Proceedings of the Standing Senate Committee on
Energy, the Environment and Natural Resources
Issue 17 - Evidence - October 28, 2014
OTTAWA, Tuesday, October 28, 2014
The Standing Senate Committee on Energy, the Environment and Natural Resources met this day at 5:10 p.m., in camera, for the consideration of a draft report on the current state of ''One Call'' programs that identify critical underground infrastructure in Canada; and in public to give clause-by-clause consideration to Bill C-501, An Act respecting a National Hunting, Trapping and Fishing Heritage Day; and to study non-renewable and renewable energy development including energy storage, distribution, transmission, consumption and other emerging technologies in Canada's three northern territories.
Senator Richard Neufeld (Chair) in the chair.
[English]
The Chair: Honourable senators, welcome to this meeting of the Standing Senate Committee on Energy, the Environment and Natural Resources. My name is Richard Neufeld. I represent the province of British Columbia and I'm chair of this committee. I would like to welcome honourable senators, any members of the public with us in the room and viewers all across the country who are watching on television.
As a reminder to those watching, these committee hearings are open to the public and also available via webcast on the sen.parl.gc.ca website, and you might find more information on the website under ''Senate Committees.'' With me is the deputy chair of the committee, Senator Paul Massicotte from Quebec. I will now go to the rest of the senators.
Senator Patterson: Dennis Patterson, senator from Nunavut.
Senator Seidman: Judith Seidman from Montreal, Quebec.
Senator Wallace: John Wallace from New Brunswick.
Senator Tannas: Scott Tannas from Alberta.
Senator Ringuette: Pierrette Ringuette, New Brunswick.
Senator Sibbeston: Nick Sibbeston from the Northwest Territories.
Senator Day: Joseph Day from New Brunswick.
The Chair: Thank you. I would also like to introduce our staff, beginning with the clerk, Lynn Gordon; and our two Library of Parliament Analysts, Sam Banks and Mark LeBlanc.
Bill C-501, An Act respecting a National Hunting, Trapping and Fishing Heritage Day was referred to our committee on June 19. On October 21, we heard from the sponsor of the bill, Mr. Rick Norlock, Member of Parliament for Northumberland—Quinte West. We are now at the stage where we will begin going through the bill on a clause-by-clause basis. Before we do so, I would like to remind all members around the table that if at any point a senator is not clear where we are in the process, please ask for clarification. As chair, I will do my utmost to ensure all honourable senators wishing to speak have the opportunity to do so. For this, however, I will depend on your cooperation and I will ask all of you to keep your remarks to the point and as brief as possible. Finally, I would like to remind honourable senators that if there is ever any uncertainty as to the result of a vote or show of hands, the cleanest route is to request a roll-call vote, which provides clear results.
If there are no questions, then we will proceed.
Is it agreed that the committee proceed to clause-by-clause consideration of Bill C-501, An Act respecting a National Hunting, Trapping and Fishing Heritage Day?
Hon. Senators: Agreed.
The Chair: Carried.
Shall the title stand postponed?
Hon. Senators: Agreed.
The Chair: Carried.
Shall the preamble stand postponed?
Hon. Senators: Agreed.
The Chair: Shall clause 1, which contains the short title, stand postponed?
Some Hon. Senators: Agreed.
Senator Day: On division.
The Chair: Carried, on division.
Shall clause 2 carry?
The Chair: Carried.
Senator Day: On division.
The Chair: Carried, on division. Okay.
Shall clause 3 carry?
Hon. Senators: Agreed.
The Chair: Carried.
Shall clause 1, which contains the short title, carry?
Hon. Senators: Agreed.
The Chair: Carried.
Shall the preamble carry?
Hon. Senators: Agreed.
The Chair: Carried.
Shall the title carry?
Hon. Senators: Agreed.
The Chair: Carried.
Shall the bill carry?
Some Hon. Senators: On division.
The Chair: Carried, on division.
Is it agreed that I report the bill to the Senate?
Hon. Senators: Agreed.
The Chair: Thank you.
I would invite the gentlemen to come forward.
On March 4, 2014, the Senate authorized our committee to undertake a study of all non-renewable and renewable energy development including energy storage, distribution, transmission, consumption and other emerging technologies in Canada's three northern territories.
The committee has held numerous meetings with witnesses on this subject in Ottawa and last May travelled to all three of Canada's northern territories, holding private meetings and visiting sites. Today I am pleased to welcome, from QUEST, Quality Urban Energy Systems of Tomorrow, the following: by video conference from Yellowknife, Northwest Territories, Gordon Van Tighem, Co-Chair, Northern Caucus; and joining us here in Ottawa, Adam Chamberlain, Co-Chair, Northern Caucus; and Eric Campbell, Acting Director, Communications and Engagement, Northern Caucus.
Gentlemen, thank you for appearing here tonight. I believe some of you have opening remarks. The floor is yours.
Eric Campbell, Acting Director, Communications and Engagement, Northern Caucus, QUEST: Thank you, Mr. Chairman and honourable senators. It is a privilege to be able to present here today.
I am the Acting Director Communications and Engagement with QUEST. I'm also the secretary for the QUEST North group. I am accompanied by Gordon and Adam, the co-chairs for this group. I will introduce them in a moment.
For the benefit of the committee, I will provide some background on QUEST, who we are as a group and who is presenting to you today.
QUEST is a national non-profit organization focused on advancing smart energy communities in Canada.
[Translation]
We focus on advancing smart energy communities in Canada.
[English]
Why communities? Communities in Canada are where 60 per cent of energy use happens in Canada and where over half of greenhouse gas emissions, 51 per cent, are produced in Canada — what we call the other 50. By focusing on communities, there is an opportunity to improve energy efficiency, reduce greenhouse gas emissions, cut costs and improve energy reliability.
QUEST works across Canada, but we can see how some of these opportunities would apply particularly in the North.
Regarding what makes a smart energy community, you will see in your notes on slide 3 that we have step-by-step ingredients of a smart energy community. First, conventional energy networks are integrated. That means that the electricity, thermal, transportation and fuel networks in a community are better coordinated to match energy needs with the most efficient available energy source.
When we are in urban communities, this has implications for things like smart grid and smart energy networks and opens the door to alternative energy systems like combined heat and power, and others.
The second point about smart energy communities is that they make smart land use decisions recognizing the important links between land and energy use, beginning with moving people, goods and transportation but also moving water and waste water and other critical community services.
The third ingredient is harnessing local energy opportunities. This means renewable electricity, prioritizing renewable natural gas and other thermal opportunities like heating and cooling capture. There are opportunities in the North around biogas, small-scale hydro and other local opportunities. These are the three ingredients that make a smart energy community.
To conclude with some final background on QUEST, we are a non-profit organization that is national in scope, but we are informed through provincial caucuses. For those of you familiar with the Canada Green Building Council and their chapters across Canada, this is the QUEST equivalent.
We currently have eight provincial and regional caucuses across Canada made up of local stakeholders from utilities, local governments, the real estate sector, technology and service providers, and provincial and territorial governments whom we see as the key stakeholders in advancing smart energy communities.
Segue to QUEST North. The QUEST North group was launched by QUEST in 2014. Mr. Gordon Van Tighem and Mr. Adam Chamberlain are the inaugural co-chairs of the group. It is a distinguished group. Right now, I believe I am on slide 6. I am the sitting secretary. The group has an executive that is made up of some leading stakeholders from across the three territories, Nunavut, Northwest Territories and Yukon, from a variety of sectors including energy and utility providers, from local governments, from energy providers and consultants, technology and service providers, and from the real estate sector. I should also mention that when we talk about local governments, there is some important First Nations representation there.
Adam and Gordon co-chair this group. This group has met via teleconference on two occasions this year. It has decided that it is worth collaborating and pursuing this group going forward and to collaborate around issues and opportunities for advancing smart energy communities in the North. What do they look like in the North? What are the specific northern issues and opportunities specific to the context of North? What are the opportunities for greater cross-territorial collaboration?
With that, I'd like to turn it over to Mr. Chamberlain, who will start explaining some of the common messaging that we have developed as a group.
Adam Chamberlain, Co-Chair, Northern Caucus, QUEST: Thanks very much. I will start by saying that if you think you are experiencing dØjà vu, that may be the case. I was here before you two or three weeks ago in a volunteer capacity for the Chamber of Mines for the Northwest Territories and Nunavut. This is one of my other volunteer activities, as co-chair of this caucus, and so I have the great pleasure of being back again.
I would like to reiterate the broad membership of executive. It is an interesting body. I am lucky to be in the position to co-chair this with Gordon. The input we get from the various different stakeholders involved in this organization is beginning to provide some unique perspectives about energy and alternative energy use in the Arctic in particular. It speaks volumes to where I think we can go as an organization.
Today, we have three focuses. I will speak to the first one, Gordon will speak to another and then I will finish off with the final one. I will be keeping my comments very brief.
The first area I would like to explore or indicate we are spending time thinking about is this notion of building northern knowledge and coordination. One of things I am struck by when I travel across the North, and I have the good fortune of being able to travel across all three territories, is that there is not a great deal of communication between people in the various territories. This is obviously a function of geography and the challenge we have faced historically. It is interesting to see that we have entered a time now where communication and technology can be used to help alleviate challenges around these geographic constraints we have.
With respect to energy in particular, we think it's really important that we see support for stronger communications across the North that help to bridge the gaps between northern communities and, in particular, allow people to explore together what they've done and what approaches they have taken to deal with energy challenges in their territories or in their communities. The North is a very different place, and it is really important, we think, for there to be good communication across the North.
This is not necessarily a high-capital area, but it is one that does require expenditure of funds. While we increasingly see technology like we have here, with Gordon joining us from Yellowknife, bridging these challenges, there is a cost. The Internet, especially in remote communities, is not done cheaply, and the bandwidth is actually quite dear. While increasingly we have television sets and systems that facilitate this, there is a cost, and it strikes us as an important thing that time and money be spent trying to facilitate this through technology, and also through making resources available to people in different centres.
Organizations like QUEST actually will help to provide some of that, but I think government has a role to play in this area as well, and we've talked about that at some of our meetings. It's not just about technology but also about sharing resources and information where they are available, particularly with smaller communities even with the technology. It is one thing to have the technology, but it is another thing to know that there are people in other places that you can call on, and facilitating the knowledge and awareness of those people, especially with respect to energy, is valuable.
This is the first time I've ever met Gordon face-to-face. We've always only dealt with each other by telephone conference. Gordon, it's good to see you, and I will hand it over to you now.
Gordon Van Tighem, Co-Chair, Northern Caucus, QUEST: Now we know we're both as good looking as we thought.
First, thank you very much for including us in the discussion, and we certainly hope that the messages that you're receiving are consistent as you go forward in your deliberations.
As a group, we have been recommending federal and territorial support to a variety of fuels and systems. LNG is one that is rising on the horizon, and local energy opportunities are constantly being discussed.
The reality that we face in the North, and Dennis and Eric can speak to this, and I know they do, is the scarcity we have of people and resources and the huge amount of land we are spread across, coupled with an aging infrastructure. A lot of our power generation is in excess of 50 years old. We just celebrated the sixtieth anniversary of the transmission line into Yellowknife. We sort of depend on it. With the requirement to recover the cost of the full load, the systems are set up for the maximum load in the community, so anything that's not used is inventory. There is a cost to inventory.
That challenge is the application of alternatives, because anything that comes out of another source takes away from the pot to keep what is there moving forward. That is not to say it is not happening, but it is one the challenges to keep in the back of your mind.
Gas is depleting even though the proven reserves and the anticipated reserves in the North are unfathomable. LNG is being looked at as a solution in three communities, one in the Yukon, two in the Northwest Territories, but it is coming from Surrey, B.C. Is there technology that people could be working on where it could be produced locally and there are fewer transportation challenges?
Solar is being promoted and is becoming an actuality. It is promoted throughout the territories with net billing programs. There were some introduced earlier this year.
Wind has been in the forefront of a few for a period of time. There are a couple of wind turbines lying on the beach at Tuktoyaktuk from an experiment a few years ago when they found out how much wind there really is. Recently, some of the mines have put up large turbines, and they are reducing their greenhouse gas contribution through the use of that alternative.
Biomass is another one with significant potential. There is a major project moving forward as a community project in Hay River that would look after a huge section of the South Slave Region of the Northwest Territories and involve the surrounding Aboriginal communities in the harvest and production of wood pellets.
Geothermal showed some potential. In Fort Liard, someone drilled a gas well a few years ago, and everything came out of the ground at 120 degrees Fahrenheit. Yellowknife has worked on it. Fort Simpson has demonstrated that potential, and there are areas in the Yukon as well.
In addition, in the South Slave Region of the Northwest Territories, there is surplus hydro, which gives the opportunity to look at what that could mean.
The next thing is looking at an integrated approach. There are many programs. Sometimes it is confusing in the North as to how we fit into them and how we access them.
We have had significant success in the integrated community sustainability plans and the component of those, which are called community energy plans. This should be looked at as the basis to grow and go forward because they were all put together at the community level at the buy-in of the community people. They have recommended some very interesting solutions.
Funding remains a challenge in the North. As a market, we tend to be somewhat less sophisticated. In some communities there's one person to fill in all the paperwork for the community, and that includes any applications for extraneous funding, so if there is any way this can be funneled through a single portal or has been growing in that direction, it could be simplified. One area of access would certainly help.
We had significant evidence of investment. A new transmission line in the Yukon that has gone to a mine has demonstrated how things like the surplus hydro in the southern Northwest Territories might be gridded, either to Alberta or within the North and South Slave. There are other examples, as I already mentioned, plus simpler ones like Colville Lake, which has sweet gas capped wells right in town, which could be converted into generation potential without a whole bunch of challenge there.
Finally, looking at the role of efficiency, it is hard to discuss efficiency with the inefficiencies that we, just by our geographic and population base, create. But we are applying technologies, and encouragement for this needs to happen. LED street lighting is now in almost half of the communities in the Northwest Territories and some in the Yukon. This has a one-year payback, so there are advantages.
Building standards: Yellowknife went years ago to an EGH standard. Everybody said it couldn't be done. They are now operating at EGH-83. Yellowknife, as a growing city, has reduced the amount of water they use even though the population has increased by a measurable percentage. Building codes have been increased, but only in the larger areas. Again, population distribution is a challenge. There are building inspectors only in the major cities, and there are only three major cities.
Arctic Energy Alliance is an example of an NGO that works to expand the reach of these types of programs into the communities, and it is a successful venture that might be moving forward.
Finally, Minister Miltenberger recently gave a report on the Northwest Territories Power Corporation because, as you may be aware from our dry summer, where we have a significant number of forest fires, we also have the lowest water levels in 64 years. This has resulted in communities like Tuktoyaktuk missing their fuel run. If you want to fill up your car in Tuk it is well over $2 a litre. This also created, in addition to the forest fires, low water levels contributing to an increase in having to use diesel in the hydro areas, and the NWT had to participate in adding an extra $20 million to offset the cost of this diesel, which is an emergency-type situation.
What showed was the current way of operating is no longer sustainable and, quoting the minister, ''rates have reached their limit of affordability. What occurred this past summer, while an environmental anomaly, has been a catalyst that has initiated serious discussion on potentially game-changing direction and focus,'' encouraging us to look at the alternatives, but also ensuring that the efficiency extends to the cost of services.
Mr. Chamberlain: First of all, I will expand on something Gordon said. He was talking about challenges of changing weather patterns we saw last summer. I work and have worked for some time with communities in the far northwestern corner of Ontario, which of course to Gordon is the deep south. Communities there are having challenges getting their fuel in during the winter road. The road that was passable for many weeks or months at times in the past is now sometimes open only for a week or two. There are communities I have been to where only 10 or 20 per cent of the fuel needed for a year has been able to get in through the winter road. Of course that has a direct impact on fuel costs.
One other thing I wanted to point out is that Gordon spoke about aging infrastructure. I know Nunavut more than I know the Northwest Territories, although I do work in both. However, in Nunavut we have power generation facilities that are well at, or exceeding, their design life, and while this is for sure a concern, and something to watch for in terms of making sure that the lights stay on, it is also an opportunity. How do we look to replace those facilities or change the energy framework to deal with replacing that capital investment? If we do the right thing or we are able to take some thinking outside the box, we could see interesting things and changes in some of those communities.
The part I wanted to finish my discussion with before we encourage you to ask questions is that access to capital is a challenge. While there are many programs that exist — SDTC has some funding, and there is funding through other government agencies, whether Environment Canada or NRCan — the trick is that often the funding envelopes for capital are built for larger projects. The strange thing about energy infrastructure in the Far North is that it is at one time extraordinarily expensive and, on the other hand, extraordinarily small-scale.
If you are dealing with 25 or so hamlets in Nunavut, for instance, you can't get the economies of scale and scope that you can throughout the South where you can link them together by transmission lines at a reasonable cost. These are typically going to have to be stand-alone communities. Transmission is not going to be an option for many of them. There are going to be challenges.
While there are existing frameworks for capital provision, we think it is really important that as government looks at funding these sorts of things in the future, careful thought be given to the criteria that are there to be met for these capital programs to allow smaller programs in more distant places to benefit the same way programs or capital expenditures might be spent on energy projects in the South. That will require some outside-the-box thinking. We, as a group, have spent some time speaking about that in our calls. In a nutshell, that's the last point we wanted to make sure we got across.
We would be happy to answer any questions.
The Chair: Thank you very much, gentlemen.
Senator Massicotte: Thanks to all three of you for being with us today. We appreciate it. We are trying to come to grips with the solutions for energy costs. We understand that high energy cost is a definite impediment to your development and quality of life.
We were up North — I guess time flies — a month and a half ago. We noticed that a lot of your consumption of energy is subsidized, if you wish, whereby the consumer does not fully appreciate the total costs. Would it possibly not be better to make sure the right pricing is given to basically make the real cost more transparent, and give the money directly or differently so that people are more sensitive to the real energy costs?
Mr. Campbell: I might refer you to Mr. Van Tighem on that one.
Mr. Van Tighem: The cost of energy specifically in the Northwest Territories is fully transparent in the general rate assessment process that goes through every couple of years for those who look at it and additionally for the government. In our situation, the government is motivated to attempt to lower the rate across the board, but in order to do that, they needed to create an across-the-board rate, which then made the subsidization more apparent.
As for having it done in a different way, it would have to be carefully thought out because the challenge is that the higher-cost areas are found frequently in areas of less sophistication than in the challenge of operating. That is significant as well. I will leave it there.
Senator Wallace: Thank you, gentlemen, for your presentations. To better understand your organization and how you have interacted with the federal and territorial governments, I see from the list of executives in QUEST North that you are well represented at the municipal level in the North. You have a representative from Aboriginal Affairs and Northern Development Canada and a representative from the Government of Yukon.
When you have been working to advance this concept of smart energy communities, how have you interacted with the governments, starting with the territorial governments?
Obviously the governments have their own priorities and their own agenda as to what they want to advance, so how have you involved yourselves in that so you are not in conflict with what their priorities might be? How have you interacted with them to try to develop something in a consistent way, or have you?
Mr. Campbell: That's a very good question. To clarify, QUEST North is similar in many ways to our other provincial caucuses, but, in other ways, because it is coming together across territorial jurisdictions, it is unique.
As a national organization and through our caucuses, we have done a lot of work to engage provincial, territorial and federal governments. It tends to be our caucuses that engage the provincial and territorial governments because they're provincial and regional, in the case of QUEST North. As a national organization, we are engaging the federal government. We have done so through NRCan and through the environment and infrastructure ministries to date.
I think, Senator Wallace, your question is this: In our daily dialogue, as a group and as a network, where do the provincial and territorial governments fit in? You are right to note that on QUEST North we currently have representation from the Government of Yukon and the Nunavut Energy Secretariat. We are yet to secure the right representative from the Government of the Northwest Territories.
QUEST's philosophy is that when it comes to fuels, systems and stakeholders, we're agnostic. We try to provide the space where dialogue can happen and to provide a rough framework, the smart energy community's framework, which in itself is very inclusive, so that everybody can feel some ownership over the conversation.
When we have the territorial governments involved in our conversations, and it is an incredibly constructive role that they're playing. In some ways, they're informing our conversation. Sometimes we get sidetracked because there's a conversation happening there between a territorial government and a local government, such as ''Were you aware of this program?'' ''Oh, no, tell me more about this program. Is it something that can be useful?'' Whether it is with Terry Rufiange-Holway from Champagne and Aishihik First Nations in Yukon or with someone else, lots of conversations are taking place with the Yukon government.
We find that they play a very constructive role, both informing the conversation and participating actively and taking a lot away from the conversation. We are here before you today because we feel that the federal government can play an active role in advancing smart energy communities in the North, but we also recognize, as a group, that the federal government and the territorial governments aren't the only players. There are a lot of other players around our table that need to play an active role in making energy efficiency and energy innovations a reality in the North. It is very much a round table when we get together in person or on the phone.
Senator Wallace: On your executive, you do have a representative from Aboriginal Affairs and Northern Development Canada? Is that department active in your organization? Do they take a lead role in your organization, or are they there to see just what is going on?
Mr. Chamberlain: QUEST North is a fairly new entity that has been setting up over the last 12 months. At this point, most of the participants that you see listed here are fairly equal in their activities. I wouldn't say that anybody is taking a particular lead. We are drawing out as best we can input from all the various stakeholders, whether the federal representatives or the others that you see.
Senator Sibbeston: I want to commend all of you for your participation in this organization. It seems as if oftentimes in the North, it is the governments that deal with important things like this, the territorial government and the federal government. It is good to see that people like you are involved in that.
There has been tremendous advancement in the North in the area of responsible governments and the territorial governments taking over responsibility, particularly those that had been in the hands of the federal government, and there's been devolution in the last few years.
Recognizing that, there's still a role for the federal government in the North in areas like energy. What would be the single most important new initiative that the federal government could take to help both your organization and the people in the North in providing self-sufficiency and sustainable energy to the people of the North?
Mr. Campbell: It is hard to narrow it down to a single thing. I would like to give Mr. Van Tighem and Mr. Chamberlain an opportunity to answer that, if I could.
I will start by saying there's two approaches that we can take, which is evident in our messaging as a group. There's efficiency, working with existing buildings and infrastructure and how we can improve energy conservation and energy efficiency. Then there's how we fuel and serve our communities with energy services and how we can incorporate energy innovations that help us produce and distribute energy more efficiently up North.
On the efficiency side, Natural Resources Canada, through the Office of Energy Efficiency, has a very strong efficiency program. It would be terrific to see them play a more active role in the North. That's where I will start. I will now turn it over to Gordon to provide his insight there.
Mr. Van Tighem: It is an interesting evolution. The mention of devolution is a key thing. Prior to discussions of devolution and the actual signing of devolution agreements, most of the authority and responsibility for what we do came through the federal government. That's why there's still a fairly strong relationship between the two.
Having said that, though, in recent years it has been identified that in order to have shovels in the ground and to move things forward, it is good to involve the municipal levels of government. That's where there's been a flow-through of capital from the federal government through the territorial governments and provincial governments through things like the Building Canada Plan, the gas tax and the GST programs that have moved things more in the direction that we now see as working well and creating some efficiencies.
One thing that can happen is to continue to move in the direction that it has been moving.
We are the heirs and beneficiaries of the Northern Canada Power Commission, which in 1988, I believe, became the Northwest Territories Power Corporation. It split with Nunavut probably in 1999.
The challenge occurs, as the population grows and as things age, in finding creative approaches to moving that into the next generation or the next century. Support behind programs in that and simplifying them so that they can operate within the structure we find ourselves in is good.
Basically, to some extent, stay the course. In other ways, take some of the course that's happened so far and see if it can be broken down to the lowest common denominator. That is something we learned in Grade 4, and it seems to apply in this marketplace.
Mr. Chamberlain: I don't purport to have knowledge of what the best thing that the federal government could do in the North would be, but I have a couple of ideas. One I would raise is that organizations like SDTC are very active and provide funding for things like what we're talking about in the South. If they were able to have a focus and dedicated funds for work in the North, it would be a good step. As I said before, the ability to appropriately focus funding and make it available for capital projects in the North would be very valuable.
Senator Patterson: I would like to thank all the witnesses, including Mr. Van Tighem in Yellowknife.
With a focus on Nunavut, I would like to ask Mr. Chamberlain, who I know is also a director of the Nunavut and NWT Chamber of Mines, to give us a bigger picture look at an important question that the committee should be addressing in its report.
Basically, we are a Senate committee with a mandate to study matters relating to the Government of Canada, but we are looking at energy issues in the three territories. I would like to ask your views. Mr. Campbell spoke of the active role that the federal government might play in the territories, and there was some reference to Sustainable Development Technology Canada. We have also heard from NRCan and AANDC. I think it is fair to say our committee was surprised that there seemed to be so few programs and resources dedicated to the three northern territories.
Mr. Chamberlain, what would you say the federal interest is in the North? Why should this Senate committee be studying the territories from the point of view of the federal interest and the federal role? What is the justification for the federal government being interested in energy in the three territories, please?
Mr. Chamberlain: I won't regale you with my law school stories, but it takes me back to law school in that the territories have a special constitutional place in Canada. We talk a lot about devolution, but the federal government has significant responsibilities and control of natural resources and related issues in the territories that it doesn't have to the same degree in the provinces.
That's really important to keep in mind when you are thinking about this, because we talk a little bit about conservation. Conservation gets a bit of a short shrift in the North because once you get a diesel generator up and running, it's running and the power is being used. In smaller communities, there's not a lot of provision for how you create more efficient communities. We think it is important because those communities are consuming federal resources one way or another. They're consuming them through transfer payments that are being used to subsidize, if you will, fuel costs and other related expenses, which are massive. You would know better than most people how the subsidies work and how important they are to keep the lights on in the North. I acknowledge that some of this is money up front to create savings down the road. Could you take some of that money up front and be able to create efficient communities that don't need as much diesel or have other options? Whether it is hydroelectric or biomass, they all have challenges. I'm not pretending there's a magic bullet for energy consumption in the North or energy generation. But any money that is spent on conservation is going to save money down the road in some other area, like transfer payments and how they're used for fuel consumption.
I don't know, Senator Patterson, if that provides the kind of answer you were looking for or thinking about, but that's where it is important to keep in mind that there is a special role for the federal government in matters in the territories. I must say that as somebody who works in the territories frequently, I take that for granted, so I appreciate being pulled to that, and I hope that comes across.
Senator Patterson: Further to that, there's a hydro line to Churchill, Manitoba, a stone's throw, one might say, from the sixtieth parallel. There are seven communities in that region. There's a potential gold mine at Rankin Inlet. The committee actually had an opportunity to visit that Agnico Eagle proposed project. It has not been determined feasible yet. There's also a large proposed uranium mine in the same region. All of those communities and both those mines, subject to alternatives, are faced with expensive and price-sensitive and hard-to-transport or sometimes risky-to-transport diesel power generation.
There is some excitement in the Hudson Bay round table about building a link to the Manitoba grid, and I understand that Manitoba Hydro has offered at the Hudson Bay round table to build the line on a cost-recovery basis.
There is also some study being done into the feasibility of a hydro facility in Iqaluit, where the power corporation burns about a third of the diesel consumed throughout Nunavut's 25 communities in that community.
Would you see a role for the federal government in any of these kinds of projects? I did get excited when I found that the federal government had played a role in the Muskrat Falls project in Labrador. Is there a role for the federal government in helping to make such projects, the two that have been identified by the Nunavut territory, feasible? And what might that role be?
Mr. Chamberlain: I will take a crack at it. Gordon, if you have anything to chip in after I finish, feel free.
I have had the pleasure and good luck of working on transmission projects in remote communities. I worked on the team that extended the Ontario grid north from Moosonee to Attawapiskat and eventually into the Victor diamond mine, so I have some experience with transmission and its development.
Transmission is very expensive, to be blunt. That means two things: One, it is difficult to get everybody together to do it. Two, you need the stars aligning. You need entities like Manitoba Hydro to step up. You benefit not just from having residential communities or places where people live that need power but also from having mines that will be part of the electricity load to help shoulder the cost of the transmission over time.
You need those stars aligning for consumption and on the utility side, but you also need a significant Crown anchor, even in the provinces. I can speak to my experience in northern Ontario where there is a desire and an ability to actually make a change for transmission development. The federal government has a key role to play. The role there is always, at least in part, justified by the fact that if you extend a transmission line to communities that are, in Ontario's case, Aboriginal communities, First Nations, then there's a federal interest there because the federal government is paying to get the fuel to those communities.
If you can offset that fuel use, obviously in the long run it is going to create two things: fewer fuel costs for getting diesel up and opportunities for those communities to build small hydroelectric facilities because they then can contribute the electricity into the grid and be part of a larger grid.
An electricity grid is not just about getting power from the South in Manitoba into communities in Nunavut; it is also about being able to move power around Nunavut. I am not suggesting for one second that we are about to build transmission lines to all 25 communities. That's just not something that is going to happen in my lifetime, but there will be opportunities, such as the one you described, that can be taken advantage of, and those will require a significant federal anchor.
Mr. Van Tighem: I have a copy of Popular Mechanics from 1949, and the title of the lead article is ''Federal government throws $5 million into a hydro transmission line in the middle of nowhere from the Snare River system to Yellowknife and no possible way of ever getting a return on it.'' With what has happened in this community and the result, I think there has been a significant return. And by the way, we are still using that line.
But there are two other considerations that come up and have over my history of involvement nationally through the Federation of Canadian Municipalities. It is that we see Canada's North — some of us — as the future of Canada because the resources are here. Our background, our history is non-renewable and renewable resource development. In order to do that, and in addition to the sovereignty consideration, we need to have people who are living here and employed here and who can afford to live here and be employed here. I see those two things as key national interest issues that this relates to.
Senator Day: Gentlemen, I have a couple of questions for Mr. Campbell as it was part of your presentation. Could you just expand and explain for me, if you wouldn't mind, ''recognizing that poor land use management can result in energy waste.'' Can you tell me what you're talking about? I understand energy waste, but it's the land use aspect.
Mr. Campbell: Thank you for the question, and for full disclosure, our executive director is a planner, so we have a special spot in our hearts for planning decisions.
What do we mean by land use planning? Maybe I could describe it in the urban context in Canada's South, and we can perhaps extrapolate that to what the implications are for the North.
When we make land use planning decisions, such as building suburban sprawl or communities that are spread over a wide geographic base, it immediately locks us in. For as long as that infrastructure, community and those planning what is being built there are going to last, it locks us into energy waste, into longer distance for cars to be moving people. It locks us in to longer distances for trucks and rail to be moving goods. It locks us in to longer distances for moving water and waste water. That's one point that has interesting implications for the North where the movement of water and waste water is a significant user of energy, and it has significant implications for the movement of other critical services, such as medical services, ambulance, security and police. If we're paying for the fuel, — gas, diesel or propane — to move those vehicles over a much broader distance, then that will increase our fuel costs.
That's one example, and we see in the South that when we're building first with greater density we are then able to eliminate a lot of that waste.
One other example, we often hear from the Railway Association of Canada, which has a stake in this game because their members are moving freight from community to community — not necessarily distributing it within the communities but moving it from community to community. The placement of those hubs — where there is transition happening from intercommunity delivery to within-the-community delivery — if it's fed into a transportation network that's integrated and connected to where the goods need to be delivered, they see significant cost savings when that happens. Those cost savings come from energy savings.
Those are two examples, and I have to excuse myself; I am not a planner so I cannot speak to the myriad more ways that planning has energy implications, but hopefully that provides a picture of how land use and energy are related.
Senator Day: That's very helpful, thank you. I didn't expect the answer to be that long, but I certainly understood your answer and I thank you for it.
The other point of clarification is the heading ''harness energy opportunities,'' and you talk about renewable electricity, renewable natural gas. Can you expand on renewable electricity, renewable natural gas?
Mr. Campbell: We realize that renewable natural gas is a concept that people are not accustomed to hearing about. At QUEST, we are fuels and systems agnostic. One thing we recognize is that 60 per cent of the energy we use in this country is not for electricity services, but heating and cooling. In some jurisdictions, heating and cooling is provided through electricity, but in some it is not. It is provided through natural gas, district energy or biomass. The majority of the energy we use in this country is for heating and cooling. When we talk about renewable energy, people think solar, wind and things that are generating electricity. We think it is also important to draw attention to renewable natural gas opportunities. What are renewable natural gas opportunities? There are a number of gas providers across Canada who are capturing biogas from landfills, waste water systems, from farmers —
Senator Day: Methane in large part.
Mr. Campbell: It is essentially methane.
The point in underlying ''renewable'' is obviously there is a priority that should be given for energy sources that can replenish themselves, simply because there are implications for lower costs over the long term and improved reliability over the long term, which is an important one. Notwithstanding Mr. Van Tighem's reference to the hydro in some communities that has been depleted because of the low water levels brought about by the drought, renewables tend to have a higher reliability, and in the North, reliability is crucial.
Senator Day: I will finish up with this question: I looked at the percentage of publicly owned housing in Nunavut. It was almost 60 per cent. You are talking about conservation and buy-ins, and the efficiency argument you are making from the point of view of use. Is this a community-based project, or are you getting individual housing occupants buying into a lot of these programs that you're talking about?
Mr. Chamberlain: The short answer is it's going to be both. Communities are going to be the best place to do the planning, but not just with respect to apartment buildings and other communal housing. You will need individual residents to retrofit houses and install. Mr. Van Tighem spoke about energy-efficient buildings and meeting higher codes. You don't rely on communities for that. You look at individuals to do it themselves. That's one of the reasons some of the tax incentives that government provides or can bring to bear are so important.
I work in the renewable energy sector as a lawyer across the country, and I can say that many of our clients get into this activity not because it's free or subsidized, but rather because there are certain incentives there. A tax incentive for installing an efficient ground source heat pump that allows for a large chunk of a building's energy heating consumption and goes off the non-renewables like natural gas and onto geothermal power has a big impact. They have impact on large developers, but we also see that they have a significant impact on individual homeowners as well.
Senator Seidman: One of my colleagues asked you for an example of a model project, something that particularly signified something of importance that you felt you were working on up there. One of the things you talk about regarding the smart energy communities, and you just made mention of it, so perhaps we could pursue it, is the retrofitting concept. How does retrofitting in existing buildings fit into this whole approach to smart energy communities? What are the practicalities of it, the costs and the barriers?
Mr. Van Tighem: The best example was that when the City of Yellowknife came up with their new building bylaw, the requirement on renovations was that you go to an ENG-80 standard, and that did a couple of things. It made it very scary for the people who were doing it, but it really brought back what their return was. If you were to do a retrofit, as had been done before, you would reduce your utility costs a little bit, and you might have a payback in five or six years. By going to the new higher standard, your upfront money was higher, but the recovery was not sooner but it was dramatically higher.
The thing that brought it to light was an accountant who did the calculation and explained that at age 68 if he did it he would be 103 when he got all his money back, but thank you very much for the savings. It is demonstrably a reduction in the consumption.
The one thing that stood out for me was a gentleman who climbed one of the hills in Yellowknife. On one side of the hill he could look at downtown where there were the old houses that had been dragged in from mines all across northern Saskatchewan, Alberta and the Northwest Territories, and in the wintertime the chimneys were puffing smoke or steam or whatever regularly. If you looked on the other side there was the new subdivision under the new building code, and this chimney would have smoke coming out and stop, and then another one would start and then it would stop. These were buildings that were maybe twice the size of the ones on the other side. Just seeing the change in technology, you knew you were reducing what you were consuming.
Mr. Chamberlain: I know a fellow who owns a geothermal business. This is not volcanic geothermal, but from ground source heat pumps that can be installed in certain communities. It doesn't work everywhere. For example, if you have permafrost it's not great. In certain places where you have heat stored in the ground you are able to pull it out. It's complicated. I've been told it's much the way a refrigerator works. In a nutshell, this fellow said it drives him crazy to listen to people talk about payback. If you figure out that he's taking someone off hydro-electric, so they're not using diesel to generate electricity to heat their house. This particular place he was telling me about is using a ground source heat pump, so it needs a very small amount of electricity to run the heat pump. The savings meant that there was to be payback for the capital cost within six or seven or eight years, I believe.
The thing that drove him nuts about it, and I think it's instructive, was that once you get beyond that payback period you're into free. You're into a point where you've paid back that capital, but now you're just using that small bit of electricity to make it work. It's a good example of how a modest investment up front can save money that gets paid back over a reasonable period of time, and then from then on you've got a much more efficient system.
Senator Seidman: If you factor in those years when it's virtually free, then the six or seven or ten years it takes at the front end you see it costs much less.
Mr. Chamberlain: Right, and you can see the same thing if you are just increasing insulation requirements so that houses are well insulated. You will see a similar phenomenon manifest itself, maybe over a longer period.
Senator Seidman: You're saying there's a purpose and real value then in the retrofitting approach.
Mr. Chamberlain: That's right. And back to the cost of energy generally, if you draw a pie chart of Nunavut, which doesn't quite apply for the Northwest Territories or Yukon. At a conference I saw a fellow who once had the job of Chris Down, who is with the Nunavut Energy Secretariat. It was his predecessor I saw speaking at a conference a few years ago. He was doing a presentation about energy in Nunavut, and he had a great slide with pie charts. It showed that in Ontario the energy mix would be a quarter nuclear and a quarter hydroelectric and all that. The pie chart for Nunavut is one colour because it's all diesel. Any chink you can make into that pie chart, any piece of pie that you can build that's not that colour, that's money you're saving down the road, and the federal government will realize savings because over time it's having to ship less diesel.
The Chair: I want to ask a couple of quick questions, if I could.
You have here, on page 8, local energy opportunities such as solar and wind. Can you gentlemen tell me what experience you have had with solar and wind in the High Arctic?
Mr. Van Tighem: Solar is increasing exponentially and surprisingly even works in the wintertime when we have extended hours of darkness versus the rest of Canada.
We have a gentleman who lives outside of Yellowknife off the grid, and he has put out 10 kilowatts with solar panels, and in the wintertime he still gets 5 kilowatts, which is adequate to replenish his battery, and away he goes. We have further given incentives to that process with people on the grid. If they are generating more than they need, they can sell it back into the grid, and if they need some they can take it off the grid, and that has started some stuff moving.
The government has put in some very significant banks. There's one going into Colville Lake and one currently in Fort Simpson. These have replaced large areas. One of the things they learned right away is that if you use it in the wintertime you have to sweep the snow off.
With regard to wind, as I mentioned, some tests were done in the High Arctic and they found that the turbines actually blow over. Some of the mining companies, with the changes in technology in recent years, have put in wind turbines. Diavik, which is part of Dominion Diamond now, was able to replace 10 per cent of their fuel oil requirement with putting in a turbine. They use 60 million litres a year, so by reducing 10 per cent of that, you cut back on the trucking, the usage and the effluent. It has a significant impact, and that is happening in smaller capacities now too as technology improves.
It is the same thing with the solar panels. My brother installed solar panels in southern Alberta. I sent him the quote that we got here for purchasing panels, and they are actually less expensive up here, so there must be a volume thing happening.
Mr. Chamberlain: To make a point, the mining companies don't put up wind turbines for public relations reasons. Diavik has put up two or three turbines, and the turbines they've built there are built by a German manufacturer called ENERCON. They are widely considered as being one of the highest-quality turbines and highest-cost turbines in the world. In fact, some of the wind developers I know refer to them as the Cadillac of wind turbines. Yes they are more expensive, but they are being used there because they work well in cold conditions. They are designed for that. They don't have gears, and there is a whole bunch of neat stuff about them. But the main thing is that they pay for themselves. These diamond mines won't stay around for as long as my children are here, but they will stay around long enough to have saved money and paid back their wind turbine costs and then some in the life of the mine.
The Chair: Those are interesting comments because we will have a witness come here to corroborate what we've just heard. I appreciate that. Does Yellowknife have net metering now?
Mr. Van Tighem: The Northwest Territories has a net metering program, yes.
The Chair: How long have they had it in place?
Mr. Van Tighem: This is the first year. They did a three-year pilot which doesn't show a whole bunch because not a lot of people were signing up for it under a net building scenario. It is currently operating in a one- to two-year test horizon as net metering and there will be some adjustment to the rates that are ascribed to the project. It is starting to show an increased uptake — hopefully in the diesel communities.
The Chair: That's interesting. I think it's great that they are doing those things. Can you tell me that the corporation pays back to the individual the same price or maybe lower transmission costs compared to what it costs them to generate? Would that be the subsidized price or the full price?
Mr. Van Tighem: That's the part under discussion now. It is set up now on the basis of what you pay is what you get back for what you put in. The calculation over this test period will be to pull out the subsidization. One of the scenarios that is looked at is if the government is the major installer of solar, and if the government went on that net metering, they would be getting recovery based on a subsidy. Some of the nuances that need to be tickled are in process right now.
The Chair: Thank you, gentlemen. I appreciate it very much. If no one else has questions, thank you for taking time out of your busy schedules. We appreciate it very much.
(The committee adjourned.)