THE STANDING SENATE COMMITTEE ON ENERGY, THE ENVIRONMENT AND NATURAL RESOURCES
EVIDENCE
OTTAWA, Thursday, November 21, 2024
The Standing Senate Committee on Energy, the Environment and Natural Resources met this day with videoconference at 9:01 a.m. [ET] to study emerging issues related to the committee’s mandate; and in camera, to consider a draft agenda (future business).
Senator Paul J. Massicotte (Chair) in the chair.
[Translation]
The Chair: My name is Paul J. Massicotte, I am a senator from Quebec, and I am the chair of the committee.
Today we are holding a meeting of the Standing Senate Committee on Energy, the Environment and Natural Resources.
I will ask my fellow committee members to introduce themselves, starting on my right.
Senator Verner: Josée Verner from Quebec.
Senator Youance: Suze Youance from Quebec.
Senator Miville-Dechêne: Julie Miville-Dechêne, also from Quebec.
[English]
Senator McCallum: Mary Jane McCallum, Manitoba.
Senator D. M. Wells: David Wells, Newfoundland and Labrador.
[Translation]
Senator Galvez: Rosa Galvez from Quebec.
The Chair: Today, the committee has invited witnesses to appear as part of its continued special study on climate change: Canadian oil and gas industry. We welcome via video conference from the Pembina Institute, Simon Dyer, Deputy Executive Director; from the Trottier Energy Institute, Simon Langlois-Bertrand, Research Associate; from the Canadian Association of Physicians for the Environment, Dakota Norris, Fossil Fuel Extraction Campaign Manager. Welcome, and thank you for being with us. You have five minutes for your opening remarks. The floor is yours, Mr. Dyer, followed by Mr. Langlois-Bertrand and Mr. Norris.
[English]
Simon Dyer, Deputy Executive Director, Pembina Institute: Good morning. My name is Simon Dyer. I am deputy executive director of the Pembina Institute, an Alberta‑headquartered, national clean energy think tank. We are experts on all types of energy production and use, including oil and gas.
I join you today from Edmonton, which is Treaty 6 territory and home of the Nêhiyaw, Dene, Anishinaabe, Niitsitapi and Nakota Isga peoples, and the Otipemisiwak Métis Government. Thank you for this invitation.
The Pembina Institute was founded 40 years ago in Drayton Valley, Alberta — the heart of the oil patch in Alberta — in response to the Lodgepole sour gas blowout, when gas erupted from a well just southwest of Edmonton, caught fire and burned for more than two months, all the while releasing toxic sour gas into the air. A group of concerned Albertans came together and pushed for a public inquiry, which led to stronger rules for sour gas safety.
Although today we are a national organization, when it comes to oil and gas, we remain true to our beginnings as a group of concerned Albertans who acknowledge the benefits of living in a resource-rich province but who are concerned about the long-term impacts of oil and gas production on the air, climate, water and land.
Recently, we find ourselves concerned about the health of Alberta’s economy in a world that is rapidly decoupling itself from reliance on fossil fuels and where countries are instead moving toward low-carbon models of economic growth.
Let me share a few facts.
The oil and gas industry is Canada’s largest source of greenhouse gas emissions, accounting for almost one third of our country’s total emissions.
A lot is often made about the industry’s economic contribution. We don’t seek to downplay this, but facts are important. Since the year 2000, the industry has contributed about 5% of Canada’s annual GDP, so that means almost one third of greenhouse gas pollution for one twentieth of our GDP.
You may have heard that the oil and gas sector is already making progress to reduce its emissions. Again, numbers are important. From 2005 to 2022, absolute emissions from the oil and gas industry increased by 11%. During the same period, average emissions across Canada decreased 7%. Not only is the oil and gas industry our largest source of emissions, but its trajectory is also out of step with what the rest of Canada is striving toward.
But there is one part of the oil and gas industry that I would really like to talk about today, and that is the oil sands.
For now at least, oil sands emissions in Canada are largely unregulated. You may be aware, for example, that Canada has had some success in reducing methane emissions from oil and gas production. That is true, but there is little methane associated with bitumen, so methane regulations have had almost no impact on the oil sands. This lack of regulation is partly why, since 2005, oil sands emissions have gone up by 142%.
Carbon capture and storage, if deployed at scale in the oil sands, has the potential to dramatically alter this. That is why we had supported the oil sands Pathways Alliance, who three and a half years ago proclaimed they would build a huge network of carbon capture and storage facilities in Alberta. The problem is that despite millions of taxpayer dollars on the table for those CCS projects — projects that would undoubtedly create new jobs and investment in Alberta — the oil sands companies remain stuck in a holding pattern of negotiating for even more public funding instead of getting steel in the ground. This is why we think regulation is urgently needed for the sake of the climate and for the future of Alberta’s economy.
Canada’s oil and gas sector is facing a shrinking market. A convergence of credible models from both inside and outside the industry now shows global demand for oil and natural gas entering long-term decline in the 2030s. With this on the horizon, companies are adopting short-term attitudes. More than ever, they are focused on getting costs down through automation and other technological improvements.
The latest oil price boom, after recovery from the pandemic and Russia’s invasion of Ukraine in 2022, was the first boom in Alberta not to be accompanied by large-scale job creation.
Despite all this, we see a future for a leaner, cleaner oil and gas sector in Canada — one that produces low-carbon fuels but also low-carbon feedstocks for products like petrochemicals and other materials. But industry’s delays in investing in decarbonization are costing Canadian communities jobs in 2030 and beyond.
To summarize, there is a pathway for the oil and gas sector, including the oil sands, to decarbonize, but companies have shown they will not do so voluntarily. It’s the government’s job to plan for our future economy — one that is climate safe and prosperous for all Canadians. That is why additional regulation is urgently needed.
Thank you.
[Translation]
The Chair: Thank you very much.
Simon Langlois-Bertrand, Research Associate, Trottier Energy Institute: Good morning, everyone. My name is Simon Langlois-Bertrand and I’m a research associate at the Trottier Energy Institute. We’re located in Tiohtià:ke, also known as Montreal. Thank you very much for the invitation. I’ll try to give you some food for thought for the important work you’re doing. I’ll make most of my opening statement in English, but I can answer questions in the language of your choice afterwards.
[English]
I’m a project lead at the Trottier Energy Institute. We do all sorts of research and analysis focused on the energy sector and on the development of net-zero pathways, including propositions and strategies to tackle some of the challenges linked to the net‑zero transition across the country.
The remarks I am making here are based on two sets of work. The first is the extensive analysis and modelling I lead as part of our Canadian Energy Outlook, which released its third edition a few months ago and assesses trajectories to meet different climate commitments.
The second strand of work is various sectoral analyses focused on strategic issues in the shorter term facing the provinces and Canada as a whole. In this work, I have written analyses, for instance, of the options facing the Canadian oil and gas sector in decarbonization pathways and the risks associated with each.
The Canadian oil and gas industry stands out in discussions over future technical, social and economic trajectories in at least two ways. One is its contribution to the national GDP, around 5%, its generation of $200 billion in early export revenues and a large number of jobs. The second is its outsized contribution to the country’s greenhouse gas emissions, the largest source, at 28% of the total, despite its geographic concentration.
In this context, it is difficult to determine precisely what role the oil and gas sector should play in the future low-carbon Canadian economy. On the one hand, if Canada is serious about meeting climate targets, our work and that of others clearly show that, from an energy system cost perspective, a very large share of reductions to achieve GHG targets should come from the oil and gas sector. This is both the cheapest way and the most straightforward.
Of course, that would be a simplification. As you well know, the size of this sector and its role in employment in several parts of the country mean that any hypothetical trajectory for reducing production or emissions levels drastically must be managed very carefully but also actively, as many factors point to the industry not acting to transform itself, despite its claims in relation to several options, like carbon capture or emissions intensity reductions.
As part of the reflection over the design of regulations to direct change, I would suggest three aspects to consider in terms of the risks and implications associated with various strategies regarding the sector for the coming years and decades.
The first thing to take into account is that, in terms of fulfilling Canada’s commitments under the Paris Agreement, it is important to note that not reducing emissions from oil and gas production means that other sectors will have to compensate in order for the country to meet targets, which means much more expensive transformations will be needed elsewhere, for instance, in other industries such as the transport sector, et cetera. In some cases, these transformations would be much more technologically challenging and risky.
The second thing to take into account is that many actors in the energy realm have been projecting a peak in oil demand worldwide before or around 2030, which means that export markets on the longer term could shrink and affect Canadian production’s opportunities. On the other hand, given the size of the sector, any transition away from current modes and levels of production will take considerable time. Therefore, in this context, the safer strategy would be, by far, to plan as soon as possible for a soft transformation toward a much smaller size for the sector, even if other techniques to reduce emissions are deployed at a large scale.
The third thing to consider is that the potential application of carbon capture and storage or utilization across the industry continues to offer more reasons for caution than hope for a silver bullet. Despite a dramatic effort in recent years to get these technologies and applications deployed worldwide, the results leave us wanting; not only is the deployment extremely costly — in fact, it is one of the costlier ways to reduce GHG emissions, which, in turn, makes industry very reluctant to invest, despite significant production tax credits — but, in addition, it continues to fail to reach its theoretical capture potential.
To be clear, this is not to say that exploring carbon capture, utilization, and storage, or CCUS, applications for a net-zero future should be avoided at all cost, but since the true potential of these technologies and processes is yet to be determined, and given the very disappointing experience so far after 45 years of research and deployment, the risk of failure in relying merely on CCUS to reduce emissions from any sector is extremely high.
In short, even beyond a narrow but essential focus on GHG reductions, the current economic and social importance of the Canadian oil and gas sector should not be mistaken for insurance against future risks. A resilient economy is one that is able to adjust to changes on its own terms. In this case, worldwide trends should give food for thought.
I will stop there, but I am very happy to answer your questions to the best of my abilities.
The Chair: Thank you.
Dakota Norris, Fossil Fuel Extraction Campaign Manager, Canadian Association of Physicians for the Environment: Thank you for the opportunity to speak today. I am a member of the Gwich’in nation and fossil fuel extraction campaign manager at the Canadian Association of Physicians for the Environment, CAPE, I unite Indigenous and physician voices.
I acknowledge this committee’s work, including on Bill S-5, on upholding the right to a healthy environment. Strong Canadian policy, not industry goodwill, must guide our collective future.
Dehcho Grand Chief Herb Norwegian said that climate change is a government and science term; and there is a much bigger issue here: global evolution. Climate change reflects dominance systems of humanity over nature, industry over the public and money over health. Nations like the K’atl’odeeche First Nation know this, as they’ve faced famine, floods and wildfires in a few short years, exacerbated by systemic inequalities. Canada cannot reconcile climate change without Indigenous reconciliation.
Human health is at the mercy of fossil fuels through impacts like extreme weather, birth defects, child leukemia and reduced food security. These are Canada’s greatest public health challenges, and CAPE therefore prescribes a moratorium on further oil and gas development to prevent ongoing harms.
To address the study themes, on industry’s relevance, oil and gas has been important to our economy; yet, as fossil fuel demand declines, we continue subsidizing the industry, socializing its risks while continuing to externalize environmental and health costs onto Canadians. We must reject industry projects as inevitable. Communities lead the energy transition and could absorb triple the funding for Indigenous clean energy and other projects, which strengthen resilience and reconciliation. Why underfund projects that benefit the public while subsidizing an industry that harms them? As Wet’suwet’en Hereditary Chief Namoks said: “This country is better than we think it is, and we’re worth more than a dollar.”
On industry’s record, despite promises, emissions continue to rise. Industry erodes trust in its commitments through underreporting emissions, greenwashing and co-opting Indigenous goals. Industry-led incremental technological solutions fail to align with Canada’s climate goals. For instance, subsidizing electric vehicles benefits private companies while still requiring mining for vehicle proliferation. Public transportation, by contrast, benefits the collective and reduces emissions.
On sustainable futures, oil and gas job decisions are hard for communities, but they are a fraction of Canada’s workforce and are the largest source of emissions. They are harmful to health and were never sustainable to begin with — extractive projects often end in one lifetime. Sustainable futures must prioritize generations over jobs. Economic reconciliation has been pushed to mean providing some jobs and equity in these destructive projects, whereas clean energy offers real reconciliation and more jobs for Canada’s youngest and fastest-growing demographic.
On risks and trends, industry positions itself to maintain dominance while facing declining demand, ad bans, Indigenous rights and new policies. Unfortunately, they mobilize their resources to mislead the public, challenge policymakers and put Indigenous communities under duress. The industry’s vulnerability underscores the need to diversify Canada’s economy.
On competition, industry seeks to remain profitable, in part by producing more plastics. We can’t bank on false solutions such as that or CCUS that cause as much or worse harm than our current system. Dene National Chief George Mackenzie shared a message to industry: “We try our best to take only what we need, share what we have and not take all that is available to us.” Corporate profit maximization drives unsustainable exploitation. Therefore, Canada needs strong policies to establish sustainable competitive positions in the energy transition, including the right for communities to say no to industry and yes to their own futures.
In closing, all people in Canada, including future generations, have rights, and we have a responsibility to uphold them. How can we stop denying the climate crisis? Indigenous knowledge is climate action. What would it mean if we stopped looking at the land as a natural resource to extract, sell and consume, and rather as our home? Or as the intergenerational wealth we are stewarding for our children and their children rather than a short‑term job opportunity? How can we recognize that planetary health is human health and that the land is healing for us and sustainable in itself?
Thank you.
The Chair: Thank you very much.
We are going to our question period.
[Translation]
Senator Verner: I thank the witnesses for being with us this morning.
Since the beginning of our study, witnesses have stated that the industry’s transition to carbon neutrality necessarily involves a significant reduction in its oil and gas production and exports by 2050. In February 2023, Mr. Serge Dupont, a former deputy minister at Natural Resources Canada, stated:
If we can generate profits while selling oil and gas and investing in this transition, I think that’s good business overall.
…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.
Do you have any comments on this statement by this former deputy minister? The question is for anyone who wishes to comment.
[English]
The Chair: Mr. Dyer, do you want to venture an answer to that question?
Mr. Dyer: Yes, I would be happy to.
I agree with a lot of that statement. As I said in my remarks, the industry needs to decarbonize, but they are not making the investments in decarbonization. When we talk about carbon capture and storage, as Simon Langlois-Bertrand said, it has been talked about for 45 years. The government of Alberta launched its carbon capture policy in 2008, so we are in year 16 currently. Oil sands companies are 16 years on and still not actually making the investments in decarbonization.
I think it is less about reducing the industry, but there is going to be a global decline in oil demand, and Canada is very vulnerable. In all those models that talk about those declines, Canada is the first country to be hit because we have some of the most expensive and highest carbon oil.
I think it’s somewhat of a distraction to talk about reducing production in this industry. Those declines are likely to be coming due to global market trends, but the industry does not appear to believe its own rhetoric around decarbonization because we are not seeing the investments. I think that’s a key place where the Government of Canada could —
The Chair: Mr. Langlois-Bertrand, would you like to add something to that?
[Translation]
Mr. Langlois-Bertrand: I agree with Mr. Dyer on the principle that a good portion of the funds can be used. One of the main criticisms of the industry in recent years has been that the increasingly large profiles are not invested at all. This would be a short-term solution. We can’t imagine a future even in carbon‑neutral trajectories where there is no industry. Another point I’d like to stress is that we shouldn’t look at this only in terms of funds to be invested. One of the contributions that can be transferred from the oil and gas industry is jobs. In all carbon‑neutral trajectories, there is an absolutely incredibly great need for manpower, even in the short term, let alone in the medium and long term.
More and more utilities have started to assess what it’s going to take to build tomorrow’s energy infrastructure. This workforce doesn’t exist; there will be a critical shortage. As it happens, most oil and gas jobs can be transferred with a minimum of training to some of these sectors. When we talk about contractions, it’s a contraction of a certain form of industry, but not automatically in terms of jobs. That’s where we should be focusing most of our attention.
Senator Verner: Thank you.
Senator Miville-Dechêne: The three of you have painted a rather bleak picture of the situation. I’d like to hear your opinion. Mr. Dyer, you were particularly critical of decarbonization subsidies and the fact that industry in particular is not contributing to the capture of these emissions. In view of this, we know that the government is planning to cap emissions in 2026. Do you think this is enough? Should Canada continue to fund carbon capture, given its more or less satisfactory results? Or should it ask the industry itself to do so? That’s a lot of questions, but since we’re at the end of this study, I’d like to know what you suggest, because the government says that it’s all very well, that it has a cap and that it will have to comply with it, but do you think that’s feasible? Do you think we need to change the trajectory of subsidies to the oil industry?
The question is addressed first to Mr. Dyer and then to Mr. Langlois-Bertrand.
[English]
Mr. Dyer: I think there were two great questions in there.
As it relates to the emissions cap, absolutely we need a cap on oil and gas emissions because no other policies have actually driven the kind of behaviour that is necessary for the oil sands sector to reduce emissions. We are confident that an emissions cap — we have done the modelling to show this — will actually drive the investments from the companies to actually decarbonize. It is an important part of the puzzle. It is just math. Oil and gas emissions are not decreasing. The industry needs to do its share.
On the issue of subsidies around carbon capture and storage, of course, carbon capture and storage can be applied to many other sectors as well, not just the oil and gas sector. It is actually in many of those other sectors where you are actually seeing companies make investments and commitments. The current subsidy situation is extremely generous for the oil and gas sector. When you combine the federal investment tax credits and Alberta grants for carbon capture and storage, oil sands companies are being offered 62% of the capital costs for their projects, and they appear to still not be willing to invest their money for the remainder. That is why we need an emissions cap and strong regulations to drive down oil and gas emissions.
Those investment tax credits are not currently being used by the oil sands sector, but certainly when you compare it to what is happening in the United States, we would say the suite of subsidies and incentives provided in Canada with the investment tax credits we have here are comparable to the Inflation Reduction Act in the United States. Coupled with the importance of industrial carbon pricing, we think that is appropriate to get the appropriate action from the oil and gas sector.
[Translation]
Mr. Langlois-Bertrand: I agree with most of what Mr. Dyer said. I’d like to add one thing about the capture subsidy. You may have heard from other witnesses or seen in your research that most modelling efforts in Canada or elsewhere in the world show a very important role for capture in the carbon-neutral trajectory. That’s undeniable. Then you have to be careful what you mean by that; it’s not capture anywhere for everything that’s difficult.
In fact, despite the staggering amounts of capture projected to be needed to get close to carbon neutrality around 2050, virtually no capture is being applied in the oil and gas industry, because that’s not where it’s most worth doing. It’s applied where demand reduction is much more difficult, such as cement production, where we have no other options at the moment. We hope to reserve capture for other sectors. It’s not a bad thing that there’s some in the industry, but when it comes to public funds to support it all, you have to make choices. There are limits to the purse and to what we can deploy. In this context, we need to give more support to other sectors where it’s more promising. If tax credits are on the table, that could be a starting point.
Senator Miville-Dechêne: Thank you. Neither of you believes that the government should invest more, as the oil companies are asking, either in technology or tax exemptions?
Mr. Langlois-Bertrand: No, indeed, I do not think so.
[English]
Mr. Norris: I would like to second the statements already made as well as add that, from a health perspective, every opportunity has costs, and we have yet to account for all the costs of emissions as well as CCUS. We don’t yet know all the health impacts. What we do know is that they are bad, as well as the impacts on the environment. Who is bearing the brunt of these costs? It’s most likely going to be Indigenous communities. We can’t forget that they are likely to be sacrificed for any further investments in CCUS as well as any failures to reduce emissions.
I would like to remind this committee as well that Canada is developing an environmental justice strategy, so that needs to be considered alongside the right to a healthy environment. We must consider this broader health environment and justice context when we are looking at these decisions. Thank you.
Senator Galvez: As you have heard, witnesses, we are at the end of this study, but I still have some technical questions. I will direct my questions to Mr. Dyer, but if the other witnesses want to take note of my questions, please send written answers.
I want to know how much energy is required per barrel of oil sands. I want to know where this energy that you use to extract the oil and gas is coming from. I want to know how many barrels of water are needed to extract one barrel of oil. I want to know how we balance the amount of water you have used to extract all this oil and the tailing ponds that are accumulating. I want to know what the efficiency of the carbon capture and storage is. I want to know where in the world this is a full-scale and how much CCUS adds to the cost of production of oil and gas I want to know the subsidies we give to the industry and how that compares with how much the industry pays to all its workers and how it compares to the cost of the health issues that Mr. Norris mentioned.
So if you can send that to the committee before — which date, Mr. Chair? When is the deadline for sending answers?
The Chair: The questions you’ve asked are not insignificant.
Senator Galvez: I think they are important to complete.
The Chair: We should give you more than a few days.
Senator Galvez: Okay. One week?
The Chair: How about 10 days? Is that fair to all three of you?
Mr. Dyer: Respond in 10 days? Yes, the Pembina Institute would be happy to summarize that information. I’m glad you’re not asking me to cover it all now.
Senator Galvez: Thank you so much.
The Chair: If you wish, you can call my office. If you don’t have a complete list, we’ll give you a copy of this transcript to ensure your answers are complete.
Mr. Dyer: Thank you.
Senator Galvez: Thank you.
Senator D. M. Wells: Thank you, witnesses, for coming.
Mr. Dyer, you mentioned earlier that it’s just math that subsidies, incentives and all these things that are claimed to go to the oil and gas sector should be cut. If these subsidies, incentives and tax breaks actually do reduce emissions, wouldn’t that math be beneficial to this discussion?
Mr. Dyer: Absolutely.
Sorry. To be clear, I said it’s just math that, with 31% of Canada’s emissions coming from the oil and gas sector, we need to reduce them. Pembina believes there’s no need for any further subsidies for the oil and gas sector and points out that the existing investment tax credits, grants and other opportunities the sector have are already extremely generous. We’re not suggesting those should be removed, but we are pointing out that even with those incentives, companies and CEOs have been quite clear about this: It still costs more to do CCUS than to do nothing, so the option to do nothing is still preferable to their shareholders. We have provided lots of carrots, but now we need to provide the regulation, which is to require oil sands companies, in particular, to reduce emissions.
Senator D. M. Wells: A number has been tossed around by witnesses who have appeared at this committee of $50 billion a year that the oil and gas companies are getting in subsidies. We were also told that sending a barrel of diesel to a Northern community so that citizens there can heat their homes would be considered under that category of subsidy. What do you consider a subsidy? We’d like to get to the bottom of this, because two weeks ago, we asked representatives of the oil and gas companies, via CAPP, what subsidies they received, and they said zero. Could you help us there, please?
Mr. Dyer: I don’t think I’m really qualified to provide a detailed definition of “subsidy,” and I can’t speak to those numbers that you mentioned. Certainly, though, dollars that are provided through grants, investment tax credits or royalty rates that are lower than could be provided by governments all comprise the definition of a subsidy. This industry does receive a significant amount of direct financial support from governments across the country.
I saw some interesting data from RBC’s Climate Action Institute. It said that, in terms of direct investments by the Government of Canada, it’s spending more on carbon capture and storage than all the other potential ways to reduce emissions. As another witness said here, there’s only so much money, and we need to be very careful about where we choose to assign that. Currently, the oil and gas industry is receiving money and has potential to access much more of those dollars through investment tax credits than maybe other places where we can reduce emissions.
Senator D. M. Wells: Thank you.
This question is for Mr. Langlois-Bertrand. It’s more of a global question, not specific to Canada. China has over 1,100 coal-fired plants that generate electricity — certainly more than 50% of China’s electricity — and more are being permitted every year. Canada has eight coal-fired plants. China is the largest emitter, followed by India, followed by the United States. Russia is up there, too. The efforts of the largest emitters in Canada, as you know, are at 1.5% of global emissions, and these other ones are 60% of global emissions. I recognize that people use the metric of per capita, which doesn’t really tell the full picture if we’re talking global emissions. The environment doesn’t care about per capita; it cares about total tonnage. So given Canada’s 1.5% of global emissions and the massive cost that has — we were told $2 trillion by Environment and Climate Change Canada — do you see some incongruity in where we are positioning ourselves as the “bad guy” of the globe versus our competitors?
Mr. Langlois-Bertrand: There are two scenarios you can consider in that. You can consider a future where none of what you just mentioned changes, and, therefore, Canada is a relatively small player in the world’s scale, and then there’s the question of where the investment goes for reducing greenhouse gas emissions, and is it worth it, given the unequal efforts by others? So there are two answers to that to really understand the implications. One is simply to refer back to Canada’s commitment to the Paris Agreement, but I assume that’s not satisfactory here for that debate. The other thing is that there are trade partners that are already pushing much further. They are looking for solutions for their industries. Canada can provide those, hopefully, and take the opportunity while reducing at the same time. It’s not an either/or — should Canada reduce or do something else. I think we can play it safe for a future trajectory in which there are opportunities seized but also a respect of the commitments. That goes through the development solutions in all sectors, including oil and gas, by the way. We talked about carbon capture applied to oil and gas, which is still struggling worldwide. If we find solutions for that, they will be welcomed elsewhere for sure.
I think the safer strategy is to consider a more prudent but optimistic future in terms of actions of the others. That’s how the agreement is designed. We care about our emissions, and then we hope that everyone else does their part. A lot of the other countries you haven’t mentioned, including the EU, of course, but elsewhere also, are indeed marching in that direction.
Senator McCallum: Thank you for your presentations.
On paper, the Government of Canada has committed to a net‑zero greenhouse gas emission economy by 2050, yet their actions do not fully support that. The federal government retains the discretion to approve of a project even when experts determine that the project will have significant adverse environmental effects, which oil and gas does, and the government cannot be forced to enforce the law because of the wording in the legislation. They continue to give subsidies to the oil companies.
Now we have the oil companies using AI to expand their autonomous vehicle fleet by the end of this year, 2024. Suncor has Canada’s largest fleet of automated vehicles, boasting efficiency and safety, and they are on schedule for an expansion. At Fort McMurray they have 45 haul trucks driven by a network of sensors, lasers and global positioning systems, or GPS. Imperial Oil, at its Kearl operation, became fully automated last October. Suncor announced that it would add 150 autonomous haulers to its operations, putting in the largest investment in electric autonomous vehicles in the world. When we have companies who are expected to voluntarily agree to suspend their operation, that is highly unlikely.
Now, when we look at AI, AI use is directly responsible for carbon emissions from non-renewable electricity and for the consumption of millions of gallons of fresh water. They’re using AI everywhere, including by the oil industry for their vehicles. In the United States, Massachusetts Senator Edward Markey said the development of the next generation of AI tools cannot come at the expense of the health of our planet. They introduced a bill that would require the federal government to assess AI’s current environmental footprint and develop a standardized system.
When we have other countries working to really address what is happening through oil and gas, when we look at this, to what extent, if at all, can the sector meet its emission reduction targets without reducing oil and gas? Is this possible, and how could it be done? If you can start with that, that would be good.
The Chair: You’re addressing that to whom?
Senator McCallum: To all of them.
The Chair: Can we get some quick answers from you?
Mr. Dyer: Great questions. I guess that’s the problem. The oil and gas sector does not have any targets yet, so if we put in place an emissions cap, we will actually regulate them to reduce emissions. Net-zero by 2050 is important, but what is much more important is short-term action. As Canada, we’ve committed to reduce emissions by 40 to 45% by 2030, so what happens in the next six years is most important, which is why companies need to commit to start decarbonizing now so we can actually reduce emissions.
That was great information you provided about automation. That’s the same reflection that we are seeing. Industry recognizes there is not growth in oil demand in the future and declines are coming. They’re getting very efficient at automating, and it takes fewer jobs, so actually investing in decarbonization and the clean economy is a route to more jobs as well. There would be job opportunities through making companies reduce emissions.
Mr. Norris: I think this is another great example of a way that industry is subsidized, because electric vehicles and automation do require significant water inputs. They require critical minerals, which are mostly mined on Indigenous territories. We don’t know what all the health impacts of this are. The road networks that these vehicles rely on also rely on bitumen products. Although industry may be, in a sense, increasing its efficiency, the harms that are not accounted for are still staying the same or increasing. If we talk about subsidies, we must also consider these externalities and the other health impacts that they may be having.
I don’t think anything other than reducing emissions directly is a solution. In fact, those would be false solutions, because they distract from what is truly required, and they direct funding and other resources into new revenue streams that benefit industry rather than the public and reduce emissions.
[Translation]
Mr. Langlois-Bertrand: To add further information to what Mr. Norris said, in reference to Mr. Dyer’s ceiling, indeed, we don’t know what’s possible. It’s pretty easy to show that it’s impossible to completely eliminate emissions from industry with the size it is today and with current practices. However, we do know that there were quite detailed and numerous consultations with the industry to establish the cap, which we use as a target.
Is it realistic? We’ll have to see. We don’t know from the outside. It’s what the industry seems to be putting forward as information, and that’s what made it possible to set the cap. Then it’s up to the industry to demonstrate what has been possible for several years. In particular, Pathways Alliance has been in existence for several years now. We still haven’t seen the realization of some of the figures that have been put forward in recent years. Obviously, if it can work, that would be welcome.
[English]
The Chair: If I could comment, Mr. Dyer, your company has many times in the past done some studies on how to better align the interests. For any deal you have with people, including employees, you have to ensure it’s a win-win situation and that everybody wins by doing so. Therefore, I think your firm very much supports investment tax credits as a mutual, good approach. Yet, as we notice, it’s not getting there. It’s not causing the results we’re looking for, so what do you do? You made a comment earlier that as it is, the firms are better off to do nothing than to do something, and you can’t blame companies to do what is in their best interests, as that’s the whole market system. What do you do? How do you get more action? Is it simply time, whereby we will have an election — presumably shortly — and the companies believe they’ll get a better deal with the new government? I’m not sure. What do you do? How do you align the interests to ensure everybody wins from this process?
Mr. Dyer: I think it’s through a fair emissions cap. This is not about demonizing the industry. It’s simply about holding them accountable to their promises, as Mr. Langlois-Bertrand said. The emissions cap is set at a level that is only the level that oil sands Pathways Alliance said they could achieve, so I don’t know how it can be controversial to say that we are setting a regulation that says you will be accountable to keep your promises. It’s the missing piece.
We’re having these really polarizing conversations across the country. The Government of Alberta, I know, is running ads in Ottawa and talking about vendettas against the industry. This is just simply an industry that is responsible for 30% of Canada’s emissions, and it needs to reduce emissions. They’ve been asked to do so voluntarily, and they haven’t done so, so we need to create fair regulations that make them proceed. Pembina is very optimistic. There are opportunities here that they can achieve.
The Chair: You think, therefore, if you get a cap, that everybody’s self-interests would align themselves to a positive result? In other words, you force them to do something, but are you comfortable it will do the thing we want to get done and not some other subsidies or whatever?
Mr. Dyer: I think combined with the incentives and a carbon price, those things together, companies and their boards will say, “We need to comply with the law, which is this cap, and we can still make money,” and we’ll get the investments in decarbonization.
The Chair: If I’m correct, you’re saying to not only give me the cash, regarding the investment tax credit, but you’re saying that we want to impose where the CCS, benefits are, and you’re suggesting the cement industry, because you’re saying not only use it for everyday stuff but use it for strategic assets or investments; is that correct?
Mr. Dyer: That’s correct. Any industry can use those investment tax credits, yes.
[Translation]
Mr. Langlois-Bertrand: That’s a good way to put it. The sector produces a huge amount of emissions, so a lot of energy is being focused on strategies to cut emissions. It’s that simple. There is no need to see it as unfair criticism. As Mr. Dyer said, the cap was developed in cooperation with the industry.
I would add to that a point I made earlier about job opportunities and alternatives. The debate is a difficult one, and the industry’s future is controversial in many people’s minds. In terms of the effort to decarbonize the industry, the vision for the future is either one where the industry is completely gone or one where things stay as they are. However, there is a lot of latitude between the two views. The thing that’s missing is a vision for the future involving other employment opportunities for communities, especially in Alberta, but also elsewhere, as the transition takes place. Numerous options exist. I mentioned building the infrastructure for new energy systems. There is no reason why we can’t talk about that alongside the emissions cap and measures to advance the specific case of oil and gas extraction.
[English]
Mr. Norris: I just wanted to mention that the Fort Chipewyan residents downstream of the oil sands who are facing increased cancer rates probably don’t feel like winners. Someone like my daughter, who was just born and will inherit a world driven by the climate crisis, probably won’t feel like much of a winner. There are a lot of people who are already not winning and will probably continue to not win in this scenario.
We need to move from a traditional interest-based negotiation between two parties, which would consider how two people share a slice of a pie so they all win, to rights-based negotiations, which instead prioritize the legal and moral entitlements that people have. It’s not always just about win-win; it’s about how do we prioritize the rights and responsibilities that we have, and how do we not forget that there will be losers, and there are currently people who are not benefiting at all or are being actively harmed in many ways by this situation as it stands. Thank you.
The Chair: Thank you.
Senator McCallum: We talk about Indigenous equity investments in energy and infrastructure projects and that they have grown significantly and that this can advance economic reconciliation, but how do we move that conversation from money to putting in how humans have been negatively impacted by oil and gas? We continue to disregard that. We keep bringing it up, and if we don’t address is, that is a form of environmental racism that we are practising. When we look at Indigenomics, which is the values and principles that — I’ll say First Nations, because I’m First Nations — First Nations practise when they do economic ventures, how do we get the energy groups to look at that and truly understand how important that is to counteract all this destruction that they’re doing?
Mr. Norris: We need to be wary of such narratives because industry has been fuelling them extensively. We’ve seen some pretty shoddy statistics, astroturf groups and others pushing the idea that equity equals consent or that participation in these destructive and unsustainable projects is the same thing as economic reconciliation. Many of these nations agreed to such projects under duress, just like they did with treaties. They’re facing a lack of jobs because they’re marginalized onto reserves, areas that aren’t productive for other economic purposes, et cetera, so it is not true that these projects are inevitable, and it is not true that they automatically equal economic reconciliation.
I think we can truly understand that the more we listen to communities, and we can do that using tools like Canada’s environmental justice strategy, really uncovering the truths and stories of the health and environmental and social impacts of these industries within communities. If you go to almost any community with an industry project, you will hear stories of people who lost jobs, of the disrupted social atmosphere, of the health impacts such as respiratory issues due to emissions, of increased cancer rates due to being downstream of the tar sands industry, et cetera. These stories are available. We just need to listen to them, and we have tools like the environmental justice strategy to do that.
I really want to reiterate that equity does not equal consent. It’s typically used as a way to purchase social license to get projects approved rather than to truly contribute to reconciliation in Canada.
Mr. Langlois-Bertrand: I don’t have anything to add. That was really well said.
Mr. Dyer: I agree with Mr. Norris’s comments. I don’t want to speak on behalf of the communities downstream of the oil sands, but I’m very impressed in the way that they have identified their needs and are demanding of higher standards around protection of water, land use planning and establishment of traditional areas, and the way they’re taking those investments and investing them in massive renewal energy projects themselves as well. There’s a lot of leadership and a lot we can learn from Indigenous communities in taking a much more balanced approach than other governments do in dealing with some of these issues.
The Chair: Thank you very much.
Senator Galvez: I would like to have a little conversation with Mr. Langlois and Mr. Norris about who should pay for the transition. My colleagues like talking about the free market, but we know that, by injecting so many subsidies, the free market doesn’t exist. It’s a distortion; it doesn’t exist. Even though the polluter pay principle is enshrined in every single environmental protection law, we know that, in practice, it never happens.
I just came from Baku, and I heard people from Africa and South America saying that they want to still produce oil because they want to use those profits to pay for their transition. But in the north, we know Norway is paying their transition with their sovereign funds, and in Canada we don’t have that, and I heard that in Canada, according to the way we are going, is a hothouse scenario. Is it going to happen that, like with the tobacco industry, oil and gas will pay?
I also heard, for example, that children are losing their hearing and that there will be some cases suing Apple and everybody who says that we should be using these headphones all the time because it’s bringing down our hearing and there’s going to be court cases. So who should pay? How should we pay?
The Chair: Mr. Norris, we are running out of time, so if you could make it short, I would appreciate it.
Mr. Norris: I do know that several Indigenous leaders have said that industry should be paying to not only clean up the environmental and health damages that they’re causing, but also to support the clean energy transition, so that is certainly one call to action.
I think we can encourage companies, through policy, to withhold funds to clean up after themselves, such as the tar sands companies, so that the environmental remediation, et cetera, is not just passed on to taxpayers. We can prevent them from shutting down their companies, which allows them to create loopholes or escape the need to clean up their pollution. All of these things would free up more money because industry would be, in effect, paying billions and billions more towards clean-up, environmental and health remediation that the taxpayer is currently expected to pick up. So all those billions of dollars could be redirected towards the clean energy transition.
I think government really needs to look at how they can invest in this as well. I know for a fact that clean energy projects, community-based monitoring projects and others by Indigenous communities could pretty much immediately absorb triple the amount of funding they currently have. We’re talking project proposals already in hand. It’s not for lack of opportunity; it’s a lack of will that we’re seeing here and a lack of holding industry accountable and accounting for their true costs and not passing that on to the taxpayer. Thank you.
[Translation]
Mr. Langlois-Bertrand: I have a hard time envisioning a sovereign fund like Norway’s for the oil industry. One of the high-level challenges in this multipronged cross-sector transition to a decarbonized economy is that industries have been operating and moving in a certain direction for decades upon decades, and now we are stuck with that. In that context, our options are limited and certain choices can’t be made. That is the reality. It may not be that way.
The carbon tax does some of what you’re talking about. I completely agree with Senator Galvez that it falls short of having the necessary impact on pollution.
I want to come back to what you said about African or developing countries not having the same resources to pay for the transition and make changes at the pace that’s required. I come back to Canada’s commitment in the Paris agreement, under which countries pledged to provide financial assistance to assist developing countries. The transfer of technology to countries that can’t afford to develop that expertise at the same pace as us can involve solutions to improve and decarbonize sectors where doing so is difficult. That’s a way to approach the problem at a global level. However, it doesn’t solve the whole polluter-pays issue you mentioned.
[English]
Senator D. M. Wells: Mr. Dyer, I’m trying to get to the motivation here. If there was a way to produce oil and gas that had extremely low emissions, that didn’t require an industrial infrastructure like rail or pipeline to get to market, and that was actually lower than some of the other things that produce electricity and heat, transportation, manufacturing and construction, which are the four highest uses of oil, would you be in favour of that? Or are you generally against oil and gas production?
Mr. Dyer: Pembina Institute is certainly not against oil and gas production. We are going to continue to use oil and gas over the next 30 years, but the world is going to use a lot less of it, and there will be a competition for the countries who can produce oil and gas most cost effectively and the lowest carbon. We should absolutely be driving down the impact and the emissions of oil and gas while we continue to use it, but recognizing there is a transition taking place. Pembina Institute recognizes the importance of the oil and gas sector, but the sector needs to do its share to reduce emissions.
Senator D. M. Wells: Given the extremely low emissions from the Newfoundland offshore oil sector, would you be in favour of increasing Newfoundland’s production to the world market?
Mr. Dyer: At Pembina, we don’t have any direct research or offices in Newfoundland, so I wouldn’t want to comment on the sector before I have studied it some more. Sorry about that.
Senator D. M. Wells: Just to let you know, we don’t have to remove our oil from sand. It just comes up naturally.
The Chair: I am surprised by the question.
Thank you to all the witnesses for your expertise. We very much appreciate it. It was important information you shared with us. Thank you, Mr. Norris, Mr. Langlois-Bertrand and Mr. Dyer.
[Translation]
Honourable senators, we will now suspend briefly to move in camera.
(The committee continued in camera.)