Proceedings of the Standing Senate Committee on
Energy, the Environment and Natural Resources
Issue No. 13 - Evidence - October 20, 2016
OTTAWA, Thursday, October 20, 2016
The Standing Senate Committee on Energy, the Environment and Natural Resources met this day at 8:28 a.m. to study the effects of transitioning to a low carbon economy.
Senator Richard Neufeld (Chair) in the chair.
[English]
The Chair: My name is Senator Neufeld, I represent the province of Alberta, and I am chair of this committee.
I would like to welcome honourable senators, any members of the public with us in the room and viewers across the country watching on television. As a reminder to those watching, these committee hearings are open to the public and also available via webcast on the Senate's website. You may also find more information on the schedule of witnesses on the website, under Senate committees.
I am now going to ask the senators around the table to introduce themselves. I will begin by introducing my colleague to the right, the deputy chair, Senator Paul Massicotte.
Senator Massicotte: Good morning.
Senator Lang: Senator Dan Lang, Yukon.
[Translation]
Senator Ringuette: Pierrette Ringuette from New Brunswick.
[English]
Senator Patterson: Dennis Patterson, Nunavut.
Senator Enverga: Tobias Enverga from Ontario.
Senator Seidman: Judith Seidman from Montreal, Quebec.
Senator McIntyre: Senator McIntyre, New Brunswick.
The Chair: I would also like to introduce our staff, beginning with the clerk, to my left, Lynn Gordon, and our second clerk, Maxime Fortin, and our two Library of Parliament analysts on my right-hand side, Sam Banks and Mark LeBlanc.
Today marks the eighteenth meeting on our study of the effects of transitioning to a low-carbon economy as required to meet the Government of Canada's announced targets for greenhouse gas emission reductions.
In the first section of our meeting, I am pleased to welcome, from the Coal Association of Canada, Robin Campbell, President. Mr. Campbell, thank you for joining us. I believe you have a presentation to make to us, and then we will move to questions and answers. The floor is yours, sir.
Robin Campbell, President, Coal Association of Canada: Thank you, Mr. Chair. It is a pleasure to be here, and I want to thank you for allowing me to address this committee. It is very important work for the future of Canada. When we look at transitioning to a low-carbon economy, it leaves a lot to look into to make sure that we do the right things for all Canadians as we move forward.
You have a slide deck in front of you. I'm not going to go through it. It is more for information, and I hope it will generate some questions. I think there are some important questions that need to be asked, and we have some answers, moving forward, to do our part when we look at what's happening around the world.
The Coal Association of Canada is a membership organization. We believe in advocacy and member support, and we have a vision of development growth, advancement of a safe, socially-responsible and economically sustainable Canadian coal industry.
I am a coal miner, and I have come full circle, I guess. I'm a fourth-generation miner. My family mined in Nova Scotia, in Glace Bay, and I mined in the coal fields of Alberta. After that, I was in politics for seven years, serving in the Alberta government. I've served as Minister of Aboriginal Relations, Minister of the Environment and Sustainable Resource Development and as Minister of Finance and President of the Treasury Board. I am now back to where I started as President of the Coal Association of Canada.
I understand the industry, the impact it has on our communities across Canada and the importance of it when it comes to looking after safe, reliable energy that our country needs as we continue to grow, and that the world will need as we continue to go.
Right now, it's important to realize that the world has an abundance of coal. There are 986 billion tonnes of known reserves around the world. That's both metallurgical coal and thermal coal.
If you look at the slide deck you will find that metallurgical coal is also called coking coal and it is used for making steel. Unfortunately, in Canada, we export all of our coking coal to places like Korea, Japan and China, and for a while we were also exporting coal to Brazil and Spain.
Then we have thermal coal, which is used for power generation. In Canada, most of our thermal coal is used domestically. We use it right here in Canada.
There are opportunities to utilize coal for years and years to come. Right now, when we look at around the world, 41 per cent of the world's electricity is generated by coal, and 1.2 billion people did not have electricity in 2013. Again, I have a slide that shows how that is broken down in the countries that do not have electricity and where people are without.
One of the things electricity and power brings is quality of life through refrigeration, heat, safety and access to information. As we look at developing countries around the world, the Internet has made the world a small place. What I mean by that is that anyone around the world can click a button, and up comes Canada. People around the world see the lifestyle that we have in North America, especially in Canada, and they want to have that same lifestyle. To do that, they need two things: infrastructure and the power to build that infrastructure.
As I said earlier, coal is abundant right around the world, and countries are using it more and more to get to where they want to be. According to the International Energy Agency, coal right now is the second-largest global energy source until 2030, and it will be the third-largest until 2040. Developing countries will continue to use it, and the question we have to ask ourselves is: What are their environmental standards?
One of the things about Canada is that we hold our industries to high standards. When we look at mining regulations across the country, we have the strictest standards of anywhere in the world. I can tell you that in Alberta, for example, the Alberta energy regulator is world-renowned. People come from all over the world to see how they do business, put regulations in place and enforce them to make sure that we do a good job of looking after the environment as we look at harvesting our natural resources across the country.
It is important that coal will have a place in the global energy mix for decades to come, and there is nothing we can do about that in Canada. What we can do is look at ways to a lower-carbon economy through technology. Technology is being developed around the world to utilize coal more efficiently and with lower emissions.
Right here in Canada, in the province of Saskatchewan, you have the Boundary Dam project, in which they have incorporated CCS, which is carbon capture and storage. Some of the members of this committee may have toured the Boundary Dam a few weeks ago, and I know two of the federal ministers — Ministers McKenna and Carr — were both in Saskatchewan, toured the facility and were pleased with what they saw and saw that as a bright spot moving forward. It is a made-in-Canada solution, and while all the technology is expensive at first, it's important to realize that it's going to continue to happen around the world.
Also in Alberta, in the oil sands, Shell put in a carbon capture and storage plant and this year, they celebrated 1 million tonnes of carbon that they removed from the atmosphere. Again, it was in the enhanced oil recovery, so they were able to take that carbon and put it into wells that they couldn't get at in a conventional manner and have been able to recover a resource. That's important moving forward.
What has been happening is that there has been a lack of investment in coal technology, and we in the industry think it's time to change that. CCS has been acknowledged by Canada's federal government in Paris and was also acknowledged by the Three Amigos agreement between Canada, the U.S. and Mexico.
Canada can become a global leader, and we can export equipment to other countries. This is how we control emissions at home and we can help to reduce them abroad.
If we export our coal rather than burn it here, we lose control over emissions and we don't know how the importing countries will burn it. There is no single answer to climate change, but CCS and coal technology is part of it, as is finding a balance between the economy and the environment as we move forward.
We need to take our time, do the research and invest, and energy transitions must be well planned out. It's easy to say we're going to shut down the coal mines but, for example, in the province of Alberta, coal produces 6200 megawatts of power, which is 51 per cent of their capacity. I know New Brunswick is dependent on coal, and Nova Scotia and Saskatchewan depend on coal. What is the replacement going to be for those moving forward?
The last point I want to leave you with is the most important to me. While we have these discussions about climate change and about going to a low-carbon future, we don't put a human face on any of this. To me, this is very important. When I look at the rural communities across this country that depend on the coal industry to provide employment and infrastructure for these communities to be successful, no one is thinking about what we will do with those communities after the mines are shut down.
With most of the mines, we look at the thermal side of things, or what we call mine-to-mouth operations. Those mines are there because the plant is there, so you ship the coal right from the mine to the plant by truck and it is very efficient, cost-effective and productive moving forward.
I was down in Glace Bay, Nova Scotia in September, and I was down there because we had a board meeting about the new Donkin Mine project happening in Glace Bay.
It was the first time I had been down there in probably 20 years. My family is from Glace Bay. I'm a fourth generation miner. When I look at what Glace Bay was like when I was a kid growing up, there were about 20,000 people there. It was a vibrant community. When you're seven or eight years old, everything looks larger. But people were proud to be miners and proud of their community.
You go there now and there is nothing. I went down the street where my grandparents used to have their house, and there is nothing there now. There is no hope for people. The Donkin mine opening up is providing hope for people in Nova Scotia that they can get good-paying jobs. The average coal miner across Canada makes $96,000 a year. We are not talking about chump change. These are real dollars that are spent in their communities. They pay tax on these dollars.
When we look at our rural communities across this country, and because I live in Alberta, I'm talking about communities like Hanna, Forestburg and Warburg, these are communities with fourth, fifth, sixth generation people living there. They have not always been coal miners. A lot have been farmers. One thing that the coal mines do in Central Alberta and Central Saskatchewan is it allows these individuals to keep their small farms running, because they can't sustain the farms on their own. The coal income sustains that for them so they can continue to run their farms and have a rural life they enjoy and we can move forward into the future.
A report came out in August 2016 from the U.S. Department of Energy, and it's an issue brief on Carbon Capture, Utilization and Storage, so they call it CCUS, where we call it CCS, and it is the climate change, economic impediments and energy security.
The summary starts off saying:
Carbon capture, utilization, and storage (CCUS) technologies provide a key pathway to address the urgent U.S. and global need for affordable, secure, resilient, and reliable sources of clean energy. In the United States, fossil fuel-fired power plants account for 30 per cent of total U.S. greenhouse gas (GHG) emissions and will continue to be a major part of global energy consumption for decades to come. CCUS technology is necessary to meet climate change mitigation goals at the lowest possible cost to society, but its widespread deployment will require continued improvements in cost and performance. In addition, key sources within the industrial sector, which accounts for 21 per cent of total U.S. GHG emissions, cannot be deeply decarbonized without CCUS. A combination of tax incentives and research, development, demonstration, and deployment (RDD&D) will be critical to developing transformational carbon capture technologies and to driving down the costs of capture.
It is important that our neighbour, one of our largest trading partners, is looking at carbon capture and storage and is ahead of the curve and where we should be.
Without CCUS, the Intergovernmental Panel on Climate Change has said that realizing scenarios of less than 2 degrees of global temperature rise may not be possible and the cost of mitigation could increase by 138 per cent.
Under the CCUS incentives and the president's 2017 budget request: provide refundable investment tax credit for CCUS projects supporting infrastructure, provide a 20-year refundable sequestration tax credit for captured CO2, $10 per metric tonne EOR and $50 per metric tonne saline.
Even though there is lots of conversation in the United States about shutting down coal-fired generation, they are moving to CCUS and are prepared to put credits in place and to see that this project and technology become reality.
In Saskatchewan, in February of this year, SaskPower and BHP Billiton, which is one of the largest coal producers in the world, established a carbon capture and storage knowledge centre in Saskatchewan. The company is investing $20 million to build on Saskatchewan's global leadership in CCS research.
We think that's very important and timely. We think that we can be doing that right across Canada. We should be looking at research and technology, because that is the future and that is going to provide the answers we need moving forward. We should be working with our universities and looking at the intellectual capital we have, and we should keep it in this country. We have some of the finest universities across Canada, and these people leave because we don't have the opportunities for them here in Canada.
When I look at coal as a whole and at what's happening around the world, I believe if Canada moves quickly, we be world leaders in the low-carbon economy by providing research and technology that we can sell worldwide and create jobs here in Canada and abroad to do what we can to lower emissions when it comes to using coal-fired generation around the world.
I will leave it that and be happy to answer any questions.
The Chair: Thank you very much for that presentation.
Senator Massicotte: Thank you, Mr. Campbell. We need to accept, like you said, that there will be an increasing need for coal for the next 20 to 30 years in spite of the fact we have a major challenge with climate change. But climate change, as you noted, is non-negotiable. We have to get there because the consequences to our society are significant, compared to the costs of getting there.
You rightly argue that the dilemma we have is the cost of producing electricity with coal is the cheapest form of energy. But that's because you exclude the major cost of getting there, which is the cost of capturing CO2. If you fully cost out the cost of producing coal, including the cost to society, which is the cost of the CO2, does it become competitive?
We hear all kinds of speculation, but what is the cost of capturing CO2 with CCS, if you wish? Even in Saskatchewan, you hear numbers of $100 a tonne. Is it $125 or $150? Let's say it's $100 a tonne. What's the effect on the costs of producing electricity with coal if you have to have that kind of technology to get us there, and is it still competitive?
Mr. Campbell: It's an interesting question, and it's important to compare apples to apples and oranges to oranges.
When you look at coal itself and the CCS, it is expensive right now, no doubt about that, because it is new technology. Saskatchewan went on its own and did what they had to. But when you look at everything, nothing comes without consequences. Whether you look at coal, wind, solar or natural gas, they all have a down side to them.
For example, when you look at wind, you need coal to build wind turbines. Seventy per cent of a wind turbine is steel. You need coal and iron ore to make that. What are the emissions from the coking plants that are used to make the steel, and then the transportation costs to get the steel where we have to get it to build the turbines and then ship them? We don't take all those costs into consideration. All we look at is the emissions coming out of the stack.
Everyone says natural gas is a clean fuel. Yes, it is, when we look at the emissions coming out of the stack. But when we look at the total carbon footprint, what are the costs of that moving forward?
I suggest that when you look at everything, coal can compete with anything, as long as there is a level playing field. If you put a carbon tax just on coal and not on other resources, then it's not competitive.
Senator Massicotte: I agree with you; it has to be fair. If there's going to be a tax, there's going to be a tax on everything. Let me get back to the question. What is the cost to produce electricity today, excluding CCS? Is it 4 cents a kilowatt per hour?
Mr. Campbell: Yes, 4 to 6 cents, somewhere in that range.
Senator Massicotte: If you include a $100 carbon tax, what does that number become?
Mr. Campbell: I couldn't tell you that. I'm not an expert in CCS. One of the struggles we have with the coal industry is that we mine the coal. We don't run the power plants. If you shut down coal-fired generation, you're shutting down the mines. That's our concern, and that's why we're here today. We produce the product that goes into the plant. The work that has to be done has to be done with the power generators and the scientists to continue to improve on the costs of bringing that down.
On a side note, I just read an article this week where a couple of scientists at, I think, the University of Pennsylvania found how to turn CO2 into ethanol, and they can burn it. As we continue to see the research going on, we will see the costs come down. In Great Britain, for example, any new coal-fired generation will have CCS attached to it, so that will bring the cost down because you will see more and more efficiencies moving forward.
Again, we have to look at the fact that there is going to be a cost to doing what we have to do for climate change. I don't think there is any doubt about that. It is whether or not we've done the research and we've taken our time and have a well-thought-out plan moving forward on climate change.
Senator Massicotte: Thank you.
Senator Seidman: Thank you very much for your presentation, Mr. Campbell.
Looking at the slides that you gave us, you say that the total production value of Canadian coal was $3.1 billion in 2015, and it's the fifth most valuable commodity mined in Canada.
Mr. Campbell: Yes.
Senator Seidman: In considering a bit of a phase-down, your presentation was very clear that there are countries in this world that will have to continue to rely on coal. Canada produces a huge amount of it and it's important to the economy, so how do you see it impacting, number one, the domestic situation perhaps from an economic point of view? And then do you see that, in fact, we will produce but export in order to help supply parts of the world that will have to continue to rely on it?
Mr. Campbell: I think you definitely will see a shift because, as I said in my presentation, most of the thermal coal that we mine in Canada is used here, and in some cases it's cost-prohibitive to export it because the infrastructure is not there. You'd have to put rail lines in place.
You're competing against large producers. For example, one of our biggest competitors is Australia. Australia puts out huge volumes of thermal coal, as does South Africa, and they're closer to the ports and to the customer. When you look at coal within Alberta and Saskatchewan, the shipping costs are probably prohibitive to get that coal to the market on the thermal side.
On the metallurgic side, we can compete, and when you look at Ontario and British Columbia, all the mines in the interior now are metallurgic mines. They ship coking coal, but again, they are competing with Australia and South Africa and other countries. The United States is a large exporter of metallurgic coal.
What's interesting is we're now seeing the United States ship coal through Canada because they can't get support to build coal ports. Westshore Terminals, for example, is now shipping American coal through there, and they have for a while. We think we should be shipping Canadian coal through there. It doesn't make sense to say we're not going to mine in Canada but will allow coal to come up from the United States and go through our ports. To me, that doesn't sit well.
Senator Seidman: If we can't compete from the perspective particularly of thermal coal, then you don't see it as feasible to think about producing it and exporting thermal coal. Will it then be a phase-out? Is that what you're saying?
Mr. Campbell: In Nova Scotia, you can export it because you have the port right there. The mines are on the coast, so they have the opportunity to export some of that.
When I look at Saskatchewan and Alberta, there are some logistical problems that would have to be worked on to see if it would be worthwhile for a company to be able to make a profit by shipping that coal. Right now, most of the mines were built because of the power plants. Remember that a lot of these power plants have life expectancies, some of them, to 2061. In Edmonton, for example, the Genesee 3 project and Keephills are two of the cleanest plants anywhere, and their life span goes to 2061. So the jobs are still there if the government allows them to run that long.
Senator Seidman: Again, looking at your slides, you show electricity in Canada and the provinces, and you have a diagram of Alberta electricity generation, and coal is 51 per cent of Alberta electricity generation. Just this morning, in the newspaper, there was an article very clearly saying Alberta was going to phase out coal generation and will present a plan to do that. You talked a lot about Saskatchewan, but how do you see this happening? What is going to be the impact on jobs and the economy, and how do you see that transition?
Mr. Campbell: Well, do you want to talk about Alberta specifically? In Alberta, I see some real issues moving forward in the sense that Alberta wants to phase out coal by 2030. As you can see in the chart, 51 per cent of our generation — about 6,200 megawatts — is from coal.
What you will see is rural communities basically disappear because there will be no jobs there. We hear a lot of talk about going to green technology, like wind and solar, but I question what those job numbers will actually look like. I look at what happened in Ontario and the jobs they said they would produce, and they didn't.
An interesting article came out a while ago when TransAlta shut down their wind farm in Alberta. It was the biggest wind farm. The most interesting piece of that article wasn't about the capacity or how much energy they produced. It only employed 18 people. That's what is telling. When you have a mine that employs 250, 300 or 600 people and they shut that mine down and replace the capacity with wind, yes, there are some jobs for the first couple of years because you have to erect the turbines, or solar panels. But that's only for two years. Once those are erected, where are the jobs after that?
It is our contention that there are no sustainable jobs there that will keep these communities afloat. We're seeing the uncertainty right now in these communities. I visited every one of them last year. I toured all of Alberta, I talked to all the coal communities and these are people that are worried about their futures. As I said earlier, these are people that might not only lose their coal jobs but they might also lose their family farm. It's going to be devastating.
Again, when I look at Canada and Alberta and Saskatchewan trying to attract investment dollars, one thing Alberta has always had is affordable, reliable power. The lights would always come on. When you're looking at investing billions of dollars in industry, one thing you will want to make sure you have is reliable power. It's one of the things that helps us compete globally. When you look at wages, we pay more for labour. As I say, we're not close to ports so we have shipping costs that other countries don't have to deal with, so we have to look at anything we can to give us that edge to make sure that we're attracting investment dollars and creating jobs within the province.
Senator Ringuette: I have a quick question. Does the SaskPower Boundary Dam capture 100 per cent of emissions? What would be the percentage that it captures?
Senator Patterson: Isn't it 90 per cent?
Mr. Campbell: Yes, I think their goal was 90 per cent. They're looking at capturing a million tonnes of CO2 per year. They're looking at reducing SO2 emissions from the coal process to 100 per cent and the CO2 to 90 per cent.
I can say to you, madam senator, that the Southeast Saskatchewan Airshed Association has monitored the air quality in Estevan, Saskatchewan, for the last 25 to 30 years and has never had issues with air quality, even before putting the CCS in place.
Again, one of the things we are blessed with in Canada is that a lot of our coal is very low in sulphur and very low in ash. It's a good-burning coal.
Senator Ringuette: Did I hear correctly that the life span of this new technology that was installed goes to 2061?
Mr. Campbell: No, no. We have some plants in Alberta that, under the federal regulations that are in place today — they went to a supercritical burning process — have a lifespan to 2061.
Senator Ringuette: What is the cost of the installation of the CCS technology, specifically at SaskPower? Our mandate is to try to identify what the cost will be of the transition to meet the targets, so it's very important for us to understand what cost is involved here.
Mr. Campbell: I can't give you the exact dollar figures, but I can tell you the Saskatchewan project was expensive. It did have some overruns because, again, being the first with the technology, they ran into some hiccups.
Senator Ringuette: We know about that because we had the same situation with nuclear technology in New Brunswick.
Mr. Campbell: As I said, the fact that it has been sanctioned by the World Energy Council and the fact that, out of Paris, they say that carbon capture and storage is a real thing, I think you'll see the costs come down considerably.
Again, I've had a number of different companies from Japan come and visit me over the last little while. Japan is building 24 or 29 coal-fired generating plants today, as we speak. It's going to be the top technology. They'll have their emissions almost to zero. It's what they do.
I had a company come and see me — and I actually sent them to a number of different provincial governments that are using coal today — to see if there was some interest in moving forward. They have a slightly different technology than the carbon capture, but it's based on reducing the CO2.
When you look at the research going on in the States and in Germany, these countries are going to do what they have to do, number one, to look after their citizens, which is always important. Number two, they're going to do it in such a way that they also meet their targets in the Paris accord.
The Chair: You've been asked a couple of times about the cost of carbon capture and storage. When we were at the Boundary Dam project, we asked that same question and they didn't have an answer for that either. It's new technology and there's a whole bunch of new things happening there, and they couldn't put an exact price on it either, just so the rest of the table knows.
Senator Patterson: I was terribly impressed with the Boundary Dam project, which we were told actually produces less carbon than a combined-cycle, or a dual-phase, natural gas generating station. That really astonished me.
It's my impression that coal is a bad word in the environmental community. We actually heard that in Weyburn, there was a false story about carbon that had been injected into the oil fields having leaked. That was false but widely publicized, and environmental groups piled on and never acknowledged when the science proved that that charge was totally bogus.
You mentioned that carbon capture and storage was acknowledged in Paris, which, of course, was the climate change summit. What profile did it get and does it have in this world of obsession with carbon reduction?
Mr. Campbell: It didn't get a lot of profile. I think as countries are wrapping their heads around the issues that are facing them — number one is looking after the environment, but number two is looking after their economies — it's getting more and more profile.
It's not just carbon capture and storage. Like I say, countries are looking at what they can do to reduce emissions and are actually looking at the research that has to happen.
The United States, in particular, surprises me. We hear that they're going to shut down all the coal-fired generation, but the fact of the matter is they can't. While things are said, what's happening in reality is different.
We're not saying status quo. We know that we should continue to work towards reducing emissions. That should be the goal of everybody. But we're saying coal has a place in the energy mix. In Alberta, for example, we have wind, we have run-of-the-river, we have a little bit of solar, we have coal and we have natural gas. There's nothing wrong with that. Competition is good. It keeps everybody honest.
We see a mix of energy throughout Canada, but we live in a northern climate. The wind doesn't always blow and the sun doesn't always shine, and we need reliable power. We have a number of people who depend on power to heat their homes. In Alberta, we're lucky; we have natural gas. Very few people still heat their homes with electricity. But when you look across the country and up in the northern parts of this country, they're using electricity, so we need to do what we can to make sure that electricity is reliable and affordable for our citizens.
Senator Patterson: Things are said, but getting there is another story.
I'd like to drill down a bit with regard to Alberta, which has the highest percentage of electricity produced by coal. We have the federal regulations, which came into effect in 2015, requiring the phase-out of the older plants. Now we have the Alberta Climate Leadership Plan's ambitious goals of having zero emissions from coal-fired electricity by 2030 and its retired plants replaced by natural gas. Then we had the TransAlta Project Pioneer carbon capture and storage demonstration project at Keephills 3 shut down, or put on hold, because of economic reasons. Does Alberta have a clear path? You mentioned the Genesee station with its long life. Does Alberta have the path figured out here, between goals and reality?
Mr. Campbell: I'm not in the government, so it's hard for me —
Senator Patterson: But you were.
Mr. Campbell: I was, but we have a new government.
Senator Patterson: Yes.
Mr. Campbell: In my mind, I would say no. I think that in fairness to the government, they came in at a time when they had to very quickly get ready for Paris. They went over there and they came back and said, "This is what we're going to do.'' What we have asked the government to do is take a step back, let's revisit this and come up with a plan that's going to make sense moving forward.
Again, there are articles and there was a talk in Vancouver this spring where a member of the Geological Society of Canada spoke. One of the questions they asked was, "If you were shipping coal or natural gas to China, which is cleaner?'' He said coal. For the next 50 years, it's coal.
People are realizing that natural gas, of course, emits methane.
Senator Patterson: It's worse than carbon.
Mr. Campbell: Yes, the environmental community says that's worse than carbon. We're going to shut down coal and go to natural gas, but what does that mean moving forward? I think when you're looking at Alberta, right now, nobody is investing in natural gas because they're waiting to see what the regulations are going to be coming out of the federal government. Prime Minister Trudeau and President Obama signed an accord on natural gas reducing emissions at 2015 levels by 45 per cent over the next decade. What does that mean? What are those regulations going to look like?
The uncertainty out there in the power and energy industries as to where we're going is creating some real angst. Our concern is that it's our citizens, our members and the people who work in the mines who are going to take the brunt of this. We think the plan needs to be thought through more clearly.
Senator McIntyre: Thank you, Mr. Campbell, for your presentation. As you have indicated, New Brunswick depends on coal. As a matter of fact, coal accounts for 15 per cent of New Brunswick's total electricity supply. And, of course, Alberta, Saskatchewan and Nova Scotia rely on coal for approximately half of their electricity generation.
As I understand, the elimination of coal generation in these provinces could result in a rise in electricity prices. Do you believe there's any way to eliminate coal generation in these provinces that will not result in a rise in electricity prices?
Mr. Campbell: No, I don't think there is. When you look at the renewable energy that they're talking about, we know what the costs of that are. We know they need to be subsidized. The coal industry is not subsidized, and I think that's important for people to realize. The coal industry does what they have to do. They have to be efficient and they have to be productive to make a buck. The taxpayers aren't subsidizing the coal industry.
When you look at wind and solar, we know there are going to have to be some subsidies. What those subsidies look like, we don't know, because it's changing. When you look around the world, it's interesting that countries that went to solar and wind are going back to coal. There are countries that have shut down projects.
Denmark, for example, has shut down five wind farms because their taxes went up 66 per cent. Holland went to electric cars and gave tax incentives, and people bought into that, all for good reasons. But you know what? They had to start up three coal-fired generation plants because they needed the power to charge the cars. Now there's talk they're going to shut those plans down, but who knows what's going to happen. Germany has started up new plants. They're good plants with top technology.
Senator McIntyre: As I understand from your presentation, coal is not going away any time soon, and it will have a place in the global energy mix for decades to come. The idea in Canada, then, is to invest in clean coal technology that can be used locally and around the world. Is this the bottom line?
Mr. Campbell: That is what we'd like to see. We'd like to see the research technology happen here in Canada. We'd like to see jobs in areas of the country that are depressed, and partnerships with different universities in some of those areas.
I look at Cape Breton, for example, because my family is from there and I will always have a soft spot for it. Why can't we set up coal research technology at Cape Breton University and create good-paying jobs and come up with results that are going to make a difference around the world? Why are we going to let somebody else do that and then have to buy it from them?
One of the great things about this country is that when we look at natural resources, the technology innovation and research that we've done in oil and gas, forestry and agriculture had gone worldwide. We've been able to take that knowledge and help out countries right around the world. We can do the same thing with coal if we move, but right now, I would suggest that we're going to be behind the eight ball here if we don't move quickly.
Senator Lang: I'd like to follow up on part of a question that Senator Patterson brought forward. The point he made was that coal is viewed as a "dirty'' type of energy by the general public and is a significant contributor to the problems that we face with respect to greenhouse gas emissions. But based on what you've just said to us, that is, in good part, not true.
Over the last number of years, it has come to the attention of many of us — but not so much to the general public — that there are millions of dollars coming into this country, directly or indirectly, to finance environmental groups to appear, bring forward and become part of a public narrative with respect to the debate in Canada on energy. That doesn't just apply to coal; it applies to the pipeline debates, the oil sands and anything to do with resources in Canada.
As an organization, are you concerned with the fact that there are millions of dollars being spent by American foundations financing, directly or indirectly, environmental groups in this country to appear and bring forward their narrative, as far as Canada's resource industries are concerned, of a very anti-development campaign for Canada? If you're concerned about it, what do you think should be done in order to ensure that Canadians are fully informed of the debate that should be ensuing in our resource development?
Mr. Campbell: I'm concerned about it, for sure. As Minister of the Environment in Alberta, I dealt with a number of these organizations that would come to us and, of course, they want to shut the oil sands down.
When I look at the curriculum in schools, for example, kids are coming home and saying to their dads, "You know what? You're killing the planet, dad.'' He's a coal miner, and the kids are being taught this in school by the teachers. It's the same thing with people in the wood industry.
I think the playing field has to be levelled, for sure. I think we need to deal with facts and science. Again, as I say, the Internet has changed politics. It's changed the world, because, if it's on the Internet, it's got to be true, and you've got all kinds of stuff going on there. When I look at Twitter, for example, how do you win an argument in 140 characters? You just don't.
There has to be an auditing process or some sort of mechanism put in place to control some of the international money that's going to come into Canada, shut down our resources and take away jobs from our people.
I've spent my whole life in the industry, and it's been good to me. It put a roof over my head; it fed my family and put my kids through school. It has provided me with a retirement. It has done that for thousands of people in the coal industry, and the oil and gas industry has done the same thing.
I get frustrated. Because I'm the president of the association, I have to be a little more diplomatic than I'd like to be when I'm out in the public, compared to when I was President of the United Mine Workers when I could pretty well say what I wanted to say.
It does concern me when we have people coming to our country saying to us, "You can't do this.'' The fact of the matter is they come to Canada because it's a nice place to come to. People in Canada are always apologetic for what they do, so it's easy to come here and raise money.
For example, I would suggest if Greenpeace were to go to China and try and shut down the coal industry in China, they wouldn't get the same reception, or into Russia and shut down the natural gas exploration there. You don't see them over there. Why? Because they wouldn't get past the border to start with.
I have some real concerns. We have a great country; we have great provinces; we have great resources. I think we do a very good job of looking after the environment. I've travelled this country from one end to the other, and we need to do something to get the message out, as I say, to level the playing field.
Unfortunately, when it comes from industry, it's not accepted, and that's not a good thing. So it has to come from people within communities. They have to start standing up and speaking for their communities and their industries and taking pride in what they do. There has to be more of that going on. Hopefully our elected officials will hear that but more importantly will listen to that when they deliberate to come up with regulations and policies moving forward.
Senator Lang: I do share that concern about the fact that there are millions of dollars coming into this country that most Canadians aren't aware of and affecting the public policy in Canada. I think that should be of concern to all of us, and we have to start the public conversation. Who are these people and why are people spending millions of dollars in our country to do this?
I'd just like to move to your slide presentation, "Government Policies: What do they mean for coal?'' The statement is made: "We do know that carbon pricing will make it extremely uneconomical to continue to use coal for power generation in Canada.'' Perhaps you could elaborate on that. If a carbon tax comes in, that means you will eventually be out of business? Is that what you've just said in that statement?
Mr. Campbell: Yes. We won't be able to compete. You put a carbon tax of $30 a tonne on coal, and we're not going to be able to compete with natural gas. We're not going to be able to compete with wind or solar. They've done that in Alberta, where they've taken a carbon tax and put it on coal-fired generation, period.
Senator Lang: So at the end of the day here, just so we get it clear and the listeners out there fully understand the implications here, the consumer will pay more, whether it's coal with a carbon tax or an alternative source of energy if it puts coal mines out of business.
Mr. Campbell: I believe that, yes.
Senator Lang: So there's going to be an added cost.
Senator Massicotte: Relative to your answer about a $30 carbon tax on coal, to go back to your earlier point, fair is fair. If you apply that $30 to your competitors, be it natural gas, do you still remain uncompetitive?
Mr. Campbell: If it's fair, no we don't, because everybody's paying the same, but that's not what's happening in Alberta.
Senator Massicotte: But if you applied the carbon tax to carbon, period, no matter where the sourcing is, if you apply it to everybody else, you're okay? You would still be competitive?
Mr. Campbell: Yes. We would be able to compete, as long as it's a level playing field. We're not arguing that there should be no carbon tax. Carbon pricing, if it happens, it happens. We're not arguing about that. What we're saying is let's not single out coal as the prime culprit in what's happening around the world.
Senator Enverga: Thank you for your presentation. I live in Ontario, and I think we have the largest or the most expensive electricity bills compared to the rest of the country. Last year alone, we had an increase of 15.7 per cent, which is really high. I'm concerned about if they reduce emissions and reduce the production of electricity through our coal-fired generation. It will be devastating for the economy of Ontario. I'm really concerned about that.
I know there's a plan to reduce it by 2030. Do we have enough plants for maybe the whole planet or the whole country? Have we put enough money into research and development to stop these emissions 100 per cent? Has the government put enough money towards this?
Mr. Campbell: For the research and technology?
Senator Enverga: Yes.
Mr. Campbell: In Alberta, we have what's called the tech fund. The CCEMC, Climate Change and Emissions Management Corporation, is based on the premise that the large emitters pay $15 per tonne into this fund. Of course, the largest emitters in Alberta are power plants, which are coal-fired generation. Not one penny of that money went into coal research. It all went into oil and gas.
We're saying it doesn't cost the citizens of the province a penny because industry pays for it. The money is there. Let's use it for research and technology to lower our emissions and become leaders. I would suggest we can probably do that right across the country.
Senator Enverga: Have we told the government? Why is the money not going to coal research? Have you knocked on any doors about that?
Mr. Campbell: I'm just starting to door knock. Because I was a provincial minister, I had a cooling-off period, so I couldn't talk to the government for one year. I'm now in the process where I can talk to people. That's why I'm here today and going around the country talking to different ministers about coal. We're not saying leave it alone; we're saying let's be part of the mix and part of the solution.
Senator Patterson: Just as we're wrapping up, and I found this a most helpful discussion, it seems to me that you've said that the U.S. is actually probably ahead of Canada in some respects. You've talked about the need to create a level playing field to give coal a chance to compete as a potentially clean energy source, even cleaner than natural gas, as I learned in Saskatchewan.
Could you tell us now or perhaps later what you would suggest we recommend to the federal government to create this level playing field? How should Canadian investments moving forward be structured so as to give coal a chance?
Mr. Campbell: First of all, there has to be the will to do that. That's the first step. There has to be a will by the government to take action.
The second phase I would look at is what do we have in place right now that we can build from to look at research and technology? You don't want to reinvent the wheel and waste a bunch of money doing something you already have in place. There has to be some planning.
I would be partnering with the U.S. Department of Energy to see what they've already done and where they're headed.
I think that in Canada we have time. When you look at the global emissions around the world and what Canada contributes, it's minimal. There are now papers coming out that would suggest that Canada is actually carbon neutral. We have huge carbon sinks with our boreal forest.
Industry is continuing to move forward to define more efficient and productive ways of doing business, which lowers emissions. Industry wants to be part of the solution. They do not want to be part of the problem. They have shareholders to answer to, and the shareholders want them to be good corporate citizens.
In talking to industry, universities — we have some great ones in this country — and the government, I think we have the opportunity and the time to actually put a plan in place that creates and maintains jobs and makes us a world leader. Moving forward, I think it's important that we can lead. We don't have to be followers.
I have the issue brief from the U.S. Department of Energy and some slides. I will leave them with the clerk, and you can see what's going on in the States. I found it fascinating, because what I read in the newspapers compared to what they are doing here is totally different, and there is some really good work going on. The industry is very big in the States. We're talking thousands of jobs; we know that thousands of jobs have been lost down there. I worked for the United Mine Workers of America as the international rep for Canada. I spent time in Appalachia, West Virginia, Pennsylvania, Tennessee and Kentucky, and those places are devastated right now.
The other thing that's important is that in the United States, when they talk about the jobs that have come back, the wages haven't. That's important to remember. You're going to create jobs, but what are those jobs going to pay and what does that do to our economy as far as discretional spending and supporting small business, for example. This isn't just about the coal industry. There is a trickle-down effect right across the country.
The Chair: We're running short of time and there are still a few questions I and others want to ask you. Senator Seidman, do you have anything quick that you want to ask?
Senator Seidman: I think the follow-up from Senator Patterson went pretty much where I was going, so I'm okay.
Senator Ringuette: Mr. Campbell, in your presentation you said that the industry is just now starting to invest in technology, with $20 million in research centres, and yet, on a yearly basis, one of your slides says that the total production value of coal in Canada is $3.1 billion.
The climate change conversation is not new. It has been going on for at least 30 years. How come the industry has just now decided to invest $20 million in a research centre to do research for your industry that you seem to indicate is in dire need of support? And yet, it's not a big percentage of the total value of the $3.1 billion that is produced in Canada.
How do you respond to that? The industry seems to be, from my perspective pretty much at the last minute, saying that this climate change issue is not going away we had better take it seriously. Shouldn't it have begun to take it seriously 30 years ago?
Mr. Campbell: You have to differentiate between the coal industry and power generation. The CCS in place is done by SaskPower. They have put this in place to reduce emissions at their power plant.
The coal industry has done a number of things over the years looking after the environment. All of our plants now, especially on the metallurgic side, have closed loops for water, so we don't expel water like we used to. We do a better job of reclamation as far as reforestation and grasslands. I can take you out to Cardinal River on the eastern slopes of the Rockies and you will see any species of wildlife you'd like to see that's native to that area. We're doing a good job there.
We're looking at railing the product to the coast. We put latex on the cars to make sure there is no dust coming off. A lot of that has been going on. Teck Resources is looking at running their trucks on natural gas instead of diesel to reduce emissions. The industry itself is always evolving and looking at doing things.
When you look at Alberta and Saskatchewan, the governments have lent and spent a large amount of money on CCS. It's not popular with some people, but they understand the dependence on coal for reliable energy and they're doing what they have to do. Is it a little late? Who is to know?
Senator Lang: In response to one of the questions, you referred to Japan and the fact that they are going ahead with a number of coal-fired plants and that their emissions are going to be virtually non-existent. I think that's the terminology you used.
Why are we not planning on replacing our older coal plants with these types of plants so that, at that stage, there would be no more debate about the question of a plant's greenhouse gas emissions?
Mr. Campbell: I think, right now, one factor would be cost, and another would be uncertainty as far as what the regulations are going to look like moving forward.
If you are going to spend money, you want certainty. That's what industry wants out of regulations and policy. They want certainty. They want to know that if they are going to invest, they will get a return on their dollar.
When we look at Alberta and the Capital Power plant in Genesee, it was supposed to be able to run until 2061, but they are going to shut it down in 2030. That doesn't send a good message to other investors who want to invest in an industry moving forward.
The Chair: Thank you. I have a couple of quick questions.
You talked about EOR — enhanced oil recovery — and carbon capture and storage. I appreciate that. What do you do in New Brunswick and Nova Scotia? They don't have oil fields, first off, so there is no enhanced oil recovery. I'm not sure whether they have the strata below the surface to actually capture the carbon, because there hasn't been a lot of drilling, that I'm aware of, to find out exactly what is down there. That would be the same in some places around the world, would it not? Carbon capture and storage or EOR are great — I'm not saying anything about them — but they don't fit everywhere.
Mr. Campbell: In Saskatchewan and Alberta, we have the geology, so it works there. You're 100 per cent correct.
The Chair: In your notes, you say that emissions from coal-fired electricity generation will be phased out by 2030. When we visited with the Alberta electric system operator, they said coal had to be phased out with the new climate plan that came into Alberta. Which is right? Does coal have to be phased out, or just the emissions? I want to get that clear.
Mr. Campbell: I can say to you that that question was asked, and the answer was to phase out coal. We asked whether we could still burn coal if we got emissions down to zero, and we were told no.
The Chair: That clears that up.
The last thing is that you said — I think it was something to do with Paris — that without carbon capture and storage, the cost of electricity from coal generation would go up 138 per cent. Maybe I misunderstood. Could you clarify what the 138 per cent was?
Mr. Campbell: That came out of the Department of Energy report, and I will leave that with you. It says that realizing a scenario with less than a 2 degree centigrade of global temperature rise might not be possible, but the cost of mitigation due to not meeting that goal would increase by 138 per cent.
The Chair: Thank you very much, Mr. Campbell, for your presentation. It's interesting. We look forward to the other things that you'll leave with us. If there is anything you think of after you leave us related to issues about costs and emission reductions, we'd appreciate if you could send a note to our clerk, and she'll get it around to all of us, and we would appreciate that very much.
(The committee continued in camera.)