THE STANDING SENATE COMMITTEE ON ENERGY, THE ENVIRONMENT AND NATURAL RESOURCES
EVIDENCE
OTTAWA, Tuesday, February 14, 2023
The Standing Senate Committee on Energy, the Environment and Natural Resources met with videoconference this day at 6:32 p.m. [ET] to study emerging issues related to the committee’s mandate.
Senator Josée Verner (Deputy Chair) in the chair.
[Translation]
The Deputy Chair: Good evening, honourable senators. My name is Josée Verner. I am a senator from Quebec and the Deputy Chair of this committee.
Today, we are holding a meeting of the Standing Senate Committee on Energy, the Environment and Natural Resources.
[English]
I would like to begin with a reminder. Before asking and answering questions, I would like to ask members and witnesses in the room to please refrain from leaning in too close to the microphone or remove your earpiece when doing so. This will avoid any sound feedback that could negatively impact the committee staff in the room.
[Translation]
I would like to introduce the members of the committee participating in today’s meeting: Senator David Arnot from Saskatchewan, Senator Clément Gignac from Quebec, Senator Denise Batters from Saskatchewan, Senator Mary Jane McCallum from Manitoba, Senator Julie Miville-Dechêne from Quebec and Senator Karen Sorensen from Alberta.
I welcome you all, dear colleagues, and the viewers across the country watching our deliberations.
Today, we are continuing our study on the Canadian oil and gas industry. We therefore welcome our first panel of witnesses, Ms. Luisa Da Silva, Chief Executive Officer of Iron and Earth Canada, and Ms. Sylvia Plain, as an individual. Welcome and thank you for accepting our invitation.
You have five minutes each for your opening statement.
We will start with Ms. Da Silva, followed by Ms. Plain.
[English]
Luisa Da Silva, Chief Executive Officer, Iron and Earth Canada: Thank you very much.
I would like to begin by saying that an energy transition is under way, and we will continue to roll out over the course of the current generation and the next generation of Canadians. While there are challenges, it is an opportunity for workers, communities, companies and entrepreneurs to create a prosperous energy transition. An analysis by the Business Renewables Centre Canada shows $3.7 billion worth of renewables construction by 2023 and 4,500 jobs in oil- and gas-rich Alberta alone.
Canadian Natural, Cenovus Energy, ConocoPhillips, Imperial, MEG Energy and Suncor form the Pathways Alliance, which has the goal of achieving net-zero greenhouse gas emissions from their operations by 2050, so industry is already onside to deal with climate change. The energy transition requires technology but it also needs people to create renewable technology, implement the technology and maintain the technology. By training workers in remote and Indigenous communities to install and maintain their own small-scale solar- and wind-power generation systems, we are helping to implement climate solutions.
Iron and Earth Canada has a lead role to play in bringing sustainable energy to communities because we are the only non-governmental organization offering customizable and funded training and climate solutions based on community needs.
There are transferable skills between traditional energy workers and workers in the sustainable energy sector. Through its training, upskilling and infrastructure initiatives, Iron and Earth has played a role since we were founded by workers in 2016, and we are significantly expanding our programs in 2023. We expect to have 2,000 plus workers to go through our various training programs this year.
The national consultations around the forthcoming legislation were important because the voices of workers and communities most likely to be affected by any transition to renewable energy need to be heard. As a national organization founded by workers with community collaboration as an ongoing objective, Iron and Earth is in a better position than oil and gas companies, or even the federal government, to engage communities to develop their own climate solutions.
At Iron and Earth, Abacus polls show that 88% of fossil fuel workers are interested in training and upskilling to make a move to a net-zero economy, and 80% of the workers in that same poll supported a national upskilling initiative. Those workers need supports to make career decisions, to understand and identify the training they may need and to have one-on-one mentorships. When your entire livelihood has been in one industry, and your family and friends, community and professional colleagues are all working in oil and gas, but you are seeing the future and want to move into something different, having that support system will make for a soft landing. The oil and gas industry is not in a position, nor does it have a mandate, to take on the job of easing that transition for the average community or worker on its own. That requires a collaboration of partners, including industry, non-governmental organizations, governments at all levels and the work of non-profit organizations such as Iron and Earth.
In closing, it is the people and communities, not industry, who need to know that they will be taken care of as we make the transition to renewable energy sources. Thank you.
Sylvia Plain, as an individual: Good evening, my name is Sylvia Plain. I’m Anishinaabe from Aamjiwnaang First Nation, located in southwestern Ontario. It’s an honour for me to be here this evening. I want to say chi-meegwetch to Senator Mary Jane McCallum for encouraging me to share my story and for supporting my position to speak before you all here today.
There are many people from Aamjiwnaang who could have been here this evening, as we have many contributing citizens who are actively working for a healthier and sustainable future for our community. I hope to do them justice by sharing some of the environmental and health issues caused by the pollution being emitted by the 62 petrochemical plants that surround our community.
What I can offer here today comes from my experiences while living in Aamjiwnaang, as well as advocating for Aamjiwnaang citizens and our human rights at the United Nations. I can also offer my knowledge as an educator, a knowledge carrier and practitioner who works with a network of other Indigenous knowledge carriers and elders across Turtle Island.
I’ll give some brief history about our community. Canada first struck oil in our traditional territories in the 1850s. Due to our location on the St. Clair River and at the mouth of Lake Huron, we are a gateway to the St. Lawrence River and for going north and west through Lake Huron, hence the establishment of one of Canada’s largest petrochemical refining sites.
Before I get into the daunting details of the pollution of our community, I want to say that we were proactive in trying to work with the industry by entering into the green economy by having wind and solar farms, and we also have an economic development park where we lease out facilities to some of the companies in the area. It’s not all completely negative; we try to be proactive, provide jobs and generate income for our citizens. We want to commend our leadership for taking the opportunity despite something so negative bounding us in three directions.
I’m going to share some data from November 2021. The Ontario Ministry of the Environment, Conservation and Parks gave an air exposure review presentation to Aamjiwnaang community members, and it was revealed that benzene, benzo[a]pyrene, fine particulate matter and sulphur dioxide were above the 2020 Canadian Ambient Air Quality Standards and the ministry’s Ambient Air Quality Criteria. Benzene emissions were 44 times the ambient air quality standards, and benzo[a]pyrene was between 10 and 20 times the ambient air quality standards. 1,3-Butadiene also reached elevated levels in certain areas of the region, and the St. Clair River, which is on the west side of our territory, was heavily contaminated with methylmercury and still remains a binational area of concern by the International Joint Commission.
Members of Aamjiwnaang plant gardens, fish, hunt, trap, harvest plants and medicines, we play outside and enjoy outdoor activities, all of which exposes us to dangers of the pollution being emitted in the air, in the water and through the food we eat. In our community, twice as many girls as boys are being born. Children in Aamjiwnaang are born pre-polluted and continue to be exposed throughout crucial periods of their development. Some children are born with deformities, face lifelong respiratory illnesses, have regular nosebleeds, asthma, and, most recently, cancer is becoming a major concern due to the heavy amount of carcinogenic chemicals being emitted. Overall, Aamjiwnaang community members are denied basic human rights before they are born and throughout all stages of their life.
In summary, Aamjiwnaang citizens would like to be included at the decision-making tables, to be informed and consulted without delay, and we would like to see the fines collected by the polluters in the “chemical valley” reinvested back into Aamjiwnaang. Furthermore, we would like to contribute our regional, gendered and intergenerational knowledge to support all levels of government in ensuring that we maintain the highest standards of environmental air quality, water quality and human rights. I want to say meegwetch for listening and for the opportunity to be here. I hope to be sitting in your seat one day.
The Deputy Chair: Thank you very much.
Senator Sorensen: My question is for Ms. Da Silva. I’m very interested in your business model, and if I can just elaborate on a couple of points, I’m asking how this works. I see you are in Edmonton, but I’m curious to know if your services are offered outside of Alberta. I think you said how long you have been in business; I can’t quite remember. I’m also interested in how the whole concept came about. I think the model of not being an industry-led organization or a government organization is a good thing. But I’m also curious who the client is. Who is paying for the training? Are the companies your clients, and they are helping their own employees get trained, or is it something an individual is doing? Is it on-site or in classroom settings, or maybe both? And lastly, how are the Indigenous workers meaningfully being included in this transition and in the training?
Ms. Da Silva: Thank you for the question.
Senator Sorensen: There were a few of them, but I kept them on theme.
Ms. Da Silva: I will try to get to all of them, and if I miss one, please catch me on that.
Our organization is located across Canada. We are remote. We were remote even before the pandemic. We’re officially based out of Edmonton, but we offer services everywhere. Just this past summer, for example, we were up in Nunatsiavut, which is on the eastern shores of Labrador, and we were delivering a training program there to Inuit youth to be able to have community solar skills so that they could have base knowledge, be inspired to pursue this and have skills brought to them, because it’s quite difficult for them to go out of their community and to get the micro-credentials or skills elsewhere in teaching. So it is offered right across Canada.
The way that we specifically benefit and make it meaningful for Indigenous workers is that we are going into communities — a lot of the times these are Indigenous communities — we listen to the community and we see what it is that the community needs. If the community asks us to leave, we honour that, and that’s fine, but we’re actually usually the ones being invited in. They are looking for energy diversification. A lot of the time, they are very reliant on, perhaps, diesel or they have not enough energy to go around within the First Nation. Bringing in that energy diversification, which in the past has looked like solar panels or wind turbines, gives them that diversification, but it also brings training into their communities so that they have it right there. It creates the idea of sustainable jobs and sustainable community because you stay within your community for these employment purposes.
Who pays for this? Right now our business model has been very much based on foundations, and we also have Suncor as one of our longest-standing funders. We have been granted a fairly meaningful grant this year from the Government of Canada, which we’re under a ban to mention until they give us the right. It’s allowing us to really expand our program to literally thousands of people this year.
We were founded in 2016 by a group of people who were working in the oil sands and who were looking around and seeing the writing on the wall. They were seeing that, either by being concerned for climate change and what was happening or seeing the 100,000 job losses that happened in that two-year period, people were concerned about this boom-and-bust cycle they find themselves in. They want to be growing in their career and they want to be supporting their families. It’s lovely in a boom cycle, but when you find yourself in the bust, you have the option of waiting that out until the next boom cycle, you leave and do something else or you take on less meaningful work. What that always means is that there is a skills loss or there is a brain drain from the industry.
We have a model where we do the training within communities, where it’s on-site. Our model is five days of in-class and five days of hands-on training. So that infrastructure that is brought to them — they are the ones installing it themselves so that they are left with the skills within their community. What we have seen is that people then have the skills to go on and either work in this industry or they become entrepreneurs and they start their own business. We are building partnerships with unions and with other training organizations. We want to be able to fit and fill the gap that others can’t, and we want to be doing the hard work that’s necessary to move this forward.
Senator Sorensen: Thank you. You got every point and a few extra.
Ms. Da Silva: You are welcome.
Senator Arnot: Thank you. I just want to follow up and ask a question of Ms. Da Silva. You are filling an important niche. It’s a gap. Of the 2,000 people who will come to be trained this upcoming year, what are the skills that are being identified? Who is identifying those skills? What are the trends that you are seeing, and what sort of different energy sources are being identified by either you or the corporations that the employees will eventually be working for? Are you working in concert with those employers? Where do the people who are actually doing the training come from?
Ms. Da Silva: Thank you for the questions. We work on a community model, so it’s for community, by community. We very much identify the skills that are needed by industry, and we speak to industry to identify those skills and where their gaps are. What we learned from that is that their skills evolve quite quickly. When they are looking at gaps, it can sometimes be a year out that they are looking. They know that’s what they need to do. It’s a bit of a moving target in a way. That’s why having hands-on skills is the best way to approach this and the best way to close that gap.
We find that a lot of people have these baseline skills to be entering the net-zero energy economy, but what they very much lack are the opportunities. This is a bit of a cycle. The opportunities are missing because perhaps there is not enough investment coming into that sector. However, there is also a lot of growth in that sector, so the demand is very much growing. When we are speaking with employers, that’s what we’re identifying that needs to be filled.
The employees can come from communities themselves. They can be persons that need work placements or persons who are coming out of unions. We have been speaking with one union, for example, where they have the people but they don’t have the funding to be giving out wage subsidies to these people to give them opportunities with employers.
We also work specifically with employers. When employers are looking within a community that they want to be working with, because we’re already working with that community and doing sessions with them, we understand what the community needs and we can translate that for the employer if the community wants the employer to be there. Communities can be approached with a lot of different solutions. Sometimes the next solution is the one that’s going to solve all their problems. Sometimes it doesn’t look that way to the community, but it can look that way to the employer.
Regarding the trends that we’re seeing, there is huge demand right now for both solar and wind. We’re also seeing demand in the hydrogen sector. For example, we’re working up in Hinton, Alberta, where they have geothermal happening. Potentially, we’ll be starting to work with Fort Nelson, where they also have geothermal. A lot of different communities are looking for this energy diversification. They need the energy. Companies are seeing the demand and they have the demand for making these installations, but they lack workers with the skills. Then we have workers who either don’t understand how their skills translate into this new sector or simply don’t have a good sense of what jobs are available to them in that new sector. These are the three gaps that we’re seeing, and these are the trends that we’re seeing. Did I miss any question?
Senator Arnot: No, that’s good. Of the people who have been trained, I assume it’s a very high percentage that gets employed. Do you keep track of that?
Ms. Da Silva: What we see is that within the communities that we’re working with, as long as there are employers that are also within that area, then they are employing the people nearby. For example, we did a project in Maskwacis, Alberta, last year, and SkyFire wanted to bring these people on. Likewise, with the project that we did in Taber, Alberta, with RenuWell, which is repurposing abandoned and orphan drill wells, the companies there were also hoping to bring people on. There is a real, enormous gap in the skills that the companies need, but those skills exist within workers, who need either a bit of upskilling or the opportunity to work with the employer to get those hands-on skills.
Senator Arnot: Thank you very much.
Ms. Da Silva: You're very welcome. Thank you.
Senator Miville-Dechêne: My question will be for Sylvia Plain. First of all, thank you for being there and thank you for your exposé. I was very shocked by the 63 petrochemical plants around your community. That’s quite a lot. I know you have been an environmental consultant and that you have been interested in this question.
Have you seen any kind of improvement in the waste, in the pollution by those who are near you? Have you seen anything change? You have been talking at the highest level about this situation. Our committee is trying to see what kind of transition we will have, how we can clean up the environment. Is anything working? Have you been successful or somewhat successful?
Ms. Plain: A couple of our community members had brought a lawsuit against the Province of Ontario because it was a way to bring importance to the issue. Industry and the province said, “We will change our ways and we’ll change the regulations. We’ll try to minimize the pollution being emitted.” That simmered things down for a while, but even though there are things in fine print, there isn’t necessarily regulation.
For example, we could be collecting more of those fines. The companies might get a slap on the hand, but are they being held accountable? Are the full fines coming out? No. Is there improvement? It would show in the people. It’s so bad that it’s a human rights issue. That’s where I have been going with it at the United Nations. I have to frame it like that because we can’t get the data from industry and we can’t get it from the province. They started installing the technology to collect it, but we don’t have the capacity to analyze it on a daily basis and we’re not getting the full picture. We’re really in a reactive rather than a proactive mode.
Our real state of health should be that we can drink the water in our territory, that we can be outside without getting nosebleeds or that there won’t be any evacuations because of spills or the flarings being too high. We’re on high alert on a regular basis. There are many factors to say that things are looking good, but, really, we fear for our lives. We can’t trust the industry or the government, and we know that we’re not being told the full picture. We’re not getting all of the data.
Senator Miville-Dechêne: You cannot drink the water out of the faucet?
Ms. Plain: Out of the faucet, yes, as we’re connected to the municipality. But having faith in the food we pull out of the ground — is the groundwater healthy? As I’ve stated, there was methylmercury in the St. Clair River, in the sediment. They were allowed to dump it in there for a long time. It’s gotten better but, who knows? Maybe my dad’s generation has been exposed to that mercury through their fish consumption. There was a long warning of, “Do not consume X amount.” It has improved through the International Joint Commission, the Canada-Ontario water quality agreement. There have been improvements there, but in terms of air quality, emissions, there is definitely room for improvement. That’s going to take someone in the offices to hold those companies accountable. There is nothing more you can do. Otherwise, they are not doing it, and here we are.
Senator Miville-Dechêne: How big is your community? I’m not from Ontario.
Ms. Plain: I don’t know the full size, but we’re a very small community. In terms of land mass, at one point, through original treaties, we were up to almost Goderich, to almost London, down to Chatham, and then we also signed the Treaty of Detroit, so we have land on the other side, but we’re confined in this little box over a series of treaties. Those treaties, those are borders that are really defined by the industry. We’re bounded in three directions, with the river to the west of us. It’s just a square box. We’re on the city limits. It’s a very small community.
Senator Miville-Dechêne: Thank you very much.
[Translation]
Senator Gignac: I will speak slowly in French to facilitate the work of our excellent interpreters. My question is for Ms. Da Silva. Your mission and the work you do are very important. Without a doubt, with 180,000 workers part of the Canadian oil and gas industry and the energy transition, these are significant challenges and we must absolutely avoid losing the expertise developed by our workers.
In the Montreal area, the economy went through significant restructuring. In the 1970s, there were six refineries, four of which closed shortly after the start of the 1980s. In 2009, when I was Quebec’s Minister for Economic Development, I had to deal with the Shell company and meet with workers to get them requalified after the refinery closure.
You said your organization is funded mainly by the federal government. I’m curious to know what the provinces are doing, especially in Quebec, to support workforce training, since requalification is a provincial program. I am not fully aware of what’s happening in the other provinces, such as Alberta, for instance. Therefore, beyond federal funding, do you have contacts among the provinces, or are the provinces your current or future partners?
[English]
Ms. Da Silva: Thank you for the question.
With regard to our funding, it’s this year that we have quite a significant amount of federal funding. Before this, all of our work for the previous years was done from foundations, corporations, banks and those kinds of things.
We are looking to work with the provinces; we are looking to work with them in terms of rolling out these training opportunities, identifying the skills gaps with workers and how they can upskill into this economy. We have been having some conversations with different provinces, for example with B.C. We’re looking to work with others. We haven’t spoken specifically with Quebec, and that’s not because we don’t want to; it’s because we just haven’t had that opportunity yet. It’s definitely an opportunity we want to create. I would welcome an invitation.
It’s very important that this kind of upskilling and training is available across the board, from the municipal level, to the provincial, to the federal. We saw that very prominently in our RenuWell Project, which was repurposing abandoned and orphan drill wells to create renewable energy. About 10% of those wells can be repurposed and made into, for example, solar or wind sites. Our biggest hurdle was actually a municipal issue, because land is governed by municipalities. By having it across all three levels of government, it will make for fewer hurdles to overcome in trying to get this rolled out.
So I would welcome the opportunity to do that.
Senator McCallum: I want to put this into perspective. When you have two panellists who come and they are almost on extreme ends, where one has the capability to only look at fair transition, and then you look at the other speaker who is talking about a lack of basic human rights — that continues to happen.
My question is for Ms. Plain. Could you submit other documents to the committee so they will be included in the report and what has happened? When we look at the dangers — the air, water, land and the people contamination — we’re looking at a vulnerable environment, and that’s where you’re starting from. It’s a position of deficit, so you’re trying to fight for basic needs and, at the same time, not be left behind with just transition or getting into being able to tap into resources there.
When we look from that state, what is your connection to energy and your ability to partner with them? I know you talked a bit about it. Where do you get resources to deal with this and resources to move beyond?
What are the recommendations that you have for this committee that you would like to see in the report? If you think of others when you leave here, don’t hesitate to send them in.
Ms. Plain: Absolutely. I can submit documents. I have had little time to prepare, so having a few more days, a week or whenever your deadline is would be helpful for me to absolutely submit more documents for reference.
Having an economic development corporation, we have the capacity to partner, but there is more opportunity to provide training for community members to enter into the green economy. Like I said, we own 51% of a wind farm and a solar farm, so we have some people who have that experience, but they have the ability to train, so I think through funding.
There is Lambton College, which a leading research and training college for the industry. I know they’re trying to transition into new technology and the green industry.
It is opening up more spaces for Aamjiwnaang citizens to enter into the college or provide pathways if they don’t have the accreditation to get in. I know they want to be part of the industry. They want to somehow protect our territory. We have many people who are operators, carpenters and engineers in our community.
I grew up on that refining industry money. That’s why I’m here. My dad is an engineer. He has consulted and worked for many of those industries. Many of my family members are operators, shift workers and health workers. That’s the number one job industry for people in our region. So it’s very much in our face, but do we have the opportunities?
Some of the companies provide scholarships but in very small portions. They should be much bigger. There should be more pathways. I have seen some partnerships with different colleges where they provide on-site training on reserve, so people don’t have to leave. They can perhaps do cooperative learning. There are a lot of opportunities where we can keep people at home. That would be very encouraging.
So yes, we do want to be a part of it. Like I said, we do get some funding. A lot of our buildings — if you drive around Aamjiwnaang — they say, “Funded by X industry.” That’s where we get a lot of our money. It’s like guilt money: “We don’t want to pay out the full millions and billions of dollars to clean up and invest in new energy. Here is some cash for a building or a scholarship.”
So much more could be done. I would especially promote people in the health sciences. We need to have people on-site to say, “These are the health implications. I know these people. I’m comfortable with them. I can work with them.” Where can we put people in the hospitals or people on-site in the different positions?
My recommendation is from training, to management, to sitting at the table. The bottom line is giving us the ability to contribute our Indigenous knowledge. We have been the stewards of that land for many generations. We have intergenerational knowledge that’s been passed down.
We’ve seen the impacts of climate change and the degradation of our lands. Right across the road from our reserve is a conservation area, but it has invasive species. It’s created to be aesthetically pleasing for the people from the city, but what would have been beneficial is to have our traditional plants and materials that we use for people who are artists, who rely on that for bringing home money. A lot of those things were wiped out — our marshes, our rivers, our ponds — it was all cleaned up to become farmland.
When you look over Lambton County, the greenest part of that county is concentrated on the reserve. We knew to preserve and that the tree canopies would save us. They knew it would be healthy.
There is a lot of knowledge that our community members possess without holding degrees or having this Western accreditation. There are scientists. These land-based, community-based practitioners have this intergenerational knowledge that they can contribute at the decision-making table.
It would be really great to see investment into promoting our Indigenous knowledge and empowering our people to be contributors. I feel like we have a lot of answers to a lot of the problems. We’re fighting for our human rights when we could be doing so much more. We are innovative people. We will embrace diversity and we want to be a part of solving the problems.
I would really promote our Indigenous knowledge.
Senator McCallum: Thank you.
Senator Batters: Thank you both for being here. I’m sure it would be absolutely fine, Ms. Plain, if you forwarded some documents to our committee in the next few days or a week because we’ll be doing this study for a little while longer. Thank you very much for doing that. I’m sure that will be fine.
My question is to Ms. Da Silva. In a previous study at this committee, our members heard from the Commissioner of the Environment and Sustainable Development Jerry DeMarco. He presented to the committee his recent audit that evaluated the Department of Natural Resources and the Department of the Environment and Climate Change. His report expressed some great concern, noting that the two departments are working in silos, with entirely separate modelling methods, targets and definitions.
He said this:
Environment and Climate Change Canada expected to achieve 15 megatonnes of carbon dioxide equivalent emission reduction in 2030, whereas Natural Resources Canada projected up to 45 megatonnes by 2030.
I’m wondering if you’re concerned by that kind of disjointed approach. How seriously can we take these types of government emission reduction projections when the departments can’t even get on the same page?
Ms. Da Silva: Those emission reductions can vary based on how they are modelled. The two departments not speaking to each other can pose a challenge trying to move forward. That’s why the upcoming legislation, which has been very long awaited — it was previously called the “just transition”; I’m not sure, I think they are calling it “sustainable jobs” now — needs to very much come to the fore because we’re anticipating that it’s going to be that united voice which can place that squarely into a department or committee or somewhere and not have it just be within an arm of that particular department.
This is too critical of an issue — solving climate change or climate breakdown, as I’ve also seen it called, and acknowledging that we need to take measures now to ensure that we do have these reductions in emissions by 2030 to be able to have a meaningful effect.
This is critical for economic growth. It’s critical for our own sustainability here within this country and to stay competitive on the world market. We need to acknowledge the knowledge that we have already in existence in our workers in communities.
I want to pick up on something that my colleague also said, which is Indigenous knowledge. We try to bring this into the training that we do within communities by always having somebody present from the community, often an elder passing on this Indigenous knowledge.
There needs to be a unification, and there’s unification right from the ground up. That’s the way that we’re going to be able to see unified numbers coming out that we can work towards as real targets.
Senator Batters: Is it your understanding that this upcoming legislation is going to do something in order to be able to actually get these two departments to a more unified understanding of what that emissions target will be? I’m asking you something that the two federal departments can’t figure out, but what is the more realistic target, in your opinion, 15 megatonnes by 2030 or 45 megatonnes by 2030?
Ms. Da Silva: It very much depends on the approach that Canada decides to take forward. If we don’t approve any more fossil fuel projects — as the IPCC has said is necessary to keep global temperatures below 1.5 degrees — and not have approval processes for projects like Bay du Nord, putting money toward renewable projects and projects that we know can produce the gigawatts of energy that are needed to power Canada, it’s difficult for me to say which of those two are more realistic because we can’t predict what is still on the horizon to be approved. But I would hope this upcoming legislation would be addressing these kinds of questions so then we can be having those unified answers.
Senator Arnot: Ms. Plain, you’ve told a story which has a lot of common denominators with other stories I’m sure this committee heard before I got here. You talk about the pollution of the air in the community, the pollution of the water and the land. You’re telling us — and I’m sure it is correct — that this is a breach of human rights, a breach of Indigenous rights, and it may be a breach of treaty rights. The federal government has a fiduciary obligation to you and your community.
What is the political leadership doing or what have they done to actually fight for those rights? What’s happening in the community that these things have occurred, but no one saw it or found a remedy?
I’m just not understanding the complete context of what you’re saying. I’m hoping to hear what might say about that. For instance, is the political leadership standing up for these rights?
Ms. Plain: Yes. I just want to be clear, I’m not an elected official. I very much respect the people who were recognized, nominated and elected by our community members to represent the overlapping treaties. There is Treaty 45.5, which was bigger, brought us up to Goderich. It hasn’t been challenged in the same way as the Robinson-Huron Treaty in terms of looking at treaty payments. I haven’t heard that argument, but I don’t want to speak for the leadership in saying they haven’t used that as an argument, but I feel as an individual and in my work that more could be done.
However, it is very intimidating to take on multi-billion-dollar corporations that could drain our community of all of our funds. We kind of have to toe the line because we get jobs. We get some funding. I can go to the United Nations or, if I’m in different spaces, it’s generally the researchers and the universities that are willing to say, “We can give you some funding or we can support you in any capacity.”
I feel like they have less fear of challenging, saying things or calling out the government. The media is sometimes our friend as well by approaching government and saying, “Where is the data?” or “Is this accurate?”
I also question us being signatories of the Treaty of Detroit. I know that’s dealing with the United States but, again, I feel there are more opportunities. That’s not a conversation that we have necessarily had yet.
There is a tremendous opportunity, but we’re very limited in funds. I feel like we’re gaining strength, and it would be great to own more. The reason why we can have these partnerships with the solar and wind is because of those treaty areas we have; we can partner with other companies.
I see that being activated, but in terms of going after money owed to us or holding these industries accountable, it’s not there. At least, at a minimum, we are doing what we can, but I feel that if we had a bigger chunk of change, we would be pursuing more lawsuits or we would be going to the Human Rights Commission. Even for me to get to the United Nations, I have to fundraise for myself to be able to go. It would be great to have my position funded full-time so that I can continue to do this work.
Is the government really collecting those fines and putting it back in? No. If they were, we would have the ability to do a lot more things.
As I said, though, there are various treaties that enclosed us into — and looking at those treaties that were created, there is no way that land management plans today would allow industry to be established the way it is now. There are a lot of grey areas that people didn’t look into. Our leadership wouldn’t have chosen to have a death sentence — for us to be surrounded that way. There is no way.
It’s not encouraging that we can’t get the data. We’ve been saying this for many decades — I’m not saying anything new — it’s just that the data is getting worse. We’re not being heard, so we’ve just been kind of trained to be silenced and to feel not empowered when we should have more positions, funding and seats at the table.
That’s all I can really speak to. That would be something I hope to see in the future — for our elected leadership to come here — but I’m just an individual. I come from hereditary lineage, and we still try to operate in honour of our roles and responsibilities. That doesn’t stop us from waking up every day and serving our community members.
I would encourage any levels of government and any committee to please reach out to our elected members.
The Deputy Chair: I want to thank the witnesses very much for their participation today.
[Translation]
Dear colleagues, for our second panel of witnesses, we welcome Serge Dupont, Senior Advisor, Bennett Jones LLP; Andrew Leach, Professor at the University of Alberta; and Dan Wicklum, Co-chair of Canada’s Net-Zero Advisory Body.
Welcome and thank you for accepting our invitation. You each have five minutes for your opening statement, and we will start with Mr. Dupont, followed by Mr. Leach and Mr. Wicklum. Mr. Dupont, the floor is yours.
Serge Dupont, Senior Advisor, Bennett Jones LLP: Thank you, Madam Chair. My point of view on the issue of interest to you is informed by my own experience, specifically as Deputy Minister of Natural Resources, as a deputy minister with this committee’s deputy chair a few years ago now, and by my current work with organizations participating in the energy transition.
Your subject is vast and has many dimensions. In five minutes, I will limit myself to providing you with some data and sharing some points of view. I’ll be referring to a presentation distributed to you in both official languages. At the outset, know that climate change is the challenge of our generation, the starting point for Canada, noted on page 2 of the presentation, which is a significant energy advantage.
It may be a singularly Canadian trait to sometimes consider our energy potential as a handicap. Let’s compare with Europe as it is now. With the rising prices caused by the war in Ukraine, and Europe’s need to diversify its supply, the continent’s trade deficit in the energy sector is about 4% of its GDP. For Canada, at the end of 2022, we’re looking instead at a surplus of about 6% of GDP. So we are talking about an advantage compared to the European Union that fluctuates with the price of energy, at about 10% of GDP. Our export revenues contribute to workers’ salaries, company profits, shareholder gains and increased revenues for our governments. Above all, for our energy future, it is a possible source of capital for investment.
In fact, as per page 3, to maximize the profits of our energy advantage and make the shift required by climate change, it is essential to channel this capital and these export revenues towards investment, starting with transforming the energy industry to make it sustainable and competitive. This could include investments to meet the needs of our worldwide partners for liquefied natural gas, for example. Above all, we must decarbonize our oil and gas production, including the oil sands, and develop the energy sources of the future.
Furthermore, we mustn’t forget our own national market and the opportunity we have to leverage the security of our supply for economic development here at home, then accelerate our energy transition as energy consumers through electrification, for example.
To mobilize required investments, we must focus on regulating major projects so they can better guide the energy transition instead of impeding them when they’re executed under good conditions. Otherwise, we will be unable to reach both our climate and economic targets.
[English]
At the moment, across our economy — and not only in energy but certainly in energy — our investment is under par. Private non-residential investment is low historically, relative to our global partners and relative to what is now a solid profit performance in the private sector. Closing that gap requires that investment be recognized as a national priority, with solid private and public sector collaboration.
In the Bennett Jones Economic Outlook that we produced with our colleague David Dodge, we set out a notional target for public and private — that is, government and business — non-residential investment of 17% of GDP before 2030, from about 14.5% in 2022. Simply getting back to the historical average of 15.6% of GDP for investment would represent about one point of GDP. And I’m talking about total investment in the economy, not just energy; that’s to put the investment challenge into context.
To get even close to Canada’s climate targets, we estimate a needed added flow of investment of about 1.5% of GDP annually, and that’s on a sustained basis for years. The total delta we are talking about relative to the performance we had in 2022 is about $80 billion in additional flow of investment per year in the Canadian economy.
[Translation]
On page 6, it talks about the issue of regulation. It’s a stumbling block for many investors, a degree of uncertainty and a source of sometimes prohibitive costs. In a publication with my Bennett Jones colleagues, we outlined some qualities required for a better adapted and more efficient regulatory system that also includes high environmental and social standards. What seems, in my opinion, to be an especially important need is better coordination between regulatory bodies to draw a clear path for investors and project proponents. I can talk about this in more detail if that’s of interest to you during question period. Thank you.
The Deputy Chair: Mr. Leach now has the floor.
[English]
Andrew Leach, Professor, University of Alberta, as an individual: Thank you, Madam Chair.
I am a professor of economics and law at the University of Alberta, and my research and my teaching are focused on exactly the questions you are wrestling with today: How do we reconcile our oil and gas sector with climate change? Specifically, of the interests you have identified for your report, my interests are probably mostly on the strategic positioning of the oil and gas industry and how the industry aligns with Canada’s goals.
[Translation]
I am also interested in solutions to achieve net-zero emissions, as well as our government’s ability to manage a transition towards a low-carbon economy. I can talk about it during question period, if you like.
[English]
Previous witnesses to your committee whom I’ve had a chance to look through have done an excellent job of framing the contribution of the oil and gas sector to Canada’s economy and, in particular, to people living and working in Canada’s energy-producing provinces.
Too often, though, we frame the importance of an industry to a country only in that way. We think of it only as jobs. When you think about Canada’s oil and gas industry, it’s had a much larger impact than that. The technological development, the foreign and domestic investment that’s gone into that industry have unlocked some of the largest hydrocarbon reserves in the world. As Mr. Dupont just highlighted, in doing so, yes, we have increased the wealth of our country, but we have also ensured our energy security. Neither of these things are trivial matters, especially today.
With that in mind, there is still no avoiding these two conflicting and colliding realities. Canada’s oil and gas industry has contributed immensely to our prosperity, but the by-products of that production and the combustion of the eventual products are leading us on a march towards catastrophic climate change. Reconciling these two realities in economic policy, in politics, in the law, et cetera, is a generational challenge for our country and it’s basically where I have targeted most of my career. Let me just share some numbers to frame both sides of this.
We know now that 2022, with data in hand, was either the fifth- or sixth-warmest year on record. The eight warmest years on record were the last eight years. We can’t attribute any particular event to climate change, but we know we’re increasing the odds of a variety of climate calamities. What climate science doesn’t tell us — and people will say, “Look at what the science tells you” — is what we, as a small, open economy with a vibrant oil and gas industry, should do. It doesn’t tell us what the actions of others and the policies of other countries will be and how those actions will affect us. Let me now frame our position in the world a bit for you.
First, Canada continues to overcommit and underdeliver on the international scene. We committed to a 40% to 45% reduction in emissions in Glasgow from 2005 levels by 2030. A couple of weeks ago, we submitted our fifth biannual report that has us only meeting a 33.5% reduction, with a bunch of layered policies added to our mix. That’s a big accomplishment that we have managed to underwhelm by pulling the rug out from under ourselves.
From oil and gas, our emissions are only down 21% by 2030 in those ambitious projections. Transportation emissions — the sort of wells-to-wheels kind of stuff that we talk about sometimes — are barely back to 2005 levels by 2030. Those two sectors of our economy are really stubborn.
The projected emissions from oil and gas have two hidden bets. First, if you want to have even that chance of meeting our target, you need the deployment of new, expensive technology to drive down emissions. The second one underlying it is that there’ll be a global market for 30% more oil sands than we produce today and that we’re going to see that industry grow and invest in new technology while continuing to produce oil.
So, the first bet relies largely on carbon capture and storage, or CCS, but, more importantly, it relies on an assumption that governments and shareholders are going to share in a multi-billion-dollar bet on lowering oil and gas production and processing emissions. The trite answer there is somebody is going to be willing to pay for our oil and gas at some price. The question is how much. The larger question is this: Will we find ourselves with a list of long-lived assets that can’t make a go of it in a world oversupplied with easy oil, just as we did in 2015? Furthermore, will those owners be able to shoulder their environmental remediation liabilities, or, as we’re seeing in Alberta right now, will there just be a bill left for taxpayers? There’s no clear answer.
One thing I want to emphasize is if people are telling you to bet on a world with increasing oil demand — not so much the case with gas, but with oil this is absolutely true — they are telling you to bet on a world that’s not acting on climate change. In closing, I would ask your committee to think whether that’s a bet that you would have us make. Thank you.
[Translation]
The Deputy Chair: Thank you very much, Mr. Leach. We will now hear from our third witness, Mr. Dan Wicklum.
[English]
Dan Wicklum, Co-chair, Net-Zero Advisory Body: Thank you, Madam Chair. I’ll introduce myself and the organization that I’m representing. I’m going to alter my remarks to build on the first two witnesses rather than reiterate their sound comments.
I am here as a co-chair of Canada’s Net-Zero Advisory Body, or NZAB. This is an independent entity that’s launched under Canada’s Net-Zero Emissions Accountability Act. It’s a permanent body of Governor-in-Council appointees. Our job is to advise the Government of Canada on two main things: interim emission reduction targets on the way to a net-zero 2050 and the most likely pathways to net zero.
We were launched about two years ago. We have now issued three reports. One was a summary report of the 12 whole-economy actual pathways to net zero that we found globally, which we summarized into 10 values and principles. Those 10 values and principles continue to guide our work today and will for the foreseeable future.
There are a couple principles that you might be interested in. One is, “Beware of dead-end pathways.” Just because something reduces emissions now does not mean it can be part of a true net-zero economy. It’s very seductive to invest in some things — business models or technologies — because they reduce emissions, but what they are actually doing is locking in technologies that will cause us to increase the overall cost of getting to net zero and cause delay. That’s the type of principle that we put into our initial report.
Our second report was 40 pieces of advice for the Government of Canada to consider as they publish their first 2030 emissions reduction plan. That document was included in its totality in one of the appendices of the emissions reduction plan. In those 40 pieces of advice, we reacted to the Minister of Environment and Climate Change’s request for us to develop principles on which the federal government could base the development of an oil and gas emissions reduction regulation.
Our third piece of work, which was put into the public domain about two weeks ago, was about 25 pieces of advice for the government to consider going forward as it refines its next emission reduction plan that should be out in 2023.
I’m going to give you two musings here. First, since the Paris Agreement in 2015, we have now adopted around the world this concept of net zero. However, it’s very different than the concept of an emissions reduction paradigm that almost all of us have lived with throughout our adult lives. The emission reduction paradigm started with the signing of the UNFCCC treaty in 1992. Frankly, the NZAB has not much patience for organizations that are feeling or portraying that this concept of emissions reductions, and now eliminations, has snuck up on them and they need more time. We have known this has been coming for over 30 years. Most of us have lived this for most of our adult life. This has been around for an awful long time.
But some things have changed. One of the things that changed is this net-zero paradigm. To put a point on it, for most of the time since 1992, the scientists were telling us that reducing emissions was enough. We could manage climate change by reducing emissions, but the whole world dithered too long. Now they are telling us that we have to get to eliminating emissions inside of the net-zero definition. There is a consequence of not getting this right.
We sometimes tend to frame these issues around — like the one we’re talking about here today — the impact of the net-zero concept on the oil and gas sector as a trade-off between economic activity and this management paradigm of getting to net zero. It is a trade-off, but it’s important to understand what we’re trading off. We’re trading off permanent damage to the planet, permanent changes in the way the planet operates, so that every single human being in the future, every single generation will have a more difficult time than we’re having today. That’s the trade-off here that we need to keep in mind.
The other thing to keep in mind is that much of the world has adopted a competitiveness paradigm now, like the United States with their Inflation Reduction Act. They are investing dramatically and heavily in accelerating the decarbonization of their society, and not just for the sake of protecting the planet; they are making it into a competitiveness paradigm where they want to develop the technologies, the sectors and the companies where they will outcompete us. That’s a fundamentally new paradigm that has emerged over the last couple of years. So there is the economical downside, but there is also the upside that we need to take into consideration.
[Translation]
Senator Miville-Dechêne: My question is for Mr. Leach. I’d like you to further explain what you said, which is very high level, in my opinion. Help us, as parliamentarians. We need to know what must be done to ensure a transition so the planet survives. What you’re telling us is that, if we continue to produce oil, we will not be able to address climate change. That’s what I understood from your presentation.
So, what should we do? I know it’s a big question, and you said no one has a definitive answer. Should we continue to invest in technology to decarbonize oil production, while still continuing to produce it? Currently, we are increasing oil production. Can you explain in simple terms what we should do? I know that nothing is simple. What is the path to follow?
Mr. Leach: That is a very broad question.
[English]
The first point is that there is not a one-size-fits-all, even for facilities within the oil and gas sector. I’ll do oil and then gas, because I think they have different storylines.
In the oil sector, we have a lot of very low-cost oil-producing operations that are present today and are generating huge revenues. Many or most of those are going to continue to be viable almost no matter what. So the question is this: What do we build new? How do we build? Or do we build? And then how do we modify some of these existing ones? To me, the answer is that those that are positioned where we could invest in decarbonized supply without fundamentally changing their business case — the best oil sands resources, for example — if we can decarbonize that production and keep costs low, absolutely. There is still going to be a sustainable market for some oil supply in the future.
But there are some other facilities that, for example, are still burning petroleum coke as an upgrader by-product in northern Alberta. There are some processes that, in a carbon-constrained world, are not going to be viable. That is where the industry is going to have some tough choices — maybe not with that particular technology, but in general — to say that if your facility or your process isn’t viable in a carbon-constrained world and in a carbon-constrained Canada, you have to have it on the table to say, as we would with any technology or manufacturing, that this is just not where we go.
Gas is more complicated than oil because — and Mr. Wicklum’s testimony was bang-on to this — there are different transition paths that we might follow as a world. There are some that are very gas-oriented, where a lot of gas transport infrastructure in Canada would be viable for the long term, especially if you have electric drive. There are other transitions where the world jumps off gas very quickly. One of the things I would equip you with is to say that what we do in Canada — we’re a small player in a global energy economy. To Mr. Wicklum’s point, we have to be careful about locking ourselves into one particular vision. I’m speaking as the Government of Canada — private capital, absolutely, go for it — but as the government to say, “We’re going to make a whole budget bet on one particular technology or one particular class or view of the world energy economy in the future,” I don’t think that is fair.
Just one last point. At the end, I said, “Be careful.” If people are selling you a world where we’re going to use more oil every year, year over year, implicitly what they are telling you is to bet on a world that’s not acting on climate change, regardless of what Canada does. I want to know if you are comfortable with that bet.
[Translation]
Senator Miville-Dechêne: Mr. Dupont, can you answer this big question?
Mr. Dupont: Should we continue to produce oil? I think Mr. Leach gave a good answer to the question. There will be demand for many years yet, and we can produce oil while decarbonizing production in Canada. We may still be able to generate an income in Canada, which would give us additional resources to invest in our energy transition. So, there could be a favourable dynamic for a transition.
From my point of view, it boils down to choosing between contracting or transitioning. If we stay strictly in contraction mode, it’s not necessarily a contraction that will happen smoothly, without shocks, without disruptions. Obviously, it will have a particular impact on provinces involved in production, but also on markets more broadly. Therefore, as much as possible, the transition must be supported. It will require investments in decarbonization. If we can generate profits while selling oil and gas and investing in this transition, I think that’s good business overall.
So, we have to see the problem as a whole: revenues we can get from it, what we do with those revenues, how to transition rather than simply contract the activity.
[English]
Mr. Wicklum: I have a couple of comments, and I’ll build on Dr. Leach’s comment. There should be a very different perspective around what industry does and what the governments do by public investments. Industry should be able to do whatever the heck they want. If they want to make bets on the world not decarbonizing and not meeting net zero, that’s their money; they should be able to do that. But the public dollars should be laser-focused on getting this economy and helping the global economy get to net zero. There is no credible way to have an oil and gas economy where we combust oil and gas and have a net-zero economy.
The NZAB’s perspective is very strong that public dollars should preferentially go to developing new sectors, new companies and new systems that are net-zero and functional, so preferentially building the new economy, not supporting the old. And the old is oil and gas combustion.
Senator Seidman: Thank you all for being with us. I would like to address you, Mr. Wicklum. I’m looking at your advice for the 2030 emissions reduction plan. This is your advice document to the government. One of your four lines of inquiry is governance, and your group offered eight pieces of advice to the government regarding governance. I’m looking specifically at recommendations 3 and 4 that relate to data. Your third recommendation is:
Prioritize the development of a climate change data, insights, and monitoring digital platform by the end of 2023.
And then the fourth recommendation is:
Ensure that the models and analytical approaches used to project and assess Canada’s progress towards emissions reduction targets are transparent, robust, and coordinated.
I love that advice. Did the government accept your advice, and do you know whether they are acting on it?
Mr. Wicklum: For the benefit of the committee, in terms of reference, we have things called “lines of inquiry,” and you can think about them as priorities. The three main priorities we have now are net-zero future energy systems, industrial policy and the notion of governance. Governance is really around whether we have the institutional capacity, strategy and relationships to get to net zero in this country.
We’re proud of those two pieces of advice. The first one is really around the notion of having much better, accessible progress updates to Canadians. The second is that we feel we could be doing and need to be doing a much better job at modelling the pathways to net zero.
Your question was around whether the government is taking the advice. We briefed the Minister of Environment and Climate Change this morning. He was extremely attentive and asked great questions. Ultimately, though, it is up to the government to decide whether they want to take the advice. We are not elected officials. We can prompt and give advice, but it’s up to them.
Over time, we will be able to develop a track record and report to Canadians how much of our advice the government is taking, but so far, we’ve only had two years of advice.
Senator Seidman: I’m happy to hear that you had that meeting with the minister.
Your report also says:
Governments, industry, and third-party experts from various fields, like labour, science, and economics, can work together more effectively if they have access to authoritative, transparent, and comparable modelling, analysis, and data. We intend to conduct further inquiries on these areas in 2022.
I know we’ve just turned the corner to 2023, but I’m interested in whether you actually started to do that job and if you have anything further to add.
Mr. Wicklum: We did. Senator, I will refer to one of our initial principles upon which we based our work. One of them is that we don’t feel that incremental changes to our existing systems of energy, transportation and buildings will suddenly and magically lead to net-zero functional systems in 2050. We think we need to define the future systems and build a pathway to those systems.
Yet most of our models that we have are really just mathematical equations that describe the existing world. You tweak them, change the equations and see how the existing world changes a little bit.
There actually aren’t really great models for helping you determine what actual functional systems are that happen to be net-zero. So we actually think a lot more effort needs to be put into the development of new models. We are working with several third parties externally to develop a whole body of work, involving experts, to try to make better models and do more modelling in, frankly, a more collaborative community.
Senator Seidman: But it’s challenging undoubtedly.
Mr. Wicklum: Everything is a challenge.
Senator Seidman: All right. Thank you, Mr. Wicklum, for your response.
I would like to ask a quick question to Professor Leach with regard to a piece you wrote in the CBC in which you explored the issue of orphan wells. You concluded that the Premier of Alberta must:
. . . find a way to make sure there is a pot of money attached to every well site to ensure its cleanup, funded by those who’ve made money for decades.
I know it has been a huge issue. This committee itself has looked at that subject matter very carefully in another study. We need the orphan wells sealed. I’m trying to be pragmatic, but many of the companies are now insolvent. So what do we do at the federal level to get those wells sealed as soon as possible?
Mr. Leach: It’s a great question.
The “pot of money” remark was actually a term that now-Premier Smith had used in a Calgary Herald editorial; I picked that up from her. There was a bit of tongue-in-cheek there.
It does say that we have wells for which, as you clearly put it, no solvent owner is able to take on those responsibilities. There is a provision already for those wells to be declared orphans, essentially, pass through the Orphan Well Association and remediated through a levy that’s placed on the existing industry. For lack of a better term, that was the deal that the industry and government struck years ago: This should not be on the taxpayers’ dime; industry will take care of it. Through a number of other files, there has always been that message: Industry, almost speaking as one, will take care of it.
So I think that mechanism already exists.
The challenges you’re seeing in Alberta right now are two things. One, it’s hard to push a company into insolvency. If they don’t owe money to the bank or to the government, it’s hard to push them into insolvency. The regulator hasn’t been willing to do that. That’s where you end up with these wells in limbo that are not technically orphans — so they don’t end up with the Orphan Well Association — they are not being remediated; the landowners are not being paid; the municipalities aren’t being paid; and everyone is standing looking at their shoes saying, “What do we do now?”
The first thing that has to happen is that we have to put on our polluter-pay-principle boots and say that if these are actually insolvent companies, it’s time to deal with them as they are. If they’re not insolvent companies, it’s time to take out the ability to just extend these licences forever and to say that if this is truly a suspended well, let’s change the timeline and bring those wells into focus with the Orphan Well Association or what have you.
As you might have gathered, I am not a huge fan of the program that’s being pitched now, which is basically saying that if you happen to have a lot of these wells that you haven’t dealt with and you’ve been piling liabilities onto rural land, great, we’ll pick up the bill. If you’ve been a good citizen, we’re not going to give you anything. It’s like a giant government cheque for the worst actors. I’m not a fan of that.
Senator Batters: My question is for Mr. Wicklum.
In a previous advisory report to the government, your Net-Zero Advisory Body advised that the transition should “prioritize people and communities,” stating:
Targets for the oil and gas sector should be accompanied by measures to directly address the needs of Canadian citizens.
Achieving ambitious targets for the oil and gas sector will have impacts on Canadian workers, families, and communities—especially those who are directly connected to the oil and gas sector.
Your report further states, “Reducing GHG emissions is a shared responsibility, and so too is supporting those affected.”
I’m from Saskatchewan. Given the tens of thousands of job losses to date in the oil and gas sector, how confident are you that the government will strike the right balance and “prioritize people and communities,” as your advisory body has suggested?
Mr. Wicklum: I point to the part of that quote that talks about shared responsibility. From the NZAB’s perspective, this idea of a transition to a prosperous future is not just a federal government responsibility; it is just as much a provincial one, a municipal one and also a private sector one.
Purely from an oil and gas sector perspective, I have heard the narrative change. For about seven years, I was the CEO of Canada’s Oil Sands Innovation Alliance, COSIA. One of our major taglines back then was that we needed to keep the oil sands sector strong because it was the oil sands sector that was going to help drive Canada into a net-zero future. That seemed very plausible.
The reality is that those companies have now made the decision that they’re actually not going to drive us into a net-zero future. They’re going to take their profits and give them back to the shareholders. They’re going to pay down debt and buy back shares.
So, is it the federal government’s responsibility? I think it is very shared. In this case, I look at those remarkable profits that especially the oil sands companies are making. I would say that they have just as much a responsibility for transitioning their employees as the governments do.
Others would disagree and say that the private sector’s job is only to deliver a return to the shareholders.
I think the concept of net zero changes everything. Even the definition of what a company should be and the role of a company in our society. I think it’s those existential questions that flow from this moral imperative for us to get to net zero.
I would reframe the question to imply that — and I think from NZAB’s perspective — it is very much a shared responsibility for job creation and future prosperity between private sector and all levels of government.
Senator Batters: Okay, except that your advisory report was to the government and it was directly talking about your conclusions and suggestions to the government, indicating that this needs to be targeted also at and supporting those directly affected.
We are federal politicians here, so what role do you see the federal government playing? Also, I will ask my question again: How confident can you be that the government will play its part? I hear what you’re saying that you don’t believe that the federal government has the entire part to play here, but how confident are you that the federal government will play its part, and how much of a part do you think that should be?
Mr. Wicklum: Again, I’ll sort of muse on that.
One of the other things that we feel very strongly about is that all of our pieces of advice be read in totality in a package. I understand that one piece of advice that you’re very interested in, but another whole section of our advice is around governance and shared leadership responsibility and what we’re increasingly calling “distributed leadership.” The federal government absolutely has a role. So does the Government of Saskatchewan and all municipalities and industry.
Look, it’s highly contentious. I’m sitting in my basement just west of downtown Calgary. The federal government had mused about launching a piece of legislation called the “just transition” legislation that has been a lightning rod. I think everyone agrees now it should best be termed as “future job prosperity” legislation.
So that is what I know about what the government is thinking in terms of that notion of transition, but I also want to make sure I don’t end up being a spokesperson for the government. Our role is to advise the government, and our advice is, “Play an appropriate role.” Whether or not they play that appropriate role, I think, will likely be dependent on people’s definition of “appropriate,” which may differ.
Senator Batters: Right. Although not only am I concerned about this but obviously tens of thousands of Western Canadians, the region I represent, are very concerned about this too.
[Translation]
Senator Gignac: I thank the witnesses for being here with us this evening. I have a special thank you for the first witness, Mr. Dupont, with whom I had the opportunity to interact during our bilateral meetings, when he held the position of Deputy Minister of Natural Resources in Ottawa, and I held the position of Minister of Natural Resources in Quebec. I have two questions for Mr. Dupont, and I’d like him to take them into consideration in his answers.
[English]
I will quote you in English. In December 2021, you mentioned that:
Without serious change and new approaches we will be unable to sustain . . . our standard of living and successfully transition to a low-carbon economy . . . .
The title of the article is “Canada is a country in trouble, we have no credible plan for a prosperous future.”
[Translation]
This is my question: There was a federal budget and an economic update, and the Canada Growth Fund company was created. Do you still have the same opinion, or are we going in the right direction?
[English]
Mr. Dupont: I don’t recognize my words. I will take you at face value. I typically am more diplomatic than in those words.
Senator Gignac: It was in The Hill Times.
Mr. Dupont: Listen, I was trying tonight to just make a basic point that to get through an energy transition is an enterprise globally and in Canada that is unprecedented. We’re trying in 25 years to transform an energy system that has been built in about 100 years and more. We may, for example, have to double or triple the size of the electricity grid within 30 years, something that, again, has been built over 130 years or more. We have to go globally from 80% reliance on fossil fuels to net zero, which doesn’t mean 0% reliance on fossil fuels — there are different ways — we talk about net zero.
We’re talking about something that is absolutely fundamental and an enterprise that is perhaps unprecedented. So to do that, you need the kinds of plans that Mr. Wicklum and his advisory body are working on, some alignment, but there will have to be conditions for investment to be made. I would suggest that includes investments by oil and gas companies in decarbonizing their operations.
I would not say today, senator, that there is no plan, that we’re nowhere. The government has put in place a number of instruments. Having those come together and for investment now to actually take place, to really lift the level of investment so we can actually work towards those targets, it’s on execution, I would say, that we have the greatest challenge now. We have put in place a lot of instruments, a carbon price, other pieces of regulation, other financial instruments, tax measures to stimulate certain investments, the Canada growth fund that’s on the way — all those instruments are going to help. We’ll have to be able to execute and get projects done. And that, as I mentioned, also includes looking at the regulatory side of it so that we are actually able to build things, whether it’s a transmission line or whatever we have to do, in less than 10 or 12 years. Because otherwise, it’s not going to work.
If you look at what we’ve done for the past 10 years, progress won’t happen fast enough without change. Mr. Wicklum was saying exactly the same thing. But you still need to think through how you’re going to get the private and public sector to work together on a credible path. I’m not quite sure we’re there yet.
Senator Gignac: To be fair, it was maybe your colleague David Dodge who used that expression. So I can understand.
Mr. Dupont: David is sometimes less diplomatic than I am.
[Translation]
Senator Gignac: For my second question, we received Mark Carney, former governor of the Bank of Canada, who talked to us about retirement funds and pension funds in Canada. Some pension funds are reducing their carbon footprint by selling off their shares in the oil sector and don’t contribute to decarbonizing the economy. Can you elaborate on that? Isn’t there an important role for retirement funds to play, since they represent about 150% of Canada’s GDP? Should we be somewhat more prescriptive with pension funds, because investment is being diverted from Canada and going to countries that are not necessarily friendly or democratic? Is there anything to consider on that side?
Mr. Dupont: I think one must be very careful when setting out directives for a retirement fund, whose organization and governance are tasked with ensuring good returns for retirees. I think you saw it as a minister in Quebec, where a great deal of caution surrounds the Caisse de dépôt et placement du Québec.
That said, in Canada, the Infrastructure Bank tried to see how we could draw private capital, specifically retirement funds and institutional investors, into investments and infrastructure, including transportation infrastructure or energy infrastructure. We have not yet quite succeeded in doing so.
I myself feel some impatience when I see our retirement funds sometimes being invested in projects in other jurisdictions, similar to things we’d like done here. I think it’s important for organizations to do their work, to see the investment opportunities here in Canada, but they do so insofar as they can get a positive financial return. There is a role for governments to play in providing conditions to draw investments and institutional investors into our energy transition and climate goals.
[English]
Senator McCallum: Thank you for your presentations. I should have asked this question quite a while ago. I’ve been stewing about it and didn’t know if there was something I was missing.
Why is the industry asking for public funds and private funds when they have been making record millions? It seems like they’re making this, but they don’t take care of what they should mitigate, like orphan wells, the tailings ponds, abandoned mines. Those are all near Indigenous lands. They’re just collecting, and there is so much toxicity. That’s my first question.
When we look at CCS and carbon capture, utilization and storage, CCUS, and the natural gas processing sector, the gas burned at the end of the value chain produces the most significant chunk of emissions, which these two proposals do not address.
Then we look at the enhanced oil recovery, or EOR, which itself leads to carbon dioxide emissions because it’s used to produce more oil rather than curbing its emissions. Therefore, any claim that CO2-EOR systems ultimately reduce CO2 emissions by their nameplate capacity is an overstatement.
It seems like there are hidden areas that are not brought to our attention.
Is CCUS and CCS greenwashing to extend the life of fossil fuel assets or a panacea to avert catastrophic climate change consequences? That is for anyone who wants to answer.
Mr. Leach: I can take a first crack, senator. I think you’re right on a number of fronts.
First of all, I would say that in a number of cases, industry wants to speak as one whole, and that tends to end when somebody is abandoning liabilities or stranding assets on the landscape, et cetera. Then they’re almost of another.
I’ve recently worked on some of the questions about tailings reclamation for a northern Alberta First Nations consortium, so I should be transparent about that. However, I think there are real concerns about whether the companies will be there at the end to take care of those liabilities. Mr. Wicklum has worked extensively on that question.
I think the CCS/CCUS questions you ask are the right ones. EOR is not a panacea and it does have emissions impacts. But on the scale of CCUS that we are talking about, even to decarbonize the oil sands and the gas processing sector, you are far beyond just CO2 that would be used for EOR. You are into storage directly. You are potentially, down the road, as we saw in Texas now of direct air capture and sequestration, building products and some other uses.
I think EOR will be a small part of that world, but it does matter — exactly the point you raised — that we need to count these things not as how much carbon goes in the ground but what the net impact is.
I would say the truth lies exactly between the goalposts you set out. It is by no means a panacea because it doesn’t touch the tailpipe or combustion emissions from the fossil fuel and it’s not just greenwashing.
Right now, we are seeing in Alberta over a million tonnes a year of carbon dioxide being sequestered by carbon capture and storage projects. In the scheme of Canadian emissions, it’s relatively small, but it’s still billions of dollars of capital and operating expenses going to meaningfully reduce emissions today, and it could scale up quite a bit.
That was a lot in one answer, but I hope it ticked the boxes there.
Mr. Wicklum: Again, I think you’re asking the right questions. I’ll focus on your second one, which is whether or not carbon capture and storage or carbon capture, use and storage is greenwashing. I would say there are differing opinions on the Net-Zero Advisory Body, so I’m going to answer this more from the perspective of my day job, which is working for something called The Transition Accelerator.
We’re actually a fan of carbon capture and storage. We think the technology can work. It is working. Whether or not it has the ability to work at the scale that we want it to, and quickly enough, in order to play the remarkably meaningful role that some people in the oil and gas sector want it to, that is a question. However, fundamentally, the technology does work.
Wearing both my hats, to me it’s much more a question around who is going to pay for this rather than what technology certain sectors or companies use in order to decrease their emissions. And who is going to drive them to make sure they set goals and meet those goals?
The second part of my answer will be a bit of a throwback to the role of institutional investors, like pension plans. At the Net-Zero Advisory Body, we made a recommendation to government that all federal institutions — whether they be department, agency, Crown corporation, anything, including the pension funds — be mandated to, frankly, do much more for us to get to net zero: to take a look at their mandate, ask for a mandate change in legislation if they need one, to see what possible role, existing or new, they could play to help drive to net zero.
If investment is the key to many of these emission-reduction solutions — like the remarkable investment required in carbon capture and storage — I think these pension funds need to play a more active role, even if it causes them to depart from their current business models, their current risk models and their current way of thinking.
I’ll go back to my opening comments: This isn’t the normal challenge where if we don’t get it right, we just lose an opportunity. If we don’t get to net zero by 2050 right, every single generation into the future will be disadvantaged.
We really need to challenge ourselves around the ways we have done things traditionally, even if that means entities like pension funds taking a new role, and maybe even more of an activist role, in investing in some of these technologies.
Senator McCallum: In the report The Carbon Capture Crux, it says:
. . . the number of failures and the underperformance of these projects with carbon capture technology has outnumbered the successful projects considerably. . . . 90% of the total capture capacity in our sample, have failed or are underperforming mostly by large margins.
Can you comment on that?
Mr. Wicklum: Sure. I’ll just say that carbon capture and storage has not been around for a hundred years, like many other technologies; it’s relatively new. But it does work. I would expect there to be a lot of experimentation, failure, refinement and evolution in the early stages of development and implementation of a technology, so to me that’s not surprising. But I think that one of the great things we have in Canada are solid entrepreneurial, technical people. In case anyone is considering that my comments today on behalf of NZAB are anti-oil-and-gas-sector, they’re not. We think the oil and gas sector has a remarkable innovative capacity and that if they were challenged more and focused more, they could do more and more quickly, including on the CCUS.
Senator McCallum: Thank you.
[Translation]
Senator Dalphond: You spoke earlier of the fact that the private sector is not necessarily getting on board with the transition, because in the short term, it’s betting on a world that still consumes oil and gas. On the other hand, you talked about the necessity of attracting investment, including foreign investment.
How do we attract investment? Does that mean our transition will go as slowly as in other countries? Because there will always be countries with less rigorous transition measures than ours, which will be more financially attractive for those interested in the immediate or short-term return from oil and gas consumption.
Mr. Wicklum, you may be the person who can reconcile these two objectives.
[English]
Mr. Wicklum: I’m not sure if I know how to reconcile those two goals, but I think that’s our grand challenge for the whole planet, let alone our country.
Dr. Leach talked about this tension around the net-zero objective and the oil and gas sector. One of the realities that we have to accept is — and the way he phrased it was — that if people are telling you that you can have a healthy oil and gas sector and using those products in a combustion way, that implies that we’re not going to get to net zero. Said otherwise, we cannot be combusting oil and gas in 2050 and get to net zero. The elephant in the room is that the sector will look very different.
In some regard, we’re talking about investment to decarbonize, reduce the emissions intensity of oil and gas products, especially the oil sands. It’s about the most carbon-intensive product of its type in the world. But in some regard, that’s actually a bit of a red herring. The issue is making sure we are making investments so that we do not use those products anymore, especially on electrification. Being sensitive to the centre of Saskatchewan’s concerns, there is remarkable upside — no matter who you talk to — remarkable investment and economic activity required to build those new systems that are functional and net zero.
In some regard, the future of the oil and gas sector is not just around lowering emissions intensity of the product. It is what the new sectors, companies, economies will be made that will allow us to have the same standard of living and for people in Saskatchewan to have jobs like they do now. Focusing only on decarbonizing or emissions intensity reduction of the oil and gas products is actually in a very real regard asking, at best, an incomplete question.
Mr. Leach: I would add that the way to reconcile these is how we think about the rate of return. Is it rate of return on a single decarbonization investment or is it part of the industry’s existential business case as a whole? Compare it to safety in the oil and gas sector: You would never have a meeting in Calgary where someone would say, “Yes, it would be great if we took on more investment for worker safety, but that doesn’t meet our rate of return,” because it’s existential for the business’s survival. We saw some companies wrestling with that in the wrong way of late. The more companies start to see this as — and it comes from a clear signal from governments, a clear signal internationally, a clear signal from markets, pension funds, insurers, banks, et cetera — “I do this because it allows me to keep doing my core business,” as opposed to, “I evaluate this as I would evaluate an investment in a racetrack or a suite at the Saddledome for the Flames,” then you change the way that it is evaluated. Therefore, the rate of return is not just decarbonizing; it’s being able to continue to operate my entire capital asset base, essentially.
[Translation]
The Deputy Chair: Thank you very much.
I’d like to seize the opportunity to thank the three witnesses we heard from.
(The committee adjourned.)