more treatment equipment.

Unfortunately, because of reality, human nature, whatever you want to call it, it is easier for bureaucracies to hand out grants for building treatment plants than it is for them to tackle the tough question of how do we raise the competence of the people who are going to have to run those plants.

It strikes me as a tragedy that, particularly in remote Aboriginal communities where unemployment rates are astoundingly high, we have a need for trained people to run water treatment plants. Unemployment — need for trained people. How hard is it to see the connection?

That was the key case that we made. I do not know if you deal with that by legislation or just by policy, but that is the solution.

Senator Banks: The Circuit Rider Training Program, on which the government has spent a lot of money, goes some distance in that direction. But the other tool that was used in Bill S-11 to ensure compliance and to ensure that there was competence in providing clean drinking water to First Nations was a big hammer. It was, "If you do not do this, we are going to put you in jail, and if you do not agree with the way we want to do this, we are going to remove or trample upon your treaty rights and never mind section 35 of the Constitution, et cetera," which we thought was a back-handed way to go about it.

Just for our committee's record, would you encapsulate the structural process that your expert panel recommended with respect to safe drinking water for First Nations and the process that it ought to use rather than saying here is how you are going to do it?

Mr. Hrudey: I need to point out that our mandate was that we were expressly forbidden from making recommendations. We were told that we had to list options.

Senator Banks: You made them nonetheless.

Mr. Hrudey: Yes, we did. We outlined options, and essentially, the options were that you could develop existing federal legislation to fit the need. You could opt for adoption of provincial regulatory regimes, or you could strike out by developing a new process, new legislation that would be done in consultation with First Nations, including something called a First Nations water commission.

Senator Banks: Option 3 you thought was the least undesirable.

Mr. Hrudey: Exactly. In terms of our analysis, that is the way it was evident. The down side of option 3 was timelines. That would be the most challenging to implement, but it stood the best chance of success.

Senator Banks: Why would we not simply include water in the Food and Drugs Act and therefore ensure that the purveyors of water, the same as the purveyors of ice or bottled water or corn flakes or chocolate bars, put out a product that will not make us sick?

Most water is sold to us out of the end of a tap by somebody, usually a municipality but not always. The reason that Kellogg's does not make corn flakes that makes us sick and that Coke does not make bottled water that makes us sick is partly because they are good guys, but it is also partly because they know very well that if they do not have in place the mechanisms to make sure they do not make us sick with their product, they are going to be in big trouble and there are very serious sanctions, including jail time and gigantic fines.

Water is the only consumable that is not included under that kind of federal regulation under the Food and Drugs Act. Why do we not just do that?

Mr. Hrudey: As you know, I testified before your committee on that subject as well, and that will not work unless you put in place the structural fix. It is the same as throwing people from Kashechewan First Nation into jail for failing to meet regulations. You would end up in the same place with First Nations and non-First Nations communities to boot.

In Canada, we have, for whatever reason, by evolution and not by design, downloaded responsibility for drinking water on individual municipalities. If I am running the Hamlet of XYZ, with 20 people, and you tell me that I have to do this or you will put me in jail, if I do not have the resources, the training, the support and whatever else, it is not going to make any difference.

Senator McCoy: It is good to get that testimony on the record regarding the oil sands report.

I have said publicly, and I will say it here as well, that this is the cleanest and most objective report I have seen on the oil sands. It is, without doubt, one of the most readable reports from a non-scientist point of view, and I congratulate you and your expert panel for putting this forward. I do think that the Royal Society, and particularly yourselves, have done us all a very good service.

The Chair: I think the witness mentioned earlier that it was originally at the initiative of Minister Prentice, perhaps, that that was — it was not?

Senator McCoy: No, this was at the initiative of the Royal Society of Canada, who saw that there is a raging debate on the oil sands. The Government of Canada says this, the Government of Alberta says that, the oil people say this, the environmentalists say that. Whom do we believe?

As we were saying to ourselves the other night, everybody has 15 per cent of the story. How do you get 100 per cent of the story? Where do you go for credible information?

This report on the environmental and public health impacts of oil sands development to date tells you where to go. It says, here is what we are doing that is good. It summarizes that neatly and says that we can just continue doing that. Here is what we are doing that is bad, and here is what we have to do in order to correct that. Here is what we are doing that we do not really know what we are doing, whether it is good or bad. We have not got enough information, and this is how we go about collecting that information.

In the mean time, it also says, well, just hold on a minute here. There are a few things that we should not let go unchallenged, for example, that it is the biggest disturbance of boreal forest. As Dr. Hrudey's panel points out in the back of this report under Question 12, only 602 square kilometres have been disturbed by the mining operations, the open pits. Compare that to the James Bay hydroelectric project, which flooded at least 9,700 square kilometres of boreal forest in Northern Quebec several years ago.

There are some handy factoids in this report as well that make it come alive for a non-scientist like myself. It is very handy.

All of that is good. It still leaves open the question, though, of how do you get this information out to the public, including your colleagues from your alma mater, who are not taking your report in hand. Instead, they are believing some advocacy work that has been broadly disseminated by Environmental Defence.

Let me ask you this question: Howard Tennant, the former president of the University of Lethbridge, and Hal Kvisle, recently retired as the CEO of TransCanada Pipelines, have put together a report at the Alberta Minister of Environment and Water's request on monitoring, and they came out with a report some few months ago now introducing an independent monitoring agency.

I am sure you are familiar with this, and I would invite you first to describe it rather than having me describing it. You would provide a more accurate description, and second, give us your opinion of it.

Mr. Hrudey: Yes, that touches on a vitally important aspect, because much of the criticism that has been directed at the oil sands industry has concerned environmental monitoring, and in our report, we also concluded that the regulatory capacity of Alberta and Canada had not kept pace with the rapid pace of development.

That needs to be addressed. This is compounded by the problem on which I have had a unique perspective, going all the way back to when I worked for Environment Canada before I went to university in 1975, so I have seen regulatory agencies from the inside. My 13 years on the Environmental Appeals Board gave me a window on the performance of Alberta Environment up until 2009.

Unfortunately, governments in Canada, and I think it is true of governments around the world, have engaged in a process of dumbing down the civil service. Civil servants are encouraged to anticipate what the minister wants to hear instead of focusing on building their own expertise.

When Dr. Schindler released his second paper in September 2010 that led to the Prentice panel and a whole bunch of other things, there was no informed response from the Alberta government. It was as if they could not read the paper. That has to get fixed.

The panel that I have been asked to comment on was struck last February and given a mandate to ask how do we fix this monitoring problem. It came out with a recommendation to set up an independent, arm's-length monitoring agency that would start in the oil sands and then migrate to include all environmental issues in Alberta, but obviously the oil sands is where the action is right now.

This provides a critical opportunity that has not been acted on yet. I understand that there has been some period of grace with the new premier taking office and dealing with many fires, and I am sure that it is on the agenda. How that report's recommendations are implemented, if at all, will be a critical test of Alberta's response to these needs.

Such an agency has to be independent and it has to be highly competent, neither of which is an accurate description of Alberta Environment at the moment. The Energy Resources Conservation Board started out in the early years as the best oil and gas regulator in the world. People used to come to Alberta to see how things were done here. Unfortunately, over the years, the independence of the ERCB has been reined back in by successive governments.

I saw when I was chair of the Environmental Appeals Board that the message seemed to be, "Tell the minister what he wants to hear, do not tell him what the evidence says you should tell him." That has got to stop, and that is why you have independent agencies. It is to make sure you get the right expertise.

If you get clowns, if you get incompetent people, fire them. You need to have independent expertise with people who are responsible and give you advice.

Governments are elected. They are accountable. They do not have to follow advice. I never had a problem with a minister not following my advice. I do have a problem with a minister not wanting to hear what we heard but to hear what the minister wanted to hear.

The Chair: Colleagues, I am going to have to do something I have never done before as your chair and move the three questioners that I have to the top of the list in the next panel. We are going to have to move on to the next witness.

Dr. Hrudey, we have your documentation, your very excellent materials, and especially the report that Senator McCoy has just given you pretty high marks on. It certainly will become a Bible for us and for those of us who want to defend what is going on here, not only in Alberta but in Canada. They seem ganged up against us around the world.

Even with the best of intentions, Minister McQueen and Minister Kent in their trip to Durban are going to be beset by the media. The advocates will be telling a story so that you will not know where they have been. It will be very frightening.

In any event, I thank you on behalf of our colleagues for coming and for being here early this morning. Sorry if there was a wee bit of confusion at the outset.

Mr. Hrudey: No worries. Thank you. You know where I live if you have any more questions.

The Chair: Very good. We will be hiring you.

Colleagues, witnesses, we continue with our special hearing here in Edmonton, Alberta, of the Standing Senate Committee on Energy, the Environment and Natural Resources, our study on the energy sector in particular and our endeavour to engage with Canadians talking about energy and about a framework for a strategic way forward for Canada's energy future.

We are very privileged to have another professor emeritus with us this morning, Allan Offenberger of the University of Alberta, and with him this morning is Axel Meisen, Chair of Foresight, Alberta Innovates-Technology Futures, and from the Alberta Council of Technologies, President Perry Kinkaide.

We do have their biographies in extenso in the binders. I believe Professor Offenberger will be the principal spokesperson, and he is a professor emeritus of electrical and computer engineering at the University of Alberta, electing to take early retirement, very wisely, in 1995 to concentrate on research.

He maintained an active laboratory at the University of Alberta for many years, as well as connections with major international centres in laser fusion R & D. This involvement has led to the Alberta/Canada Fusion Energy Initiative to build a national capability in this important future energy technology based on strong working linkages with international centres.

Dr. Offenberger, I must say that I have been made privy over the last 14 months by Senator Banks to the documents you have sent him and the interest you have demonstrated in coming before our committee. I do want to apologize that it has not happened before now, but it looks like you have a very fascinating subject matter to share with us. Finally you are before us and we are all ears, sir.

Allan Offenberger, Professor Emeritus, University of Alberta, as an individual: We are very pleased to have the chance to come and have this conversation with you on what I think is one of the essential elements going forward in energy strategy, namely, what we call inertial fusion energy. I will get into the technical pieces of it. Perhaps we can respond to questions in the discussion period, but I wanted to bring the bigger strategic arguments to you today.

In the appendices, I have listed some acronyms for a bit of extra information that I think you will find quite interesting.

I am pleased that Dr. Kinkaide and Dr. Meisen are here to help with this discussion. Let me start with the issue of where energy strategy is and where it is going.

We have been in a carbon-based situation now, worldwide, for some time, and this is changing. The world is changing, and what I will get into will indicate perhaps how fast it is going to take place and Canada's total unpreparedness for it. I think that is what we want to leave with you as an ultimate message.

First of all, we recognize that with developing countries, there is a tremendous increasing demand for energy, period. If you look at electricity as a sub-component that is already 40 per cent of all the energy consumption, that is increasing not only by virtue of the stationary needs, powering all our buildings and so on in industry, but also because more and more we are moving to mobile transport that is electricity-based. This is going to put very large demands on the future.

There are two numbers, and I have given the more conservative one here, but if you take what the last 25 years’ growth of electricity has been, over 2.5 per cent, that would imply almost 100 terawatts. Now, if you think of a power plant as 1,000 megawatts, a typical large installation, I will call it a gigawatt, 40 terawatts says I have to build 40,000 of those plants in this century.

If I took the larger growth rate that historically we have been on, it could be double that. That is not replacing existing plants; that is just adding new capability. We are talking very large amounts of energy and electricity to be generated.

The other important message to come with that is that increasingly, it has to be done with non-carbon fuels. You know all the environmental issues throughout. We have to get away from carbon fuels in doing this.

The question is this: How do we do it? I will turn to fusion, but let me say first of all, and this is important, fusion is in fact coming much faster than people realize, and I will speak about that in a minute or two.

Looking at the issue of non-carbon fuels, what are our options? Well, there is fission. That is a working technology now. There is a problem with that, however, and that is finite fuels.

We run on uranium-235, which is less than 1 per cent of the world's natural uranium. If you want to sustain a fission-based economy, you have to go to fuel breeding. You have no option.

As a little aside, if I were to take all of the current electricity-generating plants in the world today and suddenly just convert them all to fission fuel versus coal and everything else, we would have uranium fuel to last us only 30 to 40 years. That is how limited in effect it is, so you have to go to fuel breeding —

Senator Banks: Known reserves.

Mr. Offenberger: Known reserves, that is right. It is an issue that we are facing. We have to go to fuel breeding then, which leaves all the accompanying waste issues.

Fusion, as I will get into, is a sustainable one. We have got very long lifetimes of fuel, so it really can be a continuing primary source.

Renewables, we certainly want all we can get of them wherever we can get them, but as you recognize in the world at large, there are limits on variability, availability and time of day and season and so on. While it will be important, it will never supply all of our base load requirements for future energy.

This brings us down to fusion then, and I will just leave you with my thought here. I put this vision of an integrated energy future to you, and I would predict by mid-century and beyond, you are going to see fusion coupled with electricity coupled with hydrogen fuel cells to cover a lot of what we are going to want in the combination of the sustainable electric stationary and mobile energy.

Fusion: What is it? I am not going to take you into the technical aspects, but I have a picture on the second slide that says fusion in fact is the source of energy in our sun and all the stars. In fact, it is the basis of life as we know it, indeed of our body chemistry.

Fusion has made everything from hydrogen all the way up to carbon, nitrogen, oxygen. We live in a carbon world; all our body chemistry is carbohydrates. Fusion in fact is responsible for everything that we know on the face of the earth.

Related to that is a new way of doing this, referred to as inertial fusion energy, and that is coming very soon. In fact, we will see even more of it.

Why do we want it? It has been the Holy Grail for decades. It has just been very difficult to achieve. That is been the bottom line.

Apart from sustainability, I would mention that in terms —

The Chair: Professor, just one second, because this is critical for your message about what it is. You have said it has been the Holy Grail for such a long time and that is really the crux of it all, but why is it so little known to people outside the scientific world, to the lay folks like us? That to me is the key.

When Senator Banks brought this to me, we sat down and said, well, what the heck is it? We had better look into it. We are not totally unsophisticated.

Mr. Offenberger: I am coming to that as soon as I hit the laser, but let me pick up on the high-energy density.

In fact, fusion is the highest-energy-density fuel. What does that mean? It means the least amount of stuff you have to transport to generate electricity and the least amount of waste that you have to carry away.

If I compare a coal-fired plant versus a fusion-fired plant, at the end of the day, we are talking about a few million times less fuel to be transported into the plant and waste to be taken away from the plant, so it really makes for very different options where you can site things and not have all the attendant issues.

The Chair: What is it?

Mr. Offenberger: Hydrogen, isotopes of hydrogen and lithium.

The Chair: Where do you get them?

Mr. Offenberger: In the ocean and on land, and they are limited.

Well, I mention under here all the applications. I will not go into the details there. It is everything —

The Chair: It helps if we get the main concept.

Mr. Offenberger: Right. So let me turn now then to inertial fusion energy, and what is happening in the world at large, and this involves using lasers to achieve the objectives of getting practical fusion energy.

I have highlighted a number of labs around the world. This does not include a lot of smaller academic-based programs, but let me pick up on one in particular, and that is NIF, the National Ignition Facility in the U.S. The following slide shows a picture of that installation that has just come on line in the last year and a bit.

The Chair: That is where?

Mr. Offenberger: That is in California, in Livermore, which is just inland a bit from San Francisco.

The Chair: It is this picture you are referring to, this slide, right?

Mr. Offenberger: Yes, right. I am using that as the example because they are the furthest advanced in the international historical activity, and I want to address what has been happening there.

On the next slide, I show just one technical slide to point out two or three important things. First of all, for fusion, you have to heat the fuel to very high temperatures, about 100 million degrees. Then you have to confine it long enough so that reactions lead to more energy out than you put in in the first place.

How do you do it? Historically, what has been called magnetic fusion has been the longest game in town for the last 50 or 60 years, and you see some dots on that curve down at the bottom referring to MFE for magnetic fusion.

You will notice now the superposition of data with the National Ignition Facility. This is dated this year, 2011, and it shows where they are starting and the march inexorably up to what we call the promised land, burning plasma to get us to where we have significant energy gain.

The important points are there, and in response to your question, magnetic fusion has been the dominant way of proceeding for decades. The laser was not invented until the 1960s, and programs really did not get started till the mid 1970s, so it was a quarter of a century later in getting started, and moreover, apart from academic programs all over the world that said this is interesting and we should be researching it, the big programs that needed the resources to do the very rapid development emerged through defence appropriations in the United States and France in two very big ways, one of them at Lawrence Livermore National Laboratory, others at Los Alamos and so on, and what is now Laser Mégajoule in Bordeaux in France.

It took a large investment to bring us up the learning curve more rapidly to catch up with what had been the slow learning curve on the magnetic fusion. In part because it was defence appropriation and initially classified, this left the laser fusion below the viewing horizon, and it still is very much below the viewing horizon.

Magnetic fusion has been open and all the media for decades has been reporting on its progress. Laser started later, but with this large input of money, plus some very stimulating science that attracted a lot of first-class people to it, they have marched up the learning curve much faster to the point where the argument obviously is they have caught up and surpassed magnetic fusion as an approach to getting to the promised land. That is a really important point.

Where are we then? The next slide summarizes the status. NIF is in operation. They are engaged in the National Ignition Campaign, so that in less than two years, we expect to see all the proof-of-principle experiments. I will not go into the details, but more importantly, the second bullet point on that status shows where we really are today and its impact.

Two years ago, the U.S. Secretary of Energy Steven Chu said do not wait for proof of principle, start planning for the future of what you do with this inertial fusion. Livermore went to work with the utilities in the U.S. and the chief executives of the companies that generate 75 per cent of the electric power in the U.S. to map out a road map to get from proof of principle into a demonstration power reactor.

Coupled with that, they went out to all of the major manufacturing vendor groups and asked could you deliver the following with the following costs and perspective and so on. They generated white papers and asked, could you get the semiconductors, could you get the optics, could you do the construction engineering, all of the elements you would ever want to bring together a practical power generation capability.

They have done an outstanding job on that, and they have come up with a very modular design where you would manufacture and deliver everything to site. Instead of one off-site construction of power plants, everything would be trucked in from what would be controlled manufacturing capabilities.

They refer to it as LIFE, for laser inertial fusion energy.

The Chair: What about building a prototype?

Mr. Offenberger: This has to be funded yet, but they are in the planning phase right now with utilities and the vendor groups, and there are discussions going on in the U.S. as we speak about that money that —

The Chair: So this is a plan, not a reality?

Mr. Offenberger: This is a plan, a full engineering scoped design plan.

What they are saying is they could have that demo plant in place in 10 years and we could be looking at commercialization in 20.

Now, this is a very big change. Looking at magnetic fusion, that was always a 40-year solution. Suddenly we have the possibility of demonstration in a decade and commercialization in 20 years. No other major energy solution has quick fixes on a shorter than 20-year time frame, so this now could have a very large impact.

In the next slide, I show a model of the LIFE facility, just to give you an idea. The following slide then just summarizes where we are, the NIF experiment leading to this design and construction of a demonstration unit to commercialization.

Now, let me turn to Canada. What is the implication for us? Well, obviously, if this can be realized, and I can say we have had this feedback from utilities themselves here in Alberta, if LIFE can be delivered on, TransAlta has already told me this would already be their fuel of choice for next generation electric power generation.

We are talking about something very profound here, if indeed it comes off in a decade or so, and as I say, it is the major utilities that are looking to replace their aging plants that have to be replaced in the next few decades.

Perry Kinkaide, President, Alberta Council of Technologies: Do you want to just reinforce that point, the replacement of the current central power plants?

Mr. Offenberger: In fact, I have a slide. In the appendices, I show a slide of the U.S. utility with coal and nuclear and so on phasing out by the middle of the century and the demand that is coming along with the replacement.

Livermore has said we would like to target for perhaps 20 per cent of that power regeneration in that rebuild to be coming from laser fusion plants. There is a very large impetus to get on with the job and do it.

This clearly has implications for us, very seriously, in terms of Canada having, for the moment, a total carbon fixation. We do not have that additional strategy in place for renewables and fusion in terms of where we might be in as little as a couple of decades, and that is why we want to get this on your agenda.

The Chair: Is this true — it must be or you would not have put it here — that we are the only OECD country that does not have a program on this?

Mr. Offenberger: That is right, yes. NRCan has a watching brief on fusion, but we have no national program in Canada.

The Chair: Every one of the other OECD —

Mr. Offenberger: All of the others do, and in fact, let me point out that in the developing nations, China and India and so on, China just in the last year in their 2020 Vision identified fusion as one of the four or five top priorities for that plan leading to 2020.

Many of the developing countries, Korea, India, China, are getting involved. Certainly for the OECD countries, we are the only one that is not engaged, and this has to change.

I should say in terms of being able to make that change, we have some excellent links internationally, which I provide data on, that allow us to get a head start if we make the decision. Let us get on with it and do it, and that is in Europe, Japan and the U.S.A.

As we started into this exercise about five years ago, I immediately went to my colleagues internationally and said that if we get a program started, we have got to get up the learning curve quickly from where we used to be 20 years ago, retreading new people, and they said, "Allan, we will work with you any way you want. Just send your people and they can work collaboratively with us. We will get them up the learning curve and build the long-term working linkages for the development of fusion."

The opportunities are there. Livermore said we would immediately take it to DOE to build a North American accord on fusion energy development. We have got their total support, and we have already got an MOU with Japan. We have the built-in links to get us moving if we make that decision.

Clearly we have an image opportunity. You have just been talking about it with Professor Hrudey. Of the wealth being generated today, what better way to help build an image than by saying that not only are we doing the following with the oil sands but we are investing in what will become inevitably a replacement energy source leading into mid-century and beyond. That will probably leave a far more positive image than almost anything else you could do.

The reason we need government is because it is a decade away. Private sector gets involved when the opportunities are there. In the U.S., all international programs are funded nationally, but they engage industry in subcontract ways so they are building up the technology capability as you do this R & D phase in order to be able to implement it in due course.

Just a final slide to say that through the Alberta/Canada Fusion Energy Initiative, in fact we have done an awful lot of work over the last few years, including addressing various provincial and national groups.

We have built the links. We have done the workshops. We have established forums, provincially and nationally. We have built a very detailed scientific plan, followed that up with a white paper and economic impact study. We have had several site visits to Livermore for senior people from both the provincial and the federal side. We have had a lot of briefings and we have established a very solid steering committee to work with us.

I will stop now, having covered the highlights, and maybe there will be questions and discussion.

The Chair: It is fascinating stuff, and I am having trouble believing that Canada has been sitting on the sidelines, but you have told us about it.

I have to absent myself for a few minutes, so I have asked the deputy chair to take over for the question period, and I hopefully will be back soon.

Senator Grant Mitchell (Deputy Chair) in the chair.

The Deputy Chair: Dr. Offenberger, we appreciate this greatly.

I know that it raises many interesting questions, and it is this kind of testimony that can move us an extra step in our Canadian energy strategy deliberations.

Senator Massicotte: That is honestly very interesting. I have read a little bit about it but not very much, so your being here forces one to read the materials and discuss the issue.

We often overuse the words "game changer" but this could be really immense. This could commoditize, if you wish, energy, which has been such a predominant part of our efforts, GDP, socially and otherwise. It is phenomenal. I presume that is the message we are getting.

Do you have any idea what the commercial costs of this energy would be? Is it competitive?

Second, when you look at the history of the world, there are often very good ideas that never get implemented for coincidence, habit, circumstance, superstition. What could go wrong so that 30 years from now, we say to ourselves that this has been put aside? What is the risk of that? In any projection, things happen.

Mr. Offenberger: There are two sides to the equation. First of all, it is not a question of the science. The science is very thoroughly understood as to what it is you need to do in order to make it work, so it is not a lack of scientific information. It really comes down more to how do you engineer it.

What you are doing is taking fuel pellets and irradiating them with very high-power laser beams, so there is everything from getting the right energy in the laser systems, the pointing accuracy, the timing, proper things happening in absorbing the energy to make it work. That comes down to the engineering ways in which you deliver and absorb the energy and induce the fusion reaction to take place. That is always subject to vagaries, of course.

That is where you need the learning curve, and in part, that is what the National Ignition Campaign is doing now. They are varying the parameter space to find out which things work, do not work, so you would know more reliably where you have to be when you come to build a demonstration power plant.

Let me say it is in the engineering and it is material science. We talk about nanotechnology. I prefer the generic term "material science" in all forms, whether it is the optical coding, the target fabrication, the materials in the reaction chamber and so on.

We have a lot of material science to do. There are a lot of subcomponents that all have to work reliably, repeatably, efficiently, economically and so on. So it is the engineering details of how you bring it all to bear.

That is why we refer to 10 years of development. It is really all the enabling technologies. We really have to get into refining and making them work very well. That would be the biggest question mark to me.

Senator Massicotte: Is there a prototype that exists today, for instance?

Mr. Offenberger: No, there is no prototype. This would be the single-shot prototype when NIF is up, but to make it repetitive for the power handling, that is when everything has to be working like an internal combustion engine over and over and over again.

Senator Banks: NIF is real. It is built. It is running, and its objective is to come up to get to the tabletop, to get a demonstrable working model.

Mr. Offenberger: That is right, that you can actually get fusion energy out on a single-shot basis.

Senator Banks: That is due when, do you think?

Mr. Offenberger: Somewhere in the next year, less than two years.

Axel Meisen, Chair, Foresight, Alberta Innovates-Technology Futures: Dr. Offenberger gave you a perfectly good scientific technical answer, but in response to your question, what could go wrong, do not underestimate the importance of public opinion.

The first thing is, it is a nuclear initiative, in the eyes of many, and we know what the public's disposition to nuclear is. I am not shying away from it, I am just sharing with you very candidly what could go wrong.

The second aspect is that if this is not handled well from a public perception point of view, it could be, and it must not be but it could be, equated with an experiment that is sort of akin to a hydrogen bomb, because you put hydrogen and nuclear together.

That is not what it is, I can assure you about that. However, you have to be realistic and you have to take that aspect into consideration as you look at any new technology.

It could be delayed, it could be derailed, it could be stymied by virtue of those considerations, and we really need to be very careful to think about the public's reaction to this. That is not to say we must not do the science. Of course we must do it, but we cannot leave the other sides untouched at an early stage.

Dr. Offenberger, to his credit, understands that very well and he gives very, very good presentations on it, but I just wanted to round out that answer.

Senator Massicotte: Other than the optics of nuclear, the major concern about nuclear is that it can be very destructive if executed by the wrong people. Is there an issue here? Is that the case?

Mr. Offenberger: No, it is not the same, and it is largely because the amount of fuel that you inject that is inside a power plant at any one time does not pose any hazard.

Senator Massicotte: No security issue?

Mr. Offenberger: No security issue, and even if you had the worst-case situation, you would never have to evacuate people outside the plant. That just would not happen.

Senator Massicotte: You said the science is there. This should happen, but like you said earlier, the execution has never occurred.

Mr. Offenberger: The execution, because we needed big enough lasers to execute it. That is the point.

Senator Massicotte: Is there an issue there? Does the working world today give you immense confidence that this will be achieved, or is it still a major question mark?

Mr. Offenberger: My answer to that would be no. Others might disagree, obviously, but my answer would be that if you look at the track record of Lawrence Livermore National Lab and their programs, coupled with the fact that France, through its Laser Mégajoule in Bordeaux, is building a facility that is one or two years behind in being finished but on the same track to do the same objective, those two countries together in terms of what they have achieved in the R & D progress would lead me to say yes, it is unequivocal. It is going to happen.

Senator Massicotte: Within five years, we can demonstrate that these things will work?

Mr. Offenberger: Within a couple of years.

Senator Massicotte: So within five years, we could see a stoppage to nuclear plants, coal plants?

Mr. Offenberger: No, that will not happen that fast because once you have done the proof-of-principle experiment, you then have to go on and build the world's first prototype demonstration. Can you now extrapolate it into a power device and how long? That is the decade. That is the 10 years.

Senator Massicotte: So 10 years from now, we can see immense change in the whole energy environment of the world.

Mr. Offenberger: Yes, 10 years will be the time frame to say that is when there could be the game changer.

Senator Massicotte: There are no consequences like climate change? None of the repercussions, from what I have read, will have any significance.

Mr. Offenberger: No. This is greenhouse-gas-free, non-carbon. It is clean; it is sustainable; and it can do all of the base load kinds of energy that are required on earth.

Mr. Kinkaide: Just to reinforce that point, one of the risks this all faces is that utopian perspective, the over-promising and the under-delivering.

While we are frustrated with the point that was made earlier about the lack of general awareness and lack of participation of Canada, we also need to be careful in how we orchestrate and communicate about this technology so that we do not run into what could be a failure, which is the over-promising and the under-delivering.

The issue that we face to this date is the demonstration of the proof of concept, the fact that it has been viewed as a military initiative, not a commercial initiative. However, progress has been made in the last year. I think here in Alberta, one of the distinct advantages is an appreciation that we need to look at this as not just a source of power, which is the first thing we look at, and we get either afraid of it or excited.

There are phenomenal business spinoffs associated with the introduction of this technology. While Canada may not be the inventor, it may not be the one to prove that proof of concept, there are numerous things that Canada could do because it is prosperous, is nimble and has access to knowledge.

Knowledge without relationships has no value. I think the federal government is beginning to realize that what we do within our universities —

The Deputy Chair: Do you have a list of the numerous things that Canada could do? We need concrete specifics. It would help us advance that.

Mr. Kinkaide: Yes.

Senator Massicotte: I am a businessperson. What are the odds 10 years from now that we achieve success? Is it 90 percent, 95 percent?

Mr. Kinkaide: We being Livermore, or what Canada can do?

Senator Massicotte: The world.

Mr. Offenberger: The world, so Livermore representing it in the sense that it is moving furthest ahead. Give or take the years, that comes down to the funding and everything else. Things can slip, as you know, in terms of time frame, even on oil sands projects and so on.

Therefore, I would say 10 years plus or minus, dependent only on the funding that is going into it.

Senator Massicotte: What probability would you give to that, that this will be a fundamental energy source for the world in 10 or 15 years?

Mr. Offenberger: Given that little slippage there, I would say 80 or 90 percent.

Senator Massicotte: Do your confreres agree with you? Listeners should sell their oil stocks right now, I guess.

Mr. Kinkaide: Remember, this is a value proposition. It takes some years, which is one of the reasons businesses do not get in so early and why government is the primary proponent at the research phase.

TransAlta and those whom we have built into this initiative are sitting around the table; they are monitoring this. They have been down to Livermore. We have been there three or four times now, so we are not presenting this as an advocate. We are presenting this from an empirical basis. We are watching research evolve.

The Deputy Chair: We have 10 minutes, so let us keep the questions tight and the answers tight. This is very informative, and I would like to come back to the first question that Senator Massicotte asked, which I think was how much does it cost.

Mr. Offenberger: I did not answer that, yes. I will pass that information on. Did I include it in the original information to you?

If you take pure fusion, fusion-producing neutrons to breed fission fuel, compare it with coal, with and without sequestration, natural gas with and without, I have a bar graph that shows the cost per kilowatt hour and how comparable they are, in fact. This has been on the basis of the detailed science, because people who sit down and design power plants know how to cost out all the details.

Senator Mitchell: You will get us that?

Mr. Offenberger: I will get that comparative figure. It is essentially the same. It is the price of the fuel coupled with whether you are doing sequestration, carbon capture and so on, which is an expensive add-on, or not. It falls within that.

Senator Massicotte: It eliminates coal.

Mr. Offenberger: And with coal, yes.

Senator Brown: My understanding is that lasers are the main driver to keep this thing going. What is the amount of energy that these huge lasers are going to take from the process itself? Is there a percentage or something?

Mr. Offenberger: The unit that we use is megajoule, so 1-, 2-, 3-megajoule laser energies. What is impressive about them is that they deliver that energy in very short bursts, less than a billionth of a second.

If you ask how much is a megajoule, if I take your coffee in the morning and I heat up a litre of water to the boiling point from the freezing point, that is about a megajoule, so the amount of energy of just heating that quantity of water. The impressive part is that it is delivered in a coherent laser beam in very short timing and is able to do far more work than just boiling your beaker of water on a tabletop stove.

Senator Brown: When would we actually be able to see something like a prototype?

Mr. Offenberger: What we are saying is that this NIF facility that has built the megajoule-class lasers will show us the proof of principle that indeed you can do it, that you get far more energy out than you put in, in the next year or two. Then if the funding emerges in the short time, a decade beyond that, we could see a demonstration power plant put together.

Senator Banks: It is not time to sell our oil stocks yet, but it is time to get seriously involved in seeing how far this goes.

I have one quick question about what Dr. Meisen raised, and I think Dr. Kinkaide too, and that is the public opinion piece. How far behind are we because of the — I do not know if the word is "failed," but the previous supposed false demonstrations of having achieved fusion?

In the PR battle, that surely puts what you are talking about way below zero, does it not? Does that not give people pause and reason to say, "Wait a minute, I'm from Missouri. The last guys tried this. Don't ask me for any money."

Mr. Offenberger: I think the answer to that is in part why you have not heard very much about this inertial fusion. Places like Livermore with the big programs have not gone out of their way to make a big hype story around it, knowing that you could get knocked over the head in the long run, so let us just build it on credibility. Let us just show people where we are going, and then when it is there, you can tell the world.

Senator Banks: Is NIF now fully funded to the point of getting it to the tabletop?

Mr. Offenberger: It is fully functional, yes.

Mr. Kinkaide: With regard to your first comment, which was said with tongue in cheek, I think it needs to be discussed. That is, the selling of oil stocks implies that this is necessarily something that the oil industry needs to be afraid of. That is not necessarily the case in the short term.

Fusion generates heat. Heat is a fundamental part of oil sands production. It is conceivable that a fusion energy plant may find its way, as they investigated fission, using fusion as a source of heat in first generation, not power.

I think we would be creating a public problem by implying that this is the end of the oil and gas industry. This is a supplement that may well in fact extend it until such time as fusion becomes the dominant source of central power.

Senator Banks: It would also make the processing of oil sands cheaper.

Mr. Kinkaide: We get a nice transition. I am being a bit Pollyannaish, perhaps, but I see no reason strategically why we cannot see this being introduced into Alberta almost first as a strategy that Alberta has opted for because we do care about the environment, we do care about sustaining the economy and we do care about the sources of energy that the world uses.

Senator Banks: Surely people have talked to the federal government about this before. Nobody has talked to us about it before. This is the first opportunity. What has happened with previous governments?

Mr. Kinkaide: What happened to previous governments?

Senator Banks: Okay, I will not go there.

Mr. Meisen: I just wanted to comment on what is really a longer-term implication of this. If this technology is proven as introduced let us say by the middle of the century, Alberta and Canada will still have large unused carbon and hydrocarbon reserves, and it would make eminent sense to me for us to give consideration to what we should do with those hydrocarbon and carbon reserves other than transforming them into fuels.

Our oil sands, our petroleum goes about 80 per cent into transportation fuels; 15 per cent goes into petrochemicals, and then there are some smaller applications. However, if the transportation sector changes and does not require oil any more, then we in Alberta and we in Canada may end up with very large quantities of hydrocarbons that do not have the markets that they currently have.

This is not going to happen in the next decade or the decade beyond, but from the middle of the century, it could happen. It seems eminently reasonable to me to start thinking about using our hydrocarbons and our fossil carbons for purposes other than fuels, and there are some possibilities.

Senator McCoy: We will have to have further conversations about those possibilities. I have a very quick question on the cost comparisons.

You say with CCS, carbon capture and storage, it is comparable. What is the basis of your estimate for the CCS costs?

Mr. Offenberger: I will pass that information on to you. It gets into the sources of all the numbers.

Senator McCoy: Keeping in mind that the current industry costs are estimated very much higher than they were initially, and that our experience with SO₂ scrubbers in the 1970s, was it, or the 1980s came in very high, and then leveled off when they were universally introduced, and the difference in depreciation paths for coal plants as opposed to nuclear, there is just a lot —

Mr. Offenberger: All of those elements come in.

Senator McCoy: It seems to me there are quite a few back-of-the-envelope things going on.

Mr. Offenberger: It is the operation of capital and everything, yes.

The Deputy Chair: Thank you very much, gentlemen. It has been very informative, provocative. We appreciate it.

Senator Massicotte: Before we let these people leave, I want them to know that what they are talking about is so immense that if it works, I will vote for them as president of the world.

The Deputy Chair: It does have that implication, yes.

I now have the distinct pleasure of welcoming Dr. David Schindler. I should just note that I think this is at least the third Order of Canada recipient sitting at the table this morning. Senator Banks and Dr. Meisen are recipients, and of course you are as well.

I have known Dr. Schindler for many, many years through environmental, water and northern Alberta issues and many other issues as well. For those of you who are not aware of much of his background, he is the Killam Memorial Chair and professor of ecology at the University of Alberta. From 1968 to 1989, he founded and directed the experimental lakes project of the Canadian Department of Fisheries and Oceans near Kenora, Ontario, which involved a great deal of interdisciplinary research on the effects of eutrophication, acid rain, radioactive elements and climate change on boreal ecosystems.

Dr. Schindler has been widely renowned in Canada, the U.S. and Europe for his work, and I remember very distinctly, just after I was appointed, Dr. Schindler actually appeared before the bar in the House of Commons, if I am not mistaken, which is a very rare and distinct honour. I was proud to realize that you had been given that honour and that I have known you and followed you for all these years.

David Schindler, Killam Memorial Chair and Professor of Ecology, University of Alberta, as an individual: What I have chosen to talk about today are some of the environmental issues that I think still surround the oil sands, and all of the concern we hear about the environmental image of the oil sands. I have a somewhat different impression of the cause of the image, I think, than most of the people who are talking to the media.

The first slide that I have put in the upper left-hand corner is a list of some of the issues that I think need to be solved, and in the short time we have, there are two indicated with arrows, and they are the only two I will talk about this morning.

The second slide is just a reminder of some of the relative areas of these things, to put the oil sands in context. I have been hearing for 20 years about cleaning up the Sydney tar ponds, which have a lot of similar compounds. If you look at the relative size, you can see why we need to be concerned about clean-up in the oil sands.

We hear a lot from our politicians in this province about how those nasty environmental groups have got it in for us and how they are giving us this black image abroad that we do not deserve.

I do not think people pay much attention to environmental groups. They expect them to come down strong on the side of the environment. However, when you see individuals like the three that I have quoted here, either ministers of the federal government or ex-provincial premiers saying things that are in tune with the environmental groups, I think that international leaders sit up and pay attention. I really think that our government is kind of doing it to itself by causing this black image.

The fourth slide is just a reminder that industry is pretty good at giving itself a black image too. I think if I had been CEO of Syncrude after 1,600 ducks were killed, I would have quietly paid the fine and sneaked away. Instead they saw that we had dead ducks on the front page of every national newspaper for a year along with ridiculous and outrageous claims by their lawyer that I think just further antagonized the public. This played widely. I could find this in newspapers in Norway and Germany on two trips when I was there.

I think part of the problem is, as exemplified in this fifth slide at the lower left, that we have such a rate of development going on. If you look at the rate of development in the oil sands, it works out to 7.5 per cent per year compounded, and that I think is a rate that is dangerous in that the rate of the development very quickly outstrips infrastructure and social needs of people.

You can see that all over Alberta. The roads are crumbling. You cannot get into hospitals, you cannot get into schools. Houses are falling apart right after they are built in Fort McMurray, and on and on.

I really think some consideration needs to be given to that outrageous rate of development, because unless is it regulated, that is the rate of development that is planned until at least 2025 or 2030, depending on which energy organization you listen to.

The first thing I have chosen to talk about is reclamation. That lowest figure on the first page is the government's own figure for reclamation deficit, being the difference between what is actually being reclaimed or being attempted to be reclaimed and the rate of digging.

You can see the rate of digging is greatly outstripping even the rate where reclamation is being attempted, and of the whole thing, only a fraction of 1 per cent has been reclaimed well enough to be certified, and the companies freely admit that that was an easy site to reclaim. However, it cost 10 times as much money as the companies were required to set aside per unit area at that time, and I understand there had been some recent moves to correct that deficit somewhat, but it is still not corrected.

Of course, we are lulled to sleep by seeing all of the beautiful images on TV every night of the Syncrude Gateway project and the wetland that they have put on a former tailings pond, which my wife, who is a wetland scientist who works in reclamation in the oil sands, tells me will never last, because eventually, the saline water underneath is going to kill the vegetation.

The panel on the right upper side is just two maps, which I had hoped would turn out better. I can pass those along in colour if they are interesting.

This is from a paper by Rebecca Rooney, who is a recent graduate of the University of Alberta, and my wife and myself, just taking the reclamation figures that the companies have in their environmental impact assessments and comparing them to the original ecosystems.

Contrary to what they tell us on TV, they have no intention of putting these systems back the way they were. What they have written right in their environmental impact assessments is that they will put back a series of hills. Any remaining wetlands will be little narrow saline wetlands that will not be peat lands at all because peat lands will not grow in the saline water.

Part of the reason why that is necessary is that they are going to leave an enormous end-pit lake in the centre, which is nothing but the final pit that they dig. It will be filled partly with tailings. A layer of clean water is put over the top and it is hoped that that clean water will remain clean enough to grow organisms. It is a process that has been approved seven or eight times now by the EAUB, and yet there is not a single working example.

According to the calculations based on these two figures, which are for about 40 per cent of the wetlands that are being dug up in these mines, it will be lacking about two thirds of the wetlands that were there originally, so I think it is time that these companies confessed that they are not going to put it back the way it was.

Tell people it is the best they can do and get on with reclaiming, the same way we do with coal companies. You do not see coal companies leaving 40 years of reclaimed pit behind. They do not claim to restore the systems to what they were. They know it is impossible. The public accepts that and gets on with it. I think it is time we got the oil sands on a realistic footing.

The intermediate panel on the left is something that I think needs to be done. We really need to figure out what the cost of this realistic reclamation is going to be and what the changes are to the ecosystem to protect the Canadian public.

As it is, if something happens to the oil industry, and it looks like it will, according to our last speaker, somewhere down the road and all the oil companies fold, we are going to have an enormous pit up there, and guess who will be left to clean it up? I think that what we are doing is a poor basis for a participatory democracy.

I want to go now to speak a little bit about our monitoring program — I should not call it our monitoring program; it is our 2008 study — and why we did it and what we found.

The government position has been what you see on that intermediate right-hand slide, which is that this huge industry does not pollute the environment at all. To someone who has worked his whole life in air and water pollution, particularly in watershed and water interactions, that just did not ring true. For one, no one has ever measured airborne fallout from those plants, and they burn coke and they smelt bitumen in huge quantities, and the reason I am mistrustful is that in the 1970s, I chaired a panel of scientists for the U.S. National Academy. There were three Canadians on the panel plus a bunch of Europeans and Americans. We produced the report, the title of which I have given you in the lower right hand. If you read that report, you will realize that the plant that burns fossil fuel or smelts ores and does not put out pollutants to the environment does not exist, not anywhere in the world. This propaganda did not ring true.

Second, earlier in this decade, the National Pollutant Release Inventory was finally made public in 2003, and you can just Google the letters NPRI and look at your favourite company and your favourite pollutant and see what they are emitting, and the numbers for oil sands are pretty disturbing.

I have given just three examples of many there for the years in this decade, mercury, lead and arsenic, and the emissions of these have all been going up at a very high rate, another reason to think that something is being missed in this claim that nothing is being emitted.

The next panel on the right is some of my own data from 20 years ago. At that point, one of Alberta Environment's senior scientists, David Trew, and I ran a pilot project in the oil sands looking at the pH depression that occurred in streams during spring snow melt. We did this hoping that if we found something, it would get some companies to give us some money to study it further.

The pH depressions that I show here for these two streams that are in the oil sands area are comparable to the pH depressions that are killing fish in eastern streams. One is over two units and the other is about a pH unit and a half.

I could have shown the conductivity graphs too, which show that these streams are being very diluted by runoff water as this snow pack melts, usually about five months' accumulation going into these streams in a couple of weeks.

We did not get any money to do the studies. There were no roads to the area at the time, and the companies told us we were asking for too much money. I think we were asking for about $200,000 for this study.

Those things together made me think that airborne pollution was something that needed investigation.

The intermediate left panel there led me to think the same thing about aquatic pollution. As I have indicated, watershed science 101 says that if you strip the vegetation and soil off and expose the underlying new geological substrate and then rain and snow fall on it, the chemicals that run off that watershed all go up in concentration.

The water body at the foot of that picture is the Athabasca River, and this is not as bad as some of the tributaries to the Athabasca River.

I think there needs to be more concern about the tributaries than there has been. These are more than just little conduits for water. If you look at the early oil sands reports back before governments ran the programs, when it was done by the Fisheries Research Board of Canada, you find that those little streams each had 17 to 23 species of fish, and many of those fish migrated in and out of the Athabasca River. They were probably using the streams for spawning and rearing grounds. Without those streams, you can expect the fisheries of the Athabasca to be impaired, regardless of the level of pollutants in the Athabasca.

Putting all of this together, three of us planned a study in late 2007. Our plan included very detailed sampling of the tributaries in the area, and at several sites on the Athabasca, much more detail than either the federal or provincial governments or industry was doing at the time, and here I am only going to present the airborne results.

Another tip-off in the lower left-hand corner is that when you fly over that area, the snow is not white; it is grey. And if you dig a profile in it, as I show here, you see episodic events, probably deposited when the wind blew from a particular direction, and to make a long story short, we looked at organic pollutants.

I have indicated PAHs here and I have given you one example for metals. We have a number in our paper on it. The two upgraders in the oil sands area are right at site AR6 where the highest concentrations were found in snow. When we melted the snow and filtered it, there was actually an oily scum on top of the water of the filtered snow melt. That is pretty definite proof that industry was adding.

This is all that we showed. There are some people who claim that we said this was affecting the health of people in Fort Chipewyan. We have never said that. What we have said is that these pollutants that can cause problems are getting into the river, and I think that what it does is strips away the excuse not to do a detailed health study of people in the area. The interpretation that this proves that the health problems in Fort Chipewyan are caused by contaminants is not true, and we have never claimed that it was.

We found low concentrations throughout, much higher ones near industry than in remote areas, up to 40-fold and more. I think the reason we need to be concerned about that goes back to the lowermost left panel on page 1. That is if you look at this rate of acceleration and the fact that a plant that comes on line and starts polluting is actually approved in an average of about seven years before it comes on line, and in that seven-year period, we are investing a couple of billion dollars, or companies are in that plant, we need to detect concentrations that are much lower than levels where they cause effect.

All of this fuss about guidelines is just baloney. We can do much better than guidelines. We have the chemistry to do it.

We need to have chemistry that allows us to anticipate when we get into trouble, not wait until whoops, we are into trouble now — sorry, you $2-billion industry, you have got to do $1 billion’s worth of fixes or we are going to close you down. That just does not make a lot of sense to me.

We published these results, one on the organic pollutants and the other on the toxic trace metals, both in the proceedings of the U.S. National Academy. Erin Kelly was the post-doctoral student who ran these studies, and the reason that I am here to talk about it instead of her and have throughout is that young post-docs do not deserve the sort of character assassination that results from the reporting of these sorts of studies.

The first reactions of ministers were very predictable. I actually had lunch with the Alberta minister the summer before mounting this study, voicing many of those same concerns, and he assured me that they were all false concerns. The federal minister first mimicked what he said because he said this is what Alberta had told him, but he had second thoughts, as did Premier Stelmach.

Premier Stelmach actually voiced his concerns first. He said, "Well, this guy has been right a few times before. Maybe we should have other scientists look at these papers."

About a day after he said that, I wrote him and said, "Yes, go to the Royal Society and get some experts on aquatic monitoring and get them to look at our paper and see what they say." I did not get a response, but the next day, federal minister Jim Prentice phoned me, and he said, "My scientists tell me that I should pay attention to your results. If I fly to Edmonton tonight, will you meet with me and go over them?"

Erin Kelly and I met him at the airport and spent two hours showing him our results, and it was obvious by the end of it that he was convinced. He was actually the first to act.

I had thought it would be a reasonable thing to have a federal-provincial panel to look at our data, but they chose to go their separate ways, so we had two panels with only one member overlapping. I have called this panel-itis. We have had no fewer than six panels scrutinizing the oil sands this year. The first you have heard from this morning, the Royal Society report, which as you know is very broadly based.

Environment Canada, the panel appointed by Minister Prentice, reported in December and said yes, indeed, you need to improve the monitoring, just as these papers have claimed.

The Regional Aquatics Monitoring Program, RAMP, review panel reported in January. This was one unconnected with our paper, but it said something that I already knew from participating in a 2004 review, that RAMP is totally inadequate to the task.

Alberta actually had two panels. They called the one that reviewed our data the data review panel, and when they reported that yes, indeed, monitoring needed to be improved, they appointed another panel to design what was called a world-class environmental monitoring program.

That panel reported in July. The minister said that he accepted the recommendations and they would be acted on very quickly, and the recommendations were to improve the monitoring, but also because of the obvious lack of trust in these industry- and government-run programs, they recommended that an independent panel of stakeholders and scientists be appointed to run it to make sure that the true results were getting out to the public and that the science that was done was peer-reviewed, which, outside of our papers, almost none has been for this huge operation, which I find incredible.

At the bottom, I mention the Auditor General, who essentially said the same thing from a different perspective.

Probably the least kind of all was Alberta Environment's data review panel. The next three slides are direct quotes from that, essentially saying that both their programs and the Regional Aquatics Monitoring Program were inadequate and that our studies indicated that they really needed new programs.

Now, I have given you one example of what we found on the right upper panel, but there is one line that did not come through. There should be a horizontal line right at the 20 nanogram per litre mark, right at the tip of that arrow on the right side. That is the limit of detection for the Regional Aquatics Monitoring Program's polycyclic aromatic method.

The bars are our actual numbers. They could actually not see concentrations that we could because their methods were 100-fold less sensitive, and they just did not move with technology.

The technology for doing these measurements has increased rapidly. The technology that we used was developed by the U.S. National Oceanic and Atmospheric Administration and their chief chemist in Juneau, Alaska, Jeff Short, was one of our co-authors who designed that program.

In fact, we borrowed their samplers because under George Bush, they did not have enough money to use them. These were the same techniques and samplers that were used to assess the Exxon Valdez. The same chemicals are causing problems to sea otters and sea ducks 20 years after that spill.

This is just one of many examples of how we were seeing things, but the ministers were reporting correctly that they could not see anything. The reason they could not see anything is that they were using outdated and poor chemical methods. As the RAMP report shows, the sampling program was inadequate. It violated almost every principle of reasonable aquatic monitoring.

The message is that if you want to validly claim that you cannot see industry polluting anything, get bad chemical methods and a bad sampling program and you will not.

We need to get on to the logical next steps. The minister promised this world-class monitoring program. Actually, the federal environment department acted very quickly after getting that first report last December. They immediately appointed a panel of their own experts and outside people, including two of the people on their panel and myself and a few other people, to design a proper monitoring program.

If you go to the federal environment department's website, you will find these as Phase 1, which was made public in March, and Phase 2, which was made public in June. So the plan is there.

So far, no one has indicated when it is going to start. Both federal and provincial environment departments have had budget cuts, and those are cuts on a succession of cuts going back for years and years.

There is a report, and I have given you the website here, by Ron Wallace, who is an Alberta businessman who had another career as an environmental scientist when he ran the original Alberta Oil Sands Environmental Research Program, AOSERP, monitoring program in the oil sands for the Fisheries Research Board of Canada. He was also a member of the Northern River Basins Study panel, and the Northern River Basins Study panel is the model that essentially this world-class monitoring panel recommended to the minister.

We have the model. We have the study plans in place. No one is indicating a starting date, and I know from my own experience that if there is going to be spring monitoring next year, and I view the critical time of the year this spring snow melt period, as I indicated earlier, unless that planning is started now, there will not be a program next year.

I think a second thing, and this goes back to the recommendations in 1996 of the Northern River Basins Study, it is high time we had a detailed community health study. I do not know that the oil sands are responsible for the health problems of that community. They are borderline statistically, as I am sure you heard from Steve Hrudey.

He outraged the community by saying there was no evidence that the pollutants were contributing to their problem. I think a fairer wording would have been inadequate evidence, which I think if you read the report is really what they meant to say. They did say that it had not been well enough studied.

We also need a serious and well-funded world-class reclamation program, and I think with that sort of thing and real evidence, not just $25 million worth of propaganda, we could credibly go international and say this is what we are doing in the oil sands and report publicly what is actually happening and what our problems actually are.

I think the day is gone when we can hide an industry that size away in the bush. You go into the remotest corners of Siberia and you will find a boy who can operate Google Earth and check out what is going on there for himself. I do not think some of our propagandists realize that people today are that aware.

My final slide here simply builds on what was said in the last presentation. We have just had a report on geothermal potential in Canada. Alberta is to geothermal energy as we are to petrochemicals, and yet I never hear anything about geothermals. It is all about solar and wind and fossil fuels.

A lot of this technology, at least for stationary power, is in place. A lot of it is used for dwellings right here in Alberta, as near as Stony Plain and Spruce Grove, and of course, for other larger power sources. Iceland and New Zealand and other places have had this technology in place for years.

I will stop there. If you have questions, I would be happy to try to answer them.

The Deputy Chair: We do have questions. Thank you very much for that presentation.

Senator Massicotte: You can appreciate that we listen to testimony from a lot of experts, including yourself, and we always have difficulty separating the scientific fact from opinions.

I just want to summarize a little bit what your thoughts are. In your first slide, you list all the concerns. Sometimes people exaggerate their fears, but my understanding is that your list of concerns is based upon real facts, real science. Am I correct?

In other words, you are saying that the concerns are valid as applicable to those eight or nine items. Is that accurate?

Mr. Schindler: I would say so. I have chosen to talk about the ones that I have some bona fide expertise in. Some of the others I could have talked about, like acid rain or violation of First Nations subsistence space.

I have worked in the Athabasca Delta area since the mid-1970s. I know where the Treaty 8 boundaries are. I have seen that they are leasing this land. I have seen what happens to the land they lease.

I cannot see how, with a straight face, we can claim to these people that we are fulfilling our obligations under Treaty 8 to leave this land in a state that is going to support them.

Senator Massicotte: From my understanding, the Royal Society of Canada expert panel basically agrees with you, I think. They said two things: With regard to water use, there is no significant empirical evidence to suggest there is a serious problem, but they do recommend monitoring. They agree with you that on reclamation, we are not keeping up with the use of land, and to the extent they buy into the need to meet some world CO₂ standards, we are not meeting those standards. They do not raise other issues. Is that a good summary of what your own expertise is compared to their own?

Mr. Schindler: I would say so. I have not been critical of the Royal Society panel even though there are a number of small errors in it and some things that I object to, like this language for native people, simply because I think their base conclusions are on the right track. I think one sure way to strip away the power of a report is to nitpick for things that are secondary in importance.

Steve Hrudey and I know each other well. We know where we agree and where we disagree. We agree on a lot of things. We disagree on some, and that is the way scientists operate.

Senator Banks: Dr. Schindler, it is good of you to come here again. I just want to make sure that I understand what you said, and I guess I am asking you to confirm the removal of scales from my eyes.

In defence of the oil sands and the companies who are investing enormous amounts of money and trying to do what I think is in the end the right thing, but I have always assumed that while they are way behind in reclamation, and this committee and others of us have visited the oil sands many times, they seem to be ending up with, even in almost the worst circumstance, something that is a little bit better than what was there in the first place.

The land that is being stripped and mined is not very attractive land. It is not nice, and sometimes, not just on the pictures but when you walk around on it, some of the reclamation looks pretty nice. You are saying it is not going to last, but we will see.

What you have said this morning I did not know, which is that whereas I have said they are behind in catching up to reclamation or reformation or whatever they want to call it, they have no intention of doing that at all. I have never heard that before from anybody.

Mr. Schindler: Because it is buried away in their own environmental impact assessments, and the first author of this paper we put together, Dr. Rebecca Rooney, is the one who went through all of those and picked out all of the things and did the GIS maps to plot what they really meant and show what the landscape would look like after those reclamation plans are carried out.

With respect to a nicer area now, I think from the standpoint of a human being, I would have to agree with you. However, from the standpoint of ecosystem function, they will not store as much carbon. There is a lot of carbon stripped out of those systems in the peat that is taken off, the part that is unpleasant to walk on, but that is an important global carbon store.

What they put back not only does not have as much carbon in it, but Dr. Rooney's and my wife's calculations indicate that the sequestration of new atmospheric carbon will be impaired. Their annual rate of adding carbon will not be the same as it was.

From an aquatic standpoint, the reason that those rivers flow all year round is because of that big sponge of peat. That is a very low precipitation area, and it is the snowfall and a few rainstorms that are absorbed by that big sponge as it trickles out that keep those rivers from being a flashy curve, so that they flow all year and supply fish habitat all year.

I think there needs to be a limit to the amount of that that we can do. Whether this in situ technique that we are now moving to since 99 per cent of the surface mine area has been leased is any better I think remains to be seen.

In general, if you put a road or a pipeline or something through this sponge and disrupt the flow of water through it, you have the same effect as just digging it up. Therefore, my guess is that it will not be a lot better.

Senator Banks: I guess we will have to read the small print more carefully.

Senator McCoy: There is much to be discussed, so it is of course useful to know that there are different reclamation targets. It is a functioning ecosystem, but what ecosystem will function is the area of debate.

I am interested in looking forward, and when I read the lower left-hand slide on page 5 of your presentation, I think there are a lot of areas of agreement there, too. I look in particular at the monitoring agency that Hal Kvisle and Howard Tennant recommended, and others on their panel. I am sorry; you may have been on that panel, for all I know. I am not familiar with the other panel members.

I asked this question of Dr. Hrudey so I would like to put it to you as well. You have mentioned it with approval, I believe.

When I read it, I imagined that it was going to be an institution of its own, another Energy Resources Conservation Board. It was going to be an establishment. It was not going to be just something that you do off the side of your desk. It would be funded. It would have scientific expertise, and enough of it, and enough money to run the monitoring programs.

Is that a fantasy in my brain? What would you see in your prognostication of this panel or this institution?

Mr. Schindler: I think it would be fantastic if that could happen. I think that this does need to be funded off the top, just like the ERCB is. It is a cost of doing business.

I think we could have better environmental impact assessments if we had this good long-term data base that could be used as a basis for evaluating new plants, rather than three or four samples that a bunch of students go out and grab for a consulting company that never looks back at what other companies have done.

I think the model that would work, whether it was independent or set up in the way that the old Northern River Basins Study was would be the Northern River Basins Study. There is some disagreement between me and a lot of community leaders on this.

If you talk to the average Aboriginal community, they will say, "Give us the money and we will do our own monitoring." I think that would be worse than what the Regional Aquatics Monitoring Program is doing. They do not have the expertise. They would be getting different contractors and there would be no interface, different methods.

The selling point that I found works with them is I think Environment Canada actually did a master stroke in putting Fred Wrona in charge of developing these Phase 1 and Phase 2 plans. He was the scientific director of the Northern River Basins Study, and I think he developed a tremendous reputation for being honest and forthright, not only with companies but with Aboriginal people.

When I go to one of these communities that is adamant that we cannot have any of these crooks or these government agencies that just hide the data from us doing our monitoring any more, I say what if Fred Wrona ran it? Well, that would be pretty good.

The other thing that I think is key to this, and this is in this monitoring report, which I thought was really an excellent job, is Aboriginal involvement. In that Northern River Basins Study, there were two Aboriginal community leaders on the main board and there were three traditional knowledge people on the science panel, and they were not a hindrance to the science panel.

I was on the science panel, and there were six so-called Western scientists and three of them. We agreed on almost everything, and it was really a tremendous experience. I think there was a tremendous amount of trust built among the communities to the point where CEOs of companies on the board were voting with native leaders. That is the kind of system that we need to have in place, with true representation.

The Regional Aquatics Monitoring Program right now claims to have that representation, but when I looked last, exactly a year ago, there were 13 companies, eight government agencies, one Aboriginal band and no non-government agencies represented on the governing panel, and the reason is that industry pays and industry and government call the shots. All these other stakeholders just disappear.

Senator McCoy: If I have the time, I would like to come back to this question, which I think is a puzzle.

You said just fund it off the top, and I have not heard you specify, but I have heard some people suggest it should be a levy on industry plus government contributions. I am curious about how that is going to stand the credibility question, the sniff test, I guess.

Mr. Schindler: I think as long as it is put in the hands of a credible group and the credible group will honestly report their data with no constraints and has membership that is not all industry and government, I think it will fly.

Again, using the Northern River Basins Study as an example, another example is the old Fisheries Research Board of Canada, which ran the original monitoring program. That was not a civil service organization. It did not report to ministers. It reported to a panel of senior scientists, and it was respected world-wide.

I first heard of it when I was a graduate student in Europe. They were at arm's length so nobody was spinning the data before they were publicly released, and I think that is an essential element of developing public trust in a program.

The Deputy Chair: Let us not be afraid of the facts. Let us get the facts out and then deal with them.

Dr. Schindler, unfortunately, I have to cut this off. It has been very interesting and informative, as we all would have expected it to be, and I want to thank you very much.

I am just going to hand this back to Senator Angus, who is the chair, and welcome him back to the committee.

Senator W. David Angus (Chair) in the chair.

The Chair: Dr. Schindler, I want to apologize. I had an urgent call from Montreal.

I remember so well, it was one of my first days as a member of this committee, I think it was seven or eight years ago now, when you came to Ottawa to a hearing on water and Senator Tommy Banks told me I was going to love this committee, especially because the witness I was going to hear first was you, and I became green overnight.

I have been talking about Dr. Schindler all around Quebec, and I was so sorry to have to miss you this morning. Thank you for coming out early this morning and sharing your thoughts with us. I hope you think we are doing good work.

Mr. Schindler: Yes, I think you are, or I would not have come back.

The Chair: Senators, we now have before us, also from the University of Alberta, School of Business, Associate Professor Andrew Leach.

I apologize for the shortness of the introduction, but feel free to tell us about some of the things you have done, if you wish.

Andrew Leach, Associate Professor, Natural Resources, Energy, and Environment, University of Alberta, as an individual: Senators, my background is that I am an economist by training with also a background in environmental science. Most of my academic research is in global climate change agreements and climate change policy, more recently moved towards energy policy, electricity policy and greenhouse gas policy within Canada. I do some work on carbon capture and storage and some new building work on oil sands tailings, research and development, et cetera.

I have got a broad range and I wrestled a little with what to talk about this morning. I thought, given the setting of the Durban negotiations and the 17^th conference, that I would talk about Canada and greenhouse gases and try to discuss a little bit my thinking on where we are and where we should go and some of the context around that. I hope to maybe give you a little bit of a different view of the context for Canada's situation with respect to greenhouse gases.

The Chair: You did also mention those key words, "energy policy."

Mr. Leach: I did.

The Chair: If you can tie it in somehow with that, that is what we are about.

Mr. Leach: I will try to do that, so the second half of my presentation actually ties back to oil sands and the way we see oil sands fitting in with greenhouse gas policy.

On my first slide, I have shown what is now a common point I think in the press and certainly in government speaking notes which is to say where is Canada headed, where are our policies going to take us with respect to greenhouse gas emissions and where is our target.

The story is very simple. With the policies we have in place right now, we are not going to meet our target. In fact, we are going to miss it by possibly 180 million tonnes per year. Our 17 per cent below 2005 level is far out of reach with our current set of policies, and I think the impression around that has been that therefore, we are not doing enough to meet our targets and that our targets, as we have been told over and over, are demonstrably weak.

That is the first angle that I want to start at, so if I turn you to my second slide, I think one of the problems we have is not just that we do not have the policies to meet our targets. There are three or four greater points that make our challenge more daunting.

The first problem, and one that I expect will be surprising to some people in the room, is that were we to meet our target, we would have to impose the most stringent climate change policy in the world by far, probably by an order of magnitude, so our targets are not weak targets. They are very aggressive targets.

The second point I think is very important is that even though our target nominally, 17 per cent below 2005, is the same percentage reduction as the United States' target, to meet that target in Canada is a very different ball game. The U.S. is likely to meet their target without taking any GHG-specific policy actions. We are not going to come close.

Senator Banks: Just for the record, we should know, which target are you talking about?

Mr. Leach: I am talking about our target of 17 per cent below 2005 levels by 2020.

The Chair: By any chance do you follow the hearings of this committee at all and our study?

Mr. Leach: Not in great detail.

The Chair: Because you should know that we have had bureaucrats and the minister from Environment Canada recently telling us that we will be meeting these targets, and they have shown why.

Not to try to create controversy, there were things that they were saying as to why we would meet them that may not be in your model. I do not know how you measure it but —

Mr. Leach: The graph that I am showing you on the second slide in my deck is from Environment Canada's publication this year of Canada's emissions trends and issues. This slide was used in Minister Kent's speaking notes for his first two public addresses, and this is consistent with the statement that he made last week in Parliament to say that we have policies currently in place to get 25 per cent of the way to our targets.

The question, then, is where are we going to go from there, and the coal-fired power regulations are actually included in this, even though they are still in hearings. The oil sands targets are not and natural gas targets are not. No further policies that have not yet been introduced or passed are included in this graph.

Again, it is important, even if you look at all of the provincial commitments, and take them at their word that they meet their target, we still do not meet our aggregate national approach. The story that we are anything other than on track to not meet it is pretty hard to make, I think, at this point.

I talked about the U.S. Back to my third slide. I think the third problem we have is that the global discussion around climate change targets has really put Canada at a disadvantage. It has painted us into a corner by 1990 standards on Kyoto, the constant emphasis towards baselining targets as opposed to rewarding aggressive action.

Domestically, I think we have seen a lot of these circumstances as a roadblock to action, in particular the idea that the growth in the oil sands industry is at odds with domestic greenhouse gas policy and specifically with globally credible greenhouse gas policy. I actually think we are not as far away from that as some would suggest, and I think there are some ways around it, which I will talk about briefly.

Let us go to targets and to Senator Banks' question just to put some detail on this. If I go to my fourth slide, Canada's greenhouse gas targets, if you cobble together statements, 17 per cent below 2005 is our updated Copenhagen pledge, and 60 to 70 per cent below 2005 by 2050, while not signed into any specific agreement, has been our government's talking point.

Alberta's target certainly notionally on this measure is much weaker. It is 30 per cent above 2005 levels by 2020 and 14 per cent below 2005 by 2050. Again, relative to a baseline, these are much lower reductions.

Contrast that with the EU's target. Twenty per cent below 1990 levels by 2020 and 80 to 93 per cent below 1990 by 2050 sounds incredibly aggressive. They are taking very deep cuts. We are not making very deep cuts. The EU and these type of 1990 targets look very stringent.

I want to take you two slides forward. The perception out there from looking at these statements is that our targets are weak. Go to slide 6. What these price graphs show is that if you wanted to meet the EU's target, Canada's target or Alberta's target, what sort of policies would you have to put in place? Everything is benchmarked back here to a price on carbon.

It says if you eliminated all of the uses of carbon in your economy that generate less than $50 a tonne worth of value, so under a carbon tax cap-and-trade, whatever it might be, which one of these curves would it take to meet Canada's policy, the Alberta policy and the EU policy.

I think we have been trained to think the EU is very aggressive, Canada is a little bit more aggressive and Alberta is very, very weak. If you turn to the next slide, you will see that exactly the opposite of that is true, that the price you would need domestically within Alberta to meet Alberta's targets rises up to $200 a tonne by 2035.

These are not my numbers; these are David Suzuki's numbers. The price that you would need to meet Canada's target, which he described as weak, would be over $150 a tonne by 2035. The price you would need, and this is from Point Carbon and Deutsche Bank, to meet the EU's hyper-aggressive target is $50 a tonne in the same year.

When you compare the stringency, the type of controls you would have to put on domestic corporations and individuals to meet the targets, the EU's target is by a factor of two to three less stringent than Canada's, but that message does not get across, and that hamstrings us in terms of how we think about our greenhouse gas policy approach.

I will jump to my next slide. Again, we come back to that idea that targets are weak and that they do not represent sufficient effort, given the magnitude of climate change. I think actually that both of these are wrong.

I think I have shown you on the previous graph that to meet Canada's targets and within that Alberta's targets, we would need an incredibly stringent policy relative to anything else that is in place in the world.

The second question to that is, well, would that be enough. If we did what we say we are going to do and everybody else did the same thing, would it be enough? And people are quick to tell you, well, no, no, no. The world has to reduce by about 20 per cent relative to 1990, a convenient number for the EU, and if everybody did that, we would meet the 2 degrees Celsius target.

Well, I do not actually think that is true, and I will come back to that in a few slides and expand on that.

If I can jump to my ninth slide, and I am skipping through this pretty quickly because I want to get to your questions, I think the two take-aways from this are, one, that Canada's targets are aggressive, but maybe more important, that because of the way effort is framed globally, Canada is always going to be seen as being behind the times.

We have this situation where even if we put in a $100 per tonne carbon tax, and remember, the Green Shift policy was $15 a tonne, to put that in perspective, we probably would not meet our targets by 2020, and those are the weak and modest targets that are not good enough. Where is the constituency to get something done there?

Canada's reaction to that has been, well, since the system does not work for us, we are not going to play in the system. I think the long-run consequences of being an impediment to the negotiations and being seen as a barrier to progress and climate change could be more severe than the consequences of non-compliance.

I think Canada needs a different approach. I have listed on my tenth slide three elements I think need to be in there. One is a metric to measure that stringency, so to not ask what your emissions were in 1990 and how much you have reduced them, but ask if you are operating a refinery in the U.K. and you reduce carbon emissions by one tonne, how much does that put in your pocket and how is that different from operating a refinery in India, in China or in Fort Saskatchewan. If we can get to that metric and formalize it and push it out on the world stage, that will be crucial.

Two, we actually have to make a commitment to impose policies domestically that either meet our targets or readjust our targets. I think that is crucial.

Third, I think we need to be able to demonstrate that with the policies we are prepared to impose in Canada, if everybody else imposed those policies within the OECD or globally, we would meet something akin to the Copenhagen pledge. Again, it is sounding very aggressive, but I do not think it is there.

If you go to the next slide, I think you will be very surprised. The next slide shows a graph of three prices. The lower curve is from last week's World Energy Outlook from the International Energy Agency, and that is the price that they prescribe for the entire OECD to help them meet their 2 degrees Celsius scenario. This is slide 11.

The lower price curve on that graph is what the IEA said the whole OECD needed to impose to meet the 2 degrees Celsius target. The next line on the graph is again what it would take to meet our current targets domestically, so if we actually impose something that did not quite meet our targets, we would have the same stringency of policy in place that it would take the world to meet the 2 degrees Celsius target, and nobody is talking about that. I think it is important that we change the language on this.

I promised I would change gears and go to oil sands, so I want to do that very quickly and then I will come to your questions.

With regard to slide 12, I think we often tend to see the threats to the oil sands industry from greenhouse gas policy and we ignore the threats from not having one. I think one of the key threats that you see from not having a national greenhouse gas policy and from non-attainment on Kyoto on our 17 per cent below 2005 is that it is going to be very clear who is going to take the blame for that.

The blame is falling right now on the oil sands industry, and we have a situation where Canada's greenhouse gas emissions are 750-odd million tonnes per year, oil sands are 30 million tonnes and everybody sees it as oil sands' fault. They are not prepared to look in the mirror.

We do have to recognize that as it currently functions, Canada's oil sands industry is at risk to global greenhouse gas policy, so a policy on carbon globally would affect the value of the oil sands. That is obvious. It is a carbon-control policy, and we have a high-carbon fuel.

However, since the global greenhouse gas conversation has now turned to let us eliminate new sources, let us eliminate growing sources and let us eliminate things we can eliminate easily, and we saw some of that with the EU's Fuel Quality Directive, with the Keystone XL decision, et cetera, oil sands are at greater risk from that than they are at risk from a broad global policy.

On the next couple of slides, I put some examples of that. This is what Canadians, and you will know this as well as I do, are reading. It is oil sands' fault that we are not meeting targets. Ontario is doing all sorts of great things. Alberta is not doing enough because Alberta's emissions are growing and Ontario's are shrinking.

Certainly from Greenpeace, you see frequently that stopping the oil sands is the answer to Canada's greenhouse gas emissions problems, on slide 14. Certainly, on slide 15, you see these mentions from, for example, NASA scientist James Hansen that somehow the oil sands in and of themselves are game over for the climate, and if we simply get into extracting oil sands, then all hope is lost.

None of these things is actually true, but perception on these frames has become a reality.

I have two quick points about how we get to 2020 on slide 16. I think we need a national GHG policy approach, not just looking at an oil sands sector approach, so we have to be able to have the tough conversations about how stringent our targets are and that we are not going to meet them without hitting consumption of fossil fuels and not just production of fossil fuels.

We cannot blame somebody else. We have to look at it as being all of our problem and all of our problem to solve.

We have to look at shifting the conversation to what efforts countries are putting on board to reduce carbon emissions, whether that be developing countries or developed countries, not trying to divide the global pie and come up with fancy equity rules for who gets what share. Let us just figure out who is doing what to reduce carbon emissions.

I think one of the interesting things for me is that the oil sands actually provide us with some leverage that we have not seen yet, which is that if we put a carbon policy on and oil sands can function under our carbon policy, how can any other industry or any other jurisdiction that has painted that as dirty oil suddenly say their industries are unable to function under the same carbon policy that oil sands can function under. I think we miss the fact that there is a lot of leverage there we could use very well.

In my view, last slide, we need a policy that concentrates on high-value uses of emissions, that penalizes low-value uses, not new uses and growing uses. We need one that rewards early actions and innovation, and we need one that concentrates on those value signals on carbon.

I do not care where you are in the country; I do not care what you are doing. If you are using carbon in a low-value way, we do not have room for you under 607. I am sorry, it is not there.

If you are using carbon in a high-value way, absolutely we do have room for you and our policy should enhance that. That is my view on where we have to go with carbon, and I am more than happy to take your questions.

The Chair: At this stage, colleagues, we do have some photographers here. I need a standard motion that you all agree that we can have these pictures taken. Is everybody in favour? Thank you. It is approved.

Mr. Leach: I am also happy to take questions in French. My first language is not French, but I am happy to.

[Translation]

The Chair: What do you mean by "high value"? What does it mean?

Mr. Leach: For example, if we look at the oil sands, let us say that you get 0.6 tons of carbon per barrel of oil, but that barrel of oil sells at roughly $100 today, compared to oil which has 1.7 tons of carbon by megawatt-hour and sells for maybe $30. We see that the value generated by extracting oil sands is far greater than the value generated through producing electricity from oil. So we have to ask ourselves what uses of carbon we want in our economy. It is not enough to say that old sources are fine but we do not want any new sources.

The Chair: Do we have simultaneous translation?

[English]

Mr. Leach: I can redo that in English, too.

In the example I gave, I was thinking that between carbon per unit energy for producing and consuming a barrel of bitumen, you are looking at a high end of probably 0.6 tonnes per barrel of oil, and the barrel of oil itself sells for $100, even the part that we are selling, roughly. It depends on the product on the market.

Compare that to 1.7 tonnes per megawatt hour for coal and that megawatt hour of coal probably sells for $30 to $40, so more carbon, lower value at the end, and probably a thinner profit margin on that end result product as well.

When you say which one would we want to eliminate from our economy, the conversation has been that we are trying to hit a budget so we should not have the new sources. We should eliminate the new stuff and cut off the growth and all these things we are already doing. We are not going to have the discussion about eliminating those.

I think the discussion we have to have is, if we have this carbon budget, how can we devote that budget to generate the most value for Canadians as opposed to preserving activities we are into now.

The Chair: Congratulations on your French.

[Translation]

Senator Mitchell: Thank you very much, Mr. Chairman. I greatly appreciate your answer in French. It is very important to have people from Alberta debating this issue in French, in both languages.

[English]

It is interesting to me that it is said that my generation is kind of having trouble coming to grips with all of this, and fundamental change can happen and it often does historically when a new generation sees the world differently.

You were speaking very forcefully and aggressively in a good way about this issue, in some senses certainly not in language that we have not heard before but with a great force behind it.

It struck me that you are of the generation that is probably coming to grips with this and we should listen to you very carefully, and I have.

I am very interested in your statement, and it is quite a profound statement actually, that the global greenhouse gas conversation has tended to focus on eliminating new sources, not on most efficient policies. This is a much greater threat to our resource wealth than doing nothing. Doing nothing is a greater threat than continuing the way we are.

Mr. Leach: Absolutely, and I think the example I could draw would be James Hansen's statements on oil sands, that one of the ways to meet global greenhouse gas targets is by leaving the oil sands in the ground, and we have all heard that conversation.

I think when you look north of here, depending how much value you put on the reserves in the ground, you are looking at value that — since it is Alberta Crown-owned, I will be careful here — is probably between $500,000 and $1 million of wealth for every single man, woman and child in the province of Alberta of the original oil in the ground, and we are being told, well, leave that in the ground because it is new. Not because it is low-value, not because of anything else, just because it is just new.

We do Saudi Arabia. We do coal-fired power. We have been doing it forever, so we are going to keep doing it and we know that, but it is easy to cut off the oil sands at the knees, so to speak, so we are going to do that.

We see that a little bit coming from the EU. It was easy to impose a fuel quality directive that highlighted oil sands. It would have been harder for them to say all of our current oil imports will have to meet a particular data requirement, file their carbon footprint, and everybody will be treated on a level playing field.

It is easy for California to say no oil sands because they do not import any oil sands right now. We are seeing a lot of reactions that cut off new sources.

It is harder for governments to say we are going to take the tough decisions that might put some people in a particular industry out of work. We are going to transfer our economy to high-value uses of carbon, away from some of these things we do now that are low-value uses of carbon.

Those are the hard conversations to have, and many of you will appreciate that. However, by avoiding those hard conversations, I think Alberta becomes the easy one or the oil sands become the easy one for people to cut off, and that is a lot of wealth that could get trapped in Northern Alberta.

Senator Mitchell: I do not think I am putting words in your mouth, but clearly you believe there needs to be a price on carbon. I ask most people who appear before here, do they think there needs to be a price and how to do it, and they say yes. Amazingly actually, even industry often says there needs to be a carbon tax.

Would you subscribe to that? Could you compare that to the regulation, which is probably the most expensive way to do that?

Mr. Leach: Yes, I think the standard economic benchmark is that the easiest way to put that value or put those trade-offs on firms is through charging a price for carbon, if that goes on through a cap-and-trade regime.

Personally, I have advocated for something I would call a "feebate" regime, which is a little bit of a hybrid between a carbon tax and a cap-and-trade regime where you have a benchmark, let us say tonnes per barrel of oil, and if you exceed that benchmark, you would pay a fee. If you are below that benchmark, you would collect.

This plays out much like a cap-and-trade regime would: If you are above a benchmark, you buy permits; if you are below a benchmark, you sell permits, but you would be doing it at a fixed price, so you give the certainty for the industry.

The disadvantage in some ways of a carbon tax is that you are collecting money on emissions that were not going to be reduced, so if I put $50 a tonne carbon tax on the economy, $50 to $100, there will still be 600-odd million tonnes of annual emissions that are not going to be reduced under that policy that are paying that tax. It is a big average cost plus a big pile of money to spend, and both of those become political footballs.

The advantage of something like a cap-and-trade regime or the "feebate" is that it lowers the average cost but still gives you that same innovation incentive. It has some changes at the margin, but it gives you the incentive.

The short answer to your question, then, is that the easiest way to do it is absolutely to put a price on carbon, but the long answer is that it is not the only way, so I think whether we are going to do it through prices or through regulation, we still need to have these conversations about sending that value signal or that trade-off, that I am going to make you do one way or the other all this stuff that costs you $100 a tonne or less or we are not going to meet our target.

Senator Mitchell: This is very interesting to me. The argument is made frequently, in fact has been made right now probably as we approach Durban, that Canada cannot do this. There is no point in a country like Canada doing anything significant until India and China does, and the corollary to that is that if we start putting carbon tax on our emissions, we are never going to be competitive, and every job that we have ever had will be lost with no recognition of the fact that if you really want to lose jobs, just keeping doing what we are doing because climate change could be infinite in that regard.

How do you answer the question about that inertia that we cannot do it until somebody else does it? Is there a way that Canada can start to do it and say look, we are doing it, here is leadership, and be leaders in the world?

Mr. Leach: Yes. I think the first point that I highlighted was that definition of a metric of effort. Europe has done a very good job of defining reductions relative to 1990 as the way that effort gets measured globally. Everybody has bought into that.

I think there is a little bit of a vacuum now, and we are maybe seeing the search for an agreement at Durban. I think there would be a role for Canada to play in saying here is a different way that we are going to define things, but it has to have that backstop of credibility that says we are prepared to impose this policy, we are prepared to measure our own performance using this metric, and the last bit is that if everybody did this, here is how we can apply it in developing countries, here is how we could apply it in the OECD, and we would meet your 2 degrees Celsius.

That is what Europe offers. It is not just that 1990 is good for us and therefore we are going to measure by 1990. They have that backup that says, one, it is easy to measure; two, if everybody did what we are telling them to do and if everybody did what we did, we would meet this 2 degrees target. We have to have the same deliverables with our message.

Senator Mitchell: So we do not go bankrupt in the process. We actually probably benefit in many ways and lead the world.

Mr. Leach: Yes.

Senator Mitchell: Imagine that.

Mr. Leach: The competitiveness thing is certainly a worry. If we were doing something unilaterally, you do put some of your trade-exposed industries at risk.

Right now, Canada is certainly seen as being behind in progress on this, so what I would do is, again, I would use that. I would say here is the effort we are prepared to do. We are going to benchmark it to what the EU is doing, and if the EU cares to lead the charge and make sure that they are going to increase the price, we are going to follow as well and see if the U.S. comes.

Yes, we are taking a risk from exposure to different carbon prices from the U.S., but that risk is actually quite small when you think about the differences in tax treatment, the differences in land costs, the differences in labour costs, all of these things which exist across national borders. You would need a very, very high carbon price to come close to any of those other differences.

We do not see all industry flooding to Wyoming right now, and I do not think you would see all industry flooding out of Canada. You would see some changes at the margin, no question, but that is the conversation we have to have.

Senator Banks: I take note, professor, that you are an economist and I am not, as can be demonstrated by the state of my personal finances and my next question.

I am looking at the charts that you gave us on slides 6 and 7, and they are talking about cost, what we have to do to increase cost, raise the price point.

By this measurement, our efforts are aggressive in terms of the cost that we would have to pay to meet those things but not in terms of the actual results in reduction. Have I got that right?

Mr. Leach: You do.

Senator Banks: The reason I am asking the question is that one of the reasons the EU figures do not have to go as high as ours is because their energy costs are already priced far higher than ours. Have I got that right?

Mr. Leach: The EU's targets are low for a number of reasons. One, their overall energy use per capita is lower because historically they have had higher energy costs, and they have higher population density, all these things.

Senator Banks: The price point there has resulted in lower energy consumption.

Mr. Leach: Yes, over time. Before 1990 and since 1990, absolutely.

The second and probably more important reason there is that if you think about greenhouse gas emissions, it is going to be driven by really four things — your population; your GDP per capita, so how much stuff people have, if you will; how much energy goes into producing the products people consume; and what emissions intensity that energy holds.

On most of those dimensions, Europe has a stable population, even in some cases a declining population. They have had relatively low economic growth relative to Canada. Their energy supply historically, certainly from 1990, was much more emissions-intensive than Canada's because they did not have the same level of hydroelectric deployment that we have, so they have declined but they are still not anywhere near the percentage that we are.

Finally, of course, they have moved to a less energy-intensive economy, so they have had all these movements away that were easier for them to accomplish than it would be for us.

When I put these on, really what I was saying is that their targets are easier for them to meet, given all of their circumstances, and that you hit on exactly.

Senator Banks: I just wanted to make sure that I understood that these graphs are not demonstrating relative reductions in GHGs.

Mr. Leach: No.

Senator Banks: They are illustrating the relative cost in arriving at whatever we said we were going to do.

Mr. Leach: Correct. That is exactly right.

Senator Brown: I think your policy here is very provocative for certain, but I am interested in a little bit of reality here.

I think we were told we were doing 1.53 per cent of the GHG gases. I do not know how it got to 2 percent, but that is what everyone is saying now. The oil sands are one tenth of 1 per cent of that, so for me that makes it 15 one-hundredths.

Canada, as you noted in your own presentation, has not signed onto any specific targets, but it has talking points. It has not, in other words signed onto Kyoto or Copenhagen.

Europe right now has signed targets and has tried to do a lot of work on GHGs, but according to the headlines, Europe is pretty much bankrupt right now. There are two or three countries that are very close to going down, period, and some others that warrant some real help. Chancellor Merkel of Germany just last week said they are not giving any more support to the euro.

In Ontario last week, the headlines said that by the year 2020, health care will consume 100 per cent of Ontario's budget. That was written in the paper.

I know there are exaggerations in papers, there are exaggerations in profiles, there are exaggerations in speeches. However, I think we have to get into some reality here pretty quickly as to what we are going to do to spend on carbon.

I think the things that are being projected right now are not real. First of all, we are one tenth of 1 per cent in the GHG emissions in oil sands, regardless of what the Ontario paper has to say.

I do not believe that Ontario's entire budget is going to be consumed in 10 years. Somebody has to do something about it.

While I agree that we need to reduce pollution in this country and pretty much in every country, I think we are going down a road that will be impossible to travel pretty soon.

Mr. Leach: A couple points, I think, just for clarification. Canada has signed and ratified Kyoto. They have not met their targets, but they have signed and ratified Kyoto.

Senator Brown: Not this government.

Mr. Leach: Yes, the government. It was passed in the —

Senator Brown: Not this government.

Mr. Leach: Not this government, but the Canadian government has signed and ratified Kyoto and may withdraw from it, and I saw some writing on that this week about the circumstances.

Second, we agreed to 20 per cent below 2005 at Copenhagen and signed, and then we updated our target to 17 per cent below 2005, and that was the Harper government.

The current conservative government has committed to this target within an international agreement, not a binding treaty, so I think we have to keep that in mind.

Senator Brown: We do not have a binding treaty, is what you are saying?

Mr. Leach: We absolutely do not have a binding treaty, so I think the question I would ask, and I think you are asking exactly the right one, is how much should we be devoting to carbon emissions reduction?

I do not think I have never argued we should take our carbon emissions reductions and assume that by our taking action, we have a meaningful effect on global greenhouse gas emissions. You will notice there was none of that in my presentation.

My presentation was how do we design our policy so that we do not end up on the punishment end of global actions with respect to greenhouse gas emissions, and that is where we are positioned now.

I think most of the evidence suggests that in tough economic times, economies become more protectionist. They become less interested in domestic expenditure, which you have highlighted, and they become more interested in blaming someone else in a way that they could use someone else's inactions to collect money to get themselves out of their own troubles.

Right now, with our approach to greenhouse gases, I would argue that we have actually opened ourselves up to a lot of those possibilities, and we saw in the U.S. with the Waxman-Markey bill that initially passed the house that the first draft of that bill had what was called a border tax adjustment for carbon, and I will highlight something important with respect to that.

Under the Alberta royalty regime, an environmental fee paid for compliance reasons is royalty deductible. It is also tax deductible, so 60 to 70 per cent of the cost of any carbon fee imposed on Alberta oil production by a country that imports our oil would not be paid for by the companies, it would be paid for by royalties and taxes. I think we have to understand the risks that exist, and absolutely not bankrupt ourselves.

We may want to revisit our targets. We may want to ask what we are prepared do, but I think first and foremost, we need our policy to match our message. If we are going to go internationally and say we are going to do 17 per cent below 2005, I think we should have the policies to back that up.

If we are prepared to do only $5 a tonne policies or zero dollars a tonne policies, then absolutely let us say our policy is we are not going to do anything.

I think if you message one way and you do something else, you open yourself up in this kind of a global context to much more risk than the costs of actually doing something.

Senator Brown: Do you not think it is a little bit much to try to blame Canada? If I accepted as much as 2 per cent, which I think is actually 1.53 per cent of the world's GHG, how would we be a culprit?

Mr. Leach: I absolutely think it is wrong to blame Canada, and I think that is the tone of my talk. One of the reasons why Canada is in the role of being blamed is because when people are faced with tough decisions, whether it is budgetary decisions or whether it is in this case an environmental decision, the knee-jerk reaction is to try to pass the blame to someone else, to try to impose the costs on someone else, and I think we have all seen the images of visiting the oil sands mines.

It is very easy to put up a picture on a billboard of an oil sands strip mine and say you are doing stuff to reduce carbon emissions, you care about climate change. Here is what Canada is doing. Do you think it is wrong? And most people will say yes.

I think that is the problem we need to face. If you are able to come back and say that if you are operating that facility in Northern Alberta or you are operating a refinery in the U.K., the carbon trade-offs are exactly the same — the atmosphere does not discriminate; our policy does not discriminate, so we are okay.

Senator Brown: I agree with you, except I do not think anyone can make it a reality that we are a culprit because of 2 per cent or 1.5 cent of GHGs. It needs a program to show what really is happening without allowing people to just pick on us.

Mr. Leach: I think that is absolutely true, but the counter, and I want to come back to this again, is the international framework has been developed in a way that disadvantages Canada. There is no mystery about that.

Right now, there is an option to do one of two things, which is to say this picks on us and we are only 2 per cent, et cetera. I think the other way to say it is here is a counter formula that actually works for countries like Canada. It would work for Australia, it would work for the U.S., it would work actually much better for China and India than the current formula, and we can get a different constituency that has more of our similar interest in mind on side and drive policy discussion that way.

Senator Brown: I thank you for your comments. I disagree. I think it is a public relations program problem, not a reality problem.

Mr. Leach: Fair enough.

Senator Massicotte: You seem to make the argument that given it is less than 2 per cent, it is an unfair issue and it is not relevant. I would ask you, therefore, would that argument also be relevant that if you look at every American state, none of them exceeds 2 per cent? If you look at every province in China, none of them exceeds 2 per cent.

It is how you define your geographic region. China is a large territory that includes 1.5 million people. That is where the problem is. What does it matter? Nobody in the world is more than 2 per cent.

Mr. Leach: Absolutely.

Senator Massicotte: Does the problem disappear?

Mr. Leach: Let me be really clear about my answer to that. My answer was not to say that because we are only 2 per cent, we should do nothing. My answer was to say that, normally with any policy, you want to look at costs and benefits of the policy, so we should not look at the costs of our policy domestically and weigh it against the benefits of everybody doing the same thing we are doing.

That is the problem that you see. People say, if Canada just did this, we could solve the climate change problem, and those are two very different assumptions, so I do not agree with that at all for exactly the reasons you outlined.

Anybody can paint an area of their country, their geography, their region, their industry, what have you, as being a very small part of a problem.

The issue with climate change or with pollution in general is that it is a public good problem, or a public bad problem, I guess, in this sense, so by definition, you need collective action, and any individual will always have the incentive to say I am not going to contribute to that, I am not going to put my money in the hat because I know everybody else is going to do it.

When everybody says, "Well, I am only 2 per cent of the problem or I am only 5 per cent of the problem" or what have you, then nothing happens.

I think the key is how does Canada come into something that could build similar consensus to what the EU is able to do, or maybe a broader consensus, while at the same time having some rules of the game that reflect our effort better.

The Chair: Colleagues, I am going to have to adjourn now. Perhaps you would like to talk to Senator McCoy off-line.

Three of us have to meet with the Edmonton Journal, and we start again at 12:30 with another witness, so we are very tight here.

Professor, thank you very much. You certainly did select something that is very much in the news today as well, and very interesting for us.

As far as the pricing of carbon, I would like to hear a little more about your variation as between hybrid and cap-and-trade and a carbon tax. You might send me an email about that.

Mr. Leach: I would be happy to.

The Chair: Thank you very much.

(The committee adjourned.)