Proceedings of the Standing Senate Committee on
Energy, the Environment and Natural Resources
Issue 20 - Evidence - March 2, 2011 (afternoon meeting)
CHARLOTTETOWN, Wednesday, March 2, 2011
The Standing Senate Committee on Energy, the Environment and Natural
Resources met this day at 1:11 p.m. to study the current state and future of
Canada's energy sector (including alternative energy).
Senator W. David Angus (Chair) in the chair.
The Chair: Good afternoon. We continue the public hearings of the
Standing Senate Committee on Energy, the Environment and Natural Resources. We
are on a fact-finding series of hearings as a part of our ongoing comprehensive
energy study where we seek to establish a strategic way forward for Canada in
this complex world that is changing so much with an exploding population and
increased industrialization in countries like China, India and Brazil, and the
demands for energy are increasing literally second by second. Clearly we have to
re-engineer our system.
We are pleased to have with us this afternoon Mr. Andrew Noseworthy, who is
the senior advisor on energy for the Atlantic Canada Opportunities Agency, known
to us as ACOA.
Andrew F. Noseworthy, Senior Advisor to the President on Energy, Policy
and Programs, Atlantic Canada Opportunities Agency (OCOA): I have prepared
remarks which I believe have been circulated to you. I propose to run through
them, and certainly would welcome any questions or comments that you might have
along the way.
I appreciate the opportunity to appear before you today and speak
specifically about the role that ACOA plays in the energy sector. I am hoping
through my comments I will be able to provide you with a better understanding of
the opportunities this important sector presents in this region. I also want to
take some time to provide you with an overview of ACOA's activities in the
I know you have already heard testimony from a variety of federal
departments, which we consider to be sister departments and with which we have a
deep relationship, and I mean departments like Natural Resources Canada. I think
it is quite important to have those communications and have an appreciation of
what those departments do because, quite frankly, it is also by definition, an
indication of what we do not do with ACOA. While the energy sector is important
to us as a catalyst for economic growth, the reality is that we have neither a
direct regulatory responsibility in this sector, nor are we the principal
federal policy lead on energy matters, even within the region.
There are a variety of federal departments and agencies which do play a
pretty active role in this region in the energy sector: NRCan, of course, which
is a federal department that has the lead for both policy and regulatory
matters; on the economic development side, along with us, Industry Canada, which
plays an important role in shaping national industrial policy as well as
International Trade, which oversees trade and commerce pertaining to this
sector; Environment Canada, which focuses on the environmental aspects of energy
development and production and also has policy and regulatory roles. Beyond all
of them, there are a variety of others that also play a role, including
departments like Indian and Northern Affairs, Fisheries and Oceans, Transport
Canada and Canadian Environmental Assessment Agency, CEAA, just to name a few.
Unlike them, ACOA does not have a statutory or regulatory responsibility in
this field. Our legislative mandate is to support regional economic development
in the region and, more particularly, to enhance the growth of earned incomes
and employment opportunities in the region.
You may ask, given our limited direct responsibility in this sector, why do
we care about energy at all? I believe the answer actually can be —-
The Chair: Mr. Noseworthy, that is a good beginning in telling us
about these organizations. Could you tell us a bit about yourself first, maybe
Mr. Noseworthy: I am happy to do so.
As you have indicated, I am Senior Advisor to the President of ACOA on
Energy. I have been with the Government of Canada for approximately seven years.
I spent approximately 18 years as a public servant in the Government of
Newfoundland and a period of time there as Associate Secretary to Cabinet and
also as a Deputy Minister of Intergovernmental Affairs. In the intervening
period, I also played the role of executive director to the Romanow Commission
on Health Care.
This is perhaps an appropriate time to also indicate that I really am not an
expert in the energy field. I will seek to answer your questions to the best of
my ability, but I am not an expert in this area.
The Chair: That is helpful. You originally hail from Newfoundland, do
Mr. Noseworthy: I do indeed. I have staff and responsibility, of
course, across the region. I will get into this in a moment, but ACOA actually
has an energy team and a very close association with the Department of Natural
Resources Canada. We have created the Atlantic Canada Energy Office, which might
be of interest to the committee and is, I think, a bit innovative.
To come back to why we care about energy, I would direct the committee back
to the testimony given to you last year by Elizabeth Beale from the Atlantic
Provinces Economic Council, or APEC. When she appeared before you, Ms. Beale
noted the critical role that energy plays in Canada's economic growth. One of
the more striking points in her testimony was the fact that, for the past 10
years, annual energy sector investment in this region has been somewhere between
55 and 65 per cent of total investment in the region. Her perspective and her
comments to you reinforced some of the publications that APEC has released of
late, including its Atlantic Report, released last year. The report
stated that the energy sector has grown to become the most important group of
industries in Atlantic Canada.
Today, the sector is about 12 per cent of Atlantic Canadian GDP. I am not
sure that tells the whole story because, in fact, there are areas across this
region with a much more dominant impact, such as Newfoundland and Labrador,
where this sector constitutes about a third of provincial GDP. Regionally, the
sector is responsible for about 18,000 jobs. Energy products represent almost
two-thirds of the region's merchandise exports and energy products produced here
in Atlantic Canada represent about 58 per cent of regional exports at a value of
about $16.7 billion.
Petroleum sector has the potential to grow and become an even more dominant
force in our economic future, and, indeed, that is true beyond the petroleum
sector and into the renewable sector as well.
The numbers that I have given you — and I must attribute most of them to
Elizabeth — show that Atlantic Canada has already built a significant strength
in the energy sector, and we have a solid foundation that is based on four major
considerations. The first is our resource base. With respect to petroleum
resources, Atlantic Canada's offshore sector is strong and growing. This is
evidenced by the fact that today, Newfoundland and Labrador is the largest
producer of conventional light crude in Canada and the offshore resources of
that province show significant promise for even further development. Beyond
that, the region boasts considerable potential in natural gas and oil
production, both in the conventional areas of the offshore around Newfoundland
and Nova Scotia, and in new frontiers like Labrador and the Maritimes Basin.
Indeed, with respect to the Maritime Basin, which encompasses the waters around
P.E.I., the Geological Survey of Canada has suggested its potential could rival
that of the Beaufort-Mackenzie Delta and produce 39 TCF, or trillion cubic feet,
of natural gas. In addition to that, as I believe the committee has already
heard, there is shale gas potential across the region. That is just oil and gas.
This region is also a literal powerhouse of clean and renewable energy, as is
demonstrated in the potential of the Lower Churchill River — a project that I
know you have already heard some things about and I know you will hear more
about tomorrow in Newfoundland. In fact, some people see that area as having
some of the last undeveloped hydroelectric potential in all of North America.
Beyond this, the region also has one of the best wind energy profiles in
North America, as you have heard from a number of speakers today, and that is
especially true here in P.E.I.
Beyond wind and hydroelectricity, the Bay of Fundy is considered to be one of
the best sites for tidal power generation in North America and world-class
companies are now deploying commercial-scale turbines on its sea floor. Indeed,
a report prepared for NRCan last year indicated that the generating potential of
the Bay of Fundy alone could be 3,000 megawatts in tidal energy. That is just in
that bay. There is, in fact, vast potential for other forms of ocean and wave
energy throughout this region and there is potential in other areas as well; for
example, wood waste, biofuel production from sources such as algae as well
developments in the fields of hydrogen and solar energy. The first base or
foundation for economic activity here in the energy sector, as I have said, is
our resource base.
The second is our existing capacity in terms of major international assets in
this field. Major projects like Sable, Hibernia, Terra Nova, Whiterose and Deep
Panuke are world-scale projects and active demonstrations of our capacity to
engage in really large-scale stuff in the offshore. Beyond the offshore, the
region is home to Canada's largest oil refinery and the country's first LNG
terminal in Saint John, New Brunswick, where you were yesterday. Of course, that
is not to mention the mammoth hydroelectric project at the Upper Churchill.
The presence of all these massive projects brings me to a third foundation
for growth in Atlantic energy industries and that is our basic industrial
capacity and the expertise that exists here as a result of these projects and
our skilled labour force.
Of course, the fourth and final foundation I would mention is the growth in
our potential for research expertise.
As the committee might know, a few years ago, Angus Bruneau, who actually
hails from Newfoundland, chaired a national advisory panel on energy, science
and technology. When it produced its report, it said, "Without a stronger
emphasis on energy innovation, we will increasingly rely on technologies
developed by others to access our own resources.'' He made that statement
nationally, but I believe nowhere is it perhaps more true than here in Atlantic
Canada, where unlocking the potential of our resources has often required new
and innovative solutions; for example, to deal with oil and gas exploration in
harsh environments, or where technological advancement has been critical to
maximizing the potential of renewable energy resources, like tidal.
As a result of the challenges presented by these resources and exploiting
them appropriately in a sustainable way, companies and academic institutions in
this region already have pioneering experience in areas such as ice management
and wind energy. The capacity we have built to overcome the challenges we face
here are not only important to maximizing the potential for sustainable and
responsible development here, but they provide our companies with the
opportunity to apply their innovative ideas and expertise elsewhere around the
globe; for example, in Greenland and the Arctic.
With abundant energy resources, world-class researchers and facilities,
excellent business and transportation infrastructure, low business costs and
well-educated workers, Atlantic Canada is a world leader in energy production,
export and research, and this capability has made Atlantic Canada a major player
in the North American energy industry as a secure and reliable supplier of
petroleum, natural gas and electricity. We have the potential to play an even
greater role in the future. All this is why ACOA cares about energy.
Let me turn to us as an agency and give you a brief overview of what we do
and specifically what we do in this sector.
Created in 1987, ACOA is a federal agency that works with Atlantic Canadians
to build a more innovative, productive and competitive economy. We are mandated
to lead and coordinate federal economic development activities in all four
Atlantic provinces, and fundamental to our role is the responsibility to work
with regional partners and stakeholders to encourage economic growth and
opportunity, and to seek to ameliorate the economic challenges that face this
part of the nation. Our programs are focused on supporting the private sector in
creating and strengthening the economic opportunities and encouraging
Fundamentally, our activities are focused in three core areas: enterprise
development, community development and policy advocacy and coordination. Through
programs such as our Business Development Program, or BDP, we assist with new
business start-ups and we help existing businesses expand and become more
competitive through innovation, the development of trade opportunities and with
productivity and skills improvements.
ACOA has been engaged in the energy sector since the agency's inception. Our
traditional focus was, in fact, on supporting small and medium-sized businesses,
especially in Newfoundland and Nova Scotia, to take advantage of the growing
offshore sector at the time of the commencement of the Hibernia and Sable
projects. Through programs like BDP over the years, we have provided assistance
to companies to support the development of business plans, marketing and modest
aid for expansions.
This work continues, as does our work with the offshore boards and the
provincial governments in securing benefits for our companies from major
projects, and we also work closely with the industry associations to strengthen
capability and investment and marketing opportunities.
Beyond this traditional core of activity, over the past decade, our efforts
in this sector have been supplemented by others, most notably by the
establishment of the Atlantic Innovation Fund, or AIF, which provides support
for innovation and commercialization of R&D in a variety of sectors, including
energy. Indeed, the energy sector has been one of the most active under our AIF
program and to date, we have invested over $90 million, or about a sixth of the
funds distributed to date, on energy-related R&D projects in this region.
In addition to our direct support for energy projects through our BDP and AIF
programs, ACOA has been an active partner with industry and provincial
governments in promoting new investment in the region's energy sector. We have
also placed significant emphasis on building a robust international supply
capability in this region to satisfy the demands of major energy projects, not
only here, but around the globe. By way of example, we have been working with
provincial governments and industry associations to further develop markets and
opportunities for local supply companies in countries like Brazil, Greenland and
the U.K. through activities like business missions that are designed to showcase
the capabilities of our companies and link them with potential buyers and
Beyond all of this activity, ACOA plays a somewhat unique advocacy role on
behalf of the region and its industries within the federal system and in the
development of federal policy. This advocacy role is embedded in our legislation
and in our legislative mandate and is critically important in a sector as
geographically dispersed and technically complex as energy.
In this context, we are an advocate for the responsible development of the
region's energy sector and we work closely, as I have said, with other federal
departments, but not only them, but with the provinces and with industry, to
address challenges and build opportunities in the region.
In that context, I would like to spend a few minutes talking about two
specific issues that I know are of interest to the committee. I have already
briefly mentioned the Atlantic Canada Energy Office. I will speak about that
first and then perhaps the Atlantic Energy Gateway, which I know you are keen to
The Atlantic Canada Energy Office, or ACE, was announced by the former
Minister of Natural Resources, Gary Lunn, in St. John's in June 2008 as a
mechanism for the Government of Canada to coordinate and manage its energy-
related activities in the Atlantic Region. In announcing the office, Mr. Lunn
noted that ACE was to be a partnership between ACOA and NRCan that would
integrate NRCan's mandate for energy resources and policy with ACOA's mandate
for economic development. Further to the announcement, ACOA and NRCan staff held
extensive consultations with industry and provincial governments regarding the
potential structure and role of ACE, and the conclusion of these consultations
was a general consensus that ACE should focus on strategic industry development
With a small staff across the region and a main office in St. John's,
Newfoundland, ACE's mandate covers both the traditional petroleum sector and the
clean and renewable energy sector. We have sought to ensure that the
establishment of this office does not muddle or confuse formal responsibilities
of either ACOA or NRCan or simply add another level of bureaucracy to the
management of energy issues in the region.
In this context, ACE actually co-locates staff from two federal departments,
creating new synergies between the two, and creating an opportunity for joint
work plans, while at the same time allowing both departments to exercise their
full legislative and statutory mandates in the region.
ACE, as I have said, does not have a direct role in the regulation of the
sector. We see our role as assisting clients in connecting them with federal
programs and services, and we do not play a direct role in program management.
ACE does play a role, however, in areas like investment attraction, and it seeks
to coordinate the activities of ACOA and NRCan in areas like trade development,
R&D support and policy analysis.
First, we see the role of ACE as fostering collaboration and dialogue on key
issues related to industry development, whether that is within the federal
family, with the provinces or with industry and academia; second, improving
communications and awareness and information flow in Atlantic energy issues
inside the federal system; and, third, supporting and facilitating efforts to
address impediments to industry development, in particular, by undertaking,
encouraging or fostering new policy analysis and policy development on industry
The office has been in place for about a year now and I am pleased to say it
is functioning quite effectively. I believe it has created a starting point for
industry in accessing the federal system and it has improved our capacity as a
government to provide on-the-ground coordination of work in this area, in
particular, between ACOA and NRCan.
With respect to the Atlantic Energy Gateway, you are probably aware that it
was announced in March 2009 with an investment by the Government of Canada of up
to $4 million. In announcing the AEG, or Atlantic Energy Gateway, federal
ministers noted its objective was to facilitate development of the Atlantic
renewable energy sector by fostering collaboration, common understanding and
communication between governments and between governments and the private sector
to maximize and expedite the development of renewable energy resources in the
In this context, the AEG is seeking to focus on, first, sharing information
pertaining to the development of Atlantic Canada's clean energy resources and,
second, where necessary, undertaking new analysis to increase understanding of
these resources and the challenges and opportunities facing new development.
This is truly a collaborative exercise co- managed on the federal side by ACOA
and NRCan, and it involves building partnerships and consensus amongst
stakeholders, including the four provinces and regional utilities, to foster a
common understanding and approach for the development and distribution of the
region's clean and renewable energy supplies. The focus of the AEG is on
detailed policy work in areas such as the merits of the integration of regional
electrical systems, the examination of best practices in financing renewable
energy projects, best practices in supporting R&D, and in developing supply
chain opportunities for renewable energy projects. The AEG work is being
undertaken under the supervision of a management committee of federal and
provincial deputy ministers and with the active engagement of both other people
in provincial governments and in the private sector. It is our hope that the
specific studies and analysis under way as part of this project will be
completed later this year.
In conclusion, it is my hope that I have shown you that there is a bright
future ahead for Atlantic Canada's energy sector, that the region's energy
potential is vast, and that developing these resources would help build Atlantic
Canada's economic strength. For its part, ACOA will continue to support the
further development of this sector through its continued application of our
programs as appropriate through our efforts to advocate and support this sector
in areas like investment attraction, trade and supplier development, R&D support
and policy analysis and advocacy. We will also continue to work closely with
other federal, provincial and industry partners through initiatives like ACE and
the AEG toward the common goal of further developing and capitalizing on our
region's energy potential.
I apologize for being wordy, senators, but I thought I would read that into
The Chair: Thank you. I would like to ask you a few preliminary
questions, if I may. First, ACOA is an entirely federal agency?
Mr. Noseworthy: That is correct.
The Chair: It reports to Minister Ashfield, I believe.
Mr. Noseworthy: That is correct.
The Chair: Are you based here in Charlottetown?
Mr. Noseworthy: I am actually based in St. John's, Newfoundland.
The Chair: Is that the head office of ACOA?
Mr. Noseworthy: No, ACOA's head office is in Moncton. We have
approximately 30 offices across the region, including regional offices that are
staffed at the vice president level in each of the four provinces, as well as a
satellite agency known as Enterprise Cape Breton that operates in that area.
The Chair: Both ACE and AEG are also federal programs?
Mr. Noseworthy: That is correct.
The Chair: Let us start with Gateway, AEG. Does it have an office
Mr. Noseworthy: No, it is a project. It is not something that we would
see as an initiative that would have a long life, although it is quite possible
that the work that we will undertake will result in more durable relationships
between governments and utilities that will have a life beyond the work that we
are undertaking. The objective and focus of the AEG is on a specific package of
policy work over the course of the next year or so.
The Chair: You say it is jointly managed by NRCan and ACOA, so that
means it reports up through both of those agencies.
Mr. Noseworthy: That is correct.
The Chair: To both Minister Ashfield and Minister Paradis at this
Mr. Noseworthy: That is correct.
The Chair: What has it actually done so far with the $4 million, if
Mr. Noseworthy: Actually, we have not spent a great deal of money at
this stage, but I think we are ramping up to do so. The money will be spent
largely in two fundamental areas. The first is a collection of work around core
industrial development issues related to the renewable energy sector. For
example, we are planning a piece of work that would look at best international
practices in financing small-scale renewable energy projects. We are shaping
that right now and would hope to have a response to the RFP and a consultant in
place in the next while. The results will be shared publicly, and it will help
inform policy making not only by ACOA and NRCan, but other federal agencies and
the provinces as we look toward further development of the sector. We are doing
other work around supplier development, best practices in facilitating R&D
support by governments in the renewable energy sector.
That is the first package of things. It is a collection of studies that
specifically look at economic development issues and what would constitute best
practices that we might be able to apply in this region.
The piece is more technical and reflects on the fact that Atlantic Canada is
not a big market and that there is a potential for efficiency and economy of
scale by encouraging greater cooperation between the region's utilities and an
integration of activity, both in terms of the management of the system and also
perhaps in future development opportunities.
That piece of work is looking at what the models for cooperation in this area
might be and in other places, for example, the ISO model that you would see in
the Unites States, and also a piece on macroeconomic modelling that will seek to
try and provide the utilities with some direction on where there are
opportunities for collaboration and what the potential benefits might be.
There is a large number of players involved in this process — all of the
utilities, all of the provincial governments — and we have spent most of our
time to date trying to frame those studies in the most appropriate way. The work
on regional planning is under intense development as we speak, and our hope is
that that work will start in an effective way in the course of the next couple
of months. The specific studies on economic development are about to start. I
believe the first one may come out in the course of the next week or so as an
RFP for bid.
The Chair: We are not the federal government, as you know. We are a
part of the constitutional structure of the federal government in terms of being
the independent upper house of Parliament, and we do such things as study public
policy, like the one we are doing on energy. We have been hearing suggestions of
how some of these basic energy issues have national import in terms of a
distribution system or an east-west grid or a cable under the Northumberland
We have had it suggested the federal government has to get involved — this is
not regional, this is part of nation building. All kinds of suggestions have
been made about loan guarantees and underwriting the costs of cables. We have
heard a lot of things. Whether or not those things ever happen, I guess, would
be a matter of policy, an energy policy. The mandate you have just described
seems to be within that area.
It is confusing. You have ACOA, ACE and AEG and not a lot of money and no
office, and I am Premier Ghiz. I want to get some money to do something that I
think is of interest and importance to not just P.E.I., but P.E.I. as part of
the greater nation. Are you the right guy to come to? I mean, who are the people
to go to?
Mr. Noseworthy: We are not funding specific energy projects.
The Chair: Would you develop the policy and recommend it to the
Cabinet? This is really what I am trying to find out.
Mr. Noseworthy: Clearly, the Department of Natural Resources is the
federal lead for energy policy. Depending on the nature of the program, there
could be any number of federal departments and agencies that potentially put
funds into future projects.
The Atlantic Energy Gateway process is not about funding a specific project.
It is not about looking at a specific piece of infrastructure. It is really
motivated by the notion that if we can facilitate getting the provinces and the
utilities together to talk and communicate about where there are strategic
economic advantages to collaboration, something good could come out of it; and
to try in that context to provide them with a common base of information to
inform future policy making.
ACOA has no direct involvement in the energy sector, as I have said. I am
certainly not an energy expert, as I have already indicated to the committee. We
see our role as a facilitator in bringing together the others that do have that
capacity, so that they have the right information in front of them and can have
an informed communication between them. Perhaps a way to look at this is, in
some way, people are aware of the viral nature of messages on the Internet. This
is in some way viral policy making in that our objective at the end of the day
is not necessarily to use this work to frame our own projects and programs, but,
in fact, to inform the broader community with the hope that good will come from
The Chair: Right. Well, I have to tell you I am a little bit confused.
Senator McCoy: On page 6, you talk about the report of the National
Advisory Panel on the Sustainable Energy Science and Technology Strategy. What
was the name of the lead on the panel?
Mr. Noseworthy: The chair of that panel was Dr. Angus Bruneau.
Senator McCoy: That should be in the Library of Parliament?
Mr. Noseworthy: It should be available. It was released in 2006.
Senator McCoy: It is something we should add to our reference
documents. It seems to me there is a great deal of potential in the work that
you are doing at the gateway and, you are quite right, developing a sort of
common understanding is extremely important and I can understand the exploratory
nature. It is very exciting. When you say that you hope that some of these
studies will be completed later this year, you have whetted my appetite.
Is this committee on your mailing list? You must be pumping out some very
interesting pieces of opinion or fact- based reporting that we should be
accessing on a regular basis.
Mr. Noseworthy: I certainly hope we will be. I do not think we really
have at this point. Certainly, any of the materials that we produce will be
publicly available. Our time to date on this work has been spent getting all the
players around the table to agree on what the right pieces of work should be and
what should be contained in those studies. We figured it was better to do that
work up front and provide that common foundation.
The first piece of work, which I indicated will be a piece that looks at
financing of small-scale projects, we hope to have out as a call for proposals
in the near term. I suspect we will see that later this spring or summer. I
would think all of the pieces will start to come out over the course of the next
couple of months.
Senator McCoy: Could I encourage you to put this committee on your
mailing list and I will give you my card, too. I would like to be directly on
your mailing list — or your e-mail list, I should say.
Mr. Noseworthy: Certainly.
Senator McCoy: It is an electronic list. I commend you on your
Senator Mitchell: Mr. Noseworthy, I have a note here that as recently
as November 30, 2010, the terms of reference of the Atlantic Energy Gateway
initiative had not been finalized, but I take it now that they have been?
Mr. Noteworthy: Yes.
Senator Mitchell: Could we get a copy of those?
Mr. Noseworthy: I will endeavour to bring that to the committee.
Senator Mitchell: Just to follow up on the point about the loan
guarantee issue, it has been very prominent in the thinking of Nova Scotia on
this project. I do not know that it is actually a deal breaker, but you can see
it as a deal breaker from where they are on that issue. Do you have a position?
Is ACOA pushing for that loan guarantee?
Mr. Noseworthy: I am afraid that is a question that is best directed
to the Federal Department of Finance or federal ministers. The Atlantic Energy
Gateway project was announced well before the announcement of the Lower
Churchill or Muskrat Falls project, and it is generally designed to encourage
and foster collaboration across the region. It is not designed to provide any
specific insight or analyses on any specific project. We are not looking at
Muskrat Falls specifically as ACOA in that context.
Senator Mitchell: The Atlantic Innovation Fund does specific
distribution of money to projects, I think. You say that it has to date invested
over $90 million on energy-related R&D projects in this region. Close to
one-sixth of those funds has been distributed.
Mr. Noseworthy: AIF is an interesting program. It is designed to
encourage the commercialization of research in the region, specifically to
promote innovation. We have done some very interesting projects in the area of
energy. An interesting one, for example, would be with a company by the name of
Atlantic Hydrogen in Fredericton, which has a close association with the
University of New Brunswick. They have actually developed a technology that can
scrub carbon from natural gas and reduce the emissions from natural gas while
improving its efficiency as a combustible fuel by roughly 30 per cent. We have
provided monies to them through our AIF program to assist in its ultimate
development. Another interesting project in the same vein would be Ocean
Nutrition in Halifax, which has the potential to develop a biofuel out of an
algae-based source, and we have provided support for them.
ACOA does provide funding support for the commercialization of research
projects. We do provide support for small to medium-sized businesses in the
sector to support their growth and expansion. Looking back at our 20-odd- year
history and specifically at the supply sector, for example, in Newfoundland and
Nova Scotia, we provided a lot of direct support for companies back then in
assisting them in starting up and positioning themselves to maximize from the
development of the offshore. We see much less activity with them now. We do not
see those companies coming to us looking specifically for funding, for example,
from our BDP program, but we still have a very deep relationship with them. They
come looking for us for advice on what is happening in the sector to assist them
in making relationships with some of the oil companies, and the nature of our
business has changed from simply providing funding support for specific projects
to assisting them in understanding what is going on in the broader energy
Senator Mitchell: Could we get a list of the projects that AIF has
Mr. Noseworthy: Yes, I will endeavour to do that for you.
Senator Mitchell: Are you aware of Seaforth Energy?
The Chair: You must be investing in that.
Senator Mitchell: No, I am just interested in it.
The Chair: You bring that up a lot.
Senator Mitchell: Here is a company that is in Nova Scotia. It is
local. It is in the heart of one of the developing wind enterprise areas of the
world. It was interesting in that yesterday one of our expert witnesses in this
area from New Brunswick did not recognize it under the name Seaforth Energy. I
noted today that P.E.I.'s development is older than Seaforth Energy, so they are
not using the technology and yet here is an economic opportunity waiting to be
exploited in a good way, and it seems not to have come up on the radar in its
neighbouring provinces. Are you aware of it?
Mr. Noseworthy: I am generally familiar with the company. I am not
sure it is appropriate for me to specifically talk about our arrangements with
any specific commercial entity.
Senator Mitchell: I take it, then, you have an arrangement. The
examination of best practices in financing renewable energy projects is very
interesting. That is AEG's focus. Have you got anything yet written or reported
in that regard?
Mr. Noseworthy: We see that as a consultant's study. We have a group
comprising the provinces and ACOA, and we have finalized the terms of reference.
We intend to put out an RFP in the next week or so for that piece of work. As I
have indicated, we should have results back in a few months.
The Chair: I want to come back to where I was trying to go earlier. If
you put yourself in the position of your political masters, the prime minister
and his ministers are up there and they are getting heat from places in these
provinces about where the "feds'' could help in a big way in a major project of
national consequence. The logical thing, it seems to me, would be to look to
folks like you down here who are on the ground and say, "What is the score?
Brief us on this. What is your recommendation? What do we do?'' There seems to
be a hodgepodge of so much stuff. I am not being critical. I am just trying to
understand how it works because the public does get the impression the big
behemoth of the federal government is up there and here we have something really
important and we do not know how to get through the maze. They have a policy
making group on the ground, but they are not even dealing with the issue, if you
follow what I am saying.
Can you comment on that or maybe just tell me I am barking up the wrong tree?
Mr. Noseworthy: Our specific focus, as I have said, with the Atlantic
Energy Gateway is to, first, encourage communication and, second, to encourage
collaboration between the provinces and utilities and ourselves.
The Chair: ACOA generally though is here for economic development.
Mr. Noseworthy: Clearly, we provide advice to the government on a
range of economic policy issues and when called upon, we provide advice on
Senator Brown: Do you have a specific budget for R&D or are you just
passing it up the chain to those that come up with the R&D, the actual funds, I
Mr. Noseworthy: Inside ACOA, AIF is an established program, which has
ongoing funding, and it is a program of general application. We do not have any
programs specifically targeted at funding and supporting R&D in the energy
sector per se. Energy projects coming into our AIF program compete against other
sectors for funding. It is perhaps a statement on the significance of the
capacity of this region that the energy sector has been such a dominant piece of
that program. The Atlantic Innovation Fund is an established program designed
for funding research, commercialization in this region.
Senator Brown: I do not quite understand. Are you the decision maker
or do you make suggestions that it is a good project and then push it up the
line or are you making out the cheque?
Mr. Noseworthy: The agency indeed makes out the cheque. In that
particular case, with respect to AIF, we actually have an independent advisory
board that reviews all projects and provides specific advice to the minister,
and, in fact, we go through a rather intensive peer review process of analyzing
projects to determine their integrity and their business potential.
Senator Brown: That is good. I am pleased with that approach because
it does have to go far to move it up, all the way to, say, the prime minister or
someone close to him. You are able to do it all in the region. Projects are
brought to you, you give suggestions, information and then you can actually make
a decision if you come to an agreement with the players.
Mr. Noseworthy: The way it works with our AIF program is we provide
funding for projects in a succession of rounds. We are presently in our eighth
round of funding under that program. We will announce our intent for a funding
round. We will invite letters of expression of interest. Then there is a second
phase of a more detailed application, which goes through a detailed review
process involving this independent advisory committee I mentioned, which
ultimately provides advice to our minister.
Senator Brown: Can you give us an idea of how long it takes for a
decision from your level? Are we talking months, years or what?
Mr. Noseworthy: I believe we started the work on the eighth round last
spring and our hope is to have announcements in the relatively near term.
Typically, each one of the rounds we have held to date has generally taken nine
months to a year from the announcement of the round to the announcement of
The Chair: Does NRCan have an office or a representative in any of the
Mr. Noseworthy: Through the Atlantic Canada Energy Office, what we
have done is co-locate staff. NRCan has three staff in the region. They all work
out of St. John's in the energy sector. There is a representative of the
Geological Survey of Canada, one from their Frontier Lands branch and one from
the policy branch. ACOA and NRCan actually work through a process of developing
a joint work plan for what the office does that involves both those staff and my
The Chair: Is there not someone here in Charlottetown or in Halifax or
Saint John? The NRCan office is joined with others in St. John's?
Mr. Noseworthy: That is correct.
The Chair: For the record, we were scheduled to go to that new LNG
terminal at Canaport, but unfortunately an incident of climate change diverted
our aircraft and we did not get to it. We hope to go and visit it on another
Mr. Noseworthy: I encourage you to do so. It is a fascinating facility
to see. There is quite a fascinating collection of major projects in the greater
Saint John area with the refinery, of course, and the LNG facility.
The Chair:, I suppose it is a significant element in the overall
energy mix right now.
Thank you, sir. We really appreciate the time you have taken to be with us.
Our next witness is Leslie Malone, Policy Associate for Environment
Northeast. I take it you are more involved on the environment side of things; is
Leslie Malone, Policy Associate, Environment Northeast (ENE):
Environment and energy policy, yes.
The Chair: You have the floor.
Ms. Malone: Good afternoon, everyone. As mentioned, I represent
Environment Northeast. Thank you for undertaking this study and for the
opportunity to speak with you this afternoon. I am looking forward to using my
time today to talk about the importance of prioritizing energy efficiency in
Canada's energy system of the future and also the benefits, the potential
economic and environmental benefits of increasing our investment in this very
important energy resource. My presentation, which I will aim to keep relatively
short so that there is sufficient time for questions, is going to track the
slide deck that hopefully has been circulated. I do apologize that it has not
been translated into French. That is my delinquency.
By way of background, ENE, or Environment Northeast, is a not-for-profit
organization. We engage in energy policy, research and advocacy in the U.S. and
Canada. We have offices in Maine, Massachusetts, Connecticut, Rhode Island and
Ottawa, Ontario, although until fairly recently, our Canadian office was located
here in Charlottetown, but as of January, I am based out of the capital. We are
currently entirely funded by foundations. ENE staff is composed of attorneys,
economists and environmental scientists.
The Chair: We have an interest in these foundations. Could you give us
a sense of who funds you?
Ms. Malone: They are primarily based in the U.S. Actually, I do not
think we have any Canadian foundation support at this point. The Energy
Foundation is a key contributor. The Oak Foundation also funds aspects of our
work, especially around energy efficiency policy. I would have to go into our
annual report to pull out some more.
The Chair: That is fine. Are you an American?
Ms. Malone: I am from Charlottetown, P.E.I. I am Canadian.
The Chair: Do you work in all of these offices?
Ms. Malone: No, I work out of the Canadian office. I am the Canadian
The Chair: In Ottawa.
Ms. Malone: The rest of our staff is located in New England.
Our staff focuses on energy policy, climate policy, forestry and land use and
transportation. Ultimately, the crux of my presentation is that we are radically
under-investing in low-cost efficiency resource. We need to rebalance our
investment choices in order to save Canadian households and businesses billions
of dollars to create jobs, increase our energy independence and reduce
greenhouse gas emissions. To do this, ultimately, we need a cultural shift in
Canada at the federal, provincial and territorial levels toward viewing energy
efficiency as a bona fide energy resource that is assessed and procured
alongside traditional supply options.
Because of the benefits of investing in energy efficiency, it has assumed a
leading role in energy policy in a number of jurisdictions. It is a low-cost
resource. For example, in the electricity sector, the cost of efficiency is
approximately $0.03 a kilowatt hour for the lifetime of the measure, whereas in
a number of jurisdictions in Canada, you are spending three, four times that
amount, or more, on the cost of electricity. The cost effective efficiency
resource is abundant and procured locally, which means that the economic
benefits are impressive. Finally, energy efficiency is a commonly recognized
policy tool for addressing climate change. It leads to significant reduction and
avoidance of emissions.
The figure on slide four compares spending on electric supply versus
efficiency programs in 2008 in Canada. As you can see, there is a fairly
significant discrepancy in terms of where the money is flowing. Even in regions
of this country where there are relatively good efficiency programs, because of
the way utilities have been regulated and the market barriers that exist, we are
spending at least 26 times more on high-cost supply than on efficiency, which,
as you can see, is a much cheaper resource. It does depend on the energy supply
mix, but in some cases, can be down to a third as much per unit of energy.
Ultimately, these investment choices need to be rebalanced.
P.E.I. actually offers a relatively good and fairly timely illustration of
the abundance of the efficiency resource. In 2007, the provincial government
undertook an energy efficiency potential study to assess what the extent of the
resource was and how much of the resource could be procured cost effectively.
The results of this potential study showed that all of the projected energy
growth forecast out to 2017 in the residential, commercial, institutional and
transportation sectors on the Island could be offset by investing in cost
effective efficiency initiatives. The net benefits, as demonstrated by the
study, were that over the ten-year period, savings to consumers or rate payers
would be around $150 million, emission reduction would be in the order of
150,000 tonnes, and for every $1.00 put into these efficiency programs, $2.50
would be returned to the local economy in direct benefits.
To address this discrepancy in spending and to also try to access this huge
capacity, the provinces need support from the federal government. They also need
to put in place energy efficiency procurement mandates that will direct
utilities to invest in efficiency that is cost effective and less expensive than
new supply. In addition to funding electric and natural gas programs, we need to
focus on heating oil programs, and this is especially important in this part of
the country where we rely fairly heavily on heating fuel. This is called the
"all fuels'' approach that jurisdictions in the U.S. are now moving toward.
Ultimately, to be able to do this and to access this huge potential, we will
need new funding sources. In many parts of the U.S. and in Canada as well,
system benefit charges are used to fund electric efficiency programs. Federal
funding also comes into the mix and is a very important piece of the puzzle. The
revenue from cap and trade programs is also a potential funding source. In the
U.S. Northeast, where the Regional Greenhouse Gas Initiative program is
currently operating and has been since September 2009, the states are committed
to direct almost 70 per cent of auction revenues towards efficiency programs.
The program has not been operating for long, but this is translating into
hundreds of millions of dollars for new funding for state programs. This is
definitely turning into an important funding stream for efficiency. Then for
heating oil, what is being explored and discussed for implementation is a
floating surcharge on heating bills.
I am on slide 7 now and I just wanted to illustrate that in all of the New
England states, they have electric efficiency procurement mandates and some have
the same for natural gas. That is resulting in aggressive annual energy savings
targets that are being brought forward by the utilities. They are mandated to do
so, but they are nonetheless impressive. This is translating into significant
funding, generally speaking, which is demonstrated on a per capita basis in
slide 8. In fact, the funding that is going toward efficiency programs in New
England is making these states leaders in the country in terms of spending, and
this is shown in slide 9, on a per capita basis as well.
On the provincial side, some provinces could be seen as being among the
leaders in the U.S. and Canada. Others would require significant investment to
catch up to industry leaders and then all will require ramping up to approach
the cost effective levels that exist in the province. You will note that New
Brunswick is missing from the figure on slide 10 and that is only because they
were not included in the 2010 Consortium of Energy Efficiency or CEE report.
They would be among one of the leading provinces. They have good funding,
impressive programs, award-winning programs, in fact.
The conversation usually turns to the question, "If efficiency is so cheap
and so abundant, why do we need these programs and attention via funding? The
fact is that there still are significant market failures that need to be
addressed. Those include liquidity constraints, the split incentive where the
person investing in energy efficiency might not be the beneficiary, there are
information problems or access to information, and then some of these investment
decisions are fairly complex. What efficiency programs do in the U.S. and Canada
is provide technical assistance, consumer outreach and education, and they also
offer the financial incentive needed to invest in, for example, the appliances,
high-efficiency lighting, insulation, efficient motors and so on.
For the remainder of my presentation, I want to focus on a study that we did
in 2009. It was called, Energy Efficiency: Engine of Economic Growth. We
were interested in looking at the design and implementation of most efficiency
programs in New England. This was a New England-based study, but I should note
that we are talking with the provincial governments in Eastern Canada to do a
similar exercise here. In New England, it is very much a public process and
there is a significant amount of state oversight, so the direct economic
benefits on consumer energy bills have been well studied, but understanding the
non-direct impacts of the efficiency programs is equally important, both the
impacts from investing in the energy efficiency measure and the savings that
We modeled the expanded investment to approximately capture all cost
effective efficiency for three fuel types in the six New England states. That
report was released in October 2009. It is available on our website and it goes
through in great deal the methodology that we used, so I will not take up your
time with that right now. However, I did want to note that the model we used,
the REMI, is commonly used by states and has been used by some provinces to
assess their policy proposals. It is a well-regarded, well-tested tool and it
has been quite helpful in being able to present the results with confidence and
then being accepted with confidence, too.
What we modelled were efficiency investment levels that were based on state
plans and potential studies that looked at the cost effective potential, similar
to what P.E.I. had done in 2007. The target savings for electric efficiency
programs were modelled at a conservative level that achieves two per cent
reduction in energy consumption per year, and for natural gas and heating oil,
we looked at 1.25 per cent of annual consumption. We took those levels of
savings that we wanted to achieve and figured out what that translated into in
terms of investment. The figure on slide 14 is the actual investment levels,
which are fairly significant, that we ended up putting into the report. The
investment levels needed to capture these savings were ramped up from current
budgets by 50 per cent per year for electric and natural gas and 100 per cent
per year for heating oil because there is not as much experience in funding in
heating oil programs.
We looked at these investments over a 15-year period and we modelled the
energy impact over an additional 20 years so that you were able to capture the
full extent of the benefits. What you will see on slide 15 are the direct
results in terms of energy cost savings. The energy cost decreases ended up
yielding savings of $29 billion for electricity, $6 billion for natural gas, $15
billion for unregulated fuels for a total of $50 billion. That is over the
course of 35 years. They were very impressive savings.
The next slide shows the emission reductions that we saw. Total lifetime
emission benefits from expanded efficiency programs for the three fuels were 536
tonnes. It is interesting to note that the lower emissions not only provide
environmental benefit, but also provide economic benefits in terms of a
decreased amount for electricity, which translates into a reduction of emissions
associated with energy production.
I should back up and point out that these figures and graphs refer to the
states where the cap and trade program is functioning. This is an important
component, if we ever have a carbon price in Canada.
The reduced emissions lead to a lower demand for emission allowances, which
reduces the price for allowances and reduces the overall cost of a cap and trade
On slide 17, we turn from the direct benefits to some of the larger
macroeconomic benefits in terms of total impacts. The individual column
represents a cumulative of all the states operating individually, whereas the
last scenario that we ran looked at what would happen if all six New England
states implemented these programs together. In fact, they return even greater
benefits. As you can see, the output in terms of gross state product, income and
employment is quite impressive.
Slides 18 and 19 reflect total economic impact in terms of the investment
required to create the programs. Here, you have dollars of gross state product,
increase per program dollars spent, and on the following slide, you have job
years created or the job creation potential per $1 million invested. I now wish
that I had included a comparison slide on renewables or fossil-based
technologies, for the orders of magnitude can be, in certain cases, quite a bit
One of the reasons is seen on the next slide, which shows the components of
the economic impact. When you invest in energy efficiency, you receive benefits
from the initial investment in the mechanism, the person that is installing or
operating it. You also receive benefit from the savings that are delivered.
Finally, there is an economic impact on the rate payer from the surcharge used
to fund the program. There are three components.
We found that in all the cases, the savings delivered by efficiency
investments were substantial, whereas the actual initial investment was not as
significant. This is important because when you are comparing efficiency
investments with other resource options, typically, you look at the initial
investment and the economic results flowing from it. Efficiency fares well, but
it really is the savings that bump it up and demonstrate that it really should
be a first resource.
The following slide is our new go-to slide because it reflects the overall
economic benefits for New England. It is the scenario in which all states act
together. While the total initial investment in efficiency programs for
electric, natural gas and unregulated fuels would be significant, it is
absolutely eclipsed by the resulting economic output, direct and non-direct, in
terms of gross state product or GSP and employment.
I have included slides in the appendix, but I do not want to go on too long.
I am happy to address any questions based on the first part of the presentation
and the appendix.
Senator Mitchell: Are you aware of the Efficiency New Brunswick and
Efficiency Nova Scotia programs, and is the counterpart program here the
Ms. Malone: No, it would be the P.E.I. Office of Energy Efficiency.
Senator Mitchell: What is your assessment of those programs? Are there
numbers that would correspond to the kinds of figures you have here?
Ms. Malone: I am not in the program development area, so I cannot
really speak to the specifics of the programs, but my understanding is they are
functioning quite well. They are not necessarily funded to the level that would
start to even approach their cost effective potential. However, they are
relatively new, save for New Brunswick, which has been operating for longer. It
is a process that ramps up over time. They are starting at a good spot, but will
need additional funding as they expand existing programs and target other
Senator Mitchell: If you were the premier of one of these provinces
right now, what would be your five priority efficiency programs?
Ms. Malone: It would be situation/jurisdiction specific, but you would
want to focus on weatherization. Within the weatherization envelope are some
leading edge programs.
Senator McCoy: You mean insulation?
Senator Mitchell: Windows.
Ms. Malone: Absolutely, the building envelope, and also advanced
lighting, which is important for residential, but especially commercial and
industrial sectors. Those are the two big program areas.
Senator Mitchell: Do you have a more detailed analysis? Have you a
list of programs?
Ms. Malone: We have focused mostly on the policies to get funding to
these programs. We do have someone on staff who has the technical knowledge of
the actual programs, and I would be happy to pass on the information.
Senator Mitchell: It would be very nice to see that. I would like to
see specifics. I mean, it is very compelling —
Ms. Malone: But what does that mean?
Senator Mitchell: Yes, what does it actually mean?
I refer you to the chart on slide 21. If you did these total efficiency
programs, the cost for electric $16.8 billion?
Ms. Malone: Yes.
Senator Mitchell: That is actually what they have spent on efficiency
programs for electric in those states?
Ms. Malone: No, that is if they were to ramp up to capture all cost
effective energy efficiency over a 15-year period. They would ramp up for three
to five years and then maintain those program levels for the remainder, which
would result in that level of spending.
Senator Mitchell: You get $99 billion in extra gross state product.
Ms. Malone: Yes.
Senator Mitchell: Efficiency spending would account for about 12 per
cent of that?
Ms. Malone: Yes.
Senator Mitchell: There is great leverage here.
Ms. Malone: Yes.
Senator Mitchell: It creates jobs?
Ms. Malone: It creates a significant number of jobs and, relatively
speaking, it should be where we are putting our money first.
Senator Mitchell: Improves health?
Ms. Malone: Improves health, yes.
Senator McCoy: My first question relates to slide 4. You refer to a
CEE Industry report.
Ms. Malone: The Consortium of Energy Efficiency. It is an industry
group that does a significant amount of analysis of state and provincial energy
programs and each year releases an industry report that looks at provincial and
state budget levels for electric and natural gas.
Senator McCoy: They have a website, CEE?
Ms. Malone: They do.
Senator McCoy: That report will be available there?
Ms. Malone: There is a link to it on the home page.
Senator McCoy: It is hard to ask intelligent questions because I have
not had a chance to absorb all of this. I obviously need to read your report as
well. It seems to me to be a positive story, but some analysis or understanding,
at least, has to be grasped here because there is a time delay. You are
accumulating, you say, over 15 years, et cetera, et cetera.
Ms. Malone: We are presenting is the cumulative result, but these
programs start to deliver economic output and benefits immediately. They are
extremely cost effective. We do have results broken down on an annual basis,
which I can provide.
Senator McCoy: To some extent you are saying you are backing off on
investment in additional energy projects, new generation projects in
electricity, or a new oil refinery or pipeline or gas pipeline, which would
presumably mean a lowering of economic activity, right?.
Ms. Malone: That is accounted for in our study.
Senator McCoy: It is factored in?
Ms. Malone: Yes, it is.
Senator McCoy: So over 15 years it is a net increase?
Ms. Malone: Yes, the economic output is net. It is a 15-year period of
investment, and the benefits shown are for a 35-year period. Because of the
lifetime of efficiency measures, you continue to see benefits for at least 20
Senator McCoy: You have done the calculation on the direct and
indirect benefits. I presume you would apply the same methodology in a
socioeconomic benefit analysis when we are applying for the next big refinery or
whatever. It is an input/output model, I presume?
Ms. Malone: Actually, it is not an input/output model. It is a general
equilibrium model. It returns some of the same results as an input/output model,
but it has the ability to go further in the economic analysis for the region in
terms of regional feedback and so on.
Senator McCoy: I will leave my questioning there because I think I
need to study. I am glad to know you are in Ottawa. We can always tap into your
wonderful resource again.
Ms. Malone: Absolutely.
Senator Mitchell: It would be really interesting to have information
on the direct cost saving, given your claim, and it is a powerful claim. Is
there a way to calculate, say, the average cost of saving one kilowatt hour over
a certain specified period? You would have to specify a period of time.
Ms. Malone: Yes. On average it costs $0.03 to save a kilowatt hour.
Senator Mitchell: Which costs $0.09 or $0.10 or $0.12?
Ms. Malone: Or much more.
Senator Mitchell: Yes, but on average.
Ms. Malone: On average.
Senator Mitchell: Wind is even $0.07.8.
Ms. Malone: Yes. In residential programs, it ranges from a low of
$0.01 a kilowatt hour to $0.04 a kilowatt hour, and typically for commercial and
industrial programs, the range is $0.01 to $0.02 a kilowatt hour saved. The
difference in cost is significant.
Senator Peterson: Who is spending all this money to make this happen?
Ms. Malone: In the states that we looked at, they are utility-run
programs. The electric utilities or the natural gas utilities administer the
programs. They are funded through rate payers and then that funding goes into
the utility programs. In some cases, they are supplemented by state-funded
programs. Generally, those are the low-income programs.
Senator Peterson: Is it the homeowner who ultimately pays?
Ms. Malone: The rate payer, yes.
Senator Peterson: You collect the tax and then the utility encourages
me to do this by giving me incentives and so on?
Ms. Malone: Yes.
Senator Lang: I am kind of amazed that your organization is funded by
the Americans just from the perspective of Canada. Nobody can argue about the
need for efficiency. Obviously, costs are going up, so we are all moving in that
direction. I am surprised. Is there any other department in the federal or
provincial governments doing this type of work that you are doing here?
Ms. Malone: In terms of analysis?
Senator Lang: Yes.
Ms. Malone: They are definitely engaging in energy efficiency
potential studies. They are monitoring the programs that they would have in
place. This type of analysis is reasonably unique in the U.S. and we have not
seen anything similar in Canada that looks at not only the direct but also the
indirect benefits. As I mentioned, fingers crossed, we will be doing a similar
study for at least the Eastern Canadian provinces in the near term.
Senator Lang: In the conclusion and recommendations, you say that the
federal and provincial governments must support advance building and
appliance/equipment standards, energy policy reforms and new funding mechanisms.
Are you aware that at least in some of the jurisdictions, building codes have
changed over the last number of years substantially to meet the principle of
energy efficiency and, obviously, saving of energy. Also, the federal government
passed regulations not too long ago on the standards of appliances and equipment
coming into the country?
Ms. Malone: Yes.
Senator Lang: I think we have obviously met those responsibilities,
then, from across the country.
Ms. Malone: For the most part, currently, those regulations would be
quite helpful, but it involves ongoing adjustment based on best practices. It
requires a continuing focus with new recommendations.
Senator Lang: I want to follow up on your premise about efficiency and
government. At the same time, we need more money to study ourselves to see if we
can become more efficient, which involves more money from the taxpayer in one
manner or another. Have you done a study on how we could accomplish some of
these objectives without asking for more money, on utilizing existing resources
and redirecting those resources to the objectives you talk about?
Ms. Malone: We have not looked into that, but, presumably, there are
pots of money that could be better used to benefit the environment.
Senator McCoy: Alberta is beginning to conduct some of these sorts of
studies. When I did a literature review of this area, I found it very difficult
to lay hands on hard data. It is an emerging area. We have not really learned
how to think in a 21st century way about energy. This is one of those
leading-edge turnarounds to look at things a little bit differently from the
traditional methods. However, as we saw yesterday, even the major corporations
like a little help on the efficiency side when it is in their own interests,.
Senator Lang: When it is driven by costs that you cannot afford to
pay, you try to find another option to deliver the same program or deal with
your situation. I think that is happening across the country.
Senator Mitchell: The average cost per kilowatt hour is $0.03, and I
know this varies with the source of the energy, but pick one or an average. What
does that cost per tonne of reduced carbon emissions, GHG?
Ms. Malone: I do not have that number off the top of my head, but we
have definitely compiled it somewhere.
Senator Mitchell: Could you get that to me, because here is where my
thinking is going. You are talking about pools of money that could be used
differently. I am not entirely opposed to carbon capture and storage. Some
companies actually want to do it, and some governments are doing some things.
The problem with greenhouse gas is that there is always a reason not to do
anything that fixes it. Even wind apparently makes people sick or ethanol is
burning food or nuclear is dangerous. They all have a problem. It would be
interesting to analyze the use of that pool of money, for example, in carbon
capture and storage, although the results there would be a moving target in that
we do not quite know. What would it look like if you took that money and put it
into a productive conservation program such as you are talking about? It is a
lot of money, and it might capture or forgo the emission of tonnes and tonnes of
Ms. Malone: One of the reasons it is so easy to sit up here and
advocate for efficiency is that it is one of these options where there is no
fail. We should be investing in it, the economic benefits.
Senator Mitchell: Yes.
Ms. Malone: I take your point, and I am reminded of the McKinsey cost
curve, the emission reduction cost curve or mitigation cost curve. If you look
at the cheap options, they are all efficiency and it is when you move towards
the right that you bump up against carbon capture and storage and that type of
Senator Mitchell: It is much more expensive, yes.
Ms. Malone: I will look into that number.
Senator Mitchell: The ultimate limiting factor with efficiency is that
even if we increased our efficiency by twofold and we emit 50 per cent less than
what we are emitting, once we double the population or double development in
China and India, all of a sudden, we are back to square one. This is an interim
step in some sense to finding ways not to emit.
Ms. Malone: Absolutely.
Senator Mitchell: Or maybe it is a step that drives us to that. I do
Ms. Malone: That could be complemented with a cap.
Senator Mitchell: A cap, yes. Would you price carbon, and how?
Ms. Malone: That would be one of the first things that I would do, and
then I would also make sure that the revenue was being used towards programs
that reduced emissions further, and efficiency would be number one on that
Senator Mitchell: Which jurisdictions in RGGI are auctioning credits?
Ms. Malone: Every single state is auctioning credits. Some are
auctioning up to 100 per cent of the credits and in total, approximately 70 per
cent of the allowance value is explicitly going towards efficiency programs,
hundreds of millions of dollars within the first year of the program.
Senator Mitchell: What prices are they going at, the carbon credits?
Ms. Malone: Carbon credits start at around $3 a tonne, a short tonne.
They did fall, I think to the floor price, which is $1.86 a tonne, but that is
because the cap is over-allocated. It was set too high. RGGI is going into its
second phase in 2012 and, hopefully, there will be some adjustments before then.
Senator Brown: Have any American cities of any size ever tried turning
the lights out? I do not mean the streetlights. I mean turning off the tower
buildings, the huge business areas that shut down from certain hours of the
night. The reason I ask is that I have an experience in my own family. My wife
was on the board of Federated Cooperatives, which has offices in four provinces,
and they started out with motion sensor lights just to try them and then they
went to a policy of just telling everybody, "Shut the lights off when you
leave.'' They saved $1million a year for the nine years she was on the board. I
do not know whether they are still doing it, but if they are, it has gone up
considerably from $1 million a year because that was over a decade ago.
When the space shuttle was travelling across Australia, which takes all of
about 30 minutes to go across the entire continent, they asked the people of
Australia to shut their lights off so they could see the effect of seeing the
continent with no lights on at night. It was a significant change in the
electricity generation just in 30 minutes.
Ms. Malone: I can imagine. That is impressive. I do not have a good
example to point to, but I am sure that Earth Hour data are available, which is
an initiative that the WWF and a number of other organizations are involved in.
I think the date is March 28. I should know that. They ask cities, individuals
to turn off lights. I am sure you get some impressive data from that, over the
Senator Neufeld: I am a firm believer in the concept that the cheapest
form of energy is what we save. In British Columbia, the Peace Canyon dam puts
out about 650 megawatts, and through Christmas it takes everything that dam can
produce to keep the extra Christmas lights on just in the province. It is
interesting that when we put it in that context — and we all like those little
lights flashing from our houses — how much energy it does take.
On slides 9 and 10, do the efficiency budgets for states and provinces refer
to electricity, natural gas and oil or is this just electricity?
Ms. Malone: I believe, just looking at the numbers, it should be just
electricity. The CEE does present data on electricity and natural gas. I
apologize. We should have distinguished what the figure is looking at. Looking
at the numbers, it is per capita spending on electric efficiency.
Senator Neufeld: Is there some place you can get the efficiency, the
same kind of graph or numbers, for natural gas and oil for home heating, all
those kind of things?
Ms. Malone: The CEE website would have program spending on natural
gas. It is not nearly as significant because the programs are not as mature. I
am not aware of any one place where you could find the data for oil programs,
but at the same time, oil programs are very limited across the country and
involve minimal spending at this point.
Senator Neufeld: It is interesting to me that California, which is
viewed as the leader in almost everything that happens with efficiency and
regulations around cars and greenhouse gas emissions, does only half of what
The second slide is really interesting to me because it talks about Canada.
The interesting part for me is that Quebec, Manitoba and British Columbia —
British Columbia being the highest, by the way, folks — which have some of the
lowest electricity rates across Canada because they have just about all the
hydroelectricity that is available across Canada, actually have the best
programs for efficiency. That is quite surprising when you look further down the
list at the source of electricity generation for the other provinces. Some of
them are not there. I am amazed because I have heard people in Atlantic Canada
say how the oil and natural gas cost so much and that they have to generate with
it, yet their utilities and governments are not looking toward how to save
electricity. That graph says a lot to me, if it is just about electricity. There
has to be some real looking inward for some of these provinces, with their
utilities, to actually conserve electricity, instead of thinking about how they
can generate more. Would you agree with me? I mean, it really hit me. It is
great that those three provinces have the lowest rates, but I have always
thought that it was the cost of the product that drove people to get efficient.
This slide shows that I was totally incorrect.
Ms. Malone: A number of factors weigh in on the investment levels of
the province. One is potential export opportunities, but also, it is very much
the culture in the provinces and within the utilities. It is the decision makers
that are required to show leadership to mandate that utilities invest in the
lowest-cost resource. That is what is happening in New England and that is why
we are seeing such high investment levels.
Senator Neufeld: Are you saying that because Quebec or Manitoba can
export, they can afford to have more efficiency measures? Is that what you are
Ms. Malone: Not necessarily. They could, but, potentially, they could
look to it as an economic opportunity. If they are conserving at a cheaper cost
internally, then they have more supply that has mobility.
Senator Neufeld: British Columbia is a net importer, so that does not
jibe with what you just said, right?
Ms. Malone: Not necessarily, sure.
The Chair: Ms. Malone, you have undertaken to give us some
calculations, a few figures.
Ms. Malone: Yes.
The Chair: If you could send them to our clerk, that would be super.
Our next witness is David Taylor from the University of Prince Edward Island.
David Taylor, Manager, Sustainability and Energy Efficiency, University of
Prince Edward Island: Chair, deputy chair and members of the committee, I am
the Manager of Sustainability and Energy Management at the University of Prince
Edward Island here in Charlottetown.
The University of Prince Edward Island offers a dynamic learning environment
and promotes teaching excellence and student access in arts, science, education,
veterinary medicine, business and nursing.
UPEI has extended its impact well beyond its shores through unique
partnerships that contribute to a vibrant research agenda with exciting
opportunities for undergraduate and graduate studies.
Commitment to renewal has equipped the historic campus with excellent new
teaching and research facilities, student residences, a student centre and a
More than 4,600 students from 59 countries attend UPEI. They get to know
their professors personally and quickly become a part of a tightly-knit
community that takes pride in supporting their success.
As an education institution UPEI strives to be a model to our students and
community. A commitment to sustainability and energy management goes back more
than two decades when bio-mass heating was used on campus. This commitment is
continued in the establishment of my current position at UPEI and the inclusion
of sustainability and energy management in our strategic planning. The
institution also has a multi-disciplinary sustainability advisory committee that
reviews and suggests initiatives on campus in improving sustainability.
Our sustainability program here on campus includes a multi-stream waste
collection system, energy monitoring systems to identify energy issues early and
address them quickly, efficient lighting and control systems to create smarter
buildings to reduce consumption, energy efficient building design practices,
water conservation, resource reductions, including paper and other consumables.
The university is connected to the district heating system and is one of the
largest cumulative users. The heating produced at the plant provides all the
space heating and most of the domestic hot water usage on campus. In addition,
it provides cooling to a large percentage of campus through the use of campus
absorption chilling. The district heating system in Charlottetown is a
successful model of a shared energy system and an example to other regions for
energy efficiency. The economies is of scale derived from the larger system
could not have been achieved by a single customer of the system but are from the
collective nature of the service.
The centralization of the heating plant removes the individual boilers that
would have been used in individual buildings primarily heating with oil and have
resulted in a net reduction in overall emissions. Emission control systems at
the centralized plant, which would be uneconomical to single users, reduce the
level of pollutants released into the atmosphere. The system utilizes solid
waste and renewable wood bio-mass to significantly reduce the usage of fossil
fuels in space heating, a significant contributor to greenhouse gas emissions.
Government investment was critical in the development of the system which now
operates as a stand-alone operation. Strategic investments on the part of
government in district energy can provide for long-term emissions and cost
reductions. Utilization of the district energy system provides hundreds of
thousands of dollars in savings to the university each year.
UPEI is a leader in energy efficiency. The campus is currently embarking on
its third energy retrofit since 2004. A comprehensive energy audit was completed
last year, the first of the campus since 2001, and will provide over a $100,000
in annual savings once implemented. This retrofit will include lighting,
mechanical systems and automation controls to help reduce overall energy usage
In the past, the university has taken advantage of federal and provincial
funding programs to reduce our energy usage. These programs have helped the
university to reduce its energy footprint and implement projects that would
otherwise be uneconomical when evaluated on their own merits.
While committed to energy efficiency, the university must be fiscally
responsible in its implementation. In energy efficiency terms, the low-hanging
fruit or greatest opportunities for savings have been almost depleted across
campus. However, these opportunities are relative and projects that are
uneconomical can be accelerated with strategic investments by government and
government agencies and energy retrofits.
Our experience on campus has been that energy efficiency retrofits occur in a
three- to five-year cycle. Key influences on this cycle have been changing
economics, rising energy prices that made more feasible projects that were
uneconomical a few years ago, changing technologies, advancements in technology
that have reduced the cost of some retrofits or new technologies that have
provided for new retrofit opportunities. LED lighting is a recent example.
Economies of scale have come into play as the campus has grown and we have
looked to partner with other institutions and stakeholders. As governments
invest in energy efficiency through audit and retrofit programs this provides
opportunities for end users, including the university.
The campus is continually looking to foster innovation and job creation
through the use of new technologies and practices in sustainability and energy
management. Only through their implementation on a larger scale will suppliers
have the opportunity to improve their products and reduce cost to end users. The
university can use its size to help influence these changes. Programs of
government that invest in energy efficiency help the institution to make these
investments and further that innovation and job creation.
The university looks on favourably and supports the continued development of
Charlottetown's public transport system. The system has reduced overall
pollution emissions with the reduction of vehicles on local roads. It has also
begun to influence city demographics, and students, who are provided a
discounted bus pass, no longer feel the need to live close to the university. As
well, the system provides affordable transportation for those who cannot afford
their own vehicles. Government investment in public transportation is critical
in ensuring its long-term success.
Though we have made great strides and improvements on campus it is not
without challenges. There is no standardized system of tracking and benchmarking
performance of buildings, whether that be carbon emissions or energy. What we
cannot consistently measure, we cannot improve. There is a need for a
standardized open source reporting mechanism that provides for key indicators
for comparison. This should be provided by a trusted federal agency to provide
We need to strive to ensure that energy management and sustainability are
horizontal over the entire enterprise and not done in isolation. It is up to
government to provide leadership and resources to allow us to change the culture
and practices of current and future generations.
I would entertain any of your questions.
The Chair: This morning we had the pleasure and the privilege of
meeting over breakfast with the premier, and he mentioned the initiative by, not
just the university, but also other educational institutions, to give more
critical mass to the project. Congratulations to you. It is an excellent thing.
Senator Mitchell: Do you have any figures on how much usage or
efficiency in conservation you have been able to achieve in your program? Are
you able to measure that?
Mr. Taylor: We are measuring through the current retrofit that we are
doing now. With the previous retrofits we did not have good measuring tools in
In 2007 we embarked on putting those measuring tools in place. We have
installed electrical metres and heat metres that are much more accurate than
what we had. Before we had monthly data to compare, which was pretty good, but
now we actually have 15-minute data on every building on campus for comparisons.
As we go forward with these retrofits, we are able to quantify more closely. We
know there has been savings, but we cannot quite nail down the number in terms
of what we have been able to save.
Senator Mitchell: I think it is UBC that is proposing to build the
perfect state-of-the-art energy efficient building. Are you proposing or
planning anything of that kind with future construction?
Mr. Taylor: We have incorporated a lot of those ideals in the
construction we have had currently on campus. I am a firm believer that the
greenest building you can build is one you do not have to build. That has kind
of been our mantra on campus as much as possible, to maximize utilization of the
space we already have, but when it necessitates a new building, we have
incorporated the latest technologies and newest technologies.
We have incorporated geothermal energy on campus. We use the district heating
system. If you compare the district heating system against electricity, which is
a bit unfair because that would not be the likely fuel of source — you would
probably use heavy fuel oil for an institution of our size — the spread is about
$0.09 per kilowatt hour. It would cost us $0.09 more a kilowatt hour to heat the
campus with electricity than with the district heating system, so it is not
insignificant. With oil, well at the current price, it might be close to that,
as well. It would probably be in the $0.06 or $0.07 per kilowatt hour range.
From that perspective, we have utilized and maximized that technology.
We have also looked at our buildings. We do not have any LEED-rated buildings
on campus. In our experience, at least on the East Coast, when we have gone to
build these buildings, we found that the investment it takes to get LEED
certification in buildings often does not match the performance boost of the
building. In some cases, the investment you would make into that LEED
certification would be better put to use in the building itself. We have made
those kinds of strategic decisions on campus. For instance, a recent example, a
building on campus was going to cost about $200,000 to certify it with LEED. We
decided to put that $200,000 into the building with a more efficient ventilation
Making those types of strategic decisions to further conservation on campus
are the types of things we are trying to do. We are trying to change the overall
culture. We have a building currently under construction on campus, it is the
new school of nursing, and that is incorporating or utilizing the district
We are minimizing the amount of cooling in the building based on the
orientation of the building. We are using low VOC components in the building so
that the building does not need quite as much ventilation. We are trying to use
demand ventilation in the building so that you can control the time of day when
the building is actually in operation.
We do that across campus now. Two years ago we questioned why we were leaving
14 or 15 of our 22 buildings open at night when we were only offering 10 or 12
classes. We put them all in two or three buildings and closed the other
It is making those kinds of simple changes, much like the co-op example
earlier, that have led to significant savings for us. They are small operational
changes that are simple, typically, to implement.
In the latest audit I mentioned, our primary focus will be on those types of
end-user technologies. We are looking at things like new lighting technologies.
We have adopted a new lighting standard on campus to reduce the amount of
lighting output that is required in particular areas. For instance, in some
areas we have been lighting as high as 75 or a 100 lumens, and we are dropping
that back to about 30 lumens. That does not provide any less lighting for tasks
that people can do but it reduces our lighting load by about 50 per cent. We are
actually using 50 per cent less light to provide typically the same amount of
task lighting for individuals to do their daily operations.
In that case, we are actually removing things and lowering things rather than
making significant investments. I guess you would put those under the category
of "low-hanging fruit.''
At the same time, occupancy sensors are a big part of this latest retrofit.
They have been utilized pretty significantly in our newer buildings on campus.
We have a pretty diversified campus, everything from buildings over 100 years
old to one under construction. Over the years, we have been trying to
rationalize that range of building ages and technologies on campus, and this is
one measure that we have looked toward.
Senator Mitchell: You can imagine how much we could reduce the
government's deficit if we did that in the federal buildings in this country.
Mr. Taylor: You have a perfect example here in Charlottetown with the
Jean Canfield Building, which we look to actually as a beacon, I guess, when
designing buildings for the campus. I mean, the Jean Canfield Building
incorporates some of the latest technologies in sustainability. For instance, it
utilizes natural ventilation rather than mechanical ventilation as much as
possible. There is mechanical ventilation installed but the building is designed
with a central shaft through it that acts like a natural chimney, so air
naturally wants to rise. It creates a current within the building, so you do not
need as many fans and mechanical systems to operate it, and that is a federal
It also has, I think, 240 kilowatts of solar panels on the roof. It has a
cistern in the basement that utilizes the grey water. All of the toilets in the
building are fed through grey water, which is water that has already been used
or captured through a rain gutter system on the roof of the building.
All existing technologies combined in a new way in a single building leads to
a significantly efficient building.
At U.B.C. they are looking at and have done a lot of the same things. I have
been in a few of the buildings, the advance buildings that they have built on
their campus, and they look towards the same types of technologies.
The Chair: Do you have any buildings with grass on the roof?
Mr. Taylor: We have one. The Atlantic Veterinary College has a green
roof. It was built probably before green roofs were en vogue. That would have
been constructed in 1985. That is still in place. On any summer day or early
fall day, people take their lunch out on the roof of the building. They have
easy access to the roof of the structure.
Senator Peterson: Does the university have an engineering and science
department where the graduate students can assist in developing strategies for
Mr. Taylor: We have an engineering program. Prince Edward Island
offers the first three years of an engineering degree and then students leave
and go either to UNB or Dalhousie University to complete their degree. The
reasoning behind that is a full four- or five-year engineering degree is quite
expensive to operate and accredit and with the number of students we would have
on Prince Edward Island, it just did not seem to be warranted because we would
have to run multiple streams of engineering. We have a large environmental
studies department and biology department that works closely with the
environmental studies department. We are always working with both the
engineering department and environmental studies to try and further these types
of things, whether they be technology- based or end-user based.
Senator Peterson: You said you have bus passes for the students. Do
you have a dedicated bus service to the university, as well?
Mr. Taylor: The bus service is operated by a private operator. Trius
Transit is the operator bus service in Charlottetown. It is operated as a city
system. The students pay for that bus pass at a discounted rate — I think it is
$25 per semester — and that provides them with unlimited ridership throughout
Holland College, which is just down the road here, is looking at doing a
That pricing structure gives a bit more long-term stability to the transit
system. It gives them a revenue stream for which they can plan. When those buses
arrive on our campus in the morning they are standing room only. When you
consider that there was no busing system in Charlottetown five years ago, it is
pretty impressive that they have been able to reach that level.
Senator McCoy: You call for standardized open source reporting
mechanism that provides the key indicators for comparison. What does that mean?
Mr. Taylor: We can measure against ourselves but we do not know if
that is a fair measurement when we are looking at making investments in future
We have done comparisons against some other institutions across Canada, those
that have made that information available to us. We have no kind of third-party,
audited, standard system that we can look to to say this is where this building
should be. This is where it is. This is where it should be. Are we better? Are
we not? It would help us in making strategic investment decisions in terms of
where we should be putting our money in energy efficiency. Should we be
investing in building A or building B? Where could we maximize our dollar
invested in terms of reducing consumption.
Senator McCoy: You described the value of such a model. What would it
look like exactly?
Mr. Taylor: The ones we have seen are usually measured either in terms
of energy per area, so you could have gigajoules versus —
Senator McCoy: Do you have precedents that you would follow?
Mr. Taylor: We have some. Within the LEED standard, for instance, they
do follow energy standards that dictate certain energy level consumption and
certain targets you have to meet or match. We can often look to those. In the
institutional sector, it is difficult because we are like mini municipalities,
with many different types of buildings on our campus. For instance, it is very
difficult for us to compare our veterinary hospital to the residences on campus,
to an academic building or a sports complex.
It is a little different if you were, say, a real estate operator and you had
15 malls. You could take those 15 malls and directly compare them and make
allowances for variations in location and those types of things. However, it is
much more difficult for us if we have, say, one veterinary teaching hospital.
How do we compare where that should be? We would have to compare it against
others. There are only four others in the country.
We try and match it against other hospitals and other medical institutions
that we think would be comparable in an effort to get an idea of whether this is
reasonable. Is this where it should be? We are always looking to make those
investments to reduce its consumption regardless, but a targeted system like
that would help us to strategically make better long-term decisions in terms of
where we want to invest.
Senator McCoy: Let us take the example of the veterinary hospital. You
say you compare yourself with a hospital. Where do you get the data for the
Mr. Taylor: It would depend on the hospital and which jurisdictions
allow the information to be made publically available. In some cases, it might
be somebody you bump into literally at a trade show who happens to have their
data with them and is looking for somebody else to compare to. Quebec has a
requirement that universities publish their energy efficiency values on an
annual basis. We use that as a good benchmark from time to time.
We visited Concordia University in Montreal, and they shared their energy
statistics with us in terms of energy usage per given areas or gigajoules per
square metre. They are measured on that in the province, and they are required
to publish that information. In discussions with some of the institutions there,
we found that it creates public pressure on those institutions to ensure that
they are doing everything they can to drive down their consumption levels.
A system like that could go a long way. If people had to report on where
their consumption levels were, then people would have to answer questions as to
why consumption levels are high. What is driving consumption to that level?
There is incentive to drive those levels down to avoid those types of questions.
Senator McCoy: The Office of Energy Efficiency, federally or CSA, for
example, would that be the sort of place?
Mr. Taylor: Some standards body, yes.
Senator Lang: How much money was put in for the purpose of your energy
system, the solid waste and renewable wood bio-mass system? How long will it
take to pay it back in real terms? I would like you to describe you system, as
well. Are we talking about replacing the landfill when you talk about a solid
Mr. Taylor: Yes, the system was actually developed by the provincial
government back in the mid-90s. At the time, there were three separate
centralized systems. There was one at the university, which fed the university.
There was one at Holland College here in downtown Charlottetown. There was a
third but I am not sure on the location.
It was decided at that time that the provincial government would rationalize
those into one centralized plant. That is the plant that now exists just down
the road here on Riverside Drive. That plant has four solid waste incinerators
so it does use municipal waste primarily provided from across the Island.
It works in tandem with the Island waste watch system so diverted from that
would be any compostable waste, paper waste any of the recyclables. Those are
removed from the waste stream first and then what is left goes into those four
main incinerators. That provides about 40 per cent of the energy that the plant
utilizes in solid waste.
The next largest contributor would be wood mass, typically through either
woodchips or sawdust. At one point, it was provided locally through a couple of
saw mills here on Prince Edward Island. Unfortunately, those sawmills have
shutdown over the last few years so they have had to source that particular
product off Island. That provides about another 40 per cent of the total usage
of the plant.
The remainder is made up, primarily this time of year, by fuel oil, both
through a boiler at the Riverside plant and back-up boilers on campus at UPEI.
The provincial government made the initial investment to develop that system,
and then it was turned over to a private operator, I believe in 1997. It has
changed hands two or three times since then, but it has been operated as a
private enterprise since that time.
In that time frame, the private entity has actually made investments in the
plant to expand it and provide more value for end-users. I do not have the
numbers in terms of paybacks or what the arrangement was when they took it over.
I am not sure if they purchased it from the provincial government or how that
was undertaken. It was through significant government investment that that came
We spend about $5 million a year on utilities at UPEI, which is about 5 per
cent of our overall operating budget. If you compare that to other institutions,
especially in Quebec, Ontario and further West, the average is closer to 2 to 2
1/ 2 per cent. We are significantly higher. You have heard that, I am sure, in
the last few days, that pricing in Atlantic Canada is significantly higher. Our
average cost of electricity on campus for last year ran in the order of $0.15 a
kilowatt hour. We are a pretty electrical intensive institution. We have a lot
of research. We have a veterinarian teaching hospital. You may not see a lot of
things that we are doing at other institutions because the economics for us
actually do make sense. When you get to that price point it makes sense to do
some of the things we are doing, whereas for others it may not if you are at
$0.05, $0.06, $0.07 a kilowatt hour.
The Chair: Mr. Taylor, thank you for coming.
We have two witnesses left. Mr. Matthew McCarville is appearing as an
individual. We also have with us Mr. Tony Reddin, Project Coordinator, Energy,
Environmental Coalition of Prince Edward Island.
Tony Reddin, Product Coordinator, Energy, Environmental Coalition of
Prince Edward Island (ECO-PEI): I am joined by another member of our
committee, Dr. Kirk Brown.
My background is 30 years of involvement with energy and environmental
issues, both locally and regionally, and also education work in the schools and
ECOPEI, or the Environmental Coalition of P.E.I., is a community-based action
group formed in 1988, and our goal is to work in partnerships to understand and
improve the Island environment.
Our energy project, which makes us a member of the Atlantic Canada
Sustainable Energy Coalition, has produced several documents including in 2007
one called Pathways to Sustainable Energy Prosperity on Prince Edward Island
which had extensive recommendations for provincial energy policy, and many of
those were followed in the provincial energy strategies.
First, I thank your standing committee for promoting this important
discussion of a sustainable energy strategy for Canada. Your discussion paper,
which I did not have a lot of time to study, is a valuable document, and we
appreciate the effort you are making to get Canadians involved in these issues.
I noticed in particular that one of the goals was how to engage Canadians, and
that is critical.
I will not repeat the evidence that you, I am sure, have heard many times,
that our irresponsible overuse of fossil fuels is causing widespread human
suffering, climate crises and gross destruction of our planet's natural beauty
Earlier it was mentioned that you have not heard much about storage of
electricity, in particular, energy from wind turbines and what solutions there
are for that. One is storage without using batteries, for example, using surplus
electricity to heat water, ceramic bricks or some type of mass which then stores
that heat and releases it when there is less wind and more demand on the
electricity. Another example is using the surplus of electricity to cool
freezers extra cold, and then when less electricity is available, the freezer
still has extra cold in it and does not need to run at the time of greater
demand. There are other examples like pressurizing air or other fluids to take
that energy back when needed. Another method for maximizing wind is shifting the
peak. Mr. Younker could tell you more about that, and he would have if you had
These are simply programs to encourage and reward those who use the
electricity at the times when there is less demand and lots of supply. That
would typically mean a lower price for perhaps overnight hours or other times,
for example when there is surplus from available wind capacity. I just wanted to
add those to your proceeds.
I do want to raise some other issues that I did not see in the discussion
paper, and forgive me if there were things I missed. Most of those involve an
examination of our values as Canadians. I think the Canadian Sustainable Energy
Strategy must include and actually be based on a consideration of our values
Number one is the choice of using less energy from all sources. This is
almost an attitude thing, a choice of how do we actually use less, not how do we
use what we are using more efficiently, but where are there places where we just
do not need to use as much? This is critical if we want to lower our fossil fuel
use, lower our greenhouse gas emissions, and avoid more economic and climate
catastrophes. Your question in the discussion paper was: What does Canada need
energy for, and how much do we need? I would answer we need a lot less energy
than we are using, and especially a lot less than what we waste.
In another sense, I would like to paraphrase Gandhi to say solar energy is
enough to satisfy everyone's needs, but not enough to satisfy anyone's greed.
There are limits to the earth's resources, as we know, and that applies to the
construction of all energy projects, whether or not they are renewable energy
Until every political decision in Canada at least begins with the question
how can we do this using less fossil fuels or using no fossil fuels at all then
we are doomed to continue destroying the planet. Is that the choice we want to
make? Of course not. Our present economy runs on fossil fuels, an
over-consumption of resources and on unending growth to raise the GDP. Our
economy will have to be drastically changed from being so dependent on fossil
fuels. The sooner we make that change to a sustainable economy, the less painful
and expensive it is likely to be.
This will require courageous leadership on every level of government showing
and inspiring Canadians by example and by cooperation. Practical programs to
reduce fossil fuel emissions and increase energy efficiencies are only the first
steps of turning away from those destructive habits of the growth economy.
We must also reject fossil fuel projects that endanger our seas and shores
such as drilling in the Gulf of St. Lawrence. I would refer you back to the
excellent presentation given in Halifax by Gretchen Fitzgerald of the Sierra
Club which included 10 well stated reasons to protect the gulf.
Of course this is all not to say that we stop using fossil fuels today, but
our unending focus has to be how to use less, and how to use our creativity to
be fossil fuel-free as soon as possible. This requires that we be mindful of the
choices that we make all the time in our actions, both in the long-term,
far-reaching decisions of those with political power, and in the everyday
choices of everyone of us. For example, I think a meeting like this could have
been held at least partly by videoconferencing, and bringing people together by
efficient use of existing technology and using a relatively small amount of
electricity and other energy fuels. I realize that is a challenge, but I hope it
Also, this room and this building, as nice as it is, and all our workplaces
and homes for that matter, could be cooler and still be comfortable, and
The second issue I want to raise is that young people who are the future, of
course, must be included in these strategic planning discussions and decisions.
That raises the question: How do we do that? We do that by asking them how to
include them and then listening to them, and challenging ourselves to set an
example for them that will give them hope instead of cynicism. An important part
of engaging young people in society's decision making is to provide proper
funding for schools and programs such as Katimavik, that give young people a
place to explore and discuss issues and to be involved in community work.
I might mention that the sustainability program at UPEI, and actually at many
other universities, that David Taylor just described is as a result of
initiatives of the Sierra Youth Coalition, which is a national youth-run
Young people do not even wait to be asked to be included. They have plenty of
initiative, but the potential for their contribution could be so much greater if
we give them that chance.
The third issue relates to agriculture and how can we produce good food
without fossil fuels? Food, of course, is a basic need, but Canadian farming
methods are very fuel intensive and show little signs of changing. Another
aspect of this issue is the shortage of farmers — the average age of farmers in
P.E.I. is almost 60 — and the difficulties the young people face to start
farming. Yet at the same time farms and soil could provide an extremely valuable
role to store the excess carbon that we have put in the air. That is through
increasing the organic matter content of those soils, which have generally lost
tremendous amounts of carbon over the years of intensive farming, but that could
be reversed and those soils could hold and sequester even greater amounts of
carbon than they had in the first place. We must find ways to reward farmers for
providing this service to society. We must find ways to preserve farmland from
development and being paved over. Again, I suppose pavement is sort of a
sequestration of carbon, but it does not work nearly as well as organic matter
in the soil.
Agricultural land trusts may be a useful tool to use for all those problems.
That is another possible solution for land preservation, for rewarding organic
farming methods, and for giving young farmers affordable options to start
farming. Those are all, of course, tied into energy questions.
Issue number four is that Canadian trade and energy agreements must be
negotiated to serve Canadians instead of corporations. Corporations, as we know
by definition have a mandate to maximize their profits and that is usually taken
to mean short-term profits, and will usually mean pushing for free unregulated
trade regardless of the expense to people and the environment. It is just the
facts of life. The principle of fair trade must replace that of free trade.
Our economy cannot get off fossil fuels while we depend on exporting so much
of them to the U.S.A. The NAFTA agreement must be changed to encourage
conservation on both sides of the border.
Oil developments in the tar sands must at least be limited from expanding
until it is determined if there are better ways to supply our energy needs.
Atlantic Canada has already begun to cooperate with the New England states to
set goals for reducing fossil fuel emissions. New renewable energy sources must
be used in creative strategies to get us all off those fossil fuels. For
example, hydroelectric power, and in particular the Muskrat Falls project in
Labrador, must be used to balance and optimize wind power in a regional grid.
The fifth and final point is that of nuclear power, which is mentioned in the
discussion paper, but we disagree with the conclusions that are reached there.
Nuclear plants, in our opinion, are unnecessary, unsafe and uneconomical. The
huge costs and risks involved are no solution and that takes resources away from
safer solar solutions. Those solar solutions are advancing every day all over
the world. Canadians can gain and build on an amazing variety of new solar
energy projects that are happening all the time.
To repeat the issues I raised: First, using less energy from all sources is a
critical part of avoiding more economical and climate catastrophes; second,
young people must be included in these strategy planning discussions and
decisions; three, farming without fossil fuels is a challenge that must be
faced; fourth, Canadian trade and energy agreements must be negotiated to serve
Canadians instead of corporations, and, fifth, nuclear power is unnecessary,
unsafe and uneconomical.
With all those issues in mind I ask you to take the leadership on a Canadian
sustainable energy strategy to a new level. Set an outstanding example for all
Canadians of dedication to the this cause — and it is a cause, it is really a
shift of values that we are talking about — by shifting the financial resources
that you control to finding solutions for our energy climate crisis.
To conclude, I hope that our children will remember us for the beauty that we
preserved, not for the money that we made.
I will now take questions.
Senator Mitchell: Mr. Reddin, you have described sort of the other
side things, and there is a really very powerful message in what you are saying.
On your point number four about farming techniques, in fact, in Alberta, we
have a cap and sort of trade program, somewhere between trading and offsets,
which is the first such effort in North America. It is not good enough. It is
intensity based. Nevertheless, it was implemented by Premier Stelmach's
government, and it is a step. Farmers there are actually producing sanctioned
credits and selling them to TransAlta in order for TransAlta to make its caps. I
believe there are 21 different methods by which farmers can capture carbon in a
Mr. Reddin: Including organic matter in the soil?
Senator Mitchell: All that kind of stuff, yes. There are 14 ways, I
think, for dealing with raising livestock, and there are seven ways of growing
grains, or vice versa.
That brings me to my question about carbon credits and markets. I believe
that there is a place for them, that they assist us in finding the low hanging
fruit. In fact, we could have made Kyoto, I use this just as an example, at $20
a tonne in the European markets for about $5 billion a year. That would not have
bankrupted the Canadian economy despite what people say, the people who do not
want to do this. All that money, if we did it here, could go to farmers and
businesses. Anyway, I run on.
What do you think about carbon markets, carbon credits, that kind of thing?
Mr. Reddin: I agree with you. It is the sensible way to fund the
energy efficiency and other programs to get us off fossil fuels. It is going to
happen eventually because they will get more and more expensive. It is another
way to do it much less painfully.
Senator Mitchell: You touched on an answer to this question, but I
would like you to elaborate a bit more. I have often said this before, and I
know my colleagues will be tired of it, but I will say it again. It is not that
we need more technology to reduce greenhouse gas emissions, what we need is a
new technology to convince people that they have to do it. You were alluding to
educating youth, Katimavik, for example. I think you mentioned funding for
schools. That is really part of the difficulty here. It is a culture change and
it also involves convincing the public that votes for governments that do not
feel like they have enough leeway or political credit to do what they have to
do. You see it at the most basic and simplest forms of environmental
construction, a wind mill or a wind turbine. That people would resist that and
make up, I would argue, health problems and so on is incomprehensible.
Mr. Reddin: To address that example, I think it is Denmark — and Mr.
Brown may be able to add to this — where the wind development that they have
done has been very community-based. Is it Germany or Denmark?
Kirk Brown, Member, of the ECOPEI Energy Project Advisory Committee,
Environmental Coalition of Prince Edward Island (ECO-PEI): Denmark.
Mr. Reddin: There has been little public opposition because people
were part of the decision making, and the setbacks were properly put in. I think
an important part of it is to involve people in the decisions.
You are right, it is not easy. It is a challenge, but that is no reason not
to do it.
Senator Mitchell: It is not just lobbying governments; it is lobbying
Senator McCoy: Earlier I was asked somebody to briefly address the
environmental impacts of a large scale hydro development. It strikes me you
would have some opinions that I think we should put on the record. If you would
be able to, I would invite you to do so.
Mr. Reddin: It is not something on which I claim to have expertise or
much involvement with studying. The main issue with hydroelectric dams is of
course the large land mass that is taken and in effect destroyed, put under
water. There is always a question of how long that dam will actually work. It
will eventually fill with silt depending on the design and such. The other is,
of course, the major financial investment and is that investment the best choice
for that money or would energy efficiency solve the same issues and the same
things that we are trying to deal with for less investment. In other words we
could perhaps do more with energy efficiency and conservation programs than by
putting it all in one big project.
Of course, there are other issues of just whose land is it that is being
used, and are there better uses for that land than putting it under water, and
other issues around transmission corridors and, again, the large land use for
that. Even the total energy input to build a dam has to be looked at very
closely, because it is such a big project that a tremendous amount of energy has
to go into putting it in place.
Mr. Brown could probably add to that.
Mr. Brown: Another important aspect of it is the ability of dams and
water behind the dam to act as a battery. It tends to compensate for wind
energy. It comes when it is blowing, but it is not when you need it. It becomes
a battery, in effect. I have been trying to get the province here to do
something with dams in Nova Scotia and New Brunswick for quite a while, and
talking about it anyway. You do have to take a good look at the situation.
Sometimes it does work, sometimes it does not work.
Senator McCoy: One of the themes I hear you alluding to at least is a
systemic approach to analyze how much we need, the best way to get it, and
whether we are doing those comparisons across a number of platforms. I am
hearing those sorts of considerations pushing your comments. Am I correct in
Mr. Reddin: Yes. To me it is not just a matter of how are we going to
supply ourselves with energy, it is how is our society going to run. We can see
the crisis happening now. We are lucky in Canada to be protected from it, so
far. I refer to not just the climate events, those are obvious, and we are
suffering those, but also the consequences for people who do not have the
resources to protect themselves. Obviously, overseas on other countries severe
pain is being suffered. We have to decide how our society will be run. A big
part of it is using resources that we should not really claim. They should be
left there for future generations.
Senator Brown: I have listened with interest to your presentation, Mr.
Reddin. You have outlined an awful lot of problems but not too many solutions.
However, I want to talk about farming costs, because I know a little bit about
them having been in the business for about 50 years.
Farming is non-unionized. The costs that go to farming can only be solved by
larger farms. I will just give you one example using combines. When I was a
teenager my father bought a couple of used combines. I think one cost $800 and
the other one cost $500. He spent a lot of time fixing them. I spent a lot of
time driving them and taking them back to get fixed. When I got out of college
the first combine I bought was two years old and it cost me $38,000. A new one
would have been $58,000. When I left farming 10 years ago I had bought a combine
that was a little over $200,000, but only had one straight cut header. The other
pick up header would have been another $50,000.
I am now on an advisory committee ultimately to the ministry and Mr. Harper
on the current costs for farmers. I polled my neighbours just a couple of months
before Christmas for their costs today. I was a little bit surprised. It is
about $450,000 for a John Deere combine, and when you add a couple of pickups,
one pickup header and one straight cut header, you are over half a million
dollars. This is a consequence of having unionized labour that is able to raise
their cost every time they deal with the factory. The same thing happened with
cars. I am sure you are more aware of the price of cars over the years than you
are with farm machinery. I will tell you right now that organic farming is far
more expensive food when it is put on the shelf, and it comes from very small
farms with intensive labour. If you can give me the answer to that problem of
farming I would very much appreciate it.
Mr. Reddin: I wish I could. I can hear what you are saying, and it
amazes me. Someone was telling me not too long ago about selling a tractor, a
Cub International, I think it was, for $3,000 or $4,000. It was in Newfoundland,
and I said, "You would not sell many tractors in Newfoundland.'' He said, "These
little Cubs are 20 horsepower or whatever. We would sell 40 or 50 of them.''
There just are not that many farmers in Newfoundland, but there were not that
Certainly we have come to the point where it is really hard to have a farm
that is not huge. Of course, the farms in P.E.I. are tiny compared to what you
are talking about in the Prairies. However, it is the same situation in that
potato farms here are tending toward really big farms to make a go of it.
Energy costs will make it even harder as fuel oil goes up, but that is
another reason to tackle this problem of how to farm with a lot less fossil
fuel. Right now it is hard to see doing that. How would you run those combines?
Senator Brown: We could do it with LNG, but even LNG when you start
converting costs $100,000 for an engine.
Mr. Reddin: Generally, one would suppose an electric motor is a much
better use of energy than fossil fuels. You do not waste nearly as much heat.
Senator Brown: Yes, that is right, but it is hard to get an extension
cord that goes five or six miles
Mr. Reddin: What about a hybrid? I could see that happening. I am
surprised it is not. You would know better than I about electric.
Senator McCoy: There is something about life cycle conversion rates in
making electricity. If you do that entire analysis, electricity is not
necessarily a good source for either space heating or mobility. It might be
tidy, but there is more thinking to be done.
Mr. Reddin: For sure.
Senator McCoy: I am pretty sure it is not the panacea that is being
Mr. Reddin: It is going to take a lot of creative thought, and that is
why we have to start now and do more and more of it.
Mr. Brown: I started on a farm when I was 14. It was the best summer
job I ever had. I enjoyed farming. Farmers on average are 60 years old in our
Senator Brown: Actually they are quite a bit older.
Mr. Brown: Are they older than that elsewhere?
Senator Brown: I think Senator Peterson will back me up when I say
they are closer to 70 years old.
Mr. Brown: It is hard to say where the food is going to come from then
unless we have commercial farming, and yet other sources say that it is most
efficient to have smaller farms in some respects.
Senator Peterson: Mr. Reddin, you made a comment that nuclear plants
are unsafe. I was just wondering if you had any examples of that, say over the
past 40 years?
Mr. Reddin: The cycle for nuclear power, first of all, mining uranium
and the tailings from that are a health hazard. The plant itself emits routinely
large amounts of tritium, which is a health hazard. Assuming that you get a
useful life out of it, you then have to deal with all of the radioactive
material that is left. That is, again, another legacy for our great, great,
Senator Peterson: You can state those things you do not like. Maybe
that is how you should phrase it. To say it is not safe I do not think is really
fair because nothing has happened. They have all set aside millions of dollars,
hundreds of millions of dollars to decommission them. It is just a matter of
getting it in the right context, rather than going around saying they are unsafe
and it is dangerous. Driving a car is far more dangerous.
Mr. Reddin: As an accident, it is such an unthinkable catastrophe,
either with radioactive tailings from mining or with the plant itself, that it
is on a whole different scale. When you drive a car there is a certain element
of choice, whereas you do not choose to live within the range of the damaging
effects of a nuclear power plant failure. There are plenty of other elements. If
you like I can provide more information about my arguments. I would be happy to
pass that on.
The Chair: Thank you, Mr. Reddin and Mr. Brown.
Mr. McCarville, you are here in your own right as an individual, I
understand. You have furnished us with a very thoughtful paper, which I have
Matthew McCarville, as an individual: Mr. Chairman and members of the
committee, I have a keen interest in understanding global warming issues and
My research background is in the ecological forestry, bioscience and energy
sectors. From 2007 to 2010 I was coordinator for the ECO-PEI Energy Project. In
2008, I completed a training seminar led by former Vice President of the United
States, Al Gore, for the Climate Project Canada, and since have delivered
presentations to raise awareness about climate change and energy solutions. I
have some consulting experience in the energy sector, and am currently beginning
research for a marine renewable energy infrastructure assessment for the Nova
Scotia Department of Energy.
The Chair: What is marine renewable energy?
Mr. McCarville: That includes tidal, offshore wind and wave. I expect
we will be focusing on those methods in that order in terms of priority for this
Today I want to talk about a plan to convert Canada's energy system to 100
per cent wind, solar, geothermal, tidal, wave and hydroelectric power for all
purposes. I will initiate this by asking the questions: What is the problem. Why
do we even care. Why act quickly? Why can we not act in 100 years?
Aside from the 2.5 to 3 million air pollution deaths a year, the hidden
medical and insurance costs, et cetera, temperatures are rising rapidly. In
Atlantic Canada, from September to December in 2010, 89 new temperature records
were set including three new lows and 86 new highs. In the 2000s we had nine of
the 10 hottest years in recorded history. That is not to say that these are the
hottest years ever during the evolution of the earth. There have been hotter
years 100 million years ago, but nobody lived at that time so we did not really
have to deal with it. Now we have huge populations to support infrastructure,
and we want to be sustainable for a while.
Arctic sea ice is decreasing very rapidly, in the order of 15 per cent in the
last decade alone. Because the Arctic sea ice is very thin, only a couple of
metres, sometimes three to four metres, when it decreases you uncover the lower
albedo ocean below on the order of 5 to 6 per cent albedo versus about 87 per
cent for sea ice. There is a rapid positive feedback. As sea ice disappears it
is much more difficult for it to recover. Once the sea ice is gone the climate
can warm even more rapidly. This is really important when we are looking at the
solutions because we need solutions that can be implemented quickly. Thus we
cannot rely on solutions that might be available in 15 years, 20 years or 30
years, because even if you have a new technology, it will still take decades to
implement that technology. We have to rely on the best technologies that exist
today to solve the problem.
Next we will look at a "Review of solutions to global warming, air pollution,
and energy security'' by Mark Z. Jacobson which was the top downloaded article
in March 2009 in Energy and Environmental Science Journal. In sum, the
paper reviews and ranks major proposed energy related solutions to global
warming, air pollution mortality, and energy security while considering other
impacts of the proposed solution such as on water supply, land use, wildlife,
resource availability, thermal pollution, water chemical pollution, nuclear
proliferation and under-nutrition. The use of wind, concentrated solar power,
geothermal, tidal, solar PV, wave and hydro to provide electricity for battery
electric vehicles and hydrogen fuel cell vehicles, and by extension, electricity
for the residential, industrial and commercial sectors, will result in the most
benefit among the options considered.
The combination of those technologies should be advanced as a solution to
global warming, air pollution and energy security. Coal, using carbon capture
and storage and nuclear offer less benefit thus represent an opportunity cost
loss, and the biofuel options provide no certain benefit and the greatest
Next we will discuss "Providing all global energy with wind, water and solar
power'' by Mark Z. Jacobson and Mark A. Delucchi, published in Energy Policy
Journal in 2010.
In abstract, the paper analyses the feasibility of providing worldwide energy
for all purposes including electric power, transportation, heating and cooling,
et cetera from wind, water and sunlight, known as WWS, they call it. In Part I,
authors discuss WWS energy system characteristics, current and future energy
demand, availability of WWS resources, number of WWS devices, and area and
material requirements. In Part II, they address variability, economics and
policy of WWS energy. They estimate how many wind turbines, concentrated solar
plants, solar PV power plants, rooftop PV systems, geothermal power plants, new
hydroelectric power plants, wave devices, and tidal turbines can power a 2030
WWS world that uses electricity and electrolytic hydrogen for all purposes. This
WWS infrastructure reduces world power demand by 30 per cent and requires only
about 1 per cent more of the world's land for footprint and spacing. Authors
suggest producing all new energy with WWS by 2030 and replacing the pre-existing
energy by 2050. Barriers to the plan are primarily said to be social and
political, not technological or economic. The energy cost in a WWS world should
be similar to that today.
Next I assess converting Canada to WWS infrastructure for all purposes. Using
Natural Resources Canada data on total energy use in Canada for 2008, I convert
Canada's energy use from petajoules to terawatt hours. Total energy use in
Canada converted to electricity is 2,424 terawatt hours per year. Reducing this
figure by 30 per cent due to electricity and hydrogen conservation measures
mainly from replacing inefficient combustion processes, such as described in the
paper by Jacobson and Delucchi, results 1,700 terawatt hours per year.
To determine whether this amount of power can be generated using technologies
recommended by Jacobson and Delucchi, I assess Canada's wind, solar, geothermal,
tidal, wave and hydro energy resources using available data. A Statistics Canada
map shows the country's population is mostly distributed in southern areas which
I use as an overlay to roughly assess the transmission and interconnection
requirements. For these recommended energy sources, I draw assumptions about
capacity factors from data to calculate how much power can be generated from
installations. Thus, I estimate 55,000 5-megawatt wind turbines, 500
300-megawatt concentrated solar plants, 500 300-megawatt solar PV power plants,
about 3 million 3-kilowatt rooftop PV or wind power systems, 150 100-megawatt
geothermal power plants, and 10 new 1,300-megawatt hydroelectric power plants,
5,000 .75-megawatt wave devices, and 5000 1-megawatt tidal turbines plus the
existing 70,000 megawatts of hydro capacity can power Canada using electricity
and electrolytic hydrogen for all purposes.
Vehicles, ships and trains would be powered by electricity and hydrogen fuel
cells. Aircraft would be run on liquid hydrogen. Homes would be cooled and
warmed with electric heaters, no more natural gas or coal or even nuclear, and
water would be preheated by the sun.
If Canada converts all personal vehicles to battery electric vehicles powered
by wind, the footprint would be 0.2 square kilometres, about twice the area of
Parliament Hill. Land area for turbine spacing can still be used for
Space heating is a key service representing 62.8 per cent of end-use energy
in Canada's residential sector. Fortunately wind, the best resource option in
general, tends to be almost doubly as powerful in the coldest month compared to
the warmest. Electric thermal storage devices such as dense, ceramic bricks can
thus be installed to supply Canadians with wind for space heating with
reliability. For P.E.I. the average household using ETS for space heating and a
95 per cent wind and 5 per cent hydro supply mix results in life cycle CO2
equivalent emissions of 200 kilograms per year.
Aside from cryogenic hydrogen for aircraft, which you have to combust, along
with some high temperature processes that would replace steel production, for
instance, there would be no need for any combustion except in some very remote
circumstances. In sum, this path to sustainable energy in Canada achieves more
than a 90 per cent reduction in CO2 equivalent emissions from total
energy use, down from 488 megatonnes of CO2 equivalent in the year
2008 to about 32 megatonnes per year.
I encourage people to review these energy solutions carefully using the
sources and calculations in this testimony as a starting point. More detailed
information and analysis can be supplied upon request.
Last, I have a page on "Moving Canada forward'' which talks about energy
policy options, and maybe I can sort of talk off of that page as we get into
The Chair: You have obviously done a lot of work on this. Does this
material form part of your labour where you are working, or was this done on
your own time?
Mr. McCarville: Over the three years that I was involved with the
ECO-PEI Energy Project I was paid for 35 hours a week, and in addition I
probably spent another 35 hours a week of my own time gathering information,
understanding energy systems and atmospheric science. I am by no means an
academic or an expert per se, but someone who has worked hard to try to
understand these issues over the past few years. Since I have left that
position, I have continued to spend a lot of spare time trying to continue to
keep pace with understanding this kind of information.
Senator Brown: Have you cost out the changes that you talk about with
the turbines, the wind generation and all the things that it would take to
produce this amount of electricity?
Mr. McCarville: If you look at the cost of wind development in Eastern
Canada, for instance, the University of Moncton's K.C. Irving chair of
sustainable development, Yves Gagnon, and his team produced a paper that looked
at the economic impact of a 100-megawatt wind farm and found that the cost is $2
million per megawatt, and that prices were $0.08 cents a kilowatt hour. For this
path to sustainable energy in Canada, I used the methodology that Jacobson and
Delucchi from Stanford University and UC Davis used, and I relied on their
analysis and their findings which they summarize in the abstract of their report
on providing all global energy, where they say that the cost should be similar
to that today. Keep in mind that cost includes, for instance, the Black Lung
Benefit Program in the U.S.. Since the 1970s, over a 30 year period, $35 billion
was spent because of black lung disease from coal. Also, external costs include
the premature deaths from air pollution and illnesses, and medical and insurance
costs for dealing with those health effects. It is quite an order of magnitude
when you try to internalize these external factors.
If you look at how quickly the world is dealing with responding to global
warming with climate change mitigation, it has been estimated by John P. Wyatt
from the Energy Modelling Forum at Stanford University, that we are on a track
to 5 to 6 degrees Celsius of rapid warming while we notionally hope to stabilize
temperature around 2 degrees Celsius. If you look at military scenario planning
it is quite plain to see that there is a hockey stick curve to try to ramp up
the military industrial capacity to deal with the fallout which may arise from 5
to 6 degrees warming relative to 2 degrees of warming. We can get into a very
long discussion about why there is no business case. We are spending $44 billion
to renew our military industrial capacity for the 21st century. This language
was in the media when the Government of Canada said it would spend $35 billion
on navy and $9 billion on aviation, while swelling our efforts to assert Arctic
sovereignty and other things. If you capitalize $44 billion, $1 of equity and $4
of financing, at $2 million per megawatt of installed wind capacity — and you
can do the math or I could give you a back-of-the-envelope calculation — and
coordinate it with other countries, you can de-risk and actually solve this
energy problem with really very little downside economically.
Senator Brown: I will accept your argument, except you have passenger
ships, tractors, and aircraft listed as hydrogen powered. The total cost of
going from fossil fuel to no fossil fuel has to be in the hundreds of trillions
Mr. McCarville: I did hear one estimate, although I did not have a
chance to really get into the nitty-gritty. The cost to this whole conversion
world-wide would be in the order of a $100 trillion.
Senator Brown: That is what I thought.
Mr. McCarville: If you keep in mind what we are already investing in
energy acquisition and look at the level of risk and exposure from military
scenario planning alone, let alone the cost, current and future, for air
pollution deaths and health problems, in other word look at the whole picture, I
do not think it is that much of an issue to give it more consideration.
Senator Brown: I will grant you that it is not impossible to do. When
we figure out the cost we will probably try to do some of what you have
suggested. We are doing a lot of that now with wind energy and other
Supposedly, in the next 50 years, we will add 2 billion people to the planet
Earth, and we have to be able to feed them. The one thing that will happen with
ice caps coming off of the North Pole is that geologists estimate that
agriculture will move farther north in Canada, something in the order of 100 to
200 miles further north. We will at least have more room for increasing food
The last thing I would have to say on the conversion you talk about with no
fossil fuels at all is that it would mean a dramatic change. If in your scenario
I look around this room there would be no microphones, just copper wires hanging
down. Most of the clothes we wear these days would be disappear. A lot of us
would be sitting around here naked. There is an awful lot of stuff that comes
from natural gas that goes into clothing, the shoes we wear, the tires on our
cars. I cannot list the number of things that would be missing without fossil
fuels. I leave you with that comment.
Mr. McCarville: I do not disagree that petroleum products are very
integral today to the way that we live our daily lives. I think it will continue
to play a role. Even if you convert the energy system there is still opportunity
to refine petroleum products, but you would be putting it to other uses rather
than combusting it into the atmosphere.
Senator Brown: We blame the warming on CO2, which everyone
seems to agree on, but CO2 is not pollution. It is the sulphur
dioxides and trace metals that come from car and truck exhaust. That is what
causes the pollution we see. We do not see CO2.
Mr. McCarville: That is a really good point from the perspective that
CO2 is naturally found in the atmosphere's composition. That could be
argued perhaps to some extent, but for instance, for Canada to spend more money
on coal plants using carbon capture and storage is totally irrational. We should
be spending it on wind because there is no air pollution. Whereas if we switch
to using coal with carbon capture and sequestration, the emissions are still in
the order of 450 grams of CO2 per kilowatt hour, and not only that
but you decrease the efficiency of the coal plant by 14 to 25 per cent. Also,
this capturing of the carbon dioxide does not capture any of the other air
pollutants such as the NOx and SOx and other air pollutants that come from coal
plants. Your air pollution will actually go up if you use carbon capture and
storage, those air pollutants that you were referring to. Using CCS to
notionally justify oil sands expansion is totally irrational from an
environmental sustainability point of view, in my opinion. I would just leave it
Senator Brown: I will leave you with your opinion.
Senator McCoy: Your presentation challenges a great many assumptions
that all of us hold, and some of us may never be able let go of some of our
assumptions. However, it encourages us to rethink and reexamine what we know or
what we think we know. I appreciate that, and I will follow up and read these
two articles that you have taken as inspiration.
You have done a good job in presenting the whole picture, but there are still
some variables. However, as soon as you start looking at a system you can start
saying things such as, "Well, what about indoor air quality? Incidents of
asthma, and perhaps even autism, are pushed by making building envelopes
airtight, et cetera, et cetera.'' There is more to be done here. With regard to
ten new major hydroelectric plants, it is not empty land up north. We think of
it as hinterland, but native peoples think of it as homeland, and they need that
space because of the way of life and the low productivity of the natural
ecosystems up there.
There are some considerations that I would raise, and you are nodding and
agreeing with me. I will not ask questions, but I did want to thank you. It is a
breath of fresh air, and it is going to push my imagination and inquiries
further, and I appreciate that.
Mr. McCarville: There certainly are challenges. Somebody mentioned
this morning rare earth elements, and that the permanent magnets in wind
turbines use a small amount of neodymium. The global reserves of neodymium are
such that if you convert the entire world to 50 per cent wind power for all
purposes you are converting to electricity and electrolytic hydrogen to power
the world. With 50 per cent wind using neodymium in the permanent magnets, you
have exhausted a significant portion of the global reserve for that element.
As mentioned earlier, there are options to using turbines that do not rely on
neodymium. It should also be noted that electric vehicles will also use
neodymium because it slightly improves their efficiency. It should not be
understated that it is incredibly challenging, and we should remain focused. If
40 per cent of the world's power is by solar PV, for instance, then you will run
into some material challenges. Luckily as materials become short you can easily
switch to other materials. With the current global reserves on land for lithium
there is in the order of enough lithium for 1.1 billion electric cars, and there
are other options as well for that material. In the end, however, you have to
get to near 100 per cent recyclability of content. It is not a problem for the
steel and the concrete and the turbines, but we do need to get to near 100 per
cent recylability to be able to sustain any kind of systems of these orders of
magnitude for global populations such as we have today. It should not be
In terms of hydroelectric, you were wondering about the environmental impact,
and I can tell you from a climate change perspective there is a range. One is
the industry estimate and the other is the peer reviewed scientific estimate. If
you look at the median point between those two you end up on the order of 65
grams of CO2 equivalent per kilowatt hour taking into account the
construction of the dam and the flooding of the vegetated area, et cetera, and
the fact that it is likely to operate for about 80 to 100 years.
Senator McCoy: That is grams of CO2 equivalent.
Mr. McCarville: Yes.
Senator McCoy: In many cases we are consumed by this climate change
argument. There are ecosystem considerations. There are weasels that will not
chase rabbits underwater.
Mr. McCarville: The reason ultimately for recommending hydro is that
it is such an excellent load balancer it would allow us to maintain reliability
at the most reasonable cost possible while reducing emissions in the order of
magnitude that is necessary to keep ecosystem functions from collapsing, which
they would at around 4 degrees or 5 degrees Celsius of warming.
Senator McCoy: You are saying it is the lesser of many evils?
Mr. McCarville: Yes. Right now, a lot of the literature suggests that
we are risking function collapse of our marine and ocean ecosystems. Not only
have we changed the composition of the atmosphere, but of the oceans as well,
and that is felt by the marine ecosystems.
The Chair: I agree with Senator McCoy in terms of the questions you
have raised and some of the old truths you are challenging. You have done this
in a polite, logical, a well reasoned and an unobnoxious way, and we really
appreciate it. Thank you for being attending.
Mr. McCarville: The reason I would not recommend nuclear and the
authors of these papers I referred to do not recommend nuclear is that, from
their analysis of the literature — and they look at industry estimates and
scientific peer reviewed literature — it produces in the order of 9 to 17 times
more carbon emitting than wind. It also carries with it the highest upper limit
mortality risk. Right now we have just over 400 nuclear power plants in the
world. If you look at a large scale expansion to power the world with nuclear,
then you are looking at in the order of 15,000 850-megawatt nuclear power plant
facilities. They would be dispersed across countries that are not necessarily as
well governed or as stable as ours. Geopolitically it is difficult to make the
case to Iran not to enrich uranium when facilities for enrichment of uranium
exist in the United States, for instance, and they are the only country in the
history of humanity that has actually used a nuclear weapon. It is estimated
that as the U.S. gets more efficient internal combustion engines it will reduce
associated air pollution deaths from 25,000 deaths per year to 15,000 deaths per
year. If you had just one bomb go off in a major city and you average it out
over 30 years then it is more than 25,000 deaths per year. We can pretend that
that risk does not exist, but it is not zero. For that reason, we have to ask
"Do we need this?'' If not, then we should avoid it.