Proceedings of the Standing Senate Committee on
Energy, the Environment and Natural Resources
Issue 2 - Evidence - September 27, 2011
OTTAWA, Tuesday, September 27, 2011
The Standing Senate Committee on Energy, the Environment and Natural Resources met this day at 5:17 p.m. to study the current state and future of Canada's energy sector (including alternative energy).
Senator W. David Angus (Chair) in the chair.
[English]
The Chair: Good evening, ladies and gentlemen. I welcome you all to this formal meeting of the Standing Senate Committee on Energy, the Environment and Natural Resources as we continue our study into Canada's vast energy sector and our work towards developing a strategic framework for a national perspective on this subject.
We are very privileged this evening to have with us Canada's newly minted Minister of Natural Resources, Mr. Joe Oliver. I share with you that Mr. Oliver is a dear old friend of mine. We have known each other since law school in Montreal. He has far exceeded our discussions of those early days and has entered the domain of politics at a mature stage in his life, having had a very distinguished career in the financial services sector. In particular, he had quite a stint with the Investment Dealers Association, which he ran very ably. He then went into politics and has been an elected member of Parliament. The Prime Minister has named him to his cabinet.
We welcome you here tonight. I believe you have with you the deputy minister of your very important portfolio.
[Translation]
Mr. Serge Dupont — a Quebecer, I believe — who has a lot of experience with the matters at hand.
[English]
I would like to let you know who is here so you can relate better, Mr. Minister. To my immediate right is Senator Grant Mitchell, from Alberta. He is the deputy chair. To his right are Marc LeBlanc and Sam Banks, from the Library of Parliament, who render invaluable service to us. To their right is Senator Bert Brown from Alberta, the only elected senator so far. Then, from the great province of New Brunswick, we have Senator John Wallace. To his right is a welcome guest, not a regular member of our committee but a very interested observer of the passing scene in energy and environmental matters in particular who I do not think needs a lot of introduction — Nancy Greene Raine, one of Canada's tremendous high performance athletes and the female athlete of the 20th century. It is pretty amazing. To her right is the former Minister of Natural Resources and related matters in British Columbia, Richard Neufeld. From the beautiful province of Nova Scotia, we have Senator Fred Dickson. To my left is our clerk, Lynn Gordon. We also have a distinguished musician here who keeps on tune and on key as best as possible, Senator Tommy Banks from Alberta. Next to him is a lovely Quebec senator, a colleague of mine from Montreal, Judith Seidman. To her left, from the province of Manitoba, we have a great long-time senator and friend of mine, Senator Janis Johnson.
[Translation]
Then another Quebecer, who comes to us from Manitoba, Senator Paul Massicotte.
[English]
From Saskatchewan, we have Senator Robert Peterson.
Colleagues, as you know, we are well along in our study on energy. We are committed to finalizing and reporting on our deliberations, which have been going on for two and a half years now, by June 2012.
By the way, we now have with us another fine senator, from the Yukon Territory, very experienced in government, Senator Dan Lang.
We have a lot to do. At our meeting Thursday morning, I will ask you to stay on after the witnesses to go over our work plan, including budgets and the like. I will not go into that now.
I did have an opportunity to meet with the minister, at least twice if not more, to discuss his appearance before us. As you know, it is our first day back, and the minister is here, so we are very fortunate. He has undertaken, I believe, to answer most any question we have about the government's policy and the direction it is going.
We all know, by the way, Mr. Minister, that energy is in the provincial jurisdiction, in many aspects, and that causes us some difficulty in how we address the various issues. There is certainly a strong concurrent jurisdiction in terms of the responsibilities you have in your department. You may get some questions along those lines. However, we are interested in knowing what the policy of this government is in these matters. I do not think there will be any surprises.
I believe you have an opening statement. Please proceed; you have the floor.
Hon. Joe Oliver, P.C., M.P., Minister of Natural Resources: Thank you very much for your warm and kind introduction. I am honoured to be here. Thank you for your invitation to meet with the committee. This is my first appearance before the committee as the Minister of Natural Resources, and I am pleased to be with you so early in the new session of Parliament.
[Translation]
I welcome the opportunity to discuss our government's priorities on Canada's energy sector.
[English]
On May 2, Canadians gave our government a strong mandate to focus on jobs and the economy. Since July 2009, Canada's economy has created nearly 600,000 new jobs, but we still face a fragile global economic recovery, as we all know because we see that every day in the news, and too many Canadians are looking for work. This is precisely why our energy sector is so important.
Canada is fast emerging as a global energy superpower.
[Translation]
We have enormous energy assets that are generating economic wealth right across the country.
[English]
In fact, energy represents roughly 7 per cent of our gross domestic product and creates hundreds of thousands of direct and indirect jobs across the country. This energy endowment provides Canada with a unique economic advantage, one that we are leveraging to strengthen our place in the global marketplace.
The numbers tell the story. Canada is the world's sixth largest producer of oil, and our reserves are the third largest in the world. We are the third largest producer of natural gas and hydroelectric power. We are the second largest producer of uranium, and we have a growing renewables portfolio. We are by far the largest supplier of energy resources to one of the world's largest marketplaces, the United States.
[Translation]
How we harness all these precious resources will have a significant impact on our country, on our global competitiveness, our environment and our overall quality of life.
[English]
Our energy sector has always been identified with opportunity in Canada — connecting workers with good paying jobs, and products with markets. Last year the energy sector provided direct employment for over 270,000 people.
[Translation]
The sector also supports hundreds of thousands of jobs in other sectors, such as construction, manufacturing and financial services.
Canada is one of the few countries in the world that is energy-rich, has a highly skilled workforce and a strong innovation system.
[English]
It is also capable of increasing its energy production in an environmentally and economically sustainable manner. One of the prime sources of our energy wealth is the oil sands in Alberta.
Canada is fortunate to have the third largest proven oil reserves in the world, at 174 billion barrels. Only Saudi Arabia and Venezuela have more.
About 97 per cent of these reserves are found in the oil sands. As technology evolves, these reserves could grow even larger, up to an estimated 315 billion barrels.
Over the next 25 years, oil sands development is expected to contribute $2.3 trillion to Canada's gross domestic product and 480,000 jobs per year.
[Translation]
We know that Canadian resources, whether it be the oil sands or clean hydroelectricity, will play a crucial role in maintaining North American and global energy security for generations to come.
[English]
That is why the Canadian government supports projects such as the Keystone XL pipeline.
While our relationship with the U.S. is vital, emerging markets in Asia are increasingly important. Just recently, China surpassed the United States as the world's largest consumer of energy. Of course, we need to get our products to China in order to tap this market. That is why we support market diversification.
That is why projects like the proposed Northern Gateway Pipeline merit careful attention. However, we do respect the regulatory process and will ensure that all projects are environmentally sustainable.
Seizing the full potential of Canada's energy future also means reaching beyond the country's strength in hydrocarbons. Our government's investments have already contributed to some truly innovative projects. We are finding new ways to enhance our leadership in clean electricity, recognizing that 75 per cent of our power generation already comes from non-emitting sources.
Nuclear will be a key component of Canada's emission-free energy mix. In 2010, nuclear power in Canada generated 15 per cent of all electricity in Canada. In the province of Ontario, 58 per cent of all electricity was generated by nuclear power. It provides thousands of jobs and generates billions of dollars in economic activity.
[Translation]
I can tell you that our nuclear industry is strong, and that we are taking concrete steps to make it stronger.
[English]
The restructuring of AECL was a difficult decision, but it was necessary to protect Canadian taxpayers and to position CANDU technology for the future with SNC-Lavalin, a strong, world-renowned engineering firm.
Beyond nuclear, hydro will and always has been one of the most important energy resources in the country. We are continuing our support for this clean energy system with our financial support for the Lower Churchill hydroelectric project. This project will boost clean energy production in Atlantic Canada and grow our status as a global energy superpower. It will also create thousands of new jobs in Atlantic Canada.
We want to do more to improve energy efficiency, to reduce our energy intensity and to promote conservation. We are also investing in innovation and clean energy technologies to improve productivity, address environmental concerns and create new jobs for Canadians.
Our new $97 million ecoENERGY innovation initiative will support a wide range of projects across Canada. It includes clean electricity and renewable projects, which will promote collaborations among industry, our Canadian colleges and universities, and government.
These investments will help build Canada's clean energy future and achieve real emission reductions while supporting job growth and creation.
Since 2006, our government has invested more than $10 billion to reduce greenhouse gas emissions and build a more sustainable environment. Certainly our government does not accomplish this alone. We are working in collaboration with the provinces and territories to strengthen Canada's position in the global energy market through a common vision, shared principles and shared goals. Collaboration puts us in a much better position to harness our energy potential, develop our markets, grow our status as a clean energy supplier, and create jobs and prosperity for Canadians. Working together, we are already making significant progress on several fronts such as promoting energy efficiency, ensuring the reliability of the electricity system and improving the transparency and predictability of the regulatory process.
Mr. Chair, senators, members of the committee, Canada has a compelling energy story to tell. Canada's energy sector is a cornerstone of our national economy. We are maximizing our resources and diversifying our markets. Our tremendous energy endowment provides an opportunity to create jobs and strengthen our growing status as a global energy superpower. With strategic investments in clean energy, we are positioning Canadian industry to lead through innovation and creating jobs of the future.
I want to thank you for the opportunity to appear before the committee and I would be pleased to answer your questions.
Senator Mitchell: Mr. Minister, it is a pleasure for us to have you here. We understand, of course, that you are busy, and so it is meaningful that you have taken the time to be here. I will get to a couple of specific points.
We are in the midst of a long-term study into Canadian energy strategy. We were therefore quite excited by the collaborative, apparently, effort that occurred at Kananaskis amongst you and the other energy ministers in the country. I have a couple of questions following from that.
It seems to many of us that if we are to do a comprehensive clean energy strategy to be a clean energy superpower — and I would like to see that used as the mantra, "clean energy superpower," not just "energy superpower" — climate change has to be part of that mix. However, what came out of that meeting in Kananaskis was an agreement to five priorities: regulatory reform, energy efficiency, energy information and awareness, new markets and international trade, and smart grid and electricity reliability.
A red flag is raised in that climate change, the reduction in greenhouse gases and the enhancement of our international reputation so we can sell our products effectively may not be the priority that some would think it should be in a collaborative energy strategy. Could you comment on that, please?
Mr. Oliver: I would be happy to. First, I will discuss the Kananaskis meeting very briefly.
All levels of government have a key role to play in setting energy policies that will help us achieve our objective of making Canada a recognized global leader. I have always talked about being a leader in secure and sustainable energy use and innovation, doing that in an environmentally and socially responsible way. I have repeated that many times. You cannot include it in every single sentence, but it is integral to our approach.
In Kananaskis, the energy and mines ministers agreed to collaborate, as you said, on a number of energy policy issues based on common principles. The principles include the fact that we must maintain a market-oriented approach to energy policies and be governed by efficient, effective and transparent regulatory systems. Our actions must be based on mutual respect for jurisdiction. This government respects provincial jurisdiction.
The other issue is the importance of sustainable energy development and use.
Against these principles, we talked about responsible energy supply, economic prosperity, energy use, knowledge and innovation. We have specific detailed policies and action plans that I can refer to in more detail, but they relate to energy efficiency, electricity reliability, smart grid, energy information and awareness, markets and international trade, and energy reform.
You asked specifically about the issue of clean energy. I want to assure you that this government is focused on clean energy, improving energy efficiency and developing alternative sources of energy, and has invested over $10 billion in that objective.
There is a whole suite of programs, some of which I can mention. For example, going forward, Budget 2011 provides $97 million to advance Canadian leadership in the development and promotion of clean energy technologies. That funding is in addition to previous continuing investments made by the Government of Canada to improve our competitiveness while moving Canada closer to its goal of reducing greenhouse gas emissions by 17 per cent from 2005 levels to 2020. That 17 per cent reduction is the overarching target for the Government of Canada, which is identical to the commitment under Copenhagen that the Americans made. There may well be other countries as well. We are moving to that target and we are getting there in a number of ways.
Another example would be the $120 million dollars that we committed — I was up there — to the Shell Quest Carbon Capture and Storage demonstration project that will capture, transport and store carbon dioxide captured from an oil sands upgrader facility in Alberta. It is actually in Fort Saskatchewan, north of Edmonton. That particular project could reduce carbon emissions by 40 per cent. In the last 15 years, carbon emissions from the oil sands have been reduced by 30 per cent.
The oil sands are, at the end of the day, a technology project. Technology is continuing to improve. We expect that gap between the oil sands and conventional oil to continue to narrow. It is not just me saying it; the final environmental impact statement put out by the State Department in relation to the Keystone XL project, which I am happy to discuss in a moment if people would like, talked about how technology is narrowing that gap between conventional oil and oil sands oil.
We are really achieving great things. I cannot predict how far it will go or how fast, but it is a certainty that it will continue.
Another example of a clean energy initiative is a project with the University of British Columbia that uses biomass to produce clean heat and electricity for small-scale, on-site applications like universities, industrial facilities or remote northern communities. We have committed $8 million to that project.
Those are just a couple of the things we are working on, but this is in the context of a significant investment by the government of over $10 billion.
Senator Mitchell: I am interested in your reference to these programs that you are doing. I think the words you used were that they were going to advance the government to the achievement of the 2020 objective. Has anyone done an inventory of all the programs you are doing, all the reductions that they will account for and whether all those added up at the bottom will equal a 17 per cent reduction by 2020? There is little concrete evidence that your programs are actually achieving sufficient reductions now or that proposed programs will achieve sufficient reductions in the future to actually meet that target. We would all be interested in knowing whether you are really serious about this. Is what you are doing now enough to meet that target by 2020?
Mr. Oliver: Frankly, senator, the person to answer that is Senator Kent, the Minister of the Environment, who I gather is meeting this committee next week.
The Chair: He has not been appointed to the Senate yet; he is a minister.
Mr. Oliver: Yes, sorry. I do not know why I said that. He will be coming to the meeting —
The Chair: Next Tuesday.
Mr. Oliver: Yes, next Tuesday. We have a list of projects for which we have responsibility, but other departments are also making progress in this area. The transportation area is clearly one of them.
When you look at greenhouse emissions from the full life cycle, from the wellhead to the tailpipe, about 70 per cent of it relates to transportation — to cars, trucks and so on. That does not mean the extraction part is not important, but it is 30 per cent of the total.
We are doing what we have to do as part of the government's overall objective in this regard.
Senator Mitchell: First, is your department playing a direct role in the development of regulations for oil sands emissions, which we are told will be released at some point? Second, do you know when they will be released? Third, if it requires carbon capture and storage for oil sands to meet those emissions, will they be delayed until we get carbon capture and storage technology that works, or is there some step in between? What is going on there?
Mr. Oliver: Again, Minister Kent's department drafts the rules. As an interested minister, my views are solicited in this regard, but he has the primary responsibility.
As to the efficacy of carbon capture, one of the purposes of this huge project is to demonstrate that it does work in a significant way. We will have the results of that fairly soon.
Senator Mitchell: The minister said he would address Keystone at some point.
I do not have another question. I want to move on. However, when you do address Keystone, could you please give us an indication of how many jobs will be created in Canada and how many in the U.S.?
Mr. Oliver: Okay.
The Chair: Minister, given that there are time constraints — some of us have a different view of what they are — if you could keep your answers a little tighter, that would be helpful to the senators. I have a long list here.
Senator Banks: A long and distinguished list.
Minister, welcome to your new responsibilities, in which we all wish you well.
As our esteemed chair has said, we have embarked on, for some time now, a study of energy writ large in the country, and this committee has also looked at that question in bits and pieces before.
Time after time, over many years, we have heard from leaders in industry, from all aspects of energy generators, with respect to any kind of regulation constraints or reduction of emissions: "If you will just please establish the rules and tell us what they are, then we can deal with them." So far we have not been clear on doing that.
However, one thing we heard consistently — and I noted that it was also discussed at Kananaskis when you were there — is a recommendation about how to price carbon. I think it is fair to say that, with no exceptions, every time this committee has talked to energy leaders, they have said they are in favour of a carbon tax, by whatever name, but that the answer to large parts of the questions with which you are dealing and with which Minister Kent is dealing have to do with the pricing of carbon, the internalizing of the downstream costs of carbon. Would you please tell us what your view — and therefore, I presume, the view of the government — is in that respect?
Mr. Oliver: I think you know that this government does not support a carbon tax, ran against it and won, and so they are not inclined to institute a carbon tax.
Senator Banks: Notwithstanding that the industry thinks that is the best way to go about this?
Mr. Oliver: I do not think that is a unanimous view of the industry.
Senator Neufeld: I listened carefully to what you said, minister, and a number of questions have popped into my mind with respect to the nuclear issue. With the advent of what took place in Japan and Europe and what we heard about countries maybe thinking that generation of electricity with nuclear is not the whole answer, what is your thought process on whether it will actually continue to grow or get a little stagnant? That is in reference to AECL. They have not been able to sell a reactor for a long time. What is the future there? What do you think will happen? There is a huge investment by Canada in AECL, billions of dollars over the years. I would like your thoughts on that.
Mr. Oliver: First, I will state the obvious, which is that the health and safety of Canadians is the government's top concern, and everything we do in that regard is a primary issue for us. We have an independent regulator, the Canadian Nuclear Safety Commission, which is strong and competent.
I spoke to Dr. Michael Binder, the president of the commission, after the Fukushima Daiichi disaster. He assured me that our nuclear reactors were very safe and that we should not have any concerns. He nevertheless ordered the nuclear reactors in Canada to undertake a review of the lessons learned from Japan, and any necessary actions resulting from this review will presumably further enhance the safety of our power reactors.
There are a few things to be said in contrast to the Japanese situation. Our reactors are not built on seismically vulnerable land, and there is no danger of a tsunami, both of which were necessary to create the terrible tragedy in Japan.
We continue to hold the view that nuclear energy is an emissions-free source of electricity. It is safe, reliable and environmentally responsible if it is properly regulated.
I spoke yesterday to the Canadian Nuclear Society in Toronto and indicated that on a global basis a significant number of new nuclear plants will be opened. I think the number is over 90. However, that is not a net number. That is a gross number for increase, and the net number is higher than that. We are talking about very large investments, each time in the many billions of dollars.
We believe that nuclear is here to stay, or for some significant period of time. Our decision to sell the commercial side of AECL, the CANDU reactor side, was designed to protect the Canadian taxpayer and, at the same time, put it in the hands of a strong Canadian company with international connections and expertise in the field. We are positive about the industry and its future.
Senator Neufeld: That is good to hear.
Also in your notes, you talked about Alberta's oil sands. I know how important they are to Canada as a whole, not just to Alberta. This means a lot to the rest of Canada. You talked about the Keystone pipeline, which is bitumen from the oil sands, and the Northern Gateway Pipeline, which will take that bitumen to the West Coast and out through Kitimat.
I did not see anything in here about natural gas, other than that we are the world's third largest producer of natural gas. I come from a province where the estimated reserves — this is not recoverable — are about 1,000 trillion cubic feet of natural gas. There is a process to get an LNG port established to move that gas to Asian markets, which I think is as important as getting oil sands down to the U.S. In fact, it is much more important, and I will tell you why.
The U.S. now consumes about 23 or 24 trillion cubic feet a year, whereas Canada is about 12 per cent of that. Actually, that would even include some LNG from offshore, but Canada is about 12 per cent. With what has taken place with fracking and the development of shale gas, not only in Canada but mostly in the U.S., they think that amount of imports will be reduced to about 1 per cent in about 25 years. Therefore, it is pretty important for Canada — not just for British Columbia, but for Canada — to access those Asian markets.
I did not see anything here about natural gas. It is the cleanest-burning fossil fuel we know of. It has huge potential for a motor fuel, which would reduce GHGs a lot. I am not trying to say that it would take the place of oil, but that is a huge market and a huge opportunity for Canada.
Perhaps you could expand on how Natural Resources Canada feels about natural gas, the advent of using more of it in Canada and exporting it not just to the U.S., because right now we are bound to the U.S. only. We need to get it out to other markets across the world.
Mr. Oliver: Very briefly, the first point is that, as you know, the regulation of onshore natural gas drilling and production falls primarily under provincial jurisdiction, and that includes shale gas.
The Government of Canada, through the Geological Survey of Canada, contributes scientific information used in making exploration resource management and environmental protection decisions by the provinces. The industry continues to improve transparency in their hydraulic fracturing operations.
We see a future for natural gas. The provinces will have to come to some decisions about shale. I think you know that Environment Canada has launched a couple of studies in that regard because they have a responsibility in respect to the use of chemicals. We will hear about that.
Everything that can be done is subject to regulatory approval when we are talking about oil and gas exploration, drilling and so on. The story is ongoing, I would say, but I think the future is clearly there. There are, as you know, very significant discoveries of shale in other countries around the world, and it is being viewed in the industry internationally as a game changer.
Senator Peterson: I am not sure whether my question is for Minister Kent as well, but I will throw it out there and you can tell me.
With respect to the money in the Clean Energy Fund, you have devoted over half to carbon capture and storage. Do we have parameters around that? Do we understand the geological formations that you can actually store the CO2 in? Is there an actual storage project under way? I know in Saskatchewan we are using a lot of CO2 for enhanced oil recovery but not storage. Where are we in that regard?
Mr. Oliver: I can only give a general answer. We have geology in Canada with a lot of aquifers that are a natural place for carbon capture and storage. We are fortunate in that regard, as we are, frankly, on the whole subject of natural resources; we are blessed in this country. I do not think we always realize how incredibly blessed we are, but that is one aspect of it. Therefore, the geology is there to store the emissions, and it is a question of the technology being proven.
Senator Peterson: You do not have an actual storage cabin that you are putting CO2 in today?
Mr. Oliver: We are doing that, in fact, with that big project, which is funded. It is in excess of $1 billion. We have put in $120 million, the Province of Alberta has put in quite a bit more than that, and the private sector has also put in money. It is well over $1 billion. I cannot remember the exact number. It might be $1.2 billion or something in that area. This is a very significant investment and it will create, as I said, a reduction of some 40 per cent, we expect, in greenhouse gas emissions.
Senator Johnson: Welcome, Mr. Minister, and congratulations on your new role.
I am interested in the Lower Churchill and the clean energy system that is happening there. When our committee was in Atlantic Canada, there was a lot of discussion about the federal loan guarantee for the Lower Churchill River projects, which would reduce capital costs and ultimately lower electricity rates for consumers. Does that mean that the federal loan guarantee marks a changing role of the federal government with respect to large energy projects with national significance?
Mr. Oliver: There are basically three criteria for our involvement. One is that it is a project of national or regional significance; second, that it is economically viable; and, third, that it is a source of clean energy or in some significant way reduces the carbon footprint. The Lower Churchill project meets all three of those criteria, which raises the prospect of other projects. However, there are no other commitments.
Senator Johnson: Have you any further comments on the clean energy potential of the Lower Churchill? Is that a question for the Minister of the Environment? I know it will create thousands of jobs, but how will it reduce the cost of energy in the Atlantic region? They are expecting to have much lower costs for their energy, once it is developed. Is that right?
Mr. Oliver: That I cannot speak to, but I can address the other things that would be achieved. One is the greenhouse —
Senator Johnson: We want them to have a deal after what happened in the Upper Churchill.
Mr. Oliver: I think it will be attractive.
Greenhouse gas reductions should equal about 4.5 million tonnes per year. That is the first point. It should generate 46,000 person-years of employment, $3.5 billion of total income to labour and business, and over $750 million in federal and provincial taxes. It is a significant project with important economic benefits that will not be confined to Newfoundland and Labrador, although obviously there will be a concentration there.
Senator Johnson: I know some of the states and New England are looking at hydropower as well, but I will not go there today.
Senator Brown: Congratulations on your new job, minister. I enjoyed your presentation in Calgary at the Chamber of Commerce.
I was really glad to have you emphasize the fact that we do not need a carbon tax in terms of we can put energy pollution — or whatever you want to call it — down wells and use it for useful purposes rather than trading off money for pieces of paper and not getting any return for it. I am pleased with that.
I do not know whether you or Mr. Kent is looking after the quality of air and the renewal of the sites, whether they are mined like oil sands, whether they are drilled like wells or whether they are put in pipelines. I am not sure whether you are both responsible for part of that or if it is more on your side or Mr. Kent's side. If you could clarify that, I would appreciate it.
Mr. Oliver: It is primarily a provincial responsibility. The bottom line is that there is a requirement for the companies to completely restore the land and the water. That is the key thing. As the project continues and moves across the terrain, the land is being restored.
I was up visiting the oil sands a few months ago and was forced to walk through a mosquito-infested forest to prove the point. I can assure you, you could not tell that there had been any mining there before. In fact, they had to cut a trail through the area to let us through because it was so dense.
The objective and the requirement under law is that 100 per cent of the land and water will be restored, which is a critical thing. That is not done in some other countries, by the way, but it is being done as we speak in Canada.
I have one other comment about the terrain. We see a lot of pictures on certain networks in particular, and I have to say that when you are there, it looks pretty big — it is quite vast — but it only represents one thousandth of our boreal forest, and it will all be restored. Therefore, the industry, both voluntarily and on an obligatory basis, is behaving in an environmentally responsible way.
Senator Brown: If I understand, then, it is the company in the beginning, but it is also your job and that of Minister Kent to ensure that it is done right. Is that fair to say?
Mr. Oliver: I think the Minister of the Environment and the province are mostly involved in it. I am an advocate for what is happening.
Senator Brown: Thank you.
Senator Wallace: I will touch on the same subject that Senator Johnson raised. As I am from Atlantic Canada, Lower Churchill is very important to us, and there is great enthusiasm for that project in Atlantic Canada. You have touched on some of the benefits of that project, all of which I would agree with.
There is another area, though, that is of particular interest, and I believe it ties in with your objective to encourage a shared vision and closer collaboration and cooperation between the federal government and the provinces. This Newfoundland project provides a clean energy source, but it will provide a new source of electricity in each of the four Atlantic provinces, so it has tremendous domestic benefit. When the line would pass through New Brunswick, it would take it to the U.S. border, and there is a tremendous export potential for the region, with the jobs and all that flows from that.
It is almost a model of what can be created when the provinces work together for the shared vision. Would you have any comment about that in the context of how you see, from the federal perspective, the need to encourage these shared visions and collaboration?
Mr. Oliver: That was one of the objectives of the federal-provincial energy conference in Kananaskis. We have a shared jurisdiction. The provinces have a significant role in natural resources, and while we respect their jurisdictional competence, we think we can all work together on a voluntary basis; that is the essence of a collaborative approach that Quebec, Ontario and every province and territory bought into.
We cannot achieve our overarching objective of being an energy superpower known to develop its resources in a socially and environmentally responsible way without a collaborative pan-Canadian effort. This is a great example, and when we look at successes like that, it provides further stimulus to work together on other projects.
Senator Wallace: Encouraging that further collaboration between the provinces sounds like a great idea, as many ideas do, but the initiative has to start somewhere to make that happen. Do you see that as a major responsibility your department is taking on to create that collaboration, or is it something that is starting at the provincial level and is up to them to figure out as they go along?
Mr. Oliver: We have to show leadership, but we will not be a bully on this matter, nor can we be under the Constitution.
I want to make one other related point. As I think everyone in this room knows, it starts with the people and public attitude. That determines the political result, which determines the policy that emerges from government. It is very important, I think, to have a national conversation with Canadians to educate them about the facts and to engage them so that they start buying into a vision for Canada. That encompasses understanding the importance of our natural resources to our prosperity and putting the environmental issues in context so that people see what the facts are.
In that regard, if I may, our oil sands represent, as I said, one one thousandth of global emissions, and I think that point bears repeating because not everyone knows about that. We have to tell people what the facts are and be rigorous about the facts, but we have to emphasize the importance of this to all Canadians from coast to coast to coast. I think as we do that, we must have a direct message — not a simplistic message but a clear one — and then you start getting people to buy in. It is not an easy and instantaneous process, but as you get people to buy in, it starts having an impact on the political environment and on the political government people and results in policies that are ultimately functional for the country and in the national interest.
The Chair: I would like to thank you, minister, on behalf of my colleagues and me, for almost a direct quote from our preliminary report called Attention Canada! Preparing for our Energy Future, which I believe you may have seen and in which we called for a national conversation on these very subjects. We tried to start explaining to Canadians where their energy comes from.
We have already started putting together the framework of our ultimate final report, and we will have a section on dispelling myths. We have identified and our staff has helped identify a number of quite shocking myths that are prevalent in the land about our power systems, so we will be working towards that end as we go forward.
[Translation]
Senator Massicotte: Thank you for being with us this afternoon, Mr. Minister; it is much appreciated.
You have said that the government's goal, using 2005 as a reference, is a 17 per cent reduction by 2020. As I understand it, that is a reasonable and attainable goal. Am I correct?
Mr. Oliver: Yes, you are correct; it comes from our obligations under the Copenhagen Convention.
Senator Massicotte: And you are confident that we will be able to reach that goal?
Mr. Oliver: As I see it, yes.
Senator Massicotte: In terms of AECL, you say that you are optimistic about nuclear energy. I am too. But I have to say that Japan has shaken my confidence a little. I completely support your agreement with SNC-Lavalin; in my view, it was necessary. Looking at the company's history, we see that it has not sold a reactor for a number of years.
When our committee talked with various experts about prospective customers for that energy, one story we heard was that the technology and its price were not competitive. Perhaps the future for nuclear energy is bright, but a number of experts agree that AECL would not be part of that market. So why are you optimistic? Is there something that we are not understanding that could lead us to believe that the future is bright, other than the maintenance of existing contracts?
Mr. Oliver: I cannot give you a precise description of the market, but we know that the province of Ontario is in the process of deciding whether it wants to move forward with the Darlington Nuclear Generating Station. In Argentina recently, a construction contract for around $400 million was renewed. The fact that the International Nuclear Energy Institute is forecasting 90 new reactors is also encouraging.
I feel that, for all its financial difficulties, the CANDU reactor has a good reputation. Given that SNC-Lavalin is a company with a number of successes to its credit and that it is ready to use those technologies, I think that the future looks reasonable, if not better.
Senator Massicotte: Is SNC-Lavalin investing a lot of high-risk money in this project?
Mr. Oliver: The amounts in the order of $15 million were not significant in themselves, but the company has made significant investments in resources in order to make it a success. They would not have wanted to go to that effort if they were not optimistic.
Senator Massicotte: I hope so, because, as we understand the plans to buy a reactor, there was no CANDU reactor. I hope that there is a good basis for your optimism.
A few days ago, you made a comment about a pipeline in order to meet Asia's energy needs. Most members of the committee support you, but we also recognize that the political and social resistance is quite considerable. Still, I believe that it is very important for our country to diversify its client base.
Is it feasible? Can we hope to see it finished in five or six years?
Mr. Oliver: As I said, we are complying with the regulatory process. We also have to consult the First Nations communities. That takes time, but it is something that we can do. The market diversification strategy is absolutely fundamental for our country. I feel that we can achieve the success we are looking for. But it is normal and inevitable that we will experience difficulties from time to time.
[English]
Senator Dickson: Mr. Minister, I must commend you; you have given our audience tonight an excellent presentation as to the great future that lies ahead of us Canadians with our energy resources.
Senator Neufeld expressed my feelings much better than I can. I think there is a tremendous opportunity for natural gas in the transportation sector, as well as shale gas. The sooner that we get on with more detailed work there, the better.
Coming from Atlantic Canada, there are two projects I would like to bring to your attention. I noted one in particular was not mentioned in your speech, and that is the tidal project, the Bay of Fundy. There is tremendous potential there. I would like a sense as to where that stands from your perspective and the government's perspective.
Second, relating to something that Senator Johnson brought up, which is pretty simple insofar as Nova Scotia is concerned — and I come from Nova Scotia — is the question of what the consumer will pay for power. That is a very controversial subject in Nova Scotia. It can lead to a series of questions or solutions, and one that occurs to me as I look at the briefing notes we were given is that the final regulations for the coal-fired electricity sector do not come into effect, although they will be proclaimed in 2012, until 2015. There is some discussion as to what the cost implications of those regulations will be to our province and what it will mean to the ratepayer in the province. There is variance as to some figures that were created either by your department or by Minister Kent's department, and they are millions of dollars apart. You could clarify the last one first, because that strikes right at home in our province. As you know, there is an issue of power rates, with NewPage closing the mill in Port Hawkesbury.
Mr. Oliver: The second point, which is important, is really a matter for the Minister of the Environment to address. They are his regulations, and he is the one who can, in an authoritative way, deal with the question.
Senator Dickson: I have some appreciation for that, but my recollection is that you will be at the table, and I am curious as to what your instinctive feelings would be when it comes to the cost of these regulations to a province like Nova Scotia. Nova Scotia is heavily dependent, as you know, on fossil fuels for power generation. Can you take 2015 and put it out to 2020? What is the magic?
Mr. Oliver: When I look at these regulations, we always want to balance the environmental objectives with the economic reality. Some people do not, but we do. It is very situational. We have to look at the particular project, the specific rules, and see what impact it has in the area in question. That kind of thing is absolutely essential because otherwise we are engaged in an ideological kind of event, and that is never the right thing.
I cannot answer you specifically, but I will tell you where I am coming from.
I know there is a great deal of enthusiasm for tidal power. I gather the tidal power in the Bay of Fundy is equivalent to all the rivers in the world. It is quite extraordinary. However, the technology must be developed. The turbines must be strong enough to withstand that power and the corrosion that is implied in an underground system. It is being worked out. Like a number of other alternative energy projects, the technology is getting better, and we cannot predict exactly what will happen or how long it will take. There is a lot of optimism in Atlantic Canada.
The Chair: It is interesting, Mr. Minister, that you mentioned the Bay of Fundy and the tidal power that is potentially there. This committee is so engaged in our study that the chairman personally went last week down to the Annapolis Royal area to see and be briefed on the situation and learned to his surprise, and horror, that the blades of the generators were completely blown out when they brought them up. It is an incredible source. As you say, we are very blessed in this country.
I know the time is getting tight, but I want to say two things. We have two more senators to ask questions. I hope you can be here for them. At the same time, we do not want to miss your offer to talk about Keystone. I would point out to you, your officials and your staff that with regard to this study, in terms of having the dialogue going with Canadians, we are on the CPAC network; we are webcast on the World Wide Web; we have our own dedicated website for this particular study at www.canadianenergyfuture.ca; and we are on Twitter. As we have been interacting here tonight, there is tweeting going on, and they are quoting you accurately and favourably. We need your cooperation and that of your people as we go forward to complete this because we earnestly believe we are doing something of national interest. I mean that in a non-partisan way, across the board. We are working together in a consensus way.
Senator Seidman: I would like to add my congratulations to those of my colleagues on your ministry.
I guess it is clear, and I return to a common theme tonight, the challenges we all face in terms of the collaboration that you refer to among provinces and territories with a common vision, shared principles and clear goals. That is exactly as you put it. I must say that in your response to Senator Wallace, when you really elaborated on that, I was quite pleased to hear you talk about public education and having to bring the public along. As our chair said, we have talked very much about this in this committee — the misconceptions and how someone has to play a leadership role.
I will be a little Quebec-centric and ask you a bit about fracking issues. I believe you have recently announced that the federal government, your department, is looking into the safety aspects of fracking. As you know, Quebec has stopped fracking, and I think a couple of other provinces have done the same. You mentioned it. Would you be kind enough to tell us what exactly you are about to do?
Mr. Oliver: First of all, the regulation, as I said, of onshore natural gas drilling and production activities, including fracking, falls primarily under provincial jurisdiction. The rules, best practices and regulatory oversight must ensure that hydraulic fracturing is done in a manner that prevents groundwater contamination. That is the objective. It typically takes place thousands of feet below water in aquifers, and to date there have been no confirmed cases of water aquifer contamination in Canada resulting from hydraulic fracturing.
The hydraulic fracturing fluid is pumped down the well bore until the pressure is sufficiently high to shatter the rock, and that creates a fracture network allowing the gas to flow. That is the way it works technically. It has been in use in the industry, I guess, since the 1960s. It is not a new technology, although they are working on it.
The provinces have different approaches to this. As you point out, Quebec has a moratorium, and others are looking at it. British Columbia is proceeding. Environment Canada has launched studies, and we will have to await the result to see where that goes.
As I mentioned earlier, shale gas is very significant in other countries. The United States is about five years ahead of us in that regard, if that is the direction we intend to go. We are talking about 100 or 200 years of natural gas supply in this country, if we want to take advantage of it. There are vast discoveries in other countries, which are, as I said, making it a bit of a game changer. If you look at the price of gas compared to the price of oil — look at what has happened to the price of gas — it is because there is so much more supply from the United States at this point.
It is having an impact, and it can be very significant, but in this country it has to pass muster from a regulatory perspective.
Senator Seidman: I know you wanted to speak about Keystone.
Mr. Oliver: I can speak about it.
The Chair: Go ahead with your question.
Senator Seidman: Given it is very pertinent, and we all watched a large demonstration here yesterday, and the Keystone project is an important one, perhaps you could give us some perspective as you tackle the issues.
Mr. Oliver: As I think you know, what we are talking about here is moving Alberta bitumen from the oil sands through the United States by pipeline to the gulf coast, where it will be refined in Texas. There is a commercial capacity of some 500,000 barrels a day and I think a physical capacity of 700,000 barrels a day.
This project would produce, as I think I mentioned, in excess of 140,000 jobs on average on an annual basis in Canada — direct, indirect, induced — and some $600 billion in economic activity. Just in terms of the oil sands, where we are talking about $2.3 trillion in economic activity over the next 25 years, this would bring it up to $2.9 trillion. This is extremely significant for its impact on the economy, on jobs, and on prosperity and the ability of governments to finance social welfare, education and health care. It is a very important project.
For the Americans it would address the issue of energy security. When I spoke to some think tanks in the United States, this was a big issue. I met with legislators there and with my counterpart, the Secretary of Energy, Steven Chu, and they are all very much aware that energy security is addressed by having resources come in from a friendly, reliable, stable, democratic country. This is not just feel good stuff, this is real.
The other issue it would address is jobs, and the Americans need jobs, desperately I would say because they had no growth last month, and then economic activity.
For Canada it is very important, and it is for the United States. This is a win-win. We are hopeful that now that the National Energy Board has opined on it in Canada last year and the state department's final environmental impact statement is positive as well, we are hopeful that it will be approved. The way the system works, there are 90 days from the time the environmental statement was issued a month ago now, at the end of August.
We are talking about a decision this year. It is in the hands of the Secretary of State because it is deemed to be an international project. There is a concurrent period of public comment. If the Secretary of State is positive and there is no objection from any of the key regulators, then it goes ahead. If there is, then it goes up to the president to make the decision. Essentially it is up to President Obama, and he will be considering the issues that I talked about.
It is not unanimous. As you know, there were demonstrations in Washington as there were in Ottawa. My view is that this is democracy, and people have every right to demonstrate in the public square; they have every right to express their views. My only answer is let us have a discussion on the facts, and then let us determine what makes sense.
I have been asked what I think about their view, and I said they are entitled to express it. We have to take account of what almost 35 million Canadians feel and how they would be impacted, and I think impacted very positively. We have to get beyond rhetoric, ideology, mythology and get to the facts and then come to a decision. It is clearly in the national interest of our country that it go ahead. I hope the U.S. administration will conclude it is in the national interests of the United States as well. We will hear this year.
The Chair: Mr. Minister, to be clear, from a Canadian point of view, no approvals are needed at this stage; all the steps have been gone through. As a matter of public policy, it is a go. We are waiting for the U.S., and then the sponsors, TransCanada and members of their consortium, are free to go ahead and start doing it.
Mr. Oliver: Right.
The Chair: I heard you last night on "The Hour," or whatever the program on CBC is. I thought you did a tremendous job demystifying the thing. I think that inadvertently you said that if they want to come and meet with you, you would be glad to see them. My question is this: Are they coming? I had the sense that probably the truth hurts and they will not be coming.
Mr. Oliver: I said that to my knowledge, I had never been asked to meet with them. We are checking that out. To my knowledge, I was never asked. They claim they did, but I do not know anything about it. My phone has not rung yet. I am not soliciting a visit, but they are entitled to be heard. It is up to them.
Senator Lang: We have talked about the requirement for the public to be educated. I believe Senator Massicotte talked earlier about the fact that in some cases in these projects social and political unrest are being promulgated in some parts of the country, opposing some of these developments. The concern I want to bring up is the point that a great deal of the money that is being brought into the country to pay for these organizations to function is coming from the United States. In the neighbourhood of up to $300 million is the number that I have heard.
I am quite concerned about that, because I do not think most Canadians are aware that this type of money is coming into Canada and funding these organizations, either directly or indirectly. Is the government taking any steps to ensure that Canadians are aware of who is financing these organizations, so that when decisions are made, we know there are outside organizations that are obviously interested in our resources, to be able to balance that type of financing with the decisions that have to be made? Perhaps you have some comments on that.
Mr. Oliver: I think it is a real issue. We have not been shy about making our views known to the Americans, to the government. We do it as the Government of Canada. Our ambassador is out there; our consuls general in New York, San Francisco and Los Angeles are out there. As I said, I have been around talking to them. We are transparent. We are not surreptitious; we are not putting money into American lobbying organizations. I think you raise an interesting public policy issue.
Senator Lang: I believe that Canadians should be made aware of it. It could be part of a public awareness program by the provinces and the Government of Canada to make ordinary Canadians aware of this interest in our resources and the type of money that is coming in here. I think it should be a requirement for these organizations, when they go before the regulatory bodies, to let the public know and the regulatory body know who is financing their type of position and where that money is coming from.
The Chair: It is a question of tidal power, is it, senator?
Senator Lang: I believe it is.
The Chair: Minister, we are grateful to you and especially to your staff and officials for being tolerant of the time situation. I know you have a speech to make. I also think I can say to my colleagues on the committee that you have an understanding with me that when it is mutually convenient, you will have an informal dinner with the committee, as Minister Kent has done, and we can explore these issues in more detail. If either Mr. Dupont or the others want to be there with you, that is great, too. It is up to you.
Mr. Oliver: I would be delighted to do that.
The Chair: That is very kind. I hope you have enjoyed your first appearance before your committee.
Mr. Oliver: Absolutely.
The Chair: This is your committee. Any time you would like to come and share your views with us, we are here.
Thank you very much. I will ask you all if you can wait a minute. We will see the minister off, and then I will have a few words for you.
(The committee continued in camera.)