Skip to Content
 

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

Issue 7 - Evidence - November 15, 2011


OTTAWA, Tuesday, November 15, 2011

The Standing Senate Committee on Energy, the Environment and Natural Resources met this day at 5:06 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.

[English]

The Chair: Good evening, ladies and gentlemen, colleagues and our listeners on the CPAC network, the World Wide Web and on our own dedicated website, www.canadianenergyfuture.ca. This is a formal meeting of the Standing Senate Committee on Energy, the Environment and Natural Resources as we continue our study into Canada's energy sector, with a view to establishing a strategic framework for a more sustainable, efficient and green way forward for the nation.

We are winding our study down slowly, with a view to coming out with our final report in June 2012, hopefully, in terms of our ongoing consultations and dialogue with Canadians generally about the energy sector, about becoming more literate in energy matters and generally understanding how important energy is and how important it is to become more sustainable and cleaner as the population boom continues — I believe we have just passed the 7 billion number, and it is projected that in a relatively short time it will be at the 9 billion level.

The energy demands are not diminishing, they are increasing. As we know, if Canada is not the greatest consumer of energy on a per capita basis in the world, it is certainly in the top two or three.

We are privileged this evening to have representatives here from the highly regarded National Research Council Canada. I will introduce our guests more fulsomely in a moment, but thank you, gentlemen, for coming.

I would first like to introduce myself as chair of this committee. I am Senator Angus from Montreal, Quebec. Our deputy chair, Senator Mitchell, is from Alberta. Also present are our able staff from the Parliamentary Library, Marc LeBlanc and Sam Banks. From Saskatchewan, we have Senator Peterson, together with my successor in this job, Senator Banks from Alberta. Visiting with us tonight is Senator Martin from British Columbia, representing Senator Dickson from Halifax, Nova Scotia. A warm welcome to you, Senator Martin; I believe you are from the Richmond area.

Senator Martin: Vancouver.

The Chair: It is great to have you here tonight. I hope you will find it interesting.

Senator Martin is one of our relatively new senators and she is making a terrific contribution to the work of the Senate and is very supportive of the work we are doing. Thank you for that.

Our very able clerk is Lynn Gordon. I nearly called her a senator. I feel she is a senator; she knows more than all of us put together.

Other senators present are a former minister of energy, et cetera, in British Columbia, Senator Neufeld; from Montreal, Quebec, Senator Seidman; from New Brunswick, Senator Wallace; from Manitoba, Senator Johnson; and last but not least — at least at the table because you may see other senators coming in — Senator Massicotte from Montreal, Quebec, originally from Manitoba.

Without further ado, let me remind you that we have this dedicated website. I may have given the wrong address, so I want to make sure I said it right. It is www.canadianenergyfuture.ca.

At our last meeting, you may recall, colleagues, we had the great pleasure to hear from the articulate Ms. Buckley, who is Director General of the Office of Energy Efficiency at NRCAN. She made some kind references to the NRC and to our witnesses tonight in terms of how we will become, as Canadians, more literate in energy matters, using technology in a way that will achieve the goals I referred to earlier. She talked about building codes, for example. I think you will be referencing these aspects this evening.

Our witnesses this evening include Mr. Ian Potter, Vice President, Engineering, National Research Council Canada. He was appointed NRC's Vice-President of Engineering in May 2011. He shared with me earlier that Senator Banks, when you and I and the committee were in Edmonton, I think that was six years ago —

Senator Banks: At least.

The Chair: At least. We met with him and his colleagues out there. He has had many years of experience with the NRC.

I want to add that before his appointment as Vice-President, Engineering, in May of this year, Dr. Potter was Chief Operating Officer at Alberta Innovates Technology Futures, the successor of the Alberta Research Council. In this role, he was responsible for the day-to-day operations of the corporation and, in particular, maximizing the performance of the corporation's research, development and innovation programs and leading the industry in post-secondary investments to achieve corporate strategic goals. Over the last 10 years at Tech Futures and ARC, Dr. Potter held several leadership and management positions in energy, environment, greenhouse gas technology and human resources.

With him this evening, we have Mr. Denis Bergeron, Director, Codes and Evaluations, and Mr. Guy Gosselin, Manager, Canadian Codes Centre, at the NRC Institute for Research in Construction. Welcome to you all.

Colleagues there is a statement that, unfortunately, we did not have before but we are pleased to have so that we can follow Dr. Potter's introductory comments. He has to catch a plane to Windsor, Ontario, and he has a car coming at quarter to seven. I think that probably suits all of us because we are hosting a dinner for the Honourable Joe Oliver, the minister of the department we are talking about, later this evening.

Over to you, sir.

[Translation]

Ian Potter, Vice President, Engineering, National Research Council Canada: Good evening. Thank you for inviting me to address this committee today.

[English]

I will forgo the introduction that I had in my written documentation because of the kind introduction by the chair, and jump into my notes straight away.

The NRC is an agency of the Government of Canada, and its mandate is set out by the National Research Council Act. Under the act, NRC is responsible, among other things, for undertaking, assisting or promoting scientific and industrial research in different fields of importance to Canada. NRC's research and technology development capabilities span a spectrum of disciplines, from aerospace and automotive to agriculture and ocean engineering.

As you said, I know that you recently heard about the programs of the Office of Energy Efficiency at Natural Resources Canada and their impact on energy conservation and consumer consumption. This evening I am here to present some of the technology innovations being developed at NRC to support Canada's energy, environment and natural resources sectors.

I will tell you how we are working with Canada's automotive, aerospace and construction industries to develop more environmentally sustainable technologies, providing Northern communities with improved energy efficiency and conservation solutions, discovering eco-products with rapid commercialization potential and opening up new markets in Canada and overseas.

First, however, I would like to offer you some insight into how NRC is evolving its strategic direction and its approach to doing business so that it can better address the innovation needs of the private sector and effectively tackle the economic challenges and opportunities facing the country, both today and long into the future.

Our new direction aims to bring greater strategic and market focus to the research, technology development and innovation work we do with industry and the rest of the public sector so that we can create a greater short-term impact and contribute to Canada's longer-term sustainable prosperity. We are building on our legacy of 95 years of success to make a clear and critical difference in helping Canada reach its innovation goals. We have the people, expertise, national facilities and global networks to make that happen.

We are designing our research and innovation programs to support the short-term and long-term needs of industry in Canada. We are also focused on results and on becoming a more performance-driven organization that targets outcomes important to Canada and our clients, such as enhanced productivity, high quality jobs, technology commercialization and increased business expenditures on R & D.

We are working with private and public clients and collaborators to develop and deploy technology solutions that address the federal science and technology priority areas and help businesses in Canada tackle critical issues that affect our future prosperity, such as economic growth and industrial competitiveness, natural resources and the environment, health care, security and urban and rural community infrastructure. To ensure we are successful, we are changing the way we do business, adopting a market-driven approach and placing a much heavier effort on engaging the private sector and our public collaborators in the work we do.

We are putting in place business models attuned to the private sector so that we can address real industry issues, such as increasing innovation capacity, reducing risk in early-stage technology development and facilitating the development and deployment of innovative products, processes and services for target markets. We are designing industry-focused programs and projects; and by working directly on the needs of our clients, we expect that they will invest in our programs and subsequently into the economy by growing themselves and their markets to achieve both private and public return on investment.

We are designing our programs in terms of strong value propositions, unique positioning in the value chain, market- pull and timely deployment paths with clear targeted outcomes within a time frame of three to eight years, delivering in a time scale relevant to our clients and collaborators. At the same time, we are providing the support to industry sectors that address their immediate needs in the next fiscal period.

How, then, can NRC's business approach and industry-focused programs benefit Canada's energy sector?

The development and adoption of all energy-related technologies are destined to be the dominant bridging strategy for the 21st century as we move to a more diversified and sustainable longer-term energy future.

However, for Canada's energy industry to continue its strong growth, there is an urgent need to address potentially serious economic, market and environmental challenges. Addressing greenhouse gas management will not be our last or biggest challenge as energy increases its presence as a global commodity and priority for Canadian and, indeed, North American energy security.

Developing made-in-Canada technology solutions will make Canada a world leader in energy and its use from all forms of resources. An exciting and rewarding future for energy resource development and use is possible in a number of areas, including sustainable hydrocarbon production, effective waste exchange to energy systems, the integration of hydrocarbons and bio-resources development with the petrochemical industry and the growth and harmonization with alternative and renewable fuels and generating systems.

To move forward, we need to turn the challenge of a calm and constrained world economy into an opportunity for the continued growth of Canada's economy. How? By maintaining secure, sustainable and diverse energy supplies at competitive prices. This will require a portfolio of technologies aimed at improving energy efficiency and at increasing the use of all fuels and processes to help reduce greenhouse gas emissions and other environmental impacts, ultimately reaching acceptable emission generation levels.

NRC is actively engaging with industry to develop technology solutions to these challenges, and I welcome this opportunity to share some of our energy-related programs and projects with you.

In the automotive sector, for example, industry needs and R & D efforts are currently concentrated in two main areas: propulsion and fuel efficiency. To that end, NRC is developing, validating and applying light-weight and advanced materials, technologies and innovative design solutions to build more fuel-efficient vehicles for both the automotive and passenger rail industries.

In collaboration with our partners all along the supply chain, from raw material suppliers to original equipment manufacturers, we expect to achieve a 10 per cent weight reduction in vehicles by 2025 with the introduction of additional aluminum and light-weight components in cars and ground transportation vehicles. In turn, this reduction could lead to a 70 per cent decrease in fuel consumption with, on average, a savings of 1.5 billion litres of gasoline per year.

NRC is also exploring vehicle propulsion methods other than traditional petroleum-based fuels. As the global demand for hydroelectric vehicles and plug-in hybrids, electrical vehicles, is growing rapidly, we are working to improve the performance, life span and safety of lithium ion batteries, which have three times greater energy density than nickel metal hydride batteries now used in hybrid vehicles. Our goal is to make lithium ion batteries safe enough in large format to use in vehicles while significantly lowering the cost. More specifically, we are developing ever higher power densities, increasing the batteries' cycle and calendar life; enhancing reliability and safety, even under abusive conditions; and finding solutions to some of the issues related to alternative materials used in the major components of batteries, including the anodes, cathodes and electrolytes.

We also need sustainable, cost-effective alternatives to fossil fuels and a cost-effective way to capture emissions. Algae could be a solution. At NRC, we are committed to demonstrating that algae can effectively and profitably convert carbon dioxide emissions at the source and recycle these emissions into valuable products, especially biofuels such as jet fuel, without consuming fresh water or displacing food crop resources.

More specifically, we are working on resolving some of the challenges related to developing the technologies needed to grow, harvest and process algae cost-effectively. With our partners, we are developing affordable photo-bioreactors that will capture carbon dioxide from facilities like the Alberta oil sands or coal-fired power stations and allow us to use these emissions for recycling local strains of algae into other products.

NRC is also investigating both the use of light-weight materials, as I mentioned earlier, and these biofuels in terms of their potential benefits to the aerospace industry. These activities are part of a larger initiative designed to foster the broad deployment of emerging manufacturing and automation technologies for the production of aircraft elements, notably aircrafts structures, engines and landing gears.

Ultimately, using more light-weight and recyclable composite materials, designing less energy-consuming fabrication processes and achieving greater materials efficiency will reduce raw material and energy consumption and help minimize the sector's manufacturing and life cycle environmental impact.

NRC's energy-related programs also benefit the construction industry. As Ms. Buckley of the Office of Energy Efficiency at Natural Resources Canada explained, NRC in collaboration with NRCan publishes the National Model Construction Codes on behalf of the Canadian Commission on Building and Fire Codes, an independent decision- making body established by the NRC that is responsible for the development and upkeep of the codes.

Later this week, the latest in the series of codes, the 2011 National Energy Code of Canada for Buildings, will be released, providing energy efficiency improvements of 25 per cent on average over the 1997 version of the code for almost all types of buildings. Similar energy efficiency requirements for smaller buildings and housing are scheduled to be published in late 2012.

Together, these codes will cover the energy requirements of all buildings in Canada, with the exception of farm buildings. Within their scope, they have the potential to affect about 70 per cent of all building energy used. In addition, by 2050, some 35 per cent of all building stock and 40 per cent of all housing stock will have been built in conformance with these updated code provisions once they have been adopted by the provinces and territories. The decrease in energy consumption prescribed by these codes will therefore have a significant impact on secondary energy consumption in Canada.

I know you also expressed great interest in the tremendous energy savings that could be achieved in commercial buildings with the help of motion sensors, if only building managers and owners were prepared to make the necessary investments. I am happy to tell you these challenges may soon be resolved. First, the 2011 National Energy Code of Canada for Buildings contains provisions that require interior lighting to be controlled with automatic devices when buildings are unoccupied. The new code also includes provisions for equipping buildings with automated controls for adjusting heating and cooling.

Second, NRC and its partners will be developing breakthrough retrofit technologies including conversion, generation, storage and management that will revolutionize how owners of industrial, commercial and institutional buildings view energy. The ultimate goal will be to flip the energy line item on the balance sheet from a cost to a revenue source.

Currently, such building owners spend about $22 billion per year on energy and perform retrofits in some of their buildings to achieve energy savings. However, to become revenue-generating entities producing more energy than they use, these buildings must not only become more thermally efficient and have the ability to harvest renewable energy, but also interact effectively and intelligently with the emerging smart grid. To that end, NRC is developing intelligent building energy management technologies that seamlessly integrate the systems that control energy consumption, harvesting, storage and sales to the smart grid. These technologies will also forecast and modify a building's energy use with the goal of reducing consumption, especially during peak periods. Such reductions during peak demand periods will help increase the stability of Canada's electrical grid.

Our focus is on the integration of retrofit energy technologies into our building systems and supporting Canadian firms in the process of commercializing these technologies for the industrial, commercial and institutional buildings markets.

Another exciting technology we are working on could also have far-reaching benefits for the construction industry, energy conservation in general and in the Northern communities, particularly where efficient and healthy housing and sustainable energy solutions for remote communities have been identified as major issues.

Today's buildings normally include four to six inches of glass fibre insulation, but one-inch-thick vacuum insulated panels, or VIPs, can yield R-values up to 10 times better than current materials. These same vacuum panels can be manufactured in sizes up to a square metre and allow a builder to wrap more usable space inside a same-sized exterior envelope. Because of their low volume and high R-value, VIPs are particularly good for applications in Northern Canada. Transport costs less and construction is quicker. They create more living space and result in lower energy bills.

Construction materials such as VIPs and structurally insulated panels, or SIPs, are clearly beneficial in terms of energy savings, transportation and labour costs. The durability of VIPs will also lead to safer and healthier housing. NRC is now in the final stages of researching longevity issues as part of an effort to set up certification in Canada. Domestically made panels should hit the Canadian market within the next two to five years. The next step will be to develop joining techniques between the panels with innovative fasteners to join panels to buildings, taking into account the intense and long-lasting cold of the Canadian Arctic.

These panels are just some of the innovative housing envelope and leading-edge energy conversion storage technologies that NRC is developing for use in Northern communities.

Also on the energy side, NRC is investigating integrated energy storage, both electrical and thermal, and control technologies to increase the reliability of the power supply as well as displace diesel generators. Integrated energy systems that use local energy sources will enable economic development, have positive environmental impacts and create health benefits for Northern communities and the Arctic region. These systems are typically microgrids of 10 megawatts or less and involve the use of custom designed energy storage systems to balance intermittent supply with dispatchable demand.

These technologies are being tested and validated in NRC's facilities and will be followed up by economic analysis to verify the potential payback for savings in diesel use through the introduction of these microgrid storage distributor generation systems. These technologies will reduce the cost of living through energy efficient buildings and reduce the North's reliance on diesel fuel through improved energy solutions. The long-term impact will be a suite of northern specialist technologies and an expertise that Canada will market to the rest of the polar world.

Finally, I would like to tell you about NRC's concentrated efforts toward bio-based alternatives, that is, materials derived from forest or agricultural sources, to the petroleum-based plastics that are now widely used. The use of bio- materials is expected to grow dramatically over the next few years. The global bio-material market is currently worth about $1 billion and is predicted to grow in the long term to represent nearly one third of the global market of $500 billion for plastics and composites. Canada is in a position to seize a sizeable portion of that market, thanks to ample raw materials or biomass supply, such as wood and agricultural fibres from plants, and its existing expertise in plant selection, yield optimization, harvesting and treatment.

Given that Canada is one of the world's major exporters of auto parts, the transportation industry is one of NRC's primary targets for the development of lighter, stronger and lower-cost materials and products using bio-materials. In turn, these will lead to more fuel-efficient vehicles that are also more environmentally sustainable.

The second focus is on developing the bio-based materials for use in the construction industry, where cost and sustainability are also key competitive elements. More specifically, we are looking at using bio-materials to produce things like siding, shingles and decking materials, all innovative products that creative companies could quickly bring to market.

Our main focus is on three R & D goals: low-cost fibres and bio-resins, more efficient manufacturing processes, and high performance products. Together, these will provide the automotive and construction sectors with lighter, stronger, cheaper and environmentally sustainable components and help position Canada as a global player in industrial bio-materials products and manufacturing, with benefits to all Canadians.

Thank you for your time this evening. It has been my pleasure to share with you an overview of some of the initiatives that NRC is involved with in supporting Canada's energy sector. I look forward to the discussion and your questions.

Dr. Potter, I know you were reading very fast, not because you are in a hurry to get to Windsor, Ontario, but rather to get to your questions. I cannot believe there was any other reason. You did a great job in getting through a very comprehensive document.

Before I go to Senator Mitchell, I have been hearing a lot about this algae business, and you referred to it in the earlier part of your presentation. I live at a place called Lake Memphremagog, and we have this thing called blue algae, which has caused great concern recently. Is that the type of algae? Blue algae has some toxicity, I believe, involved with it. Where do you get the algae and how does it work?

Mr. Potter: There are many different strains of algae. Each strain has different characteristics that would make it good for certain applications. The blue algae is a bit of a funny one. Locally, you would use the natural algae that is there. It would probably be inappropriate to bring in algae from elsewhere and populate a particular region because it is not native to that region. How do you actually cultivate that algae in that natural jurisdiction and make sure it gets the right feeding, if you like, nutrients in the way of sunlight and CO2? How you can grow it, harvest it, dewater it, and then process it using reactors to make a fuel. It is being done. There are places in Canada where it is being done. Initially, the thought was you could only do it within the hotter climates of the world, Hawaii and that sort of place, but even in Fort McMurray, in the tailings ponds, algae does grow. In the northern communities, algae does grow, as you have witnessed with the blue algae. It grows wherever it wants to grow.

The Chair: Even though the lakes or the water source may be frozen over in the wintertime? That is not a factor?

Mr. Potter: If you locate it near a power plant or some form of thermal source, that little bit of low-grade heat would be enough to keep it open, and you can contain it within greenhouse-type facilities as well. Yes, it is an opportunity.

Senator Mitchell: There are so many things that come out of this, but my first question relates to building codes, and I have a couple of examples. When you go to Europe, you cannot stay in a hotel where you do not put your card in the slot in the door, and all the lights are out when you take it out, as well as the air conditioner. In Canada, you cannot find a hotel where you even have a switch at the door that turns lights on and off. You can barely find one of those, let alone something where you take your card out of the slot and nothing turns on. Everything goes off. Why is it that we do not have building codes that just require that, and why is it that hotels in Canada and North America just do not do it? Surely it would pay for itself.

Mr. Potter: I will defer to my colleague about the reason, but I am pleased to tell you there is one that I actually stayed at the other day.

Senator Mitchell: Can you tell us where it is? We should promote it.

Mr. Potter: It was in Charlottetown, Prince Edward Island. They are coming, sir.

Guy Gosselin, Manager, Canadian Codes Centre, NRC Institute for Research in Construction: In prefacing my response to this, the national energy code for buildings, which is due to come out at the end of this week, is a model document. It replaces a 1997 version, so it has been quite a while since that particular code document has been updated. The previous code did not have any requirements for automated controls, but I understand in this version there is some requirement for automated controls, and one that would be sort of a general type of switch for certain occupancies that would be built into the facilities for use by the owners and operators of those buildings. There will also be some zone requirements for zone controls that would be more related to the extent to which the spaces are used by humans, if there is any human activity. They will be attached to motion detectors that would sense whether a facility is being used and, if there is no such evidence for 15 minutes or so, it would automatically shut off lighting.

Senator Mitchell: I saw today in The Globe and Mail an article on bio-roofs that are being required by the building code established by a municipality in British Columbia. Major facilities, like Walmart or Costco, are building their facilities with these bio-roofs that reduce the need for cooling by 75 per cent in the summer. They pay back in two years.

There is probably a series of things like special light switches in hotels and this kind of thing that would pay for itself, but there is some kind of a paradigm that people view things through, and they do not even think to do it. They just do not get to that. Is there not a series of things that you could just implement regulations to require, and people could get their backs up, but then they start to focus on the fact that they pay for themselves in no time flat? Is that a phenomenon out there? You could use regulation to draw people's attention to opportunity? Imagine.

Mr. Gosselin: With respect to roof-top gardens and other green roof solutions, my understanding is that the national energy code for buildings will not have such requirements in this particular edition because it requires further study of the full impact and the interactions of those specific types of roofing technologies with the buildings that would provide the level of confidence necessary for regulators to decide to mandate that across the board. There are no barriers to their use. This code in particular tries to ensure it is written in a way that would not introduce any barriers to new technologies and that would allow for these technologies to be considered as part of alternative solutions to the solutions that are found or published as being acceptable solutions in the code.

As a result of further research and further evidence of the performance of these roofing technologies, eventually you will get to the point where regulators will feel confident and possibly move to mandate them.

Senator Mitchell: Could you give us some idea of how much you are investing in the hydrogen fuel cell work you are doing? What progress are we making in that, and how close are we to getting hydrogen fuel cell cars to where the Prius is today?

Mr. Potter: I would be flippant and say that it is always 10 years away, but we have made major strides in the last 10 years. The rule of thumb, at the moment, for a car that you can go to the shop and buy, is probably 2015. As shown by a lot of the work we have done through our Institute for Fuel Cell Innovation, in Vancouver, and by the relationships we have with the automotive companies and Automotive Fuel Cell Corporation, they are starting to look at manufacturing plants for these things. Mercedes is putting a manufacturing plant in Vancouver. It is starting to take off. It has been there; you can buy one, but it is just a matter of the cost effect and the reliability of it. The hurdles we have crossed over the last few years have been tremendous in moving fuel cells forward. The next challenge will probably be getting the infrastructure in place to support these systems — hydrogen fuelling stations. We have a station in our facility in Vancouver, for example, but one refuelling station in Vancouver is not particularly practical.

Senator Seidman: If I look at your mandate, it says very clearly that you are responsible for, among other things, undertaking, assisting or promoting scientific and industrial research in different fields of importance to Canada. You described a lot of exciting projects, and I would like to know more about how the council operates to fulfill your mandate.

For example, how do you foster innovation and the translation of that to market? Would you help a small Canadian business that has cutting-edge ideas, for example, and requires help translating those ideas to a product that goes to market with a business plan for success? We all know that is a huge challenge. Would you match, for example, basic science researchers in academia with a small corporation, perhaps working in the same specialty area, to help them bring a product to market?

Mr. Potter: Everybody has a different definition of what innovation means. To me, it is the effective use of that product developed in a commercial field. You can put nice definitions around it. Getting that product to market is a challenge, as you alluded to, for many, many reasons. There is not the investment. The company does not have, maybe, the management skills or the technology skills to do it. The market may not be there yet. There may be a ``build it and they will come'' type of attitude. Predicting future markets — what the next big thing will be — is one of the toughest things anyone ever faces.

NRC has numerous mechanisms at its disposal. I talked to you today about the R & D type functions. We can help companies with their research challenges — how to pick the right material, how to test it and how to validate it — but we also coordinate the Industrial Research Assistance Program, IRAP. That helps these types of companies you mentioned in looking at their technology, linking them up to people who can help them, helping them with the business cases and market understanding, and linking them across the system.

There are other provincial agencies that do similar sorts of things. I am familiar, in Alberta, with TEC Edmonton, for example. They do similar sorts of activities, working through the city and university.

The other thing you talked about — and it is a very misused or misunderstood word — is collaboration. We have several thousand researchers at our disposal, and, even then, we cannot do everything that everybody needs. Collaboration within the wider research arena is critical. For me, working with my colleagues in government, whether it is National Defence or Natural Resources Canada, is critical for us in ensuring we are all on the same page, working together and making good use of public funds. Linking to the academic sector is also important. How do you link to the individual professors, the groups and the universities, as well as to other research technology organizations, such as the Saskatchewan Research Council and Alberta Innovates Technology Futures, my previous employer, for example? There is a group, formed a few years ago, called Innoventures Canada. It is a consortium, or association of these organizations, including the NRC and the Saskatchewan and Alberta groups, through which they can work together to find best practices, ways to help collectively on those projects of national importance that pull things together and ways to reach out to other collaborators, whether in academia, in industrial research, where the labs still exist, or internationally. Forming those relationships is very difficult, very timely, and, if you get it right, very rewarding.

Senator Banks: Dr. Potter, gentlemen, thank you very much. I have two questions to follow-up on what Senator Mitchell and Senator Seidman raised. In your opening remarks, Dr. Potter, you talked about energy efficiency requirements and energy consumption prescribed by these codes. M. Gosselin, you also used the word ``required.'' They are not really required, are they? What is the extent of the uptake in the construction trades, on the last code? I think you said it was from 1997, M. Gosselin? How many provinces, presuming it has to be adopted by provinces, adopted it? What is your speculation about the extent to which the ones that will be released later this week will be adopted by the provinces?

In October, a paper was released called Innovation Canada: A Call to Action. It said that the government needed to step up its R & D. You referred to collaboration. Can you describe to us a typical partnership, if there is such a thing? When there is a proprietary interest involved, do the NRC, the Government of Canada and the people of Canada retain some kind of ongoing interest when that thing becomes commercialized, whether it is automotive or otherwise? Who owns what, and what is the nature of the collaboration that you do? Do industrial researchers come into your place and work? Do your guys go to where someone is designing a new battery and work? Is it all at some sort of arm's length?

Denis Bergeron, Director, Codes and Evaluations, NRC Institute for Research in Construction: Maybe I will answer the first question regarding the codes and the uptake. You are right that the codes that are published by the National Research Council become mandatory only when a province adopts them. This is the kind of partnership we have with the provinces and territories.

The energy code is part of a series of national codes, which include the building code, the fire code, the plumbing code, et cetera. For those codes, the rate of uptake is very high. We have been working for decades with the provinces and territories and have a strong partnership with them. These codes deal, essentially, with health and safety and accessibility in buildings. Today, pretty much all of the buildings in Canada are built to these codes. We did not have as much success with the 1997 energy code for buildings. Some jurisdictions did adopt them. They were adopted in Ontario, but they were like an option to other regulations. They have been adopted in some large municipalities, but there has not been the same kind of uptake. We have learned from this. This time around, we have established a very strong partnership, not only with the industry but also with the provinces and territories, as well as with NRCan, to develop a code that is much more likely to get the kind of uptake that we are expecting from the national codes.

Senator Banks: I might be parochial for a second, because I know my province, Alberta, where Senator Mitchell and I both live, did not adopt the 1997 code. Do you anticipate that Alberta will adopt the one that we will see later this week?

Mr. Bergeron: Our partners in Alberta on the building regulatory side are on board, definitely. They are participating; they are interested. Do we have a firm commitment? We never get a firm commitment from any province. Each province has its own political and economic agenda, but definitely they are among the provinces that have indicated a strong interest in using it and adopting the model code.

When will they do this? This varies from one province to another. That is the reality of the way we work with the provincial and territorial governments. However, we have learned from the lack of success of the 1997 code and we are very confident this time.

Senator Banks: If I come to you with a good idea, how does it work?

Mr. Potter: I think my key word is ``flexible.'' There is not a prescriptive response to anyone who comes through the door; you have to listen to what they think they need.

One of the first things you get taught in research is that quite often the question is not the question; the question is misdirected. It takes a long time to work out what is the actual need; is it purely a technology need or a financial need or a management need? Having a response is flexible. Without having a prescribed solution on day one, it is critical for any researcher.

The other thing is you alluded to intellectual property. People will often raise intellectual property as being the be all and end all. I have never had an issue with intellectual property or how you manage it. How you manage the intellectual property is the critical thing — access to it, fair market access.

There are always mechanisms to ensure that whoever puts skin in the game — whether the company has invested their time and materials, background intellectual property, whether the government through its various mechanisms has invested — there is always an amicable solution to be derived. For us, it is to ensure that it benefits Canada, from an industrial focus, making sure that Canada is grown as a result of that government-directed intellectual property getting into the marketplace.

The actual business mechanisms, the contractual mechanisms are quite varied. Consortia does get complex. Every now and then you get someone who does not understand intellectual property. They want to hold it close to their hearts and will not let go. You ask why; if you do not let go, it will never give you the value you think. Quite often, they put a higher value on it than really exists.

Senator Banks: To come at it from the other side, when the people of Canada have invested $5 million in a $10- million research project, do the people of Canada have an ongoing proprietary interest?

Mr. Potter: Yes, within reason, there is normally a royalty return. I like to look beyond the royalty return. From my background, and one that you will understand, during the oil sands big technology growth in the 1970s and 1980s, there were several billion dollars invested by government alone and much more by industry. The royalty back on the Steam Assisted Gravity Drainage patent is probably $12 million to $15 million. The impact to the industry in Alberta and to Canada has been billions.

Where you draw the line on the boundary of what I would call the return on investment is not the typical business return I would expect. It is far-reaching, whether it is a royalty back to the province, or taxes back to the province or federal government, a lot more is involved than just that limited intellectual property return.

Senator Peterson: Thank you for your comprehensive presentation. Regarding your 2011 National Energy Code of Canada for Buildings, is this linked to the National Building Code or is it a stand-alone code?

Mr. Gosselin: It is a stand-alone code. It is an objective-based code, along with all the other national model codes and building codes. To allow for the expression of the energy efficiency requirements, a new objective had to be developed for it. The objective is an energy efficiency or energy use objective controlling the use of energy used by buildings; it falls under a new umbrella objective that is essentially about not having a negative impact on the environment. That is a higher-level objective under which energy efficiency requirements and the energy codes have been developed.

Currently, the activity of developing energy efficiency requirements for housing, as Dr. Potter has indicated, is about one year behind. They should be ready and published for the next year. They will be released as revisions to the National Building Code. The energy efficiency requirements for housing and very small buildings will be incorporated into the National Building Code, at which time it will also necessitate a reference to this higher-level objective within the code.

Down the road we anticipate it may be directly referenced into the National Building Code. It is being discussed now, but consultation with provinces and territories is going to be required to put that into effect — whether or not the national energy code for buildings should be directly referenced into the National Building Code. It is too early to say how those consultations and discussions will go, but it is being considered for the future.

Senator Peterson: The 25 per cent improvement in overall energy efficiency, how do you hope to do that?

Mr. Gosselin: It has already been validated. There has been a series of archetype buildings defined that have been modelled. The target that was expressed, 25 per cent improvement, was a performance improvement over the previous edition of a code.

What they did for those defined buildings — some of them were schools, others were office buildings, others were light industrial big box stores and other types of buildings — was design them or model them according to the previous requirements. Then they modelled them according to the new requirements and they compared the energy used by these two versions of the codes.

They did this across the country, across different climate zones we have across the country, and they worked out an average improvement. The actual result was 26 per cent. It is an average across all the climate zones and across all types of buildings. When you look at specific jurisdictions, you will not get 26 or 25 per cent exactly, because the construction standards within those different provinces vary.

Some provinces are already ahead of the curve from the point of view of energy efficiency and recommending energy conservation ideas. For those provinces that are already ahead, maybe the performance or the percentage improvement will be less than 25 per cent. It will be closer to 20 per cent, for example, in Quebec. In other provinces that are not necessarily up there, the percentage improvement will probably be closer to 30 per cent.

Senator Peterson: If no one adopts the code, it will be zero per cent.

What about federal buildings? How do you lead by example here? Do federal buildings implement this code?

Mr. Gosselin: For federal buildings, the requirement is they have to comply with the regulations within the province in which those buildings are located. In addition, there is also a requirement that they conform to the latest edition of the National Building Code. Any federal buildings here in Ottawa, for example, would have to comply with the most stringent of the National Building Code or the Ontario building code. They have to carry out both exercises.

Senator Banks: Whichever is higher?

Mr. Gosselin: Yes, because they have to comply with both.

In terms of energy conservation, it would be up. I am not up to date on what Public Works and Government Services Canada, for its buildings and client departments, would actually require. We do know that they have a requirement for LEED certification and certain levels of energy efficiency, as well as other environmental or sustainable considerations. Will they conform and become compliant with the NECB when it comes out? I certainly hope so. However, I do not have the actual information regarding that.

Senator Peterson: They could do that. They could make that a condition that they comply with this on one building, just to start the process and get it going.

I believe you were working with a company called Iogen on producing ethanol from grain straw. How is that going?

Mr. Potter: I have been familiar with the company over the years, but I am not specifically familiar with their projects as they exist today.

The Chair: Mr. Potter, before I go to the next questioner, for the record and for our audience online in particular, if I understood your testimony well, the new, modernized, up-to-date national building code will be released on Friday, November 18, which is this week. I do not have enough experience to know how many volumes it is, if it is something that we can have you send us a copy of. Will it be available online? Is it in the Canada Gazette? How does that work? Where can people find the current building code when it is released?

Mr. Potter: I would be pleased to share that with you. These books get thick at times. The actual building code is two volumes and about three or four inches thick. I am not sure how thick the energy code is.

The Chair: Which code is coming out on Friday?

Mr. Potter: The energy code.

The Chair: What form will it take?

Mr. Bergeron: It is about a two-inch binder.

Senator Massicotte: How many pages?

Mr. Bergeron: How many pages?

Mr. Gosselin: Around 300.

Mr. Bergeron: About 300 pages. All of our codes contain appendices and illustrations. It is not all just code requirements.

Regarding the availability, maybe a word on how the code development system works. As we mentioned, it is a partnership with the provinces and territories. The funding of it is has a particular scheme also in the sense that NRC supports the whole process technically and financially, but the majority of the funding comes from the sale of the documents. These documents are not made available for free. We have our own virtual store, libraries and regular channels through which they are made available, and people have to buy the documents. They are priced competitively compared to equivalent codes and standards in North America.

We definitely look at the market and the value of the document, and we set the prices right. We consult with the provinces and territories because they are who actually adopt the codes as they make these documents mandatory in their jurisdictions. Of course, we consult with them about the price, the strategy and the direction of the publication.

The Chair: If one were the head of construction at SNC-Lavalin and said to an employee, ``Get me this new code,'' how much would he have to pay?

Mr. Gosselin: It is approximately $200, I believe, for this document.

The Chair: Is it available online?

Mr. Gosselin: Yes, the pricing is equivalent for online versions.

The Chair: Excellent. Thank you. Did you want to add something, Mr. Bergeron?

Mr. Bergeron: In order to meet various needs, our codes are available in various formats. The most popular one, even today, is paper.

The Chair: The loose-leaf binder?

Mr. Bergeron: Absolutely.

The Chair: That is what I understood.

Mr. Bergeron: They are also available online, downloadable in PDF format. They must be purchased, but one could also buy subscriptions. For someone who uses the code occasionally and does not want to pay $200, we have subscriptions available. The shortest period of time is one week, and it is at a reasonable price. We are trying to make these codes as accessible as possible to users.

The Chair: Excellent. I assume there is a huge demand for them, and I guess there will be a big line-up on Friday morning. You will make one binder available to us?

Mr. Potter: I am sure we could do that.

The Chair: I have told the clerk, of course, that the $200 will be ready if we really needed it.

Senator Neufeld: The National Energy Code of Canada for Buildings you say will save, on average, 25 per cent. Are you talking about 25 per cent of energy per year? What is the 25 per cent representative of?

Mr. Gosselin: It is on the energy used by buildings.

Senator Neufeld: I understand that part. That is pretty straightforward. You will save 25 per cent of your energy costs. Is that on a yearly basis or over five years? How is that determined?

Mr. Potter: It is the same thing; it is 25 per cent from whenever you implement the actual changes to your facility.

Senator Neufeld: You will save 25 per cent over the lifetime?

Mr. Potter: Over the lifetime. You must remember the different cycles as well.

Senator Neufeld: I am wondering how you came to 25 per cent.

Mr. Potter: On an average basis, depending on the climatic conditions over that year period, your bill should be 25 per cent difference on a yearly basis.

Senator Neufeld: On a yearly basis?

Mr. Potter: It depends on the climate. If it is really cold one year, it might be slightly more expensive depending on the heating. You have to balance the statistics outside.

Senator Neufeld: Why do you put this code out? Is it a mandate or a directive of government or a ministry? Why is the National Energy Code of Canada for Buildings done? Do you do it on your own? Did someone say one day, ``Hey, the provinces have not accepted the one from 1997, 14 years ago, so we will develop a new one and work with them''? How did that happen? It is interesting.

Mr. Gosselin: There was quite a bit of consultation before the Canadian Commission on Building and Fire Codes, which is the body that makes decisions on the code development and also approves the content and makes the decision to invest system resources into the development of an updated version. It had been tried before. As you point out, the 1997 version had been published, and although it was certainly not mandated, it was referred to by many programs.

This time, they needed reassurance to the extent that the provinces, territories and industry could provide that reassurance, that if they were to invest those resources, the code would actually be used, referenced and mandated.

NRCan did a great job of supporting the process of consulting the provinces, territories and industry. They set up a building energy consultations committee, of which we are a member, with representatives from the different sectors in government. They mandated that committee to inquire, and they challenged them to come up with a business proposal, part of which was to come up with the funding for the development of the new code, as well as some reassurance in the form of letters, expressions of interest or intent of consideration for adoption of this. They secured those and mounted them in a business case, which was presented to the commission four or five years ago. Then the commission made the decision to say, ``All right, we seem to have a good case going forward and we seem to have some upfront funding.'' NRCan managed to provide $4 million in funding for the development of the code, and it launched us into a four-year process of developing all of the requirements, culminating in the publication being released this Friday.

Senator Neufeld: Thank you. I notice throughout much of your speaking notes, Mr. Potter, that you talk about Northern Canada. I live in what you could call Northern Canada but not in the Arctic Circle. I live in the very northern part of British Columbia, which gets relatively cold. British Columbia has a population of 4.5 million people, and in the quarter of the province where I live, there is about 65,000. Most people live in the south.

When I have driven around in the south and even here, from the airport to town, I see a lot of really old buildings. What is in this national energy code that will work to help the energy consumption of those old homes where most of the population lives, which is in the southern part of Canada? Is there something there that will facilitate that?

In the North where I live, I see lots of buildings being built, and they are being built to a pretty good standard as we speak today. People are fixing up older buildings simply to reduce their heating costs and what not. I know that, living in British Columbia, people would say it is nice and warm down here, but they have to cool them in the summer and also heat them in the winter. Is there something in here that will apply to southern homes? You talked about northern basically through your whole presentation.

Mr. Gosselin: It will apply to all regions of Canada, and southern parts as well as the northern parts. The requirements, yes, do vary. The committee was aiming at a uniform level of performance from the point of view of energy efficiency.

With regard to the first part of your question on the existing buildings, there is nothing in the code. The code is meant to apply to new buildings and to the renovation of existing buildings. When there is a major renovation to a building, it would also apply. There is nothing about retrofitting or forcing a retrofit requirement to owners and developers and provinces. It is up to the provinces and territories to decide whether or not they actually wish to introduce some regulations with regard to retrofit.

Having said that, it will be quite useful, I think, on a voluntary basis. Yes, there is a mandatory market. We do not only publish a code, but we are also currently preparing a user's guide to explain how best to apply the code to buildings. It will be a helpful guide to anyone who wishes to update or upgrade their own home. It is up to the provinces and the territories to decide whether or not they wish to make that mandatory.

Senator Neufeld: You also spoke, Mr. Potter, about isolated community energy storage. Are you talking about hydrogen? What are you talking about in regard to energy storage in isolated communities?

Mr. Potter: Energy storage is one of those sorts of silver bullet hopes that we can all have sometimes. Batteries could be energy storage. Hydrogen could be energy storage. Compressed air in geological reservoirs could be energy storage. It depends on the location specifically. As I said, I am a fan of the portfolio approach. What is it you have, what do you need and how do you make the two fit together? Look at the communities. Hydrogen is a good example, but where do you get it from? Do you have a water resource? Do you have a hydrocarbon resource? How are you actually converting it: electrolysis, thermal mechanisms, biological mechanisms? It is very much about understanding the community you are in and what works for that community. Often groups say, ``Come and buy this. It will save everyone.'' It does not save everyone. It might work in one particular area but not everywhere.

Senator Neufeld: You are actually doing research on a whole host of things as it relates to energy storage.

Mr. Potter: Yes. I alluded to the Arctic, as you mentioned, in my presentation. The Arctic is pretty extreme most times of the year. It is difficult to have a reliable power source. That is why we fly up a lot of diesel into the Arctic, because it is reliable. We know the diesel engine works. It takes a lot of abuse not to work. As we grow the Arctic and look at further development in the Arctic, how do we ensure we have those reliable resources? Wind energy will work up there. It is working up there now. Geothermal will work up there. It is making sure that it is reliable and available. How do we actually help that community grow as well, not just how do we actually get the utility there? Could it become a use of a new industry up in the North for greenhouses, for instance, and growing things? They can use the heat from whatever power sources. There is a lot of opportunity, and it goes beyond the basic utility function to how you ensure that community is vibrant and healthy.

Senator Neufeld: In the last five years, what have you developed in the NRC where the rubber really hits the road in energy efficiency and that you are proud of and can say this is something that we have invested time, money and manpower into developing? What would it be?

Mr. Potter: I think the fuel cell.

Senator Neufeld: In the last five years?

Mr. Potter: It has taken huge strides in the last five years. Fuel cells were invented in 1837. Governments started investing, I believe, in fuel cells toward the mid 1980s or end of the 1980s with Ballard in Vancouver. It has taken a lot of time to get the world market interested. Over the last five years, our investment, and this goes to another question that Senator Mitchell asked, has been about $10 million a year that we put directly into the fuel cell institute. That has had huge strides and is one of the reasons why these companies are now investing in Canada and investing in this fuel cell. I think we are at the cusp of that being commercially viable in automotive and stationary power in the next couple years. That is a huge change from where it was in the early 1990s when it was, ``Great technology, but what will you do with it?''

Senator Wallace: Thank you, Dr. Potter and gentlemen for your presentation. The question I have is somewhat along the same lines as that of Senator Banks and Senator Seidman in understanding how you do what it is you do. Obviously when I look at the list of energy-related products and technologies that you listed in your presentation, it is extremely impressive.

Do you develop these independently, or are all of them ideas that originate from the private sector and then you work in partnership with them, or would you, with your team, come up with an idea to look at developing a patentable technology or product? Do you do it independently or is it always in conjunction with a private sector partner?

Mr. Potter: Thank you for your question. The answer is yes and yes. I used the word ``flexible'' with Senator Banks a minute ago. There are things that we think look like they are worth investigating, and we will look at it and take it to a certain conceptual stage. Other times, someone will come to us with an idea and we help them develop it.

In the first case, it is critical, if we have a concept, to ensure that we have someone in shop with us, a company or companies, and I prefer a consortia approach personally, especially at the early stages of the develop when you can bring them in and de-risk it as a collective. You then have someone to transfer it to. My sitting in my lab just developing stuff because it is interesting is pointless. It is not worth it.

We are focused more on the industrial need. To get that industrial need, you need to bring them in earlier to get them to understand it. A lot of it is on the economics. What are the economic hurdles in moving this forward? Each company has its own different economic hurdles that it needs to get through. Bringing them in early is critical. Passing your technology across is critical. Giving them a report at the end of the day, if they have never been involved, is pretty useless.

Senator Wallace: From what you have said, it seems like NRC is taking more of a business-oriented approach to what you do, measurable results, very much as the business jargon I hear coming from your organization.

Mr. Potter: Yes.

Senator Wallace: Do you perhaps see yourself as a research facility for hire more than you did in the past? You see providing this technological research capability to the research sector, but there is a price to be paid, and a significant part of your role is to realize the revenue that comes from providing that service. Are you a facility for hire? Is that part of what you do?

Mr. Potter: Simplistically, yes. I prefer to view us as a strategic economic delivery agent to help those companies move forward.

Senator Wallace: That certainly sounds better than what I said.

Mr. Potter: We have a lot of infrastructure that would not exist in any one particular company. We invest in that infrastructure because it helps the sector, not a particular company but a sector, in moving all of them forward. That is important to us. How do we actually stimulate them to move forward? How do we actually get them to invest? If they do not invest — I used the phrase earlier ``skin in the game'' — where is their ownership of that technology? It is important for us that they take on that ownership and realize what they are getting into and how it can help them as well.

Senator Wallace: To a large extent, do you exist as an organization because the private sector in many cases does not have the capability of providing its own independent research facility, so you see yourself as bridging that gap and further facilitating the development of the private sector? Is that a major reason why you exist? Why not simply leave it to the private sector to develop their own research capabilities?

Mr. Potter: There is a long answer and a short answer. I think the 95 years of stability that we have given to research in Canada has been critical. During that time, industry has either been high or low on the research that they will undertake. Some companies still maintain active research labs; others do not. Others that do not are now rebuilding. They tend to go in a cycle.

Where I think a federal or a national system of research needs to be is stability — always having that stability so that companies can come to you for their what-ifs. What if I need something today, where do I go? Groups like NRC provide that go-to place. The infrastructure and the skills that we have within our researchers are the reasons that companies come to us to help them through those pains.

Senator Wallace: Something else you said was of great interest to me; namely, in developing your partnerships, you mentioned universities. I think that is so important when there are opportunities. The research capabilities of universities and the opportunity for students to benefit from being exposed to the research that your organization would have in turn is really important.

For example, being from New Brunswick, I know that NRC has a facility on the campus of the University of New Brunswick and there has been a close collaboration. I applaud you for that. I think that is an excellent model of bringing together these silos for the common good.

However, I have heard recently that there are some changes taking place in the focus of NRC that could impact its relationship with universities. Is there anything you can say about that? I was a bit concerned from what I heard that it may have negative implications on university institutions.

Mr. Potter: The reality is that we are in a new strategic direction, but collaboration is critical to us. Working with universities and with industry is part of that moving forward, but we have a stronger focus on industrial outcomes, really ensuring that Canada has an outcome for the money that it invests through the National Research Council.

Senator Wallace: Do the universities have a role to continue to play in that?

Mr. Potter: Very much so. If you look at the investments through the various mechanisms, NSERC is a wonderful mechanism for investing into people, facilities and research and generally helping companies move forward. The point that you made about people, the people are the critical element there of the investment, ensuring that they have the experiential learning as they go through their degrees so that when they come into whatever enterprise, they are ready in some respects.

We try to bring them into as many projects as we can, very much saying, where do those skills exist? If they exist at universities, bring them in. I do not know of a university in Canada that we do not work with at the moment — or have not worked with, I should be more specific — making sure that consortium works.

We like to think that we know everything. We do not. Often we get to the eleventh hour of a technology and realize there is a fundamental question that we have not addressed yet. We reach back into the stronger academic research thinking in saying what do you think of the issues here and then taking it through. Having that group of people together that can think at different levels on the innovation spectrum is important. Maintaining that in NRC's future is important to me and to NRC.

Senator Wallace: Maintaining it with a physical and continued presence on campuses.

Mr. Potter: Yes.

Senator Wallace: Back to the hydrogen discussion, as Senator Mitchell mentioned earlier, the development of the hydrogen cell has been a major feather in the cap of NRC — its involvement in the development of that. As you have said, there are other methodologies and technologies of producing hydrogen, one of which I am familiar with in New Brunswick. You may know the company, Atlantic Hydrogen, which, through the technology that it is developing, produces hydrogen from natural gas, which is interesting. I can see from the nodding that you are familiar with that and probably have had involvement with it.

Back to the comment about the North and providing alternative energy sources for the North, I am wondering about the possibility there of further developing hydrogen through electrolysis. There is certainly no shortage of water in the North. Why would that not be a natural source of energy — hydrogen as a source of energy to fuel the North in an environmentally responsible way? Is the technology there yet to do it, and is anything happening on that front?

Mr. Potter: Many things are happening. I am appearing in the World Petroleum Congress in Doha in about three weeks time, presenting on hydrogen — the challenges and the opportunities.

First, hydrogen is what we call a vector. It comes from something. It is like electricity. It always comes from something. The view that there is a hydro economy is a bit naive because it will all be based on a hydrocarbon or a water economy; it must come from one of those two sources.

With regard to your specific question, is hydrogen an option for the North, yes if there is water there and we can get the purity of the water that is appropriate for that technology.

Work is being done on new forms of electrolysis. Where you get the power from is a critical factor. Nuclear may or may not be an option, depending on the political or emotional sensitivities of nuclear in the North.

You can get these plug-and-play nuclear reactors, small ones that are similar to the ones you would find on a nuclear submarine, a 50- or 100-megawatt power system. It is possible.

As I mentioned earlier, there also are some wind energy sources up in the Arctic area. It is a good way to generate electricity for electrolysis. There is geothermal, again. There are lots of mechanisms. It comes down to how do I plug it all together to make it work?

Steam methane reforming is the backbone of most of the natural gas to hydrogen type systems today — the opportunity to change that because of the risk involved in changing that and the need for it. We have a couple of megatonnes of hydrogen used every year in Canada. There are about 50 megatonnes per year of hydrogen made in the world today and we are about 3 megatonnes of that.

It is a risky business, especially if you are in the North and it is the only source of supply you have where you are. There are lots of opportunities and lots more work to be done to find out which ones work.

The Chair: Senator Wallace, you might be interested because you were not here at the time, but as part of this study we are doing we traveled as a committee to Chalk River, where the NRC is a major player with the NRC reactor. We were able to see some of the other amazing work that they do as part of Canada's contribution to R & D.

Senator Massicotte: Mr. Potter, you people are experts. When I heard your presentation, I must admit that I was impressed at a number of things you are working at. Some may be game changers. Some may significantly improve our concern.

This committee has spent a lot of time on climate change and the CO2 problem, et cetera. You are certainly more informed than we are. What is your perspective on where we are at? Can some of the stuff dramatically change it — not only our own efforts, but most countries have efforts like your own? What is your perspective because you are more informed than we are? Are you encouraged that we can achieve the maximum 2 per cent Celsius or are we off-track?

Mr. Potter: I think separating the science from the actual engineering, that may help reduce the science. I am not a scientist. I will defer to more knowledgeable people on whether it is two degrees or whatever. Where I come about it is very much from an engineering perspective; how do we address this challenge? Whether or not you agree that it is a challenge, we have to address something there and do it in the best way possible.

To me, the wedge approach that has been put forward by numerous people is one of the best ways to do it. That is fuel switching; we talked about hydrogen, renewables, and algae was mentioned earlier. There is also energy efficiency, which is the subject of a lot of our discussion here today. There are huge amounts of energy efficiency that we can address. The building envelope is one of the major ones.

There are some consequences on that one. If I save energy on my heating bill, I will go and buy another television. Where do you balance it off? I might be saving money one way but investing it in a more energy-intensive system in another way. How do we ensure that people use those high-efficiency systems within their houses with fridges, washing machines, et cetera?

The other one is the CO2 storage side of things. There is a lot of investment; I know in Alberta there has been investment. The federal government has helped with that. There have been billions of dollars spent on CO2 capture and storage over the years, which is where we have to go. All those things link together over a time period to address getting that carbon out of the atmosphere.

I was interested to see some of the Virgin Earth Challenge projects on CO2. How do you suck CO2 out of the atmosphere using things you can buy from the hardware store? It sounds funny when you first talk about it, but it can be done. How do we do it effectively? Will we be able to change the temperatures? I do not know. I will try and do something to make sure it does not get to that point.

Senator Massicotte: The International Energy Agency came out with a report this past week or 10 days ago. When you read it, it is very alarming where they say based upon everything we have done so far, if we continue on this pattern, the climate will increase by 6.5 degrees Celsius. As you know, we are looking to achieve 2.0.

If all the governments in the world do what they are supposed to, all the plans, it will achieve 3.5 degrees Celsius. That is within the next 15 to 20 years. Most governments profess more than they actually do, so you say, wow, I think they are trying to get our attention. It is hard to be encouraged by that. You have to start thinking that we are not going to meet it, and we will be lucky to get a 4-degree-Celsius change. They say only if we really change things immensely, beyond our existing plans, will we get to 2 degrees, and there is not much time left.

A comment was made here that even by 2025 something like 70 per cent of all the buildings in the world will be existing ones, not new ones. Even the existing ones, if you just project that, that gets you to 2 degrees Celsius, never mind building another building. It is not very encouraging.

You people are in the field a lot more and you read that and think we all have to step up the game and change our method of thinking and doing with urgency. I think that is what the IEA is trying to tell us.

Mr. Potter: I agree. The energy code for buildings is a step in that direction. Reducing the weight of vehicles, better power systems and fuel cells are all part of our ability to invest in technologies to move that agenda forward. At the same time, looking at other agendas to ensure that we can grow the economy and companies and looking at other environmental challenges like water resources.

At my last appearance before this committee six years ago, the water, coal bed methane and shale gas were big challenges. That was a lot of the discussion. Some of those issues have been addressed, some have not. We learn as we go, and we try to do the right things at the right time for the right reasons.

Will we reach those targets? A lot of minds are saying yes, and a lot are saying no. I will just do what I can and NRC can to help Canada move forward effectively and to help those companies within Canada move forward in addressing some of those goals.

Senator Sibbeston: I was pleased to arrive today in this balmy weather, but in the North it is in the minus 20s where I live, in Yellowknife and Fort Simpson.

Interestingly, global warming is occurring, and the big news in the North is that up in Tuktoyaktuk overnight a wind from on shore blew the ice out of the harbour. The mayor said in all his 50-year life he had never seen the harbour with open water this time of year. It is another sign of global warming. We are likely to still have cold for a number of years.

I am glad that you mentioned the North and VIP. It is interesting that when people talk about VIPs it is not necessarily in a very positive vein but, in this case, VIP could be a very good thing if it is developed. As you say it will come on the market in two to five years.

I have some experience with it. My son, last winter, used the SIP, the structurally insulated panels, which is insulation clad with metal on the inside and outside. He used that to build a little cabin way up north of Gjoa Haven for polar bear researchers. Instead of bringing two-by-fours and insulation up North he used those panels, and I think that will work very well.

Has your work taken you to the North and have you dealt with communities way up in the Arctic or in places like Yellowknife?

Mr. Potter: The answer is yes, but it must increase. I am planning on going in the early new year, mainly because of the challenges we talked about earlier and to interface with the people there. Really, what do they need? I can go and build something. Whether they need it is another question. It must be practical for what they need and how they operate.

We are having discussions with our colleagues in the federal government, with the various groups, to say how do we interface with the communities, how do we understand their needs as opposed to going up there and saying here is technology, use it. It does not work. We need to understand what they need and then develop the technology that corresponds to their needs.

I think it can be done. It will take a long time and a lot of testing and research, but things are changing up there. Also, there is a strong desire from those communities, in discussion with my colleagues at Northern Affairs, and there is a strong desire to actually do something up there. I know the Arctic is on this government's agenda, so I would like to see where it goes.

Senator Sibbeston: One of the things the Arctic people would like is a big dome to cover some of the little towns, if you could work on that.

Senator Neufeld: You want some global warming.

Mr. Potter: We are looking at air ships, so I do not know if that counts.

Senator Sibbeston: I am aware that Yellowknife has developed a building code, which is I think higher, stricter than the National Building Code in terms of their buildings in Yellowknife. Are you aware of that situation?

Mr. Bergeron: All the territorial governments are part of the national code system, but there are some solutions that are not in the national code. Especially in the North where, because of very specific and difficult conditions, local governments have developed and included in their bylaws or local regulation some different ways of coping with issues. The regulations are based on the national, but they are supplemented with very specific things. These partners are at the table.

Maybe one day, if there is a consensus around the table that more of this should be in the national codes, the possibility is there. Right now it is a matter of how many people are affected, and is it the role of a national regulation to deal with specific issues? It is not only for the North. In some other regions there are some specific requirements that are not in the national codes but are supplements to the national codes.

Senator Sibbeston: Thank you for your work in the North. Obviously we are a cold country and will be that way for a while yet. The people in the North are affected mostly by cold, so warmer houses are needed.

It is interesting, people in the Arctic that I talk to say they like the cold; they just are not very happy about climate change, having erratic weather systems and an earlier spring and so forth. The Inuit people in particular like the cold, when it is 30, 40 below.

However the houses that they live in, government buildings, I think this VIP, if it is developed, sounds like a good thing. If it is 10 times more efficient than the present system, obviously that will do wonders for keeping buildings warm. We look forward to that being developed and made available for people in the North to use.

Mr. Potter: Thank you. So do we, sir.

Senator Seidman: I might come full circle. We have talked a lot about your mandate, so if I could just pursue in one final way this issue surrounding R & D. As you have described here, in the energy field you have been very specific. We have talked about innovation specifically as it applies to the mandate of our committee, which is energy, environment and natural resources. What would you suggest or recommend to improve our chances for greater success for Canada in business innovation?

Mr. Potter: That is the big question, I think. Everyone is fumbling in the dark. I do not think there is one solution. For groups like us, it is really how to help the companies through the short-term pains but also how to help them through the things they do not know. It is the ``do not knows'' where I think we need to put more effort. What are the future markets? Where are the next challenges that Canada will be facing?

We have talked a lot about the Arctic here today. I was at a House of Commons committee last Christmas, nearly a year ago now, and we were talking about energy security in general in Canada, and what does that mean to people? Things will come and go, but underlying that, there is an innovation strategy.

As you are aware, numerous reports on innovation have gone to my minister, and recommendations have been made. I look forward to seeing his recommendations on whether they believe that particular framework can go forward in Canada, how we can all work together to move it forward effectively, focused, making the best use of public funds, and building on the successes we have had in taking it further.

It is a complex challenge to really understand the market. I see a lot of great technologies, but you would never use them because there is no need to; you are building it for no reason. Sometimes you need to have those difficult conversations with companies that come to you with what they think is a great idea and you have to give them a reality check: Great idea, but how? Why? It is not going to quite make it.

Quite often in that case, where they think the market is, it is not; however, there is another market for it. It is really helping them with that market understanding, which is one of the main things we may be lacking.

Senator Seidman: Are you saying we should be more committed to applied research that our country needs in one way or another and that is what we should be promoting as opposed to just good ideas that, as you say, may have no practical application. Where does applied research fit in the scheme of things?

Mr. Potter: The innovation spectrum — the S-curve, as some people call it — as you know, is not that simple. I am a fan of investing fairly across the whole system, whether it is in academia or at the industry end, through the IRAP-type mechanisms to support companies, and a lot in between in applied research and demonstration.

Demonstration is probably one of the areas that, if I look at the funding spectrum, is probably lacking. We have amazing funding mechanisms within Sustainable Development Technology Canada, for example. However, even there the funds are limited. If I look at some of these projects, just to get it to proof of scale, you need $50 million to $100 million of investment from that particular side, as opposed to SDTC, where I believe the maximum they have put in is maybe $15 million or $20 million.

Therefore, it is about getting it to the scale that it is demonstrable. The reason is that most people buy things because you have seen someone else use it; it has been demonstrated to you. Getting through the demonstration phase of the innovation spectrum is one of the critical areas. To get that, you need all the other pieces together as well. You need the people to get you there, the funding in academia and applied research, the piloting, the demonstration, the business mechanisms, and the real business understanding to take it forward and transfer it to the industry, which knows how to use it effectively in their market.

Senator Banks: I can look this up if you do not know the answer off the top of your head, but is it a convention or a constitutional barrier to the application of the National Building Code? The National Building Code is sort of like Moses coming down from the mountain with 10 suggestions, which would not have the same effect. Corollary to that, if it is a constitutional bar, Mr. Bergeron, you raised the point that that would not apply in the territories. Does the National Building Code apply perforce in the territories? They are not protected by whatever constitutional whatever there might be, I presume; they are not provinces yet.

Mr. Bergeron: The short answer is that it is really a matter of jurisdiction. It is constitutional. With the model codes, we are talking about energy consumed by buildings, so we are in the area of construction. Everything having to do with buildings and property is a provincial and territorial jurisdiction. As a federal government research establishment, we are in this business at the demand of the provinces, which are asking us to develop and help them to have uniform regulations across the country.

Senator Banks: The jurisdiction for building codes has been devolved in one way or another to the territories, as well to the provinces?

Mr. Bergeron: Provinces and territories, yes.

Senator Mitchell: Several weeks ago the Review of Federal Support to Research and Development panel provided some recommendations, at least one of which would affect your structure. It suggested the division of the research that you do and its allocation in certain ways with partnerships with industry and so on, but it also would split out your policy-making efforts into specific departments. Have you given that any consideration? Are you aware of it?

Mr. Potter: It is colloquially called the Jenkins report. The report went to Minister Goodyear. He has looked at it and received a lot of advice from other parties and groups, and he is taking it under advisement. We stand by to see what recommendations and actions he takes from that.

Senator Mitchell: You said $10 million in hydrogen fuel cells in a year?

Mr. Potter: That is off the top of my head, yes, ballpark.

Senator Mitchell: Have you done oil sands research in the past? How much would that be?

Mr. Potter: We do a little bit of oil sands research. Most of that area falls to Natural Resources Canada, primarily through their CANMET Devon facilities. We do a little bit, and we work with NRCan to do that, working with the companies. Much of it is on the processing side. One of our groups is the Institute for Chemical Process and Environmental Technology, so we do a lot of work on separation techniques, catalysis, that sort of thing.

Senator Mitchell: How much would you put into that in a year, do you think?

Mr. Potter: Probably about the same order on chemical processing, not specifically for oil sands, though. The amount of effort we put in oil sands is very low. I do not have a number for you, although I could find one, but it is quite small.

We have just reported our numbers to the International Energy Agency. Through the government, we report those numbers every year on the amount of government money that gets directed to whatever energy source. Those are online. Anyone can check. Unfortunately, it does not break it down federally and provincially, but I think on average Canada spends about $260 million a year on energy research, and that is governments.

The Chair: Dr. Potter, I know you are in a hurry. You have been tremendous. It has been fascinating listening to you and your two colleagues. I want to thank you very much. I hope you will send us an energy code on Friday. You can be sure that we will help to promote it in the most favourable light. It is key to our study, to know that these energy sustainability innovations are so far advanced in Canada.

My final query to you is that you had said all of these things we are doing at the NRC will make Canada an energy leader in the world of special technologies. Are we not already the leader?

Mr. Potter: Yes, sir.

The Chair: I thought we were. I am glad we got that on the record.

Mr. Potter: I gave a presentation a couple of weeks ago, and I struggled to think of an energy resource or conversion device in the world that we have not got. We are so rich in resources and we have the technology and know-how to do it, in the universities, research technology organizations, and industry. How we get it all together is the issue, but there is a huge opportunity to go forward.

The Chair: We have to use it or lose it. We have to get the message out there and get all Canadians understanding what is there. That is what this study is all about, and you have made a great contribution. Thank you very much.

(The committee adjourned.)