Proceedings of the Standing Senate Committee on
Energy, the Environment and Natural Resources

Issue 5 - Evidence - May 6, 2010


OTTAWA, Thursday, May 6, 2010

The Standing Senate Committee on Energy, the Environment and Natural Resources met this day at 8:07 a.m. to study the current state and future of Canada's energy sector (including alternative energy).

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

[English]

The Chair: Good morning, honourable senators and witnesses. I welcome you all to this meeting of the Standing Senate Committee on Energy, the Environment and Natural Resources. We are continuing our study on the energy sector and, hopefully, the development of a strategy framework for a national policy in the energy field.

I would like to welcome our viewers on the CPAC network and those watching our proceedings on the World Wide Web. I am Senator David Angus, from the Province of Quebec, and I am the chair of the committee. To my right is Senator Grant Mitchell, the deputy chair, from Alberta; Marc LeBlanc, from the Library of Parliament, an able assistant to our deliberations and the recording of our work; and Senator Daniel Lang, from the Yukon. We also have a visitor here today, representing Senator Brown: Senator Yonah Martin, from British Columbia. To her right is Senator Judith Seidman, from Quebec; and Senator Robert Peterson, from Saskatchewan.

To my immediate left is our very able clerk, Ms. Lynn Gordon; Senator Linda Frum, from Ontario; Senator Richard Neufeld, from British Columbia; and Senator Paul Massicotte, from Quebec. We also have another visitor today, Senator Wilfred Moore, from Halifax, Nova Scotia.

I would now like to welcome our special guests who are from the Canadian Academy of Engineering, CAE. With us this morning are Richard J. Marceau, Member of the Board of Directors, and Chair of the New Directions and Public Policy Committee; and Michael A. Ball, Executive Director. According to its website, the Canadian Academy of Engineering is the national institution through which Canada's most distinguished and experienced engineers provide strategic advice on matters of critical importance to Canada. I am surprised you are not down in New Orleans today providing strategic advice to British Petroleum. We are glad you are here.

I believe your academy is an independent, self-governing and non-profit organization, established in 1987. Members of the academy are nominated and elected by their peers to honorary fellowships in view of their distinguished achievements and career-long service to the engineering profession. At present, there are some 307 active members, 125 emeritus members and 3 honorary members. Fellows of the academy are committed to ensuring that Canada's engineering expertise is applied to the benefit of all Canadians. The Canadian Academy of Engineering works closely with other senior academies in Canada and internationally. It is a member of the Council of Canadian Academies, the Royal Society of Canada and the Canadian Academy of Health Sciences, as well as several engineering societies, institutes and professional bodies.

Mr. Ball, I understand that you have been following the deliberations of the committee's study on the energy sector and that you have many things to tell us, both still in the pipeline and others that are current and ready for airing. Mr. Ball, please proceed.

Michael A. Ball, Executive Director, Canadian Academy of Engineering: I will give you a little background on some of the witnesses who have appeared before this committee. Mr. Robert Evans, who appeared before the committee last December, is one of our members. He is one of our leads on a working group that the International Council of Academies of Engineering and Technological Sciences, Inc., CAETS, internationally are doing on low-emission electricity generation. Six nations of the CAETS group are working on that. I will tell you more about that later. Several of our members have appeared before the committee in various roles.

The Chair: We need all the expertise and input we can get. As you may have heard in some of our hearings, we are nearing the end of phase 1 of the study. We have been at this for a little more than nine months to learn the lexicon and become energy literate on climate change and alternative energy. We realize that the more we learn, the less we know on this massive subject. We are delighted to have you here today to help us with our task.

Richard J. Marceau, Member, Board of Directors, and Chair, New Directions and Public Policy Committee, Canadian Academy of Engineering: I thank the Standing Senate Committee on Energy, the Environment and Natural Resources for the invitation to speak on behalf of the Canadian Academy of Engineering on the opportunity and advantages of enhancing the electrical connectivity between Canada's provincial electricity systems.

Since 2005, I have been vice-president, academic and provost of the University of Ontario Institute of Technology, which opened its doors in 2003. Prior to this, I was Dean of the Faculty of Engineering at the Université de Sherbrooke, in Quebec, from 2001 to 2004; and Chair of the Electrical and Computer Engineering Department at École Polytechnique de Montréal, from 1998 to 2001. I am an electrical engineer by training and have worked in industry from 1978 to 1990 before pursuing a university career in both Quebec and Ontario.

Given that the chair of the committee has summarized and provided a brief overview of the Canadian Academy of Engineering, I will skip over some of the comments that I had planned to make to introduce you to the academy.

In 2007, the academy's Energy Pathways Task Force recommended that Canada proceed with three national technology projects: The gasification of fossil fuels and biomass; reduction of greenhouse gas, GHG, emissions through carbon dioxide capture followed by transportation, long-term storage or usage; and upgrades to electrical infrastructure, with improved access by wind and solar sources and capacity for energy storage. Today, I will report the conclusions of the academy's Canada Power Grid Task Force, which studied this last issue of upgrades to the Canadian electrical infrastructure.

Let us begin by addressing why this was identified as a national technology project. Historically, Canada's electricity system was built on a province-by-province basis, with limited emphasis on provincial interconnections. Over the past decade, our deepened recognition of the reality of climate change has forced us to rethink our use of all forms of energy, including electricity. Electricity is no longer simply viewed as a provincially regulated service but as an energy currency deeply connected to our nation's economic prosperity. Unfortunately, in a world of increasing economic, political, environmental, energy and climatic connectivity, there is no clear consensus on how this energy currency can best be leveraged in the nation's interest.

For example, the Canadian Chamber of Commerce noted that a substantial amount of Canada's power potential is stranded because no transmission grid exists to tap that power and ship it to market. Newfoundland and Labrador Hydro stated that without sustained action on a strong east-west grid that will support this country's growing demand for clean energy, Canadians may find themselves squandering a key competitive advantage.

The United States is investigating several interregional connections to add to their grids, driven in large part by planned expansion of renewable energy. Over the past year, Hydro-Québec attempted to acquire a significant portion of NB Power's assets in the hope of augmenting its market for renewables-based generation, in particular hydro power, and expanding the reach of its transmission network. Although The Globe and Mail took the position that this initiative was in the interests of both parties, the deal failed.

The Chair: I did not realize that academics had the same degree of cynicism that we, on Parliament Hill, have about the national media.

Mr. Marceau: I am simply stating what is in the media and what is accessible to everyone. Thank you for that comment.

Clearly, Canada lacks a coherent national framework for leveraging its various energy resources into greater wealth, greater quality of life and greater environmental friendliness. Additionally, electric power systems have multiple challenges, from long-term generation planning in a weakened economy to a looming crisis in the supply of electric power engineering professionals. Despite this bleak outlook, opportunity knocks. The International Energy Agency, IEA, has estimated that Canada's electricity sector will require U.S. $190 billion in new investment between now and 2030.

With the current economic downturn, this would be the appropriate time to make energy infrastructure investments that would result in long-term economic, social and environmental benefits. Canada has a rare opportunity to build a better grid, stimulate manufacturing in advanced electric utility technologies, significantly reduce its greenhouse gas footprint and strengthen its economy. Clearly, this is an important time to examine the Canadian electrical industry and its relation to Canada's energy future.

Let us have a closer look at the five drivers that, in our view, are shaping the future of the electricity industry: climate change; aging infrastructure and the limitations of our current design; demand-side optimization; jurisdictional complexity; and the need for a new generation of people.

Let us first consider climate change. Climate change is no longer a working hypothesis. It is an accepted fact by academia, industry and government alike. Primarily because of its oil sands industry, Canada has an image as a producer of "dirty oil" and as a laggard in greenhouse gas reduction. The truth is that Canada's release of greenhouse gas from electricity generation is 34 megatonnes per exajoule thanks to its significant investment in hydro electric and nuclear generating plants. The comparative figure for the U.S. is 162 megatonnes — five times higher. Even so, the need to continue to reduce both pollution and GHG production remains a national objective. This has led governments to provide incentives for more renewables-based generation, such as solar, wind, biomass and small hydro. There are down sides to this.

Incentives tend to be expensive, providing upward pressures on electricity rates. Additionally, renewables such as solar and wind produce electricity when they can do so and not necessarily on demand, which translates into higher structural costs. To increase the attractiveness of renewables-based generation investments, markets beyond any one province must be easily accessible so that power can be sold whenever it is produced, at whatever time of the day or night. This also favours the increased use of renewables-based generation nationally.

Why do we not do this today? The answer is embedded within our second driver: aging infrastructure and the limitations of our current design.

From a generation perspective, the good news is that 73 per cent of the electricity that Canada produces is from low- GHG-emitting capacity, mainly hydro and nuclear. Two thirds of the remainder is over 30 years old, providing opportunities for their replacement with lower-GHG-emitting technology, such as hydro, nuclear, solar, wind, biomass and even fossil fuel plants equipped with CO2 capture and storage. Even so, the need to maintain and renew our fleet of existing low-GHG-generating plants represents significant additional economic opportunity. From a transmission perspective, opportunities to distribute electricity from regions with excess supply or abundant low-GHG-energy resources to those with high demand are limited. There are many reasons for this.

First, Canada has more electrical connections with the U.S. than it has among the provinces — 34, compared to 31. Furthermore, interprovincial connections tend to have modest transfer capabilities, whereas many of the connections to the U.S. have a capacity equivalent to the output of major hydro or nuclear plants. Financially, current designs have self-inflicted limitations, imposed more than a century ago, when three-phase transmission systems were less understood than they are today.

As a result of these technical constraints and others more jurisdictional in nature — which I will address later — Canada's electricity networks have been optimized provincially, not nationally. However, since the current electrical system was put in place, technology has advanced, so has our understanding of electric power systems. The foundation for optimizing power systems nationally is now available, from extra- and ultra-high voltage, AC and DC transmission and interconnection technologies, including a variety of energy storage technologies, which our report examines in detail.

This leads us to a significant opportunity. If Canadian electric power delivery was optimized nationally thanks to greater connectivity, as is the case of some gas and oil pipeline networks, would this not open the door to more effective generation planning and to optimizing costs, reliability, security, return on investment and carbon footprint? If this was the case, how would we go about it?

The United States Department of Energy's National Electric Delivery Technologies Roadmap points to the possibility that "a national backbone develops along a predominantly evolutionary or revolutionary path."

Our task force felt that, in Canada, an evolutionary approach was more sensible, and this could be captured through two basic scenarios. Scenario one corresponds to increasing the number and capacity of interconnections between provincial networks and simultaneously strengthening the Canadian provincial grids, thereby enabling the passage of greater blocks of power, both east-west and north-south to the U.S.

Scenario two corresponds to enhancing scenario one with expanded interconnections to an anticipated U.S. east- west electrical grid to provide an intercontinental electrical network. As we have seen, however, the push has traditionally been to optimize locally.

This leads us to the third driver: demand-side optimization and the smart-grid concept. The lack of optimization on a national scale ultimately impacts costs and carbon footprint. The smart-grid concept is the logical answer if the only alternative is to optimize the network municipally or provincially. To this end, the smart grid aims to accomplish three things: first, to establish an interactive relationship with the consumer, with two-way flows of energy and information; second, to improve real-time monitoring of grid conditions and implement more rapid diagnosis of problems and solutions; and, third, to avoid cascading failures when outages occur.

All of this is important. However, is more intelligence the only answer? The trend to alternative fuels in vehicles and public transportation, especially hydrogen and electricity, will challenge our existing supply and transmission infrastructure. New ideas such as leveraging hybrid- and electric-vehicle battery storage for better load management may help.

However, if electric energy consumption continues to rise, grid capacity will also need to be increased. The smart grid helps the local grid do more, but a smart grid can do no more than its basic design will let it do. A two-wheel drive vehicle cannot imitate all-wheel drive, no matter how "smart" it is.

Why have we not done more to optimize our electrical networks on a national basis?

This leads us to the fourth driver: the jurisdictional barriers to optimizing electricity supply. The operation of every provincial or regional power system has the same goals: reliable and secure power supply; consistency with North American transmission standards; expanded use of low-GHG-emission technologies; and the lowest possible cost.

In Canada, electric power systems are the responsibility of provincial governments, with an increasing number of players in both generation and transmission, and more participation by the private sector. Companies and regional ratepayers, because of their fiduciary responsibilities, will also focus on relatively short-term needs.

This complexity creates a growing need for a national framework that would help with the evolution of our electricity industry into something more than the sum of disjointed local parts. This requires enlightened public-policy agreement across the country and leadership.

To get there, we need more people who understand power systems, with broad knowledge of Canada's energy industry and a more than casual familiarity of Canada's economy. In other words, we need power-systems people capable of exercising leadership — the last, but not the least, of the five drivers.

For two decades, we have seen a steady decrease in the enrolment of students in the electric power engineering area across Canada. Combined with the expected retirement of instructors and practitioners active in this field, this represents a major concern about Canada's ability to undertake ambitious new electric power projects. Over the next 10 years, a well-documented emerging crisis in the availability of electric power engineering professionals will occur.

The industry must not only gear up to educate a large number of professionals who will keep the lights on and contribute to the advent of the electric car, but a new generation of power-system thinkers, doers and leaders who will inject renewed vision and dynamism to the industry nationally, as another generation achieved a century ago, one province at a time.

In conclusion, need we remind ourselves that electric power systems are the rivers of our civilization? To optimize the management of the smaller tributaries is helpful, but to ignore the grid's greater capacity to do more with an appropriate systems approach is wasteful and contrary to the engineer's ethic.

With electricity taking on a larger role in Canada's energy system, especially its ability to contribute to reducing Canada's GHG footprint, we believe that it is time for Canada to rethink electric power delivery as a national infrastructure priority.

A key concept considered by our task force was the value of building infrastructure not only for immediate short- term needs but also for preparing for game-changing future needs. A Toronto example began circa 1910, when architect Edmund Burke and engineer Thomas Taylor designed the Bloor Street-Danforth Avenue viaduct to span the Don Valley. They anticipated that, before the close of the century, Toronto would build a subway system requiring a Don Valley crossing, so they designed and built the bridge with a lower deck to accommodate subway trains. The decks for a future subway added but a modest increase to the construction cost. When the first trains on the Bloor-Danforth line crossed the Don Valley in 1954, over 40 years later, this was a reminder of our forefathers' foresight.

In considering this example, some will take the position that engineers do not understand economics, preferring to point out that money spent on even a modest increase in cost was unwisely spent, and that the money in 1910 would have been better spent elsewhere. To this, I would simply answer that the business of nation building requires a systems approach, taking both context and time into account, and that economics is an important tool, but not the only one.

As a result, our task force makes two recommendations, both of them to the federal government: first, as an immediate infrastructure project, that it fund new electrical grid interconnections between two or more provinces on a cost-shared basis with provinces and possibly the private sector. The basic idea is for the federal government to provide foresight on each and every individual interconnection, similar to that of the Bloor-Danforth viaduct and project. The second recommendation to the federal government is, as a long-term plan, to prepare a technology and business framework for the electrical industry investments needed over the next 25 years to capture both wealth generation and significant GHG reduction opportunities, since these investments will have to be made anyway.

The task force strongly feels that energy may be Canada's last chance to achieve a sustainable competitive advantage in today's world economy, something we have succeeded in building in few other sectors.

The Chair: Thank you, Mr. Marceau. That was a wonderful presentation and so relevant to what we are grappling with.

Mr. Ball, you mentioned that you have a list of other things that are in the pipeline. To get them on the record in sequence, could you outline them now? Then we will go to our questioning.

Mr. Ball: You have been handed various documents. One was the original energy pathways report from 2007, which Mr. Marceau referenced, and the technology projects that came out of that. We have also given you the latest power- grid report. We have given Marc LeBlanc the analysis. That is volume 2 of that report, and it is 170-odd pages. We have given him that. It is the background and analysis.

On May 18, we are holding another energy pathways workshop. This will be the third. We held the first in Calgary in 2007, just after the release of the original pathways report, and that looked at the three technology projects. At that time, then Minister of Natural Resources Gary Lunn attended and also made announcements on carbon sequestration projects in Alberta and so forth.

We held the second workshop in Sarnia in 2008, and that was looking at bio-conversion processes and demonstrations. In 2009, Canada hosted the CAETS convocation. Every two years, the international group holds a convocation around the world. That was the first one hosted in Canada. The theme of that three-day conference was "Our Heritage of Natural Resources — Management and Sustainability." All of the papers and presentations of that are available on our website.

Out of the CAETS convocations, the body issued a four-page statement. You have copies of that statement. I will point out that it is a world statement, not just a Canadian statement, so all of the 26 nations have to basically agree to the wording in that.

I mentioned the release of the power-grid task force report earlier in April. Coming up, on May 18, we have this other pathways workshop, which is co-sponsored by us and Research Park, University of Western Ontario in Sarnia.

The Chair: That is less than two weeks away. Did you say May 18?

Mr. Ball: Yes; the title of the workshop is "Canada — A Sustainable Energy Superpower: The Vision and the Progress." Coming out of that will be a report, which will be released at the workshop and will be available on the academy's website. It looks at the progress toward the goals of the first report. A group went across the country interviewing all sorts of people involved in various types of work in energy and climate change research and reported where we are at this current time.

The Chair: Do we have documentation on that May 18 conference as well?

Mr. Ball: Yes, you do. Also, if you wish, you are invited to attend. There is no registration fee. You would have to get yourself to Sarnia, but there is no registration fee. It is available on the website, and I have given Ms. Gordon information on that.

After that, we are holding our own annual general meeting in Toronto, and part of that is a symposium. The theme this year is "Low Emission Electricity Generation, Distribution, and Use in Transportation." We have information on that for you — who the speakers are and so forth. You are also invited to that, if you wish to attend.

The Chair: When is that taking place?

Mr. Ball: That is June 4, in Toronto.

I mentioned earlier about CAETS and the involvement of Mr. Evans, who appeared before you previously. CAETS, through work done in Calgary, led by the Australian academy and funded through the Australian government, are conducting the Evaluation of Strategies to Deploy Low Emissions Technologies for Electric Power Generation in Response to Climate Change. Seven nations are involved in that project, including us, Australia, the U.K., Germany, South Africa, India and Japan. That report will be made available at the CAETS annual meeting in Copenhagen on June 30. I have the background of that information, but as soon as it is released, it will be made available on the website as well.

The Chair: You referred to the acronym of the International Council of Academies of Engineering and Technological Sciences, Inc., CAETS. What is that?

Mr. Ball: CAETS is an international body, and 26 nations participate in that group at this time.

The Chair: Are those your points?

Mr. Ball: Yes. If you wish to see the nations, they are all on the back of this supplement.

The Chair: I see them there. Before we go into the questions, I have a couple points of clarification.

First, you indicated firmly at the end of your presentation that you have two concrete recommendations for the federal government. I am sure you are not making them here formally to us as the government because we are only one of the elements of the structure up here. Can we assume you are making these presentations with these recommendations to the Natural Resources Canada, NRCan, and the environment people?

Mr. Ball: Yes.

The Chair: We have had both Minister Paradis and Minister Prentice here. We are satisfied that they are engaged in the process, but we need to know that they are getting this material.

Mr. Ball: To give you some background, when we released the first energy pathways report in 2007, we made it available to all the ministers involved and the deputy ministers. We made presentations to various Members of Parliament and so on. We are planning to do the same sort of thing with the Canada Power Grid Task Force as well.

The Chair: Yes. It is important to have the focus, Minister Paradis from the energy point of view and Minister Prentice. The topics you mentioned are so intertwined, for example, the clean energy dialogue and the joint dialogue with our friends to the south and the government's declared policy of trying to become a clean energy superpower, which leads me to my next clarification.

You have indicated the title of this May 18 symposium refers to Canada becoming a sustainable energy superpower, which is basically the same thing, is it not? All these terms are being used with the same sense, "clean energy" and "sustainable" and "renewable." Do you feel that Canada can become a clean-energy superpower, or are they pumping at windmills, or are they already one?

Mr. Ball: Let me put it this way: Picking up something the Prime Minister said a while ago about Canada being an energy superpower. We have discussed this and made presentations and enlisted various experts from our academy and elsewhere to look at this. The idea of this workshop in Sarnia is to discuss the progress that has been made in Canada on this matter, and then discuss if this vision is viable. We are not stating that it is, rather we are bringing together many people to discuss the pros and cons, the barriers and the opportunities. That is the focus of the workshop in Sarnia.

The Chair: Senator Frum, you might be a bust senator if I look for volunteers to go to that workshop, it will be in your bailiwick.

Last week, there was a breakthrough when the State of Vermont legislated that hydroelectricity and power generation is clean and renewable. Still, many states in the U.S. do not consider Canada's hydroelectric power to be renewable. We find it curious here, but, again, it is part of our learning curve. Could you explain why it is that they do not consider it renewable?

Mr. Marceau: I would say it is a question of education. The roots of this problem are probably due to the great tensions between the Aboriginal and First Nations people and the great projects of the 1970s. Since the 1960s and 1970s, as we were struggling in the first wave of environmentalism and the founding of the great advocacy associations that are now worldwide, such as Greenpeace, we have had a period of growing pains and adjustment. These organizations are becoming more sophisticated and more fact-based.

Powerful and emotional trends are involved in these issues. However, we are dealing more and more with organizations that are becoming far more educated, making decisions on actions and positions that are fact-based as opposed to emotion-based. We are moving away from the roots of these organizations and from tensions that are decades old, perhaps centuries old, to a more fact-based environment. I think that is where we are.

The Chair: Are you saying that the power or electricity is itself renewable, but it is the dams and the alleged damage and upheaval they cause to the habitat and the ecological environment where these projects are established that is the reasoning?

Mr. Marceau: Yes. There are modifications to geography in some cases. In every case, when you build something, you are modifying geography. It can be a very local thing, such as digging a hole or putting in a foundation, or it can be a massive change in the flows of water. Many people forget that when we built the St. Lawrence Seaway, many people in Southern Ontario were moved as a result of the construction of our electricity capacity along Lake Ontario and elsewhere. Changes are made to geography whenever you build something.

Senator Massicotte: Some are worse than others. It is not always the same.

Mr. Marceau: Yes. Some impacts are greater, and some are lesser. I am not an expert on the environment, and I would not want to pretend that I am. As an engineer, I would simply say that our projects try to be as respectful of the environment as possible. However, the most emotionally charged parts of any project are those involving people. If you need to move people around, that is emotionally charged. If you are putting water in places where there were cemeteries or traditional hunting grounds or sacred grounds of First Nations people, this can be particularly upsetting. If we ignore these facts today, we ignore them to our detriment.

The Chair: Thank you. You have stimulated a great deal of interest. The first questioner will be the deputy chair, Senator Mitchell.

Senator Mitchell: This has been a very interesting presentation. We have not had anyone focus on the power grid east-west and north-south in the detail that you have. It is an important piece of the puzzle that we are working on, so I thank you.

I ask this question of everyone, although it may be beyond the scope of your interest or focus. It is generally conceded that we need to price carbon, and there are two ways to do that, cap and trade, and carbon tax. If you had to make a choice, which one would you choose?

Mr. Marceau: This is a very interesting question. I have an opinion on it, and it has to do with neither of your positions.

I believe that carbon is not a waste product. I believe carbon can be the most important feedstock of a value-based industry that is now beginning to emerge. If it is the feedstock of a value-based industry and it will be worth a large amount of money in the future, why do you need to tax it in the way we are proposing? This table is sequestered carbon. It did not come out of the ground. It came out of the air through a biological process called photosynthesis. We are all sequestered carbon, each one of us.

What is carbon? Carbon is the most valuable resource on Earth. We have only to look around this table to see what it can do. To say that CO2 is a waste is truly a misnomer because it is one of the most valuable products on Earth. All life on Earth, whether it is plant or ultimately animal, captures carbon from the atmosphere. The key here is not to send carbon in the atmosphere. Having too much carbon in the atmosphere is creating many problems, and we all acknowledge that, whether we are academics, government, engineers, scientists or environmentalists. We all agree on that. The issue has to do with how we will deal with this and get it out of the atmosphere faster than we are putting it in and how we can transform this feedstock into value-added products.

A good example of this is what is happening at St. Marys Cement Group in St. Marys, Ontario. You may know already that for every tonne of concrete, one emits a tonne of CO2 in concrete plants. This particular concrete plant in St. Marys, Ontario, has gone beyond the point of creating a prototype; it is now in the process of producing biodiesel. It does so by capturing its CO2 emissions and using the waste heat of the plant to drive an algae-based process that captures the CO2 in the air and transforms it into a solid, which can be transformed into biodiesel. That is the way of the future. There is no need to sequester it in the ground for hundreds of years. It is so valuable that we can transform it into many different products.

Many people see a two-by-four plank of wood as a two-by-four plank of wood. Today, we have built leading-edge airplanes out of carbon fibre. Wood is naturally occurring carbon fibre, bound together with natural resins. Today, we take carbon out of the ground, tread fibres with it, put that in a matrix and call that carbon fibre.

We are really talking about reproducing wood, stronger, better, lighter and in a different way. People are working on processes that can create carbon fibre with the same characteristics we use to build airplanes but through photosynthesis- based processes.

If this is to be such a valuable commodity in the near future, why would you want to tax it in the proposed way?

Senator Mitchell: I am not saying that I want to tax it. However, we need to give people the incentive to do all the things you are suggesting because they have not done that yet in sufficient volume to make a difference. You need some type of incentive, although what you are saying is very interesting.

What was the name of the firm that was using the algae process? Can it be done in commercial-sized volumes?

Mr. Marceau: They are presently doing it in a commercial-sized facility in St. Marys, Ontario. It is called St. Marys Cement.

Senator Massicotte: I am trying to understand where you are coming from. How do we take this pollution and make airplanes from it? If you will not price it, why make any effort; why not just let it go into the air? How do you convert that dirty air in to airplanes?

Mr. Marceau: That is a very good point. I will ask you to bear with me.

Let us briefly talk about energy and energy resources. Are energy resources, such as petroleum, energy? The answer is no. Petroleum is not energy, nor is a waterfall, wind, natural gas, wood or coal. It is a feedstock into a technology that transforms that into a usable form that happens to be, in some cases, energy. It is technology that enables us to access what it is that we are trying to get out of natural resources.

The bridge to being able to use that resource is technology. You can mine it, pump it out of the ground and harness it in a waterfall, but the key is to discover the most cost-effective technology that will take that raw resource and transform it into a usable form for us. The key to energy and to our energy future is technology.

Senator Massicotte: How do you get there? Do we do it the old Soviet Union way, where the government tries to spend all their money on their own? In Canada, we have a market economy, and we find incentives and mechanisms to get there. How do we get there?

Mr. Marceau: You need to provide incentives for people to develop the technologies that will transform CO2 into value-added products.

Senator Massicotte: Who will provide those incentives?

Mr. Marceau: They would be government-based tax incentives for research and development.

Senator Massicotte: You think taxpayers will fund this? Why not the market?

Mr. Marceau: The market is working on this. Some people see that CO2 is so cheap, and it is an opportunity. People are working on these technologies. President Obama last year was talking about using nanotechnology to convert CO2 into usable forms.

People are working on these, but, just as any good businessperson, they do not want too many people to know that this is a good thing until they have their process up and running. With today's CO2, people are ready to pay you to take your CO2. If someone can get money to take CO2 off someone's hands and use that as a feedstock for a value-added process that creates a very important product, people will use that in their business model. Even if it is for free, it is good; you do not have to buy it to use it.

Senator Mitchell: It comes down to economics. One of the things I like about what you are saying is that you have to invest the money sometimes, and maybe you cannot actually foresee what the return will be in this case. However, it is so obvious in one sense that we have to do it, and we will get a lot back. That was your point about the east-west versus the north-south grid.

Generally speaking, we have been told — or I certainly have the impression — that the east-west grid is seen to be inordinately expensive, and we should just keep going north-south. Could you clarify your thinking? Does it open up opportunities for the development of renewable and other energies because you could also put in feeds for smaller farm-type wind efforts? Is it security? Is it saying that some provinces say that they will close down their coal plants and will not produce electricity that way but will buy it from Quebec or elsewhere?

Mr. Marceau: You are asking me to explain in five minutes what some people need hours to talk about. I will give you a brief elevator speech on this.

The Rocky Mountains, in terms of electricity, are not where they are, geographically. They are between Ontario and Manitoba. There is a great divide in Canada's electricity system between Ontario and Manitoba; that is where the "electrical Rocky Mountains" are because there is such a huge distance between the Manitoba system and the Ontario system.

When you look at the Ontario system and everything east of the Ontario system, it is connected. It is generally interconnected, if feebly, but it is. If you look at Manitoba going west, there are interconnections between Manitoba all the way to B.C. They are not very high-capacity interconnections, but they are there.

The two big pieces are the east system and the west system. These two systems are actually feebly interconnected through the U.S. It is the same as saying that we have a four-lane highway from Ontario all the way to Halifax and another four-lane highway between Manitoba and British Columbia, but we have country roads between Ontario and Manitoba. We do not have a four-lane highway on both sides; I am just trying to give you a metaphor here so that we understand the capacity issue.

That is one big issue. Everyone will tell you that it is an economic issue.

When you look at the economics for a power project today, where you will transmit power and bring clean hydro power from Manitoba to Ontario, it is true that you can probably get a cheaper alternative through some other means, whether it is some interconnection with the U.S., a gas-driven plant that is supposed to be better than a coal plant, and so on.

The real question is if the economics for one transmission line between Ontario and Manitoba are not good, is it the same as saying that there is no reason to have a four-lane highway between Ontario and Manitoba. From a nation- building perspective, once you have that four-lane highway, do you think people will use it and find new ways to leverage it to Canada's economic benefit? It is the same theory for transmission lines. Therefore, it makes sense to evaluate that transmission line from a strictly economic basis. However, to evaluate it from a nation-building perspective makes better sense.

Senator Mitchell: Yes.

Mr. Marceau: You can look at all of those interconnections individually from the same perspective. That is what our work in the task force tried to do. We grappled with the idea of economics versus the higher interest of Canada. It is difficult, but, on a one-to-one basis, you look at each interconnection and make a good argument economically for each one. You know how much capacity you will build, how much power you will transfer and how far out your return on investment will be.

However, let me point out the following: When you build an interconnection to transfer 100 per cent of what you want to transfer, it will cost you 100 per cent to build. If you want to add 50 per cent more capacity, will it cost you 50 per cent more to build? The answer is that it might cost you 10 per cent more to build 50 per cent of additional capacity. However, if economically it is not a good investment for the power utility locally, it might be a good investment for the federal government to do nationally. That is what we are saying.

[Translation]

Senator Massicotte: I think the market will decide in a logical way which is the best solution for all players. However, I agree the federal government has a role to play to make sure there is some coordination and that jurisdictional issues do not prevent you from making the right decision.

In your reports, you often suggest a federal intervention — I agree — but especially on the financial side. You say that economics is not always the only criteria, but very often, provincial governments will act according to their own interests, in a logical way. All these things cost a lot of taxpayer money — large amounts of money from the federal government —, but only for coordination purposes. I presume we are talking about subsidies. Is it what you recommend?

Mr. Marceau: These investments are good for the higher interest of Canada. I agree with you on the economics. I am also a free market believer. I believe that market forces are the basis of our prosperity. I agree with you on that.

As the representative of our working group, I would like to say that, from time to time, the idea is to stimulate here and there. The idea is not to be the source of funds to carry out projects. If two public utilities decide to carry out a project because it is in the interest of two provinces, an interconnection project for example, it might be in the national interest to do a little more because it would curtail GHG emissions.

The problem with renewable energy sources like sun and wind is they generate power only when there is sun or wind, but not whenever you need it. When you need it, these sources don't generate power. On the economics side of it, it costs more money. In fact, incentives granted for sun or wind projects are paid by the provinces and ultimately by taxpayers. These projects would be less expensive if we could sell this type of energy anytime, night and day.

If you decide to ease access to this kind of renewable energy throughout Canada, where you need it and where you have the capacity to generate it, on a national level, then you reduce your carbon footprint because you reduce simultaneously local power grids dependence on local energy. In other words, it's optimization at the local level versus optimization on a larger scale.

If you decide to optimize in Ontario, for example, you have to build excess capacity in Ontario in order to meet all possible needs. However, if you do not need to optimize locally, or to depend on a larger system, you need to build excess capacity locally in order to meet all possible needs, including peak periods.

Senator Massicotte: In one of your reports, you talk about "fusion research". There is presently a debate in Canada over the potential sale of CANDU reactors by the Canadian government. On average, we have invested about $200 million each year for the last few years. Several experts have said that with $200 million per year, you go nowhere. That we should either invest one billion dollars every year or sell the reactors. I think the government is seriously thinking about selling. However, in one of your reports, you strongly recommend we keep some research capacity in Canada, not to lose the knowledge and the technology.

Do you agree with the potential sale of this sector of our research? Or do you think we should keep it in Canada, even though it costs the government $200 million each year?

Mr. Marceau: As you may know, Bill Gates wrote two weeks ago in the Washington Post that the United States should look at a nuclear technology based on unenriched uranium. You could say it means the CANDU reactor. I think there is a future for unenriched uranium reactors. Enriched uranium can be used for nuclear weapons, but it is much more difficult to transform unenriched uranium into dangerous products which are harmful to humans.

Concerning the sale by the unit which sells reactors, I do not have any problems with that. It might be a good thing. An organization which is familiar with the sale of reactors would probably do better than a governmental organization.

This being said, there is one thing which the media do not talk about — and I don't know whether you talk about it around this table —, the CANDU technology keeps evolving. You can decide to make it evolve fast or slowly, but in both cases, it has to be at a constant pace if you want to maintain your competitiveness internationally. That means you need to maintain some research capacity to deal with minor problems, especially those related to the materials used in the present CANDU technology.

To that end, you must maintain the capacity to do research in Chalk River, to support the sale of CANDU reactors on international markets. This is the key. All companies that sell nuclear reactors internationally have a direct or indirect support of their governments.

Does the sale of a French reactor pay for the research done in France? No. Does the sale of a US reactor pay for the research done in the US? No. For the CANDU reactor to be competitive internationally, you need to look at a number of factors related to research. I am not saying the national government should pay for everything. The CANDU Owners Group already pays huge costs, $50 to $100 million per year, to maintain research in Chalk River.

The key is to maintain enough research capacity to support technology. Besides that, I cannot tell you more because I am not familiar with the costs involved. But if you want the product to be present on the international markets, you need to maintain some research capacity.

[English]

Senator Lang: I would like to turn our attention to money. In your opening remarks, you referred to an estimate made by an international body, I believe, of $190 billion that we would have to invest in our energy requirements for the next 10 years. That is $20 billion a year.

From where did they get this figure? Does it take into account all the money that will be required not only add to our system but also to upgrade the infrastructure that would need to be done?

Mr. Marceau: The World Energy Council came up with this figure by looking at their strategic plans for the next few years and looking at their capital investment intentions based on their strategic plans. I believe that is how they came up with that figure.

Senator Lang: Does this figure take into account this east-west grid that you are proposing?

Mr. Marceau: It does not take into account the creation of an east-west grid. I am not saying that we are creating an east-west grid. I would prefer to say that we are reinforcing what is there and strengthening interconnections between the different provinces.

This figure came simply by looking at population growth over the next 20 years; looking at the strategic plans of different utilities in Canada; looking at how they will respond to those needs; and looking at existing trends in how aging infrastructure is being maintained and replaced. It is a fairly high-level number, and it has many assumptions behind it.

One could argue that it is a reasonable number because if we look at simply building one major generation project, typically, we are looking at $5 billion to $10 billion for a fairly moderately sized generation project. By "moderately sized," we are looking at 2 gigawatts, for example. The $190-billion figure is easy to come up with, in my mind.

Senator Lang: Has anyone done an estimate of the costs of your proposal for the expansion of the east-west grid?

Mr. Marceau: I think Mr. Ball is aware of some of these studies.

Mr. Ball: You referred to the report of the International Energy Agency, IEA. We gave Marc LeBlanc volume 2 of the power grid task force, which is the background and analysis of what has gone into that study. You will find references for where some of these costs and reports originated.

Mr. Marceau: We have not tried to cost the construction of a grid because there are too many factors. We simply did not have the resources to do so. If one was to create a new corridor from one end of the country to the other, it would be an expensive proposition. We are not looking at that. We are simply looking at how we can take the existing system and, through natural evolution of that system, interconnect the pieces and then strengthen the backbones of the provincial grids so that they can increase the flow of renewables energy from one grid to the other. That is the underlying idea behind this study. We did not have the resources to cost it, however.

Some federal government studies have looked at that in the past 20 years. They are referred to in our detailed report. However, we did not study them in detail because we were not looking at a paradigm shift of what is done today. We were looking at how we can take what we have step by step to the next level.

Senator Lang: I wish to refer to our process here. It has been an interesting learning experience for us all to see organizations such as yours doing the work that you are doing and coming before us. However, we are looking at how to tie all this together. At the end of the day, choices will have to be made or should be made.

I have looked at your two reports but have not had a great deal of time to study them in detail. However, I do not see, for example, the energy corporations involved directly in these reports, except for one or two from the provinces. Maybe I missed them; but they should be involved in this because it is very in depth and technical. Those organizations, which I am sure Senator Neufeld can speak to, are responsible for it. They have the background and could contribute so much more to what you have done because there is good work here. Could you comment on the process and where you see it going? When do we come to D-Day when choices must be made?

Mr. Marceau: Perhaps I can comment on how the report came into being. That will give you some enlightenment on the scope of the report and what needs to be done beyond that scope.

We are an organization of very senior, capable people who have been recognized for their achievements throughout their lifetime. We identify key topics that we believe our membership ought to sit down and think about. Thanks to the contacts of our membership, we get a small amount of support for office staff, project managers, and so on.

The document that you have in front of you cost $100,000. We raised that money through our members, contacts and different energy-based corporations throughout Canada who felt that this was a worthy project to undertake. Our members, under my oversight and that of the co-chair, Dr. Clem Bowman, basically worked together to scope out the project and identify how we would approach this whole project and the guiding principle behind the project.

The guiding principle was whether there is a way to leverage electricity to drive down Canada's carbon footprint. That is basically the question that we were trying to answer, whether it is yes or no.

Our report comes back and says that, yes, we believe that we can drive down Canada's footprint by having a systems approach to the design of the electrical system in Canada. We tapped into our member's expertise to do so. Our members went into the literature. We scanned the literature and identified what was out there. We saw that other people had been looking at this. Many people in Canada have looked at this idea over the past 20 years from both a utility and an economic perspective. That was not our perspective. Our perspective was whether or not electricity can be leveraged to drive down Canada's carbon footprint. We are looking at this whole idea through a different window than that used in the past.

If one is to look at interconnecting Canada's provinces and the Northwest Territories through one single system, it is a very expensive proposition if we do it all at once and use a modern design to do it. That would be a revolutionary approach. We asked what we can do step by step. What would be a normal evolutionary approach that would be to the benefit of the provinces from their electricity-system perspective, keeping in mind this higher national prerogative of trying to drive down the greenhouse gas footprint in Canada? That is the question that we have tried to answer.

I know I am not answering your question directly.

The Chair: You are doing so incrementally.

Mr. Marceau: To address the substance of your question, we know that different utilities are considering at least 15 or 20 interconnection projects presently on the books right now. If they go forward, it is because they can make an economic case for these interconnections. We are saying that if someone is to make a case for another interconnection between Alberta and British Columbia or Alberta and Saskatchewan or Saskatchewan and Manitoba, and so on, if they go ahead with this interconnection, would it not be a good idea to give those interconnections, every one of these projects, the opportunity to build headroom above and beyond the economic case that is made for that project and to build that nation-building capacity to flow renewables in the near future as we build our renewables capacity? That is what we were looking at.

Senator Frum: Thank you for an extremely educational presentation. I want to ask you not about this presentation but about an answer that you gave in response to Senator Mitchell on this intriguing idea about CO2 capture and conversion. My question is partly triggered by a book review that I read in the The Globe and Mail yesterday about a book entitled Black Bonanza: Canada's Oil Sands and the Race to Secure North America's Energy Future by Alastair Sweeny. I do not know if you are familiar with this book.

Mr. Marceau: I have not read it yet, unfortunately.

Senator Frum: He makes the point that there are 1 trillion barrels of recoverable oil in the oil sands in Alberta and 2 trillion barrels in reserve. You talked about this energy grid as being not so much in our economic interest but in our higher interest. We are talking about carbon footprint and carbon reduction. That is our goal here. Does the CAE have a position on the potential for greening the oil patch, and why did you choose not to make that the focus of your study?

Mr. Marceau: The oil patch was not the focus of this particular study, but it can be greened. However, there are just a few obstacles.

One of the key steps of the process of extracting oil from the oil sands is the hydrogenation of the tar that we are able to extract to make it flow. Today, we use natural gas and employ a process called steam methane reforming to separate the hydrogen from the carbon in natural gas so that we can take the hydrogen, hydrogenate the tar and make it more amenable to flowing in a pipeline. This is an onerous process from the perspective of the carbon footprint because it is arguably the most carbon-intensive process in Canada and arguably the one that is most responsible for contributing to Canada's carbon footprint in a substantial way. Some people say that we are burning gold to make silver. There is some truth to that.

However, is there a better way to do this? How can we produce hydrogen differently so that we can leverage the oil patch in a better way than it is now? That is the real question. The answer is that if we can produce hydrogen sustainably without taking it from a carbon source but taking it from water, we would have solved the problem. Ideally, hydrogen would have to come from a process that would use water, that would recycle catalysts and that would use waste heat, so that basically you are able to produce hydrogen in a sustainable way, in a way that we would want to produce it in the 21st century. People are working on such projects today.

One of the leading research teams in all of North America in the sustainable production of hydrogen is at the University of Ontario Institute of Technology. We hope to demonstrate a thermal chemical process whereby waste heat is brought to a higher temperature through heat pumps. Thanks to this, you heat the water to 500 degrees Celsius, add catalysts and separate the water into oxygen and hydrogen. You take the catalyst and recycle it and use it over again. Basically, your feedstock is water. The problem with any process presently at Fort McMurray is that water is at a premium because so much of it is used to get the oil out of the ground in the first place. Some research needs to happen to reduce the amount of water that will be needed from the Athabasca River.

If the processes that we are talking about today can be implemented within the next five to 10 years, this begins not to chip away but to hack away at how much carbon we are producing simply to leverage the oil sands. The oil sands is a wonderful resource. It takes technology to unlock that tremendous capacity that we have to produce a value-added product. If we have technology that is sustainable as opposed to unsustainable, we really will become a sustainable- energy superpower.

To answer Senator Angus' question, the academy definitely believes — and this is a scoop on the workshop that will take place on May 18 — that Canada has the natural resources and the people with the technological knowledge to create those technologies that are sustainable and that will help us leverage Canada's natural resources into great wealth, value-added products and a sustainable climate and environment.

There is no question in the academy's mind that this is possible. However, the key is to stimulate people who are developing the technologies that will help make that happen; whether technologies that will take carbon in gaseous form and transform it into value-added products or those that will take water and sustainably transform it into hydrogen to leverage the oil sands resource.

Senator Frum: You have made choices in allocation of money and resources. You say that it is a five- to 10-year window to get a breakthrough on this. This is funding research. Is that not potentially the most cost-effective solution?

Mr. Marceau: Yes. The difficulty in Canada is that, between the research establishment and the national priorities, there is not always a good connection between what might be a very high national priority from the perspective of what the government is trying to do today and what the tri-councils are trying to do to fund research in universities and elsewhere.

A time lag exists between the two. The priorities end up being there in the research fund allocation and grant criteria, but with a bit of a time lag. If we could reduce that time lag between when you establish national priorities and when the research councils can actually connect those priorities and fund these as national priority research areas, then we could accelerate that.

Senator Peterson: Thank you, gentlemen, for your presentation. One of your task force recommendations is greenhouse gas reduction through carbon dioxide capture. I was wondering if you are familiar with the International Test Centre for CO2 Capture, ITC, at the University of Regina and where they are at in their development.

Mr. Marceau: I only have anecdotal knowledge of where they are in their development. I understand they have made considerable progress.

Senator Peterson: I think they have, indeed, made considerable progress because it is my understanding that they are five years ahead of anyone else in the world, yet no one knows anything about it. When it comes to putting out money, they receive none. It befuddles me.

Together with the other discussions we have had today, it demonstrates our desperate need for a national energy policy so that we know where we are going and everyone tries to get on the same page. I think that will be driven largely by technology, which is where the solutions will come from.

The information I am receiving is that we are failing our students and young people badly in access to post- secondary education. In view of all these new developments taking place and Canada trying to be an international superpower, why are the universities not promoting this better?

Mr. Marceau: Your point about the University of Regina's CO2 sequestration research centre is a very good point. This attests to the delays in translating national priorities from the federal government into priorities for research grants through the tri-councils and other programs. I think you simply reinforced that point, and I thank you for that.

Your difficult question relates to post-secondary education and access. I am looking at it systemically again. I will answer your question from a perspective that you probably will not hear at this table often. You probably hear the university view. I will take the perspective of Canada's youth, before age 17 or 18.

I do not know if you know, but in Canada's universities today, two students out of three are female and one is male. When you attend convocation at any of Canada's universities, you get a long line of females and an occasional male getting their diploma. We are losing our boys before they hit 17 or 18 years of age.

This is across the board at Canada's universities. This is happening in just about every province.

The Chair: You made a very important point in your opening comments about the diminishing availability of people with the technical engineering skills that are needed to do what has to be done. Are you on that point now? Is this is the reason behind that? I was about to ask why.

Mr. Marceau: That is one of the reasons. Other reasons are driving this issue even more.

The Chair: I do not want to interfere with your answer.

Mr. Marceau: This is one of the key drivers of many of the issues in Canada around technology and science. I will explain why.

When you look at that one male out of three going into university, where does that person go? Half of them go into science and engineering and the other half go into the other eight or nine faculties. Twenty-five years from now, we will be sitting around boardrooms and this table, and the vast majority of women sitting around these tables will be asking if they can find a token male to give them a male viewpoint.

That is our society of tomorrow, and it is not a First Nations issue; we are not talking about just First Nations here. We are talking about everyone in Canada.

The Chair: I would like to record to show that my three female colleagues have very large smiles on their faces. You may proceed.

Mr. Marceau: The key issue I wanted to bring out of your very important question, senator, is that we are losing our boys before they are 17 or 18 years of age. They are not going to university, and they are not always going to college, either.

I am deeply concerned about what is happening to our male population and what that is doing to science and engineering because, unfortunately, boys primarily go into science and engineering. We do get women in chemical engineering, chemistry, biology and the health sciences area. I am not trying to make a sexist comment, rather I am trying to give you the facts as they are in universities today: Women tend to go into areas such as health areas; areas in general where one helps people, such as environmental sciences, civil engineering, chemical engineering to make drugs and work for the pharmaceutical companies, biotechnology and biotechnological engineering. They choose areas where they feel they can connect with life and people and impact society more directly.

The hard sciences and engineering are a harder sell. That is not to say that they do not go there. We need to educate our women to go into these areas because we are not growing our female population very rapidly. In fact, in engineering, it has basically stagnated for 20 years.

Senator Massicotte: Are engineers supposed to have any emotions?

Mr. Marceau: The engineering education in the past, to say mea culpa, has been deficient. When you look at how engineers were initiated in their first years in previous generations, what is the most important and memorable moment for a first-year engineering student? It happens in the first week when they grease up a pole and they pile themselves up until they reach the top. This mountain of flesh is trying to work itself up to the top of a pole, and that is the most memorable moment of university education for past generations.

I can happily say that the engineering profession and faculties in Canada have greatly evolved since then. We have an image problem, but clearly engineers have more skill sets to learn to make them more complete citizens of Canada, and we hope to be doing that in the future.

Senator Massicotte: My daughter is an engineer, and she is pretty good. She could have a good advantage.

The Chair: Let us keep our focus.

Mr. Marceau: I am not only focusing on engineering. I am thinking science, technology and engineering. Currently in Canada, engineering education is undergoing a vast transformation to an outcomes-based learning strategy founded on what was pioneered many decades ago by McMaster University in the medical profession and education. Canadian engineers are deemed to be among the best in international engineering circles, thanks to the accreditation process of the engineering faculties. We are trying to take the skill sets of engineering students and graduates to another level to make them better citizens. The Canadian Engineering Accreditation Board has been working on that for the past 10 years. By 2014, we will have implemented a superior engineering learning strategy in all engineering faculties in Canada. We will see the benefits of that in superior human-interaction skill sets of young men and women in engineering. It is a work of ages.

Mr. Ball: Following the questions by Senator Lang and Senator Frum about who is involved in sponsorship from the utilities, in particular the power grid, whilst only one utility, Manitoba Hydro, stepped up to the plate and sat on the steering committee and made an investment, many other individuals from other utilities have been involved in ongoing cross-consultations.

With respect to the oil sands, part of the progress report that will be released at the Sarnia workshop lists all of the universities and companies that have been working on many of these areas, not the least of which is carbon capture and storage from Regina and the oil sands as well as mineable bitumen upgrade. This information will be found in the report, as well as the contacts and an analysis of where we first started, where we are now and where we will be in the future. There is a good deal of coverage on that area.

On the whole aspect of engineering education, we, in the academy, are involved with our international colleagues through CAETS. Engineering education is not only an issue within Canada but worldwide. An engineering task group under CAETS, of which we are a part, is looking at how we do can do this into the future, and so on.

Senator Lang: Mr. Ball, my concern is that with a report of this type, if no game plan exists of where it will go, it will simply be lost. Will someone prepare an overview cost study of an inter-Canadian grid? Before anyone can commit politically to such a system, they have to know the cost, which is only one element.

Mr. Ball: Some talk of that appears in the background and analysis. As I mentioned earlier, we released a report. In answer to Senator Angus' question, we are in the process of making it available not only to politicians but also to other organizations in the industry and the utilities. We will hear speakers from other utilities, which will create a continuing liaison. I doubt that we would take it to the extent of doing a definitive cost analysis. We will make all the information available.

We have worked with Manitoba Hydro to determine what makes economic sense. There has been talk about the situation between Manitoba Hydro and Ontario Hydro for many years. Both utilities have looked to see how to create better interconnections. Some of the work that has happened from here has spurred more negotiations that make more sense. Canada has is a great deal of stranded power, and part of it is the linkage between Manitoba and Ontario. I am not sure if that answers your question.

Senator Neufeld: I was heartened to hear your explanation about a national grid a few minutes ago when you said that you are not advocating such a thing across Canada. Rather, you talked about optimizing existing grids and building only where required.

To be honest, as a minister responsible for a large utility, BC Hydro, for quite a number of years, I always heard people talk about building a national grid because it would be good for the country. I think back to the time when the systems in Quebec and British Columbia were built. The one in B.C. was built as a Canada-U.S-B.C. project under the Columbia River Treaty, which is still in place and has a willing purchaser and a willing producer. I believe, as Senator Massicotte said, that there must be a willing purchaser and a willing seller to make something work. You cannot decide on paper only what we should do and expect the federal government to come and build it. Do you tend to agree with me on that point?

Mr. Marceau: I agree absolutely with you. I have nothing to add.

Senator Neufeld: I will take that one step further. British Columbia is embarking on the generation of green electricity, which has been our goal for eight years. In fact, B.C. has taken the utilities commission completely out of making some of those decisions so that the government makes them instead. However, it is difficult to do because people want to know why the government wants to flood a backyard or build another 5-kilovolt line to provide energy to the U.S. or to Alberta when they think B.C. has sufficient hydro for the province.

I was a little surprised by your statement about demand-side optimization. You said that the smart grid concept is the logical answer if the only alternative is to optimize the network municipally and provincially. I do not agree with that statement to a degree, and I will tell you why. Smart grids do much more. They optimize the generation, transmission and distribution within your province and also within the area you trade with. The federal government should look at the smart grid concept between provinces and between Canada and the U.S. to optimize our existing facilities.

Alberta has been trying to build a new 500-kV line from Edmonton to Calgary for 10 years. Alberta is generally pretty accepting of such projects, but they have not been able to do it. British Columbia wanted to upgrade a transmission line on a right-of-way that had been in place for 50 years. However, people built their houses around the right-of-way, and I had to buy 135 houses so that we could do those upgrades.

Building grids is long term. I can give you many examples in B.C. where it is impossible to do, even though electricity is stranded. A good example is Revelstoke with 1000 megawatts. It is impossible to rebuild a grid that is on a right-of-way and to move that electricity. I would like you to explain your smart grid here because I disagree with you on the smart grid. It serves us in many more ways than what you state here.

Mr. Marceau: We are not in disagreement at all. It is just the meaning of the words that we have to agree upon. The words "smart grid" today apply to distribution only. If we are talking about smart grid in a distribution context, which is what we have focused on, I stand by what our report has said.

However, if one uses the words "smart grid" in a different context, which is transmission- and generation- management systems, of course, we need more intelligence in these systems as well. It is just that the words "smart grid" in most of the literature today apply to distribution only. That is the sense that we apply to it.

Some people are beginning to apply that term in the transmission and generation grid setting, but in the report and in the literature that we looked at, it has been used quite heavily in a distribution setting only. We are entirely in agreement with everything you have said.

I would also like to loop back to one of the first statements you made about the Columbia River Basin and the systems approach there. All we are talking about is having a similar systems approach to Canada's grid.

Senator Neufeld: I agree with that. I know the larger intertie in Southern B.C. to Alberta is used mostly at peak, not all the time. When I say that there must be a willing purchaser and a willing vendor, it must go hand in hand with, I believe, extending the grid. I think you totally agree with me.

To be perfectly honest, we could look at many different places, such as what Senator Frum talked about, with respect to greenhouse gas reduction or even expanding our ports on the West Coast to take care of the goods and services that will be made in Central Canada and will have to get to Asia. There are other places we can do that.

I want to stay with the smart grid. A number of people here at this table visited the new facility in B.C. for optimizing the control system.

Mr. Marceau: I have heard of that.

Senator Neufeld: That was not just about distribution or smart meters. It was about transmission — large transmission, all of it. It was about generation — the whole thing. Everyone here will agree with me.

I am not an engineer, but I have been where the rubber hits the road. Smart grid to me, as a layman, means much more than having a little meter in your house so you know when you will get that electricity. It is about optimizing that whole system, including the transmission. I wanted to know whether you agree with me.

Mr. Marceau: I fully agree with everything you have said. There is absolutely no divergence of opinion. We are only having a little problem with the words "smart grid."

The point we wanted to make in the report — and you have just made the point more eloquently than I made it earlier and, perhaps, in our report — is that you need a lot of intelligence to run a complex system. Electrical power systems happen to be a little more complex than many other systems. In fact, in a province such as B.C., for instance, we are talking about connecting tens of millions of horsepower to people who need that horsepower, and connecting it on a geographical scale of thousands of kilometres. From north to south, the 500-kV system in B.C. is at least 1,000 kilometres long, if not more by now. To make that system work so reliably 24 hours a day, 365 days a year so that it is there when you flick the switch, the power comes from thousands of kilometres away — and it is always there and works reliably. It is a huge amount of power, and this system works in synchronism. A great deal of technology and intelligence is needed to make that work properly.

If the term "smart grid" is deemed to apply to the generation, transmission and distribution system of a power system, we are in perfect agreement. The term "smart grid," in much of the literature and when you go to the fairs, applies primarily to distribution technology. That is the only point of distinction.

The Chair: We have been told that one of the elements of the joint clean-energy dialogue between Canada and the U.S. right now is a table that deals with a smart grid. I do not know what definition they are applying, but we will find out soon.

Mr. Marceau: I would also like to point out that it takes more than intelligence to run the transmission system properly. You need capacity. There comes a point where no matter how much intelligence you put in the system, you need another line, a higher voltage or a different technology. There comes a point when capacity reaches its limit.

Mr. Ball: I wanted to pick up on what Senator Neufeld was talking about. All the work we have done on the energy pathways, the power grid and everything else looks at the fact that nothing is any good unless you do a complete systems approach to everything you are doing.

The Chair: That message is clear today.

Mr. Ball: You will find that in all our reports we talk about needing the systems approach. It is no good to just develop one particular technology in any field. You need a whole systems approach for it to be beneficial and economic for the well being of Canada.

Senator Seidman: I had not imagined that I would find a crossover between this committee and another committee that I am sitting on with respect to access to post-secondary education in Canada. The population-based studies we have heard about bear you out very much so, that, indeed, the shrinking male population in post-secondary education is verging on crisis proportions.

In order to have the R & D we need to develop the necessary technology, we need to somehow market these programs in this field of study, which is a bit of an aside.

I wanted to ask you a question on this emerging crisis and the availability of electrical power engineering professionals. I am not sure if you answered it completely or if you would like to say something more about it.

Mr. Marceau: I would like to say more about it. In 2000, while I was the chair of the department of electrical and computer engineering at the École Polytechnique de Montréal, I identified the problem for the Province of Quebec, and I created a five-university consortium with Hydro-Québec and a number of industry representatives from companies. We were able to gather the funding to create a response for Quebec. Since 2002, the Institute of Electrical Power Engineering has graduated 50 people a year for the past seven or eight years. In the province of Quebec, the response is in place.

In the province of Ontario, I have been working on the response for the past 18 months. I did a presentation about 18 months ago at the Association of Power Producers of Ontario. A number of people told me then that I seemed to understand the problem and should get involved. You will forgive me for saying that I was not looking for another job. I was starting up a new university and had a great deal on my plate. However, the call of my discipline took over. Since January 2009, I have been bringing together a consortium of six universities and six industry representatives around the table. I am pleased to report that we have finally negotiated a framework for the academic partnership. We are presently working on a business plan. We will come up with an advocacy plan to ask for the funding, partly from industry and partly from government. We have a lot of support. Ontario Power Generation is there; Hydro One is there, as are the Ontario Power Authority and the Society of Energy Professionals and the Canadian District Energy Association. We have many people around the table and much enthusiasm now for the project.

By September 2011, this consortium that we are calling the "Power Engineering Education Consortium" will be up and running for Ontario. We recognize a problem exists in other provinces. It is a deep problem. The chairs of electrical and computer engineering throughout Canada are beginning to talk about this. I think what has been done in Ontario and Quebec will be a model for elsewhere. It is a province-by-province thing. If we can solve it for Ontario, and I am confident that we will, then we will work with our colleagues in Quebec to have a closer relationship with them, and then we will work with other provinces to see what we can do to help them.

Senator Seidman: To follow up on that, one of the witnesses that we heard here not long ago presented a convincing argument that Canada needs to focus its R & D and investments on a single, renewable source of energy and put all our resources into developing that in a most competitive and avant-garde fashion. Could you comment on that, please?

Mr. Marceau: There is no question that focus has great benefits. I would be tempted to say that I am not in support of that approach because I do not think that there is one solution to this problem. We need to have a broad-spectrum solution to the problem. I do not think there is a magic bullet in this particular case, for many reasons. The shape of the economy in Canada is different in different parts of Canada. The regions are different. One must be respectful of that and the present economic base and the way wealth, the environment and our quality of life is created in the different parts of Canada.

The Chair: Senator Seidman, that was a particular piece of evidence, but would you not agree that the majority of the witnesses have said that, because of the obvious future demand for energy, we must use every single source that there is to get it as efficient as possible?

Senator Seidman: Indeed. It was in terms of how Canada should focus its R & D. This witness said that wind power was pretty much developed, and solar was fairly unreliable from a Canadian perspective. If we were to focus all our energies on something, we ought to focus them and direct ourselves to developing something.

Listening to you talk about transforming the electrical infrastructure and the whole electrical industry, I wondered if there was an underlying idea that this could be a grand project for Canada. If we were to focus on something in this country and perfect it and develop new technology, maybe that is where it ought to be.

Mr. Marceau: That is an excellent idea. However, we have talked about this in the academy extensively. At the academy, we believe that there ought to be a number of national projects rather than only one. A few well-chosen, focused national projects could have tremendous impact.

We are advocating a number of national projects because we understand that, from a pragmatic perspective, it is difficult to come up with a national energy policy. Because of energy policy, the federation was stretched to the limit in the 1970s, and we are not quite over that tension in the energy area. Within the academy, we believe that an adequate substitute could be a small number of well-chosen, focused national projects that will have a cascading effect throughout the economy and throughout a large area of technologies, which would benefit manufacturing on the one hand, the transformation of energy resources in a useable form on the other and the delivery thereof. Focusing on those three aspects, we can have many cascading benefits.

By doing a national project in three or four areas, if you need the workforce, the economy will generate the wealth that will help you create the workforce. If you need technology to get there, then the investments will get us the technology, and the manufacturing opportunity of selling that technology throughout the world will impact a large swath of the Canadian economy again.

We are focusing here on the electricity industry because we believe that if we were to invest in a certain number of interconnections for now, and then strengthen the transmission networks of the different provincial networks, then that would have an impact in creating new technology that would be Canadian-based. We would design and develop new technology for the electric power industry. We could establish the manufacturing capacity to set that up because we would purchase that technology. That would offer a tremendous opportunity to export that technology throughout the world, and our network would be a showcase of advanced electrical technology.

The Chair: That leaves the platform susceptible to future interesting discussion.

Senator Martin: I am a visiting senator, here on behalf of Senator Brown. I have not been party to the other discussions of this committee, but it has been most interesting and educational. I want to take this opportunity to say a few things and invite your response to my comments.

A diamond is not a diamond because someone says that it is a diamond. It is what it is. I think Canada is an energy superpower. We are the envy of the world. Being from British Columbia, I have an opportunity to meet with different groups from Asia, in particular. I can absolutely reinforce their opinion and their envy of Canada as being this incredible country with a diversity of resources and opportunities. Being more regional or having these divisions within our country geographically speaking because it is a large country, we do not necessarily have that broader perspective, that view of the identity of Canada, and we do not see how the world sees us.

I have had conversations with the potential investors from Asia, and I have also attended energy and technology forums from the Chinese and Korean governments. To go back to what you mentioned about incentives needed in Canada, I believe the awareness building that your organization is doing and what we are doing as a committee for all Canadians is a number one priority. As a nation, we need to embrace and harness what we have here. The forum coming up in Toronto will be quite important.

The incentives for the foreign investors from abroad are important because they diversify our revenue base. There is a great interest. However, some of these foreign investors say that they see Canada as this one nation. However, when they come here, whether it is in B.C. or other provinces, they are faced with provincial laws and jurisdictional protocols, as well as those at the federal level.

We need to be thinking about the incentives not only for Canada but also for our foreign investors because there is great opportunity and increasing interest from abroad. Looking at even just the visuals of this report, great opportunity is evident.

Senator Seidman and I are both on the Standing Senate Committee on Social Affairs, Science and Technology where we are looking at post-secondary education, PSE. Perhaps we can also look at the world and the students that we can attract to a Canada who will continue to add to the ideas. Our education is something that we can compete with in the world, too. We need to consider those types of incentives. I really believe that the work you are doing is quite valuable.

Thank you to the committee for the study that you are undertaking.

The Chair: Mr. Marceau, please be very brief, sir; consider some final words.

Mr. Marceau: I would like to make a general comment by stating a metaphor. Deans and professors say, "I have this wonderful project. Can you give me the resources to do this project?" Therefore, I understand exactly where you are all coming from.

I have established a market-oriented and career-focused culture within the University of Ontario Institute of Technology, UOIT, that is different from other universities. I understand what you are trying to do here and what the government can and cannot do.

The answer I give to many people is that I can prime the pump, but I cannot be the pump. I would submit that notion that the government can prime the pump. It does not have to put much water into the pump to get it going, but someone must prime the pump to start it. That is all we are suggesting today.

The Chair: Ladies and gentlemen, it has been a tremendous session. As you can see, the two hours have flown by, and I have a whole list of questioners here. We could go on all day.

Thank you so much for coming here this morning. I hope you found it to be as enriching as we did. We will be calling on you again as we delve deeper into this wonderful national opportunity that the country has that has been so eloquently described by some of the senators.

[Translation]

Mr. Marceau: It was an honor for me to appear today before your Committee. I thank you for this opportunity.

The Chair: The meeting is adjourned.

(The committee adjourned.)