Proceedings of the Standing Senate Committee on
Transport and Communications
Issue No. 7 - Evidence, October 17, 2016
MONTREAL, Monday, October 17, 2016
The Standing Senate Committee on Transport and Communications met this day at 9:30 a.m., to study the development of a strategy to facilitate the transport of crude oil to eastern Canadian refineries and to ports on the East and West coasts of Canada.
[English]
Daniel Charbonneau, Clerk of the Committee: Honourable senators, it is my duty to inform you of the unavoidable absence of the Chair. Since the Chair is not here, it is my duty to preside over the election of an acting chair for today. I am now prepared to take any nominations.
Senator Doyle: It is my great pleasure to nominate the very distinguished Senator Mercer.
Mr. Charbonneau: It is moved by the Honourable Senator Doyle that Senator Mercer do chair this committee today. Is it your pleasure, honourable senators, to adopt the motion?
Hon. Senators: Agreed.
Mr. Charbonneau: Carried.
Senator Terry M. Mercer (Acting Chair) in the chair.
The Acting Chair: Thank you all for your confidence.
On behalf of the committee I would like to express our distinct pleasure to be here in Montreal. This morning the committee is continuing its study on the development of a strategy to facilitate the transportation of crude oil to Eastern Canadian refineries and to ports in the East and West coasts of Canada.
This study began last March with the objective of finding a better way to bring Canadian oil products to markets. Being in Montreal reminds this committee of the events in Lac-Mégantic which occurred three years ago. As we conduct our hearings into this subject matter we keep in mind this tragic event and the victims of this horrific accident.
Normally the seat that I am in is occupied by Senator Dennis Dawson of Quebec. However Senator Dawson is undergoing serious medical treatment in Quebec City. We would like to wish him well and send along our best wishes to him, but I assure our participants that he is monitoring what we are doing. He has told me that so be careful folks. He is keeping an eye on all of us.
Before we introduce our witnesses I would ask the committee's permission for these public proceedings in Montreal, Saint John and Halifax to be recorded by electronic media. Is that agreed?
Hon. Senators: Agreed.
The Chair: I would ask the senators to introduce themselves, starting on my left.
Senator Smith: Larry Smith, Quebec.
Senator Doyle: Norman Doyle, Newfoundland.
The Acting Chair: I would like to introduce our first witness from the Quebec Employers Council, Mr. Yves-Thomas Dorval, President and Chief Executive Officer.
Please begin your presentation, following which we will have questions from senators.
Yves-Thomas Dorval, President and Chief Executive Officer, Quebec Employers Council: First I would like to transmit my condolences to the honourable senator who could not be with us today because of a death in his family.
[Translation]
My name is Yves-Thomas Dorval. I am the President and Chief Executive Officer of the Conseil du patronat du Québec (CPQ). I will give my presentation in French, but if you wish, I could also answer questions in English.
The Conseil du patronat du Québec is an organization that represents over 70,000 employers who have business in Quebec; not employers outside Quebec, in Canada or in other countries, but who have business in Quebec. We are a confederation of associations, as well, meaning that associations from all sectors can be members with us when they are employers with business in Quebec.
So we represent employers from the natural resources sector, including mining, forestry, energy, manufacturing processing and services. Since these are employers, not just employers of businesses, they can also be employers in the non-private and semi-public sectors.
Of course, you will understand, gentlemen, that since the Conseil du patronat has many members, we will not use this time to talk more about pipelines as it pertains, for instance, to maritime transport. They are all members of the CPQ, whether from maritime transport, rail transport, trucking or pipeline transport. So we will not make comparisons between the various transportation methods.
We have not prepared a specific brief for the hearings this morning, either, since we had prepared an extensive brief for the TransCanada pipeline. This morning, we sent you the French version of our brief on that project. It contains the general considerations that are our driving force when it comes to pipelines, more specifically.
As a leading socio-economic player, the CPQ intervenes to encourage projects conducive to Quebec's prosperity. Our mission is to promote the best possible conditions to thrive in a context of sustainable development and, as a result, the balance between the three pillars: economic, social and environmental.
The main challenge in the pipeline project, as in many other projects, is to find precisely this balance, which means determining how to promote projects with positive economic benefits while ensuring social balance and adequate protection of natural environments and ecosystems. I will address mainly the economic aspect of pipelines, which is at the heart of our mission. But I would like to point out that the social and environmental components are also primary concerns for us.
Keep in mind that, historically, the development of Canada's energy infrastructure, including pipelines, favoured economic growth, industrial diversification and an increase in the standard of living of Canadians.
We believe that, in the same way, projects like TransCanada East, or as we also did in the case of Enbridge for the line reversal, are likely to increase the economic development of Quebec and Canada.
The first benefit for us is that projects like this can provide greater energy security and autonomy to which Quebec and Canada aspire. Energy security can be defined as the capacity of the supply chain to respond continuously to final consumer demand, as it materializes, to normal prices and without sudden interruption or price shock. The concept of energy security makes sense when talking about exceptional circumstances, such as a trade, political or military conflict, an industrial accident or a natural disaster that may occur occasionally around the world.
We think Canada needs new pipelines to develop existing markets and to create new ones. Because of the current lack of pipelines, Canadian producers are mainly limited to the American market. In addition, 2.5 million barrels of Canadian crude oil is sold every day to clients in the United States at a price far below the cost of crude on the international market.
Increased pipeline capacity is also needed to transport crude to western Canada from eastern Canada. Currently, refineries in eastern Canada have to import much of their crude oil at a higher price on the international market than what Canada receives for its own exports. We are talking about a 20 to 30 per cent difference. Analyses done by CIBC and the Bank of Montreal in 2012 indicated that Canada was incurring annual losses of several billion dollars because it did not have access to other crude oil export markets on the international markets.
Everyone wants a drop in oil needs to reduce greenhouse gas emissions. If you drove to this hotel this morning, you saw, as I did, that we are still far gas and fuel oils being completely eliminated from the market.
Without pipelines, even if there is a significant decrease in oil needs, large quantities of crude oil would need to be transported to refineries — over three million barrels a day in Canada — using other transportation methods, such as tanker trucks and rail cars. Transporting three million barrels by truck a day means over 15,000 additional trips by truck over long distances daily on Canada's highways, which would of course have an impact on maintaining roads, noise and greenhouse gas emissions.
Studies continue to confirm that pipelines are an adequate way to transport hydrocarbons and, in most cases, oil and gas are transported safely in Canada. Pipelines carry liquids without spills 99.9996 per cent of the time.
There are many benefits, Mr. Chair and senators. I will be able to answer your questions, but we can group them as follows. The construction of projects can have major benefits on the GDP and jobs. Simply with the TransCanada East project, we are talking about over 3,000 direct and indirect jobs and over $3.9 billion in added value over nine years. Of course, that is not in the long term, but nine years. For any country, this data is extremely important for the economy.
In the current economic context, I think that these are things that we need to consider, while also looking at the environmental and social issues. But this is even more important for regions like Montreal, and it is probably the same thing for the Maritimes and New Brunswick, because the petroleum refining sector is major. These refineries are responsible, in Montreal, for over two-thirds of Quebec energy exports. We do not talk about it nearly enough. That is two times more than electricity exports.
Exports of refined products are among the top export commodities for Quebec. It is also important to note that foreign purchases represent over 50 per cent of the intake for eastern Canada refineries. The refining industry is a major industrial asset, which uses a highly skilled, well paid labour force and makes considerable purchases in goods and services.
There are other industries as well that we aren't talking about. We talk a lot about greenhouse gas emissions because fuels are important, but the petrochemical industry has also become a very important element in the economy of Montreal east. Yet we do not just produce traditional goods; there is also the innovation happening here. The petrochemical industry of Montreal east represents over 2,000 direct jobs and 2,500 indirect jobs. The refinery and petrochemical sectors certainly represent a value chain, an industrial ecosystem unique to Canada that creates many synergies. In Quebec, 511 establishments in the plastics sector include over 20,000 employees and have sales of over $5 billion, not including other aspects, like the tax revenues that such projects generate for governments.
So I will end my presentation there. I probably went over the time I was allowed. I will be pleased to answer your questions.
The Acting Chair: Thank you very much, Mr. Dorval.
Senator Doyle will ask the first question.
[English]
Senator Doyle: I am curious about the remarks of the mayor of Montreal when he said, "We are against the Canada East pipeline.'' I am wondering what he meant by that. Was it all of Quebec? Given the state of the economy you have to wonder if it is a vocal minority he was talking about or if it was a general consensus that the people of Quebec were against it?
[Translation]
Mr. Dorval: That is an excellent question, and I will answer it as follows: the first thing is that the mayors of the municipalities concerned all have the right to consult their citizens and look into the concerns of their local population. It is clear that the issue of a pipeline that crosses several waterways, that feeds refineries and carries oil, not only to refineries in Montreal, but outside Quebec, too, is a legitimate issue that the mayors must examine.
The issue is that, first, you need to review the matter as a whole and determine what the impacts will be on Quebec and Canada. There are many, and it is important not to deny that there are legitimate environmental and social concerns.
That said, if I look at the industrial impact, for instance, there are over 200 Quebec manufacturers that have already shared their means, their capacities and their interest in producing and delivering goods and services. In terms of the manufacturers, these involve construction goods for a project like TransCanada East. These employers, these manufacturers are in Quebec. If we are talking about over 9,000 construction workers, they do not all come from the Montreal region; they come from several regions of Quebec.
Still, there is great interest in ensuring these jobs are created. Of course, if you are looking at long-term employment, the development of a pipeline does not create as many jobs as a processing plant, for example. But having more than 3,000 jobs over a period of nine years seems considerable to me.
That said, perhaps these comments included a status report that was contextual at the time. The developer must do a better job to explain the file and consult the different stakeholders. Perhaps this work was not done in the best way at the outset, which is no surprise, since developers from the western provinces, where hydrocarbons are very important, live in an environment and a context that are known.
Here in Quebec, the majority of the population and elected officials have not had much exposure to development or production issues, or even to the transport of hydrocarbons, in general. So the unknown is certainly there. The developer must do this work, and the regulatory organizations must arbitrate.
You know, a line reversal project like the Enbridge one has also raised many questions. In its approvals, the Canadian regulatory organization required that there be many clarifications and changes, and that procedures be adopted, and so on, to make the project viable.
That is the goal of an authorization organization. Again, there is no doubt that an organization will have to consider the legitimate concerns of people, either environmental or social, and ask the developer to implement a series of measures to meet the needs to protect interests, health and the environment.
[English]
Senator Doyle: Do you feel that the opposition expressed by the mayor was a signal that we probably need to do a whole lot more work and to talk to municipal bodies, or was he shutting the door completely on the project?
Mr. Dorval: We believe so. We have had public hearings about social acceptability in Quebec. Social acceptability is a huge issue. If you want I can give the remarks on the social acceptability process that we delivered before the National Assembly. This is something we have to look at.
A mayor is elected to represent his constituents, his population. If we have an issue about social acceptability when it comes to industrial projects, we have to make sure we do our best to follow a path that will not necessarily result in unanimity but at least have put in place the best practices in order to discuss social acceptability in a balanced way.
[Translation]
Senator Pratte: Mr. Dorval, I would like to keep the momentum, and follow Senator Doyle's questions.
There is quite significant opposition to this project in Quebec. As you say, some of this opposition is circumstantial, and changes to the project, additional conditions that would be imposed by the National Energy Board, for example, or by the government, could change.
There is opposition. For instance, I am thinking of the opposition of many First Nations who seem determined to oppose the project, no matter what form it takes. You and your organization have worked hard and thought a lot about social acceptability, so how do you see this? Because it remains that, if the government approves the project, it would be in a very difficult position, in that there would indeed be very determined opposition to the project, whatever its form, because the project would encourage the oil sands development and many people oppose this development.
Mr. Dorval: Mr. Chair, the first thing is that we should categorize the different types of interventions that have taken place.
I think that Senator Pratte has just pointed out one. Regarding the issue of hydrocarbons, non-renewable energy, energy that mainly feeds combustion processes that generate greenhouse gas emissions, there is an international agreement to reduce greenhouse gases, so the use of hydrocarbons, especially since they are a non-renewable natural resource.
The CPQ also participates in that. We work very closely with environmental advocacy groups to find solutions to greenhouse gas emissions. However, there is a pragmatic and practical consumption of hydrocarbons that is very important in Quebec and across Canada, and it will be for a long time, even if it must be reduced.
The basic question is to determine what the biggest benefits are for Quebec and Canada. First, it is to have domestic production, when we have the opportunity, because it frees us from the insecurity of supplying ourselves elsewhere, given our consumption. Domestic production would also enable us to put in place regulations, the best ways of operating in relation to our concerns.
Most people who criticize hydrocarbons use a well-known principle called demonization. Any project related to hydrocarbons will be demonized publicly to support action aimed at eliminating hydrocarbons.
Once again, we are participating in the goal of reducing greenhouse gas emissions, and we are proposing solutions with a number of groups. However, the reality is that it is impossible to do so these days. Since we will still have to consume and use hydrocarbons for a very long time, we would prefer to have domestic production, if possible, and have it accessible to ensure that both consumers and manufacturers can have access to these products at a reasonable price. In addition, we need to ensure that the economic benefits are maximized for everyone who contributes.
So we can look at it that way. But, basically, if I ask communities like Lac-Mégantic whether they would prefer a pipeline or rail transport, it would probably be easy to get the answer.
There is no miracle solution. No transportation method has zero risk. It does not exist. But the current level of social acceptability for hydrocarbons is not high, that is clear.
The reality is that the same people, not necessarily advocate groups, but most Quebecers who, in a poll, can say what the issues with hydrocarbon production are, so the vast majority of Quebecers, use hydrocarbons in their daily transportation.
Senator Pratte: I want to come back to the specific case of First Nations because there are First Nations that have created an alliance among themselves, the First Nations across Canada and the First Nations in the United States. The First Nations have very clear rights that are recognized by the courts. They have expressed very strong opposition to the Energy East project.
This is a specific case. It is not just ideological opposition. First Nations have recognized rights. Again, how can the government and the authorities manage this opposition? Because it is very determined opposition.
Mr. Dorval: Well, I do not claim to be an expert on relationships with indigenous communities. I know that indigenous communities have specific issues in this area. I will leave it to constitutional experts to find the best ways.
What I can tell you is that, because of my age, I can remember what happened at the time of the development of James Bay, where for a long time and even afterwards, there were disputes, even before the United Nations, about the issue of river development in indigenous territories. At the time, the Government of Quebec obtained social peace by reaching agreements, including the James Bay agreement.
No question, the concerns of indigenous communities may be legitimate, and they are. Now, it remains a concern with groups that the governments have to deal with.
At some point, we also need to look at all the work, as I mentioned earlier, relating to a country's national security, and we need to review together with the various stakeholders, including Aboriginals, what the best way is to proceed.
Unfortunately, I cannot answer specific questions about Aboriginal relations or the Constitution, but I can tell you that, as in any matter, social dialogue can still end in agreements. We have seen it in the past with hydroelectricity. Today, there are indigenous communities among the partners of hydroelectric development. So I think that history can show us that it is possible to reach agreements.
Senator Smith: Who will play the unifying role in this scenario? Because we have various groups that have interests, it is clear. But who will play the role of drawing people together and unifying them? Are we talking about three years, five years, 10 years before we can find a solution to this situation, or will there always be specific groups that oppose it?
How do you see this? Because, as I understand it, the role of the Conseil du patronat is to look at the situation, examine the pros and cons, conduct studies and communicate the information to people. But how do we move this famous project forward, not just for Quebec or Montreal, but for Canada?
Mr. Dorval: The second document I sent previously presents the CPQ's comments on an initiative to develop an approach that seeks better social acceptability in Quebec.
I would say that the CPQ was created almost 50 years ago precisely to represent employers in various areas of social dialogue. That is our model. So for us, dialogue with various groups is part of our DNA, it is in our genes. There are also other groups like ours; we do not claim to be the only group. But we have done it. We have also done it with environmental groups. So, instead of just looking at the problems from our side, we and our members have begun to look at how to be part of the solutions. For example, when we were dealing with reducing greenhouse gas emissions, we co-chaired two committees with environmental and other groups: one on green taxation and one on energy transition in transportation.
The CPQ has currently put an important committee into place. We are about to do some significant research into freight transportation and on the way in which freight transportation can contribute to reducing greenhouse gas emissions.
So we are doing this according to our model. We are doing it in dialogue with the parties involved. We do not make a choice between one form of energy and another. There are advantages and disadvantages with all forms of energy. We have to look at it pragmatically, at the reality, at what is happening. The reality considers the users as well. So, as much as we have to convince users to reduce hydrocarbon consumption in order to reduce greenhouse gas emissions, we also have to be realistic. The specific reality is that use is still very high.
We can work with social dialogue and with information. For example, we established a campaign proposing inclusive prosperity for Quebec: for all, by all and with all. So it is a question of putting a value on the work companies do, while taking into account everyone's quality of life and standard of living. This is partly a quality of life issue, but it is also a standard of living issue. Neither one nor the other has to be denied. But, basically, it is still up to the government to make the necessary choices.
The Government of Quebec has chosen to develop an approach to social acceptability. What we find interesting in that approach is having a clear, predictable process when someone wants to promote a project, in order to determine the stages they have to go through. I feel that, at federal level, there should be an equally clear and predictable approach when developers come up with projects, so that they know the steps they have to follow. The best of all ways is to be transparent and to communicate as much information as possible from the very start of a project. Because, in any event, pressure groups must legitimately have all the information at some stage. For developers, that is not easy because they do not have answers to all the questions at the beginning of a project. So when they are planning for a project, they do not have all the answers.
But I look at what is being done in another major project in Montreal, the Réseau électrique métropolitain, the REM, a rapid transportation project using automated trains. What is interesting with that project is that no one had all the answers to the questions at the beginning. But, as the public hearings went on, the developers realized the concerns of the groups and did not wait until the end. They suddenly came with proposals to address the concerns. That is a very interesting process of social acceptability.
In conclusion, it is up to the government to act as the referee. Sustainable development is defined by three pillars: the economic pillar, the social pillar and the environmental pillar. It is up to the government to reconcile them and up to its regulatory bodies to make the recommendations needed to approve a project. So ultimately, it is up to the government to make those decisions. There will always be groups opposed to development projects.
At the end of the day, it is the role of elected officials to take responsibility by minimizing environmental and social impacts. But also, unfortunately, the fact is that, for most projects today, not only in Canada but also in many places in the world, the economic benefits are not necessarily considered as much as other perfectly legitimate concerns. So, decisions have to be made, and the three pillars are very important. We cannot talk about sustainable development without also talking about economic development.
Senator Smith: When you talk about the three pillars and the driving force that the government must provide, what is your observation about the elected officials? What role do they play now? And what do they have to do to move forward, to get to the next steps of this assessment?
Do you understand my question?
Mr. Dorval: No. Can you repeat it, please?
Senator Smith: Yes. You talked about three pillars: economic, social, and environmental. You also talked about the federal government's leadership role, if I understand correctly. So, when you look at the development of the three pillars, the social, economic and environmental programs, where do we fit in? What would be the most strategic role that we could play, who would be responsible for it, and when?
Mr. Dorval: It all depends on the projects, Mr. Chair, because some projects can have provincial scope and others can have national scope.
So I do not want to focus on one sector more than another. The only thing that I can say, however, is that, for a project with national scope, the processes have to be better harmonized, better integrated, because, when the processes are separate, things take too long.
But who must play a leadership role? First of all, the developer has to do the basic work. When presenting a project, the developer has to explain it, to listen to any concerns and to find solutions, the mitigating measures, as we call them. That is the role of the developer. Basically, the public authority, the government, must allow people, the interested parties, to express their concerns so that they can be considered. But, at the end of the day, a decision still has to be made.
I would say that developers do not always do their best work here. They have to improve. This is why a lot of things are being done. It is no accident that companies have begun taking steps toward social responsibility and sustainable development.
This is also why the government, as a function of its area of jurisdiction, must find the best way to allow voices to be heard and the project to be analyzed. We in turn do our best to try to highlight the economic value of it all, since that is often under-valued, not sufficiently considered. But governments also go where their people take them. So leadership is one thing, but it must be in tune with the level at which the people understand the issues.
In terms of reducing greenhouse gas emissions, you know that governments, whether federal, or provincial like Quebec's, set very ambitious objectives, with which we agree. If ambitious objectives are not set, we will not attain them. However, we lack information in terms of education, because the people who are often surveyed and who provide support for the policies do not necessarily have all the information they need to understand the issues. So it is important to create more awareness. We can conduct a survey to show that everyone wants apple pie, for example. But, at the same time, we have to be able to make the apple pie. Someone has to buy the ingredients for it and someone has to bake it. So, if I as a consumer want to have apple pie, I must not forget that we need ingredients, bakers and the will to make it. Then, one day, I will be eating my apple pie.
It is the same in any area. If we want to be able to travel the world, to cover all the territory out there, we have to understand that there are different ways. Some are better than others and some still have to be developed because we do not have them yet.
[English]
The Acting Chair: I would like to ask a couple of quick questions but before doing that I would like to welcome Senator Boisvenu.
My questions are around the understanding of Quebec society with respect to some of the aspects of the projects we are talking about. For example, is there an understanding of the pricing situation that we as Canadians find ourselves in?
We have one customer. We are selling them a product but we are not selling them a product at world prices. We are selling it at West Texas crude prices which are lower than the world price. If we get to tidewater, whether it be east or west or both, we will be able to sell our product at world prices. Those world prices will mean a lot more money flowing into Canada from whoever our customers might then be.
Is there a perception in Quebec or an understanding of the concept surrounding the issue of pipelines getting our product to tidewater?
Mr. Dorval: Mr. Chair, it depends on the stakeholders you are talking about because the general population doesn't have a lot of experience in this sector. If I asked the same question in Alberta probably Albertans will have more in- depth knowledge of the issues related to their energy. By the way, when I say that, I am not sure because not everybody in Alberta is close to the oil industry.
It is an issue. This is why we have to explain those economic impacts and those economic premises that are real because in the end Canadians will not profit from the best price. In Eastern Canada we are importing more than we are exporting. We are importing more at a higher price than we are exporting in the west of Canada because of this market mechanism. This is why it is important to discuss the economy in this type of issue.
It is also a complex issue. We don't have to be sure that everybody will understand every issue. Our history in oil was not about production, exportation and distribution. The Montreal area, Quebec City and the South Shore have certain expertise in refineries. It is a limited quantity of people; it is not everybody.
The issue here is about petrochemicals. We produce a lot of products such as plastics and clothing. Most iPhones that everybody uses are made with petrochemicals. Carbon is not only about combustion; it is about transportation and so forth.
The Acting Chair: The other issue I mentioned briefly in my opening remarks was that I found it curious that we have some opposition to a pipeline in the same place where we had a tragedy like Lac-Mégantic where we saw the perils and the risks of moving the product by rail.
Maybe I am just a poor, simple guy from Nova Scotia, but it seems to me that would be one of the biggest selling points for a pipeline. We have seen the tragedy that happens by rail. We don't see that kind of tragedy happening by pipeline so maybe pipelines are an easier answer. Can you help me with this?
Mr. Dorval: Every mode has its strengths and weaknesses. From the beginning our membership in the CPAQ includes railroad companies, maritime companies, truck companies and pipeline companies. Everyone has a place depending on the use, the opportunities and what is best. I will not say that one is better than the other. It depends on different reasons.
The only thing I can say is that pipelines are certainly not less safe than other means of transport. There are some things that pipelines are very good at. It doesn't mean that the others are not very good at them also. Even if you want to export oil coming from pipelines you will use both anyway.
In the end the means will depend on your objective. One thing we know, as I have mentioned, is that if we want to increase it by three million barrels we will have to put 15,000 more trucks on the road.
That just gives you an example of some of the positive sides of using pipelines.
The Acting Chair: The other important point to remember is that it is always difficult to get these measures across to the public. If you are to send all of those products across the roads, guess who is paying for the roads. The public is. Whereas, if you can get it in pipelines that are being paid for by the companies that is a reduced cost.
You brought up a very interesting point in your presentation that I think is worth pursuing and that is the discussion of the role of First Nations, of our first peoples. You didn't, or at least I didn't pick it up in your presentation, talk about the opportunities for First Nations in training and long-term jobs, not short-term ones. While the construction is a long-term project and there is some value in training, there are some long-term opportunities as well for the management of pipelines and possibly in sharing the wealth from the movement of the petroleum products.
Do you have any opinion on how presenting that argument to First Nations in Quebec would change their minds or soften their opposition to pipelines?
Mr. Dorval: I apologize but I don't have specific information that I can raise. The only thing that I can raise is that we are all interdependent.
The Acting Chair: Exactly.
Mr. Dorval: Quebec will benefit if the Maritime provinces are doing well because of the economic increase, prosperity and so forth. If the United States does well, Canada will do better.
If you look at the city or municipal level, the Montreal area will not work well if the other municipalities in Quebec are not working well and vice versa. It is the same for every population. First Nations will not do well if the rest of Quebec or Canada does not do well.
The Acting Chair: Do not apologize for that because it is a question I am going to ask most of our witnesses today. I am looking for someone who might have some insight that will help us understand a little more.
Senator Boisvenu, please.
[Translation]
Senator Boisvenu: Thank you, Mr. Chair. I have to apologize for arriving late. Montreal traffic is not something I control.
It is a pleasure to see you again, Mr. Dorval. Listen, I hope that my late arrival will not cause my colleagues to see me as redundant. I guess I may be asking questions that have already been asked.
In your brief, you talk a lot about the consultation process. You seem to talk a little less about your support or lack of support for the famous Energy East pipeline, which, in my opinion, is the topic of the hour.
I have two questions. First, we see that a lot of opponents are not necessarily opposed to the goal of transporting raw materials like oil, but rather to the use of the raw materials in the first place. So, here is the question I ask myself: with all our transparency, our credibility and our openness to discuss the project, how can we reconcile the concerns of the minorities who are opposed to the Energy East pipeline with the objective of making the transportation of that same material safe?
At times, I wonder if it is possible to bring the two objectives together; the pipelines would increase the safety of oil transportation as such.
We have seen the statistics. Ten years ago or so, we were talking about 4,000 tank cars per day. We are now talking about almost 400,000 cars per day and we think that that could double in 10 years. How can we reconcile the concerns of that minority who are in opposition with a more silent point of view that agrees with using a pipeline? If I lived in Lac Mégantic, I think I would prefer to see a pipeline there to seeing so many tank cars going through downtown.
Mr. Dorval: That is a good question. First, the groups, the interested parties, have to be able to express themselves. Public hearings, for example, and the social acceptability process exist for that purpose. We cannot deny any interested party the right also to have concerns.
With that said, I would like to go back to your first comment. I distributed two documents just now that were not prepared for this committee meeting, but for other things. There is a brief that clearly explains why the CPQ supports the Trans Canada East project.
The social acceptability process has to do with an initiative of the Government of Quebec. The first thing is that independent organizations are needed to analyze projects in terms of the three pillars — the economy, the environment and social development — in order to try to make choices from it all. It is not about seeking unanimity, because unanimity is impossible.
Now, concerns can be legitimate. It is up to the developers, for example, to make sure that what they want to achieve, the objectives they want to attain and the way in which they want to do it, are presented in the clearest and most transparent way possible. But that is not easy when you are facing a climate of opposition. It is why there must be clear processes to allow the organizations to do it. We cannot leave developers alone on their side. It is easy to say that behind every developer is a commercial interest. They just want to make money and are not concerned about the people.
That is why groups like ours also intervene in the debates, to point out the other aspects of a project's impact, such as jobs, tax revenue, and so on.
Just now, I mentioned interdependence when I talked about the First Nations and all the communities that live here. I was talking about the Maritimes. I did not have the time to talk about this, but the western provinces are interdependent as well. When the western provinces experience significant economic growth thanks to the development of their natural resources, we have mechanisms that redistribute the wealth in Canada, such as equalization payments and federal transfers. That is good for all members of the community. For example, a while ago, in Newfoundland, oil commanded a good price. That is also true for Alberta or other western provinces, Saskatchewan, and so on.
However, at the end of the day, people will be influenced by their own values and experiences. In Quebec, we do not have that experience as oil producers. However, Quebecers should know that Quebec refineries export more than half the products they refine to be consumed in Ontario. It is fascinating. Quebecers do not know that a large part of the products used in Ontario, refined products, are made in Quebec. That is an incredible added value for the economy, not just for the refinery workers. But, you know, refineries need a huge amount of maintenance. There are closures, for example, during which the processes have to be revised and the facilities modernized.
A lot of investments are made in Quebec refineries, but people do not know that. What they do know is that it is apparently easier to scare people by talking about issues and potential risks than to talk to them about the economic benefits of this or that. It is not easy and people have the right to their opinions. They have the right to be opposed and they may have very good reasons to be opposed.
For example, for a resident of the island of Montreal who works in Montreal, it is easier to take public transit to get to the office at a certain time. However, for a family with both parents working, as is most often the case today in Quebec, and who live outside Montreal, the situation is quite different. I know people who live in Granby, for example. The husband works in Cowansville and the wife works at Saint-Hyacinthe, but they live in Granby. On top of that, they have to take the children to the daycare.
It is not true that public transit is very efficient today. It cannot be efficient because the population density does not make for efficient public transit. So it is clear that long-distance transportation is still important given the size of the territory that we have to cover. As long as electric motors are not as self-sufficient as gasoline, we will need gasoline. The people who use it do not realize that, because they use it every day. However, if we are at risk of losing that fuel at some stage, we will soon realize it.
If we as consumers are paying higher prices, we can ask questions. But the fact remains that, in Quebec, we have chosen to increase the price of gasoline in order to reduce greenhouse gas emissions with carbon tax mechanisms, and so on.
So I am talking about a number of things at the same time, Mr. Chair, but what I am trying to tell you is that people's concerns are legitimate. The information is not complete. It is normal that that should be the case, because we have not necessarily been exposed to everything as citizens in our daily lives.
Developers have some work to do. But the media still have work to do as well, so that the information is balanced. At the same time, I am here to tell you that the government must make the decisions, in the best interests of all, by striking a balance between economic development and social and environmental concerns.
Senator Boisvenu: One last question, Mr. Dorval. You have lived in Quebec for a long time; you have been involved in business for a long time.
How can the developer's lack of visibility be explained? When I say developers, I do not mean just the people building the pipeline, but everything around it. How do we explain that kind of imbalance between those for and those against? I do not hear a lot about the advantages of a pipeline in Quebec. I do hear about it, because I sit in the Senate.
The Acting Chair: That is a good question.
Senator Boisvenu: If that was not the case, I can tell you that I would hear much more from those against, even though they may be a small minority. Conversely, when I talk about the pipeline to people in the street, a large majority are in support.
I am trying to understand why. Is it that the media has a favourable bias towards the opponents? There is a basic reason somewhere; I am trying to understand why there is such an imbalance in visibility.
Mr. Dorval: Well, a part of your question can go to the fellow senator to your left, Senator Pratt; he has more experience with the media than I do.
It is a very good question. Listen, economic environments generally have to deal with different obligations. Take a small businessman, for example. He has to make his business succeed and, for him, the priority is to run his business and see it grow. That is his priority. So he works a lot on the operations, and on things like bringing his products to the market.
When we get out of our comfort zone into what we call public affairs, and we have to figure out where we stand in relation to the media, the public and governments, business people often are not as comfortable with that as they need to be. So it is no accident that associations like ours come into existence. Groups get together in associations, which is our raison d'être.
We also do it with the means at our disposal and in the best way possible. How a message is received is something else. You know, it is much easier to scare people and tell them about the dangers than to reassure people and tell them that everything is going well, especially when we know that there is no such thing as economic activity without any risk.
So it is difficult for a developer to say what he likes and how he likes, because he always has to be responsible for what he says. If he does not make his proposal in a very balanced way, he will be criticized for it very quickly.
Senator Boisvenu: So you subscribe to the view that bad news sells better than good news.
Mr. Dorval: I certainly do. I have been in public affairs for 35 years and I can tell you that it is a reality.
However, that means that we still have work to do. We cannot blame everyone. We have to take responsibility ourselves. We have to do our work.
The government must create the best possible conditions for this dialogue to take place. And the interest groups that are opposed have the right to be opposed. They may have excellent reasons to be opposed to this. That is legitimate. In the final analysis, someone has to make the decision.
But the population in general will be affected. For instance, why are Quebec consumers the biggest per capita consumers of electricity? Perhaps because the cost of electricity is not as high there as elsewhere. Because it is part of our lives, and so on. People do not know that the energy consumed here domestically is subsidized by the commercial and institutional rate, because it costs much more to distribute electricity to homes than elsewhere.
Why does the population always oppose rate increases? Because citizens are very sensitive to that, and that is normal. So, there is understanding, education, training to be done. We can't expect citizens to know everything. The promoter has a job to do and the government has to create conditions conducive to that.
In associations like ours, we do our best to create a more balanced dialogue. The media also have a responsibility. I can tell you that in general when my colleagues and I address the media, we get adequate coverage for most of what we say. But do you know where we find our statements, often enough? In the financial pages; but the citizen does not read the financial pages, unfortunately.
So the problem regarding economic statements by promoters and associations like ours is that they are covered in programs or media sections that are important, but which unfortunately do not receive all of the necessary attention from the population. However, the position that will reach the population is generally covered in more political, social, health-based or environmental pages; generally it will not have better visibility, but it interests the population more, as listeners, viewers or readers.
[English]
The Acting Chair: It is easy to blame Senator Pratte and his former colleagues. I would like to quote the current Prime Minister when we talk about why the people who object to things are heard more than those who support them: "Because it's 2016.''
Thank you for your presentation, Mr. Dorval. You have added a lot to our discussion. We appreciate that and we appreciate your time.
I would like to welcome our next witness from the Shipping Federation of Canada, Sonia Simard, Director, Legislative and Environmental Affairs. I invite you to make a presentation which will be followed by questions from my colleagues.
[Translation]
Sonia Simard, Director, Legislative and Environmental Affairs, Shipping Federation of Canada: Thank you very much.
The Shipping Federation of Canada is an association that represents owner-operators and agents of sea-going vessels, the ships that do international trade transport for Canada, whether imports or exports.
[English]
I should say two things. I am not used to this format so I hope you will forgive me if I am a little nervous.
The Acting Chair: No problem.
[Translation]
Ms. Simard: Unfortunately, we prepared our statement in English, because we work mostly in that language. I apologize. We will be able to answer questions in French. Once again, may I extend my apologies.
[English]
We understood that the committee as part of its work had some questions in relation to ship safety once the crude oil had reached tidewater and was loaded on tanker vessels for export. We understand that is not your main subject but we saw in these sessions that you had questions, so we are here today to share information with you in relation to ship safety from an oceangoing perspective.
A huge amount of oil is safely moved on ships worldwide. We just want to put things into perspective. About 65 per cent of the worldwide petroleum production is moved on ships and the rest, about 35 per cent, is moved through pipelines and rail.
It is not quite the same scenario in Canada. We have about 100 million tonnes of oil and petroleum products that are moved safely in and out of ports mostly on the East Coast of Canada. We are talking about Come by Chance, Port Hawkesbury, Saint John, Montreal and Quebec. There is also tanker movement on the Great Lakes, on the West Coast and in the Arctic but the proportion is smaller. Again to give you some sense about 95 per cent of tanker movement in Canada is taking place on the East Coast. In order to support the safe movement of those ships in Canadian waters there is a comprehensive international and national regime that relates to oil spills prevention, preparedness, response and liability.
First, we want to give you a quick overview of the safety measures that are being taken for tankers moving oil on ships in Canadian waters. It starts with international conventions. A significant body of international conventions provides the rules for safety management and operations of ships, ocean-going vessels. Those international standards regulate construction, design, manning and operations of ocean ships. There is also an important body of rules on prevention of pollution by ships.
Once those international standards are adopted they are incorporated into national laws. Canada as a costal state has the authority to enforce those international standards for any vessels coming into Canadian waters. That enforcement is done mostly through what we call port state control. What it means is that Transport Canada safety inspectors board vessels to do inspections to ensure they are compliance with the international standards. If a vessel is found in non-compliance that vessel may be temporarily detained until the violation is rectified.
In addition to international and national regulations, it is also important to mention there are commercial pressures to ensure the safety of tankers. On the regulatory side this is done through the oil companies that got together and created a very comprehensive tanker vetting system before they charter tankers.
There is also important development in the terms of technologies and more specifically electronic navigation in support of safe navigation of vessels in Canadian waters. To give you a brief notion, all ocean vessels coming into Canadian waters must be equipped with what we call an automatic identification system, a global positioning system, as well as electronic charts.
What those tools are doing is that Canadian authorities and other ships in the vicinity have automatic information on the position of a vessel within the waters. With the electronic charts the mariners are able to see in real time the information on the position of the vessels versus other navigations.
That is quite different from when they used paper charts where they had to go back and plot the course on the paper. Now they have it in real time through the electronic charts which have significant amounts of information.
In addition to regulations and technologies we also have what we call measures to ensure waterways safety. Those measures are implemented by Transport Canada, the Coast Guard and the ports among other people.
What I am talking about here is mandatory pilotage for all ocean vessels coming into Canadian restricted waters. There are also icebreaking escorts when relevant. There are traffic schemes, tug escorts and a potential for speed restriction depending on certain areas. That is the general picture of the safety regime that surrounds ocean ships coming to Canada.
In addition we also have specific measures that apply to tanker vessels. To give you an example, all ocean tanker vessels coming to Canada must be double hull. This means that ships' sides and bottoms are made of not one but two heavy steel plates so that the inside cargo is protected by the second steel membrane if there is a grounding or a collision that affects the outer shell of a ship. I should also mention that in the double-hull vessels there is a space in between the two steel plates to provide that protection.
In terms of inspections ocean tankers are subject to inspections on their first visit to Canada and at least once a year afterward. In addition, in certain areas ocean tankers are subject to double pilotage. Instead of one pilot coming on board there is a requirement for two pilots.
In terms of mandatory tug escorts, sometimes navigation will be restricted only in daytime. There might be a restriction for tidal waters. All these safety measures are dependent on the areas where tankers are trading.
Having gone through the safety regime quickly, what does that mean in terms of environmental performance? Despite the fact that the volume of oil carried on board ship has been significantly increased over the last 30 years, we see a significant downward trend in terms of oil spills from tankers.
Numbers can be used by anyone to say almost anything, but there is an international not for profit organization that is involved in spill response. The data gathered at the international level shows that from the mid-nineties we had about 7.8 spills per year. That has gone all the way down to about 1.8 spills per year. In terms of the quantity of oil being spilled from tankers at the international level I believe less than 0.3 per cent of the oil carried on ships is actually spilled from tankers.
In Canada we haven't had a major oil spill in terms of magnitude since the oil spill regime was implemented in the mid-1990s. This being said, I couldn't be here this morning without acknowledging what happened on the West Coast last week with the tug and barge. The gentleman before me mentioned that no industrial activities are exempted from risk, but when we have a discussion on the acceptable level of risks it is important to keep in mind the overall safety record of the industry and the available measures to minimize and manage the risk on an area basis.
In terms of response regime for ocean-going vessels coming into Canadian waters, we have ability in Canada to respond to a tanker spill. There is an oil spill response regime to respond to a spill of up to 10,000 metric tons. Not only tankers but every ocean-going vessel coming into Canada must have a shipboard emergency response plan and, very importantly, an agreement with a certified response organization when coming into Canadian waters. Four response organizations are certified by Canada. They have equipment and certified responders to address spills. This oil spill regime is funded by the ships. All the costs are funded by the ships.
Transport Canada is currently holding discussions to refine the oil spill regime set up in 1990, considering that the traffic has changed since 1993 Nevertheless we have not had a spill in Canada of the magnitude of more than 10,000 metric tons.
If there were to be a spill what is the liability regime? I believe some senators had questions about what happens if there is a spill in terms of making sure money is available to compensate. The marine sector has a very elaborate scheme when it comes to liability for oil spills from tankers. Should there be a spill, there are three tiers of available compensation up to $1.4 billion in Canada.
The first layer is the shipowners who have a strict liability up to $160 million. If the claim exceeds that amount then it goes automatically to two international oil compensation funds that are funded by the oil companies. They provide an additional compensation of about $1.14 billion. Canada has its own Ship-source Oil Pollution Fund so that in the event a claim is higher than the amount available from shipowners and the two international compensation funds there is an additional $161 million coming from the Canadian funds. Altogether about $1.4 billion is available in case of an oil spill.
That is a very quick recap of the safety, response and liability regimes. Maybe I should stop here for questions.
The Acting Chair: We will now go to questions and I am going to sneak in a quick one.
Energy East, as presently constituted, talks about the pipeline ending in Saint John, New Brunswick. That means the ships would be going through the environmentally sensitive Bay of Fundy. Are there special requirements for environmentally sensitive waterways such as the Bay of Fundy?
Ms. Simard: It is on a risk management area basis. I don't have the specifics for the Bay of Fundy but what happens from a risk management area basis is often in relation to tug escorts and pilotage, double pilotage. Also it is in relation to restrictions on daylight navigation or night navigation. I don't have the exact restriction of what takes place in the Bay of Fundy right now but I can get that for you and forward it later on. The main message is that there is the ability to take these measures. In addition we have restrictions for collision avoidance with whales.
The Acting Chair: That is one of the main issues in the Bay of Fundy because right whales summer there. The whales and the ships are so big that if a whale recognizes there is a ship it cannot move fast enough to get out of the way. Nor can the ship move fast enough to get out of the way. It is an accident looking for a place to happen. If you could get that for us, it would be appreciated.
Ms. Simard: I will.
[Translation]
Senator Boisvenu: Ms. Simard, welcome to our committee. Thank you for your very instructive brief. I have a few brief questions for you.
How has all of the development in the Canadian west impacted your industry, how has it affected oil transportation? We saw the effect it had on railways; oil transport increased almost a hundredfold. What has increased development of natural resources in Canada meant for your industry?
Ms. Simard: At this time, on the west coast there are about 100 oil tankers and tugs and barges moving oil. So currently, the quantity of oil and oil products on the west coast is somewhat limited as compared to the east coast.
Senator Boisvenu: And on the east coast, did you see as dramatic an increase as the railways did, or was there less of an impact?
Ms. Simard: Could you specify what you mean by "as dramatic an increase as the railways''?
Senator Boisvenu: Well, we saw that oil transport by rail increased by almost a hundred times, daily, if you look at the number of cars. Did shipping experience the same boom?
Ms. Simard: Internationally and nationally, I think we have experienced the same percentage of increase, but oil transport has doubled over the past 20 years.
Senator Boisvenu: By ship?
Ms. Simard: Do you mean the quantities being transported?
Senator Boisvenu: Yes.
Ms. Simard: You mean the size of ships? In fact, it depends on the type of transport we need. For instance, at Come By Chance, there are large ships because they are importing crude oil. The oil is refined at Come By Chance and then exported on smaller ships. So in that case, we use bigger ships.
For transporting local supplies, we make greater use of Panamax and Abrasax ships. For instance, on the St. Lawrence, we noted an increase in oil transportation. We also noted an increase in the size of ships at Come By Chance as it relates to the volumes of imported oil being refined, and in the size of ships that serve American markets.
The oil market is fluctuating greatly at this time because of what is happening in the United States, and so it is more difficult to predict the evolution of demand in Canada. But yes, ships are larger and more numerous. Has the increase been as dramatic as for railways? Unfortunately, I don't have data on that. In any case, we have observed a considerable increase.
To get back to the west coast, the picture is not exactly the same. If I remember correctly, for Kinder Morgan, we are talking about an additional 400 ships; and for TransCanada, there are approximately 200 larger oil tankers.
Senator Boisvenu: If the eastern pipeline is built, have you assessed the impact this will have on the shipping industry?
Ms. Simard: There are two aspects to the reply. Part of the impact of Energy East would be on domestic transport. The oil arrives in Montreal and is transported to Quebec.
Unfortunately, the Shipping Federation does not represent domestic transporters. So, unfortunately I cannot give you specific figures on that. You have to examine the issue from the perspective of the impact on our industry, on the import side. Perhaps imports will diminish while export volumes increase.
As for Energy East, it all depends. In Saint John, there will definitely be an impact on ships used for exports. We are not here to take positions on specific projects. When there is a need to transport oil, the ships are there and can transport the product safely.
Senator Boisvenu: We know that if the pipeline is built — and I did say "if'' — it will compete directly with the railways, which is not the case for shipping. In a way, you would become an extension of the pipeline, for exports?
Ms. Simard: Yes. That's quite right.
Senator Boisvenu: This will be my last question. Currently, what is the situation of oil transport in the east, among other places, as regards our imports and exports?
Ms. Simard: I should know, but I want to make sure I don't mislead you. I will get back to this. To my knowledge, the volume of imports is greater than the volume of exports.
In fact, I should be careful in saying that, because here again, Come By Chance, where a large proportion of shipping transits at this time, facilitates the transport of refined/resold oil. The oil arrives at the terminal. It is refined and then exported in smaller ships. A small quantity goes to Canada, and a large volume is exported.
Senator Boisvenu: I understand. Thank you.
[English]
Senator Doyle: I would like to get back to tanker traffic on the East Coast. You mentioned the response to oil spills and what have you. What measures are in place right now to respond to an oil spill in an area like the Grand Banks where there is very rough water?
Should there be a moratorium in place in areas that are very environmentally sensitive like the Grand Banks where there is spawning and breeding of fish and what have you? What do you do there? Do you have any special plan for an area like that?
Ms. Simard: Obviously we do not approach the discussion from a moratorium perspective. We approach it from understanding the risk level and how we best manage the risk. In that respect it is in relation to the safety measures I mentioned for transportation in terms of mandatory pilotage and tug escort. Also the quality of the tanker fleets coming into Canada is being vetted commercially and inspected by Transport Canada.
In terms of prevention measures and in terms of response measures I mentioned the four certified response organizations in Canada. The response organization that would cover your area is called the Eastern Canada Response Corporation, ECRC. It is required by law to have a capacity to respond to spills up to 10,000 metric tons.
Senator Doyle: Do you respond at all to complaints about tankers doing bilge cleaning at sea and that kind of thing? A lot of fishermen out there see oil tankers coming by and cleaning their bilge at sea. Do you have any special response to that? Do you do anything about it? Do you police it? What happens?
Ms. Simard: In terms of the policing Transport Canada has the National Aerial Surveillance Program. Its airplanes have a number of hours of flight over those areas to ensure that the ships are in compliance.
I assure you that from our perspective those doing these kinds of operations are doing them illegally. We are not condoning them. We are totally opposed to them. A big segment of the industry is comprised of very high quality operators. We want strong enforcement of international standards. Canada's role as a costal state in inspections and aerial surveillance is very important. That is from one side.
From the industry side our role as an association is indeed to carry forward the message of compliance. There is also an environmental performance program developed within the industry called Green Marine where ships are becoming members to rate their environmental performance.
Nationally and internationally the majority of shipowners are of the same opinion that it is unacceptable to have substandard tanker fleets. Those tanker fleets must be subjected to strong inspection and an aerial surveillance program to work within the industry. That is definitive.
Senator Doyle: Do you have any statistics on the frequency of these things happening? Do you keep anything on it, or does the federal government have the main responsibility for that?
Ms. Simard: Maybe 12 or 13 years ago Environment Canada and Transport Canada amended legislation to address the issue of oily birds as a result of illegal discharge of operational spills. What we are talking about here is not a spill from an accident. We are talking about illegal operational spills, vessels illegally discharging their oil. Vessels discharging oil must do so through its oily water separator, which is regulated by international law. When that is done, according to MARPOL, that discharge is at a level that will not present a danger for the environment.
Senator Doyle: The bilge cleaning, is that what you're talking about?
Ms. Simard: Bilge cleaning is another component of it. There is the discharge of the operational oil.
Senator Doyle: Do they discharge operational oil at sea?
Ms. Simard: Well that is illegal. That is not conduct as part of the normal operation of tanker vessels.
Senator Doyle: But it happens.
Ms. Simard: But it happens. Like in any industry we have bad apples. Of the 55,000 vessels that compose the international fleet we have about 16,000 tankers. I am not in front of you saying that none of those tankers are operating illegally. I could not say that. What I can say is that the industry in general and the international standard adopted under the IMO is aimed at ensuring that the operations are done as per international law and it is relying on the flag state and the coastal state to enforce those requirements.
The Acting Chair: This is what happens when we have a member of the Fisheries Committee on this committee. We always get off on the fishery.
Do you have any more questions, Senator Doyle?
Senator Doyle: I have hundreds but that is okay. No, I don't.
The Acting Chair: Ms. Simard, in your presentation you talked about the automatic identification system. It was a fascinating discussion, but what I didn't hear was what happens if the system fails.
Ms. Simard: I definitely spoken about the electronic charts and the automation. That is not the only means of navigating. The mariners are still trained to be able to navigate with charts.
The Acting Chair: With paper?
Ms. Simard: The non-electronic navigation tools remain.
The Acting Chair: What you have described is fascinating in that if I am on one ship I can tell where the other ships are and where people are going. What happens if I have a failure? I am interested in what other ships are doing. How do they then communicate to me what they are doing?
I go back to my question about the Bay of Fundy. If multiple ships are coming into the Bay of Fundy, some loaded with crude oil and some coming in to get crude oil, it seems to me that the traffic becomes a little risky going through there. What happens if one's automatic identification system fails?
Ms. Simard: That is not the only tool. Actually we have in Canada what we call the Marine Communications and Traffic Services under the Coast Guard. It is the entity that is managing the traffic. It is not only relying on AIS but the ship has an obligation to be in constant communication with Marine Communications and Traffic Services. If the ship has an issue from a technical perspective in terms of navigation, the ship will be reporting to the Marine Communications and Traffic Services that will then take measures to ensure safe navigation at that time.
It is not just AIS doing an automatic transmission of position. The ship is still in communication with the shore authorities through the normal radio means and the Marine Communications and Traffic Services.
If I may, on a second point, we are talking about an accident. I was looking into the data from the Transportation Safety Board of Canada which compiles data on accidents from the ships' perspectives. It is marine accidents. It is not only commercial cargo vessels. It is also fishing, whale-watching and those commercial vessels.
If you look into the trend there is a downward trend in terms of accidents. On an annual basis what I found was about 210 shipping accidents. It could be mechanical failure. It could be grounding, touching ground. I don't mean major accidents but mechanical failures. Out of that 210 the data shows that about 50 of those shipping accidents were in relation to commercial cargo. The rest was in relation to fishing vessels and whale-watching.
We certainly need to have the conversation about what happens when the electronic navigation does not work, but I want to leave the pictures here that in terms of actual accidents happening on the ground when we talk about commercial marine navigations the numbers are very low, and that is for a reason. It is because this industry relies on its safety recourse. If they cannot carry the cargo safely they have a problem commercially and from a liability perspective.
The Acting Chair: There is probably a need to categorize the accidents into understandable levels as you have tried to do just now. Even if you talk about accidents in whale-watching some of those accidents involve whales. If you have ever been whale-watching you will know that they get very close, closer than you and I are now and so accidents do happen.
[Translation]
Senator Pratte: Did your federation or other organizations do a poll of public opinion on the safety of shipping, in particular the shipping of oil or hydrocarbons?
Ms. Simard: Yes, but not our organization. A group called Clear Seas prepared a report about a year ago. This group testified before your committee. It is a study and research centre funded by industry and government. Clear Seas attempted to evaluate the risk related to shipping. So this type of study does exist at this time. Opinions vary from one region to another. I am going by memory. I will send you the results. I hope I won't mislead you, but if I remember correctly, the public perception on shipping in the Atlantic is positive, because people may have become aware of the importance of this means of transport for the economy of the region.
However, on the west coast, public opinion on shipping, as we can see in the media, is definitely less favourable.
Senator Pratte: Does the industry make particular efforts to sway opinion through information, as you are providing here, but in a more general way?
Ms. Simard: Yes. About eight months ago, the industry and the St. Lawrence coastal communities met to discuss prevention measures and the level of preparedness in case of oil spills. These discussions often take place under the aegis of the St. Lawrence Economic Development Council, or SODES, an association which deals mainly with shipping on the St. Lawrence. This type of initiative has been launched on the west coast, and we are participating.
In summary, associations and shipowners communicate directly with the coastal communities.
There have been several public information sessions on the west coast. In these sessions, pilotage authorities, associations and shipowners get together to discuss matters with coastal communities.
So, yes, this type of initiative does exist. I also spoke to you about the marine alliance and the environmental performance program. All of the environmental performance results of the members of that alliance are made public.
The environmental performance indicator results are available to the public. We can know where the shipowner stands, if he is a member of this alliance. So, yes, work is done in this regard.
Senator Pratte: If I understand correctly, on the west coast, despite a considerable decline in the number of accidents in the last 30 years, there are nevertheless places where the public remains very worried or very skeptical.
Ms. Simard: As Mr. Dorval, the witness who preceded me, said, we still have a lot of work to do for two reasons: for a very long time — over the past 15 years — this industry made no attempt to promote its environmental safety performance.
So we have had a lot of work to do to communicate information, and it is not easy. It is difficult to communicate such technical information and to initiate a more informed dialogue on these matters. We have made a lot of progress, but there's still a lot of work to do.
I agree with you entirely. The industry is aware of this and it is making a lot of efforts.
Senator Smith: Could you share your thoughts on the development of the north of our country in connection with climate change, to reassure your members and to share your progress with them, as it relates to the development of merchandise transportation in the north of our country?
Ms. Simard: At this time there are two categories of commercial traffic. There is traffic to supply local communities, which is done with domestic vessels. In Canada, the transportation of goods between two local points, for instance from Quebec to northern communities, is reserved for domestic ships, under the Coasting Trade Act.
As an aside, often when I talk about domestic vessels, I am talking about domestic transport between point A and point B in Canada. In compliance with the law, this is reserved for Canadian-flagged vessels.
There are two large categories of commercial transport currently in the Arctic: transportation of supplies by domestic ships for local communities, and goods transportation by ocean-going vessels for resource development projects.
At this time, this type of traffic is considered a niche market. A certain number of operators who have developed modern fleets are involved in transporting raw materials in the Arctic. Their ships have major icebreaking capabilities. They are autonomous from the point of view of Arctic transportation, which presents many challenges.
We don't have enough nautical charts for shipping in the Arctic. According to the government, 3 per cent of Arctic charts are up to modern standards. There is a lot of work to be done on cartography as it relates to shipping in the Arctic.
We need services on site to support commercial transport, such as icebreaking escorts. There has to be a sufficient number of Canadian Coast Guard icebreaking vessels to escort ships in the north and south. In addition, infrastructures will have to be put in place to support the inspection of the ships in the north.
However, we are still not looking at keeping the north passage open year long for all ships. We are not there yet. There are obstacles to navigation in the Arctic involving completely iced-over waters. And with climate change, large pieces of ice that are on the move present an additional challenge.
The operators who are there currently are specialized in icebreaking operations and have modern vessels. The Fednav company, for example, is an ocean-going operator based here in Canada. It has a modern fleet of ships in the Arctic. Its ships are as well equipped for icebreaking, if not better, than those of the Coast Guard. They have ice pilots on board. The company has developed expertise in navigating icy waters.
So the commercial fleet, which deals only with resource development projects in the Arctic, is made up of operators and ships that are dedicated solely to that market.
Senator Smith: You are talking about the development of resources such as mines and so on?
Ms. Simard: Yes, that's right. Baffinland.
Senator Smith: They bring materiel in and out?
Ms. Simard: Yes.
Senator Smith: It's commercial. How is your relationship with government departments? When you talk about transport and environment, do you deal with other departments?
Ms. Simard: This is an issue that is often raised. Many departments manage shipping: Transport Canada, the Canadian Coast Guard, Environment Canada, the Canada Border Services Agency — customs — and Citizenship and Immigration. Natural Resources are also directly involved, except for regulatory issues.
We often say that the government lacks a coherent vision for developing shipping, which is an instrument to support and develop the Canadian economy. We need a global approach from the government, together with the departments that are involved in regulating and promoting shipping. Their vision lacks coherence when it comes to shipping in Canada. The main regulatory authority for the safety of services provided to ships by Transport Canada is the Coast Guard.
Senator Smith: Do you have opportunities to create relationships and contacts with these departments so as to increase capacity and ensure the coherence of the system in Canada?
Ms. Simard: Yes. We have a very good relationship with them. I don't want to give you the wrong impression. We discuss things often. The industry is part of the Canadian delegation that will meet with the International Maritime Organization to discuss international standards.
This is a common practice in all countries. The industry works closely with Transport Canada to discuss the measures that need to be taken. There is constant evolution. That needs to be said. I don't mean to say that we don't have more to do. There is always progress to be made when it comes to safety. We work mainly with Transport Canada, but also with the Coast Guard and the Canada Border Services Agency.
Senator Smith: Thank you.
[English]
The Acting Chair: Ms. Simard, a previous witness expressed concern about staffing levels and fleet conditions of the Canadian Coast Guard and suggested that addressing these problems would be a preventative measure that would improve public confidence in marine safety. What would your views be on this recommendation?
Ms. Simard: We have a strong view on that in relation to the adequacy of the current Canadian Coast Guard fleet for icebreaking vessels. Icebreaking is an essential service when it comes to ensuring safe movement of vessels. The Canadian Coast Guard fleet of icebreakers has reached a very advanced age, to say the least.
What happens is that we have a concern from the point of view of the state of the fleet. The age of the vessels on average is over 30 years old. Those vessels repeatedly go to life vessel extension, repairs and maintenance program. When that happens the available fleet is even smaller.
From the start we are questioning whether there are enough icebreaking vessels right now in the icebreaking fleet to provide an adequate service for the South and the North. In addition, if those vessels are in such a state that they need a lot of maintenance at a very high cost those ships are out of service or not providing service when that happens. The ships run all year south and north.
We are strongly making representations on the need to ensure that there is, to be very concrete, a short and medium plan for the renewal of the icebreaking fleet. We do not believe that the building of one Polar Icebreaker is the magic bullet.
The Acting Chair: As a Nova Scotian and someone who grew up within blocks of the Irving shipyard I would agree with you. Some Senate colleagues and I toured the Irving shipyard last week. I was pleased to see that the service vessels they are building for the North are all double hulled. They do not have icebreaking capabilities but they can operate in ice I think as thick as one metre, which doesn't make them icebreakers but allows them to function a lot better than some of the other vessels we currently have.
There is some good news. The government never tends to move fast enough.
Ms. Simard: If I may, senator, if this committee would wish to make a recommendation on the renewal of the Coast Guard icebreaking fleet we would be more than in support of that.
The Acting Chair: We thank you for that and we will take it under consideration.
Thank you, Ms. Simard, for your excellent presentation. You generated a large number of very interesting questions.
Our final witnesses this morning are from the Quebec Association of Heavy Machine Operators Yvan Grenier, Director General, and Jean-Yves Gauthier, Vice President.
Please begin your presentation and my colleagues will follow with a series of questions.
[Translation]
Yvon Grenier, Director General, Association des propriétaires de machinerie lourde du Québec: Good day to all of the members of the Standing Committee on Transport and Communications. I thank you for this opportunity to present the position of the Association des propriétaires de machinerie lourde du Québec in the matter of the construction of the Energy East Pipeline.
I am pleased to introduce Mr. Jean-Yves Gauthier, vice-president of the APMLQ and the owner of Transport Camille Dionne Incorporée, in Laval.
My name is Yvan Grenier, and I have been the director general of the Association des propriétaires de machinerie lourde du Québec for 20 years.
The APMLQ was founded over 50 years ago, in 1966, and brings together enterprises that specialize in transport, excavation, earthmoving and snow removal, as well as the owners of cranes, concrete pumps, and drilling contractors. It has 500 members, mainly regional and family-owned SMEs. Its board of directors is made up of 15 members who represent the 10 regions listed in the association's regulations.
The mission of the APLMQ is to inform its members about changes affecting the industry, to offer benefits and services to them, to defend their interests to public authorities, and to provide employment.
In 2015, the association's board of directors and general assembly adopted a resolution on the Energy East pipeline project and since then, the APMLQ has been involved in coalition activities in support of this project. The coalition includes stakeholders from both the employer and the union sectors. Although we do not specialize in the transportation of petroleum products, the APMLQ sees the Energy East pipeline project as one of the largest construction projects for Quebec in the last 25 years.
It also believes that transporting petroleum products by pipeline is the safest and most effective way of delivering these products. It has every confidence that government authorities will take the necessary precautions for public safety and for the environment in Canada. More specifically, the APMLQ supports this project for the following reasons: the creation of more than 3,000 direct and indirect jobs in each of the nine years of planning and construction; the creation of 3,000 jobs in the pipeline's first 20 years of operation; significant tax revenues for various orders of government during the nine years of planning and construction, and during the pipeline's first 20 years of operation; construction contracts in all regions along the pipeline route; maintaining the expertise of workers and Quebec companies in the engineering, construction and oil sectors; and finally the linking of the pipeline to two Quebec refineries, giving them a new source of supply in Canada.
In short, given the difficult economic situation of the construction industry, where the number of engineering hours worked has dropped by 30 per cent in three years and the hours worked in the industry have dropped by 45 per cent, a project on the scale of Energy East would be welcome for all of our members, which are family-run SMEs in the regions. A project such as this would provide a very substantial volume of work in all regions along the pipeline route. In the current economic slowdown, that is a significant contribution.
It will however be important to ensure that SMEs can be involved in the project. Like the Energy East Coalition, the APMLQ supports a transition to renewable forms of energy. Petroleum will nevertheless continue to be the main source of energy in Canada for many years to come.
To ensure a smooth transition for Quebec, we have to make sound, economically viable and environmentally responsible investments in order to meet society's energy needs. The Energy East pipeline satisfies these criteria, which is why we support the project.
To ensure that the public accepts this project, the consultation and analysis process established by government authorities must be rigorous and transparent. The project's success depends on it.
Thank you for your attention.
The Acting Chair: Thank you very much, Mr. Grenier.
Mr. Gauthier?
Jean-Yves Gauthier, Vice-President, Association des propriétaires de machinerie lourde du Québec: Hello. I am here as the association's vice-president. We have held meetings with our members and associates about a project such as Energy East. We strongly support the project for our members. We represent SMEs in all regions of Quebec. It would be an excellent opportunity for them in all sectors of activity, including small quarries and sand pits. Their expertise in excavation work would also be valuable to Energy East. In various locations in Quebec, many of our members have strong expertise in excavation work involving heavy machinery in their region, which could be helpful.
Everyone says they support this project and hope to be involved in it.
The Acting Chair: Thank you very much, Mr. Gauthier.
Senator Pratte, you have the floor.
Senator Pratte: Thank you and welcome. I would like to point out that this will lead to the creation of 3,000 direct and indirect jobs over nine years. That is a number we hear very often, but it does not really seem to impress many people.
I would like you to provide further details. You said that it is one of the largest construction projects in Quebec in the last 25 years. I would like you to explain the importance of this project for your member companies, its impact and what exactly it means to create 3,000 jobs. For many people, this does not seem very significant. In the end, people seem to think it is not such a big deal.
Mr. Grenier: We are not economists, I must point out.
Senator Pratte: No, but I am not asking for an economist's point of view.
Mr. Grenier: Precisely.
Senator Pratte: I would like to hear your point of view.
Mr. Grenier: One of the benefits of this pipeline project is that it would involve nearly all administrative regions in Quebec. Those 3,000 jobs will be spread out all over Quebec, from what we know about Energy East and their commitments before we support the project. They will make sure the jobs are spread out all over Quebec.
That affords us a measure of stability. In the past two or three years, the hours worked in the construction sectors have decreased. Our family-run SMEs in the regions can barely keep their equipment in operation. A project such as this one would provide a base level for nine years, which is very attractive.
Of course, 30,000 is a much more impressive number, but that would be a project on a different scale. All the same, 3,000 is not nothing. That means 3,000 companies with construction workers. These are good jobs that can support our families, and that provides a good base level of work for our SMEs.
Senator Pratte: In your presentation, you said you are confident that government authorities will take all the necessary precautions for the environment and otherwise to safeguard the public and the environment.
That statement gave me a bit of a start because such confidence is rarely expressed. On the contrary, people are very often skeptical of the ability of government authorities to make the right decisions in this regard. Why do you have such confidence in the authorities?
Mr. Grenier: Much is said in the press about the project and there are many environmental and other groups opposed to it. We are monitoring this at the provincial, municipal and federal levels.
If the project is approved, it will not be done on the back of an envelope. There will be consultations with the Bureau d'audiences publiques sur l'environnement (BAPE), Quebec's environmental review board, and with the National Energy Board, as well as discussions at various levels of government.
We think we can deal with opposition to the project by preparing arguments and demonstrating the positive effects with regard to safety and the environment. I think we do not highlight the benefits of the project enough. Of course there are some risks in transporting petroleum, but they are outweighed by the benefits. As compared to transport by train, boat or truck, a pipeline would cause much less pollution. The public has to hear this message. Of course there are fears given the number of barrels that will be in circulation, of petroleum and oil sands. In our opinion, by proceeding in stages, the project will be even safer. Unfortunately, though, we are not experts.
Senator Boisvenu: Welcome, Mr. Grenier and Mr. Gauthier. Thank you for your presentation.
I will continue in the same vein as my colleague, Senator Pratte. From what I understood, you are present in all administrative regions of Quebec. In your opinion, how many of your members would be involved in all the infrastructure and installation work?
You are talking about 3,000 jobs, is that correct? The project would entail a variety of manoeuvres involving heavy machinery and so forth. What would the impact of such a project be on your members? Have you made any estimates?
Mr. Grenier: Not exactly. We are talking about 3,000 employees in the SMEs that we represent. In general, they have 20 to 25 employees on average.
So we could cross-multiply. Yet the project does not involve only our members. There will be various companies that are members, not members or members of other associations. In general, though, a few hundred companies would be involved in Quebec alone.
Senator Boisvenu: The media debate about the Energy East pipeline is ongoing. Of course, you hear about those who are opposed. We do not hear much about people who support the project. Has your association developed a communications strategy?
Since you are in all the regions, has your communications strategy been tailored accordingly? Do you have a strategy to highlight the benefits of the project and so forth?
Mr. Grenier: We represent 500 members in Quebec. We confirm to them that we support the project at the annual general meeting and in our information bulletins.
It should be remembered though that we are just three employees in an association with 500 members: one person for communications, a director general and an administrative assistant, so our resources are limited. That is why we joined the coalition in support of the project and take part in its activities since we do not have the resources to do what you just said.
Senator Boisvenu: Can you tell us briefly about the coalition? Who belongs to it?
Mr. Grenier: It brings together various associations, including the Association des constructeurs de routes et grands travaux du Québec, which represents builders of roads and major projects in Quebec, the APMLQ, all chambers of commerce and unions, including the FTQ and the International. It is a fairly diverse group. Nine association members promote the project. We do hear more often from those opposed than we do from those who support the project. You are quite right: there is work to be done in this regard.
Senator Boisvenu: Especially since you say that the FTQ, which is quite strong in communications — indisputably so — is part of the coalition. Even so, we do not hear about those who support the project.
Mr. Grenier: Quite right.
Senator Boisvenu: I have lived in Quebec for a long time and we hear about this project almost every week or every month. Yet I am not sure that I have ever seen a group of business men or even unions speak publicly about the project.
Mr. Grenier: About a month ago, I was at press conference here, in Montreal, with everyone in attendance. It seems that the message does not get out as well when people support a project as compared to when they are opposed.
I don't know what to say. I am not an expert in communications, unfortunately.
Senator Boisvenu: You would have to hire Mr. Chevrette.
[English]
The Acting Chair: It seems to me you have struck on a very interesting point. We have been told, particularly those of us not from Quebec, about the opposition to the pipeline in Quebec, but then we meet you and others who are very supportive. It doesn't take a huge complicated communications plan to have an effect here.
The Province of Quebec is represented in Ottawa by 24 senators and members of Parliament from four different political parties. I would suggest it would have an effect if your members and the members of other organizations supportive of this project, no matter which political party they are a member of, call, write and email their members of Parliament to tell them about their support for the project.
It does not take an expensive program to ask your members to simply email, write or phone. Many of them will know their MPs. Many of them may have been supporters of that candidate or another. You would be surprised at the effect it has on members of Parliament.
The only one at the table who has been a member of Parliament, Senator Doyle, will tell you the effect of constituents calling to tell them that they support a project. You have a real opportunity to help push that project and to bring other organizations along. That is my suggestion.
Senator Smith, do you have a question?
[Translation]
Senator Smith: At the very beginning of my career, I worked for Caterpillar, Hewitt, and then Camille Dionne. It was quite an important client. I understand suppliers' economies of scale.
[English]
It is important for the members to understand that in the construction industry there a lot of small players as well as some big players in the business. Really great opportunities are created when huge projects like this come up for the construction industry. We have to look back in time to the James Bay projects, which were huge projects that turned really great opportunities.
[Translation]
They created many opportunities for people in the industry. The reality is that small entrepreneurs who are working in small localities, with all the best of everything, also bid on projects in small towns.
So there has to be political balance in everything you are saying. Did I understand correctly?
Mr. Gauthier: Very well, sir.
Senator Smith: Perhaps you can explain so the members can understand. With your members' economies of scale, you have a few big players, but also many small players who stay in their own part of the province.
If all the mayors in small regions oppose the project — and they have an impact on the projects offered in their small towns — that makes it tough for the entrepreneurs.
Can you expand on this so the committee can better understand what you are referring to?
Mr. Gauthier: Yes, entrepreneurs in the small regions often miss out on highways, big projects etc. In the case of large-scale projects in Montreal, big jobs often go to multinationals without any direct benefits for the regions. They bring their equipment and everything without asking for any help from small regional entrepreneurs. They could actually help the small regions and encourage mayors to accept projects in their region if they know there will be direct benefits. That would be positive of course.
As I said earlier, all regional entrepreneurs have the necessary equipment to carry out all kinds of forestry, excavation and other projects. They have access to the raw materials.
In Montreal, a multinational is in charge of the Turcot interchange, a major project. This company hired all the right operators in the region to do the work over four or five years. We did not get any of that work and it hurt us a lot.
So it is the same thing for small, regional entrepreneurs. They ask questions. They sometimes ask us for their piece of the pie. If Energy East is approved, we do not want a multinational to get the contract from start to finish. If that is the case, we get absolutely nothing. We have people who need to work.
That is why it is important for the regions to get those 3,000 jobs. Our members are a bit worried about this. At a meeting, they told us: of course we want to see benefits for the regions and call on the expertise of entrepreneurs in each region.
Senator Pratte: Since you have members in all regions, you have your finger on the pulse. As Senator Boisvenu said, how can we convince the public to support a project like this when there are so many people opposed to it?
Fears about safety have obviously been raised, and they are entirely legitimate. Governments have to listen to those fears. How can we convince the public to support a project like this when fears are so widespread?
Mr. Gauthier: Petroleum is transported by boat, train or truck. There have been a few unfortunate incidents in the regions.
I think the planned pipeline is much safer. There is a great deal of information out there about the risk of billions of barrels of petroleum flowing down the river.
We need to inform the public. The project would create direct and indirect jobs over nine years. It would reduce greenhouse gas emissions as compared to transporting the oil by boat or truck. I think this is what we have to stress. We need to tell people that this project is much safer. Thanks to technology, it will be easy to detect leaks. We will know exactly where there is a leak.
For my part, I think we have to emphasize safety, job creation and the benefits to the environment, particularly the reduction in greenhouse gas emissions. We need to inform people about how oil is transported. We want to reduce the risk of accidents, whether at sea, by rail or on the highway.
Mr. Grenier: People also have to understand that it is not magic. We will continue to develop petroleum, one of our most important sources of energy. Why not chose a transportation method that is safer and more environmentally friendly? We need to sell this idea.
[English]
The Acting Chair: That is a good point. As I mentioned earlier I try to educate people about contacting their members of Parliament and their senators. Quebec has 102people in Ottawa whose job it is to represent that province. A couple of them are here so you can strike two off the list, so you only have 100 left to go. Make sure you give them your message on where you stand on the issue because it does have a very real effect.
Mr. Grenier: Thank you for the suggestion and we are going to do it for sure.
The Acting Chair: Good. I thank both of you gentlemen for being here. You have added a lot to our debate and we appreciate that.
(The committee adjourned.)