RNNR Committee Report

Mr. Lee Richardson
Chair, Standing Committee on Natural Resources
House of Commons
Ottawa, Canada

Dear Mr. Richardson:

Pursuant to Standing Order 109 of the Standing Orders of the House of Commons and on behalf of the Government of Canada, I am pleased to transmit the Government Response to the Report of the Standing Committee on Oil Sands: Toward Sustainable Development.

There has been much discussion around the rate and extent of oil sands growth, the unique challenges associated with the rapid pace of development and the degree of influence these will have on future development.  Within the next twenty years Canada could become the world=s third or fourth largest oil producing country (currently holds seventh place), with oil sands production accounting for more than 70 percent of the Canadian total.

The Government clearly recognizes the development of the oil sands is important to the economy and energy security, with environmental impacts that need to be managed by the federal and provincial governments.  I would like to thank the Committee members for their work in outlining these important aspects of the resource, and for their effort in identifying and presenting the challenges that the development of this resource poses for all stakeholders in their recommendations.

Oil sands are an important resource in Alberta, with potential in Saskatchewan in the future.  Constitutionally, Canada and the provinces share responsibilities in relation to the oil sands.  The Provinces, as the owner and manager of the oil sands resources, set the framework for oil sands development by issuing development licences, approving projects, setting the royalty and provincial tax regime, and establishing regulations for development.  The federal government is responsible for broad environmental, health and Aboriginal objectives. 

The Government clearly recognizes provincial responsibilities in relation to the core issue of the pace of development and, taken as a whole, our Response demonstrates the Government=s commitment to the ongoing economic development in Alberta.  The Government of Canada generally agrees with the intent of all of the recommendations made by the Standing Committee, and most recommendations are consistent with actions already being taken by the Government, for instace with regard to the importance of science and technology to stimulate innovation in the oil sands.

The Government of Canada understands that investing in energy science and technology is a key requirement for Canada in becoming a clean energy superpower.  The Government has committed that, along with industry and provinces, to step up Canada=s research and development efforts and to use these partnerships to find more innovative ways to reduce the environmental impacts of oil sands development in a timely manner and a collaborative framework.

The Government is ensuring the solid base for our S&T is well supported and has a new and clearer focus on priority areas.  In November 2006, the Government announced Advantage Canada, an economic plan to provide solutions to environmental, health, and other important social challenges, and to improve our economic competitiveness.  This was followed up by firm commitments in the Budget Plan of 2007 to take early action to implement this initiative. In addition, the Government=s  ecoENERGY Technology Initiative will address the continuing technical and environmental challenges in the oil sands industry.

The recently announced science and technology (S&T) strategy - Mobilizing Science and Technology to Canada's Advantage - sets out a comprehensive, multi-year science and technology agenda.  The goal of this strategy is to make Canada a more competitive and sustainable economy.  This strategy clearly recognizes the important role of the private sector and of others in Canada.  Collaborations involving the business, academic, and public sectors, at home and abroad are essential if we are to effectively turn knowledge into the products, services, and production technologies that will improve our wealth, wellness, and well-being.  Key areas of the strategy include focussed research in areas of national interest, both socially and economically,  including environmental science and technologies, natural resources, and energy.

One such example of our continuing focus on priority issues is the joint Canada-Alberta ecoEnergy Carbon Capture and Storage Task Force.  This initiative was announced on March 8, 2007, and is designed to develop a strategic plan for implementing Carbon capture and Storage (CCS) technology on a large-scale in Canada.  This Task Force will build on successes such as one of the world's largest commercial CCS operations in Weyburn, Saskatchewan, which also includes the multi-million dollar and multi-participant IEA Weyburn-Midale CO2 Monitoring and Storage Project, for which the Government of Canada is a co-founder and lead funder. 

The Government clearly recognizes that strong private-public collaborative arrangements involving all players in the national energy innovation system B federal, provincial and territorial governments, universities, and the private sector are necessary to ensure the commercial demonstration and implementation of innovative and transformative technologies that contribute to significant reductions in greenhouse gas (GHG) and critical air contaminants (CAC) emissions for Canada. 

On behalf of the Government, I would like to again thank members for their effort, and ensure them that the issues that have been raised in the Committee=s report on the oil sands have been carefully considered by the Government.

Yours sincerely,


Gary Lunn
Minister of Natural Resources Canada

With respect to the role of governments, the Committee recommends that the federal government, specifically the Department of Natural Resources, base all of its actions in the area of oil sands development on sustainable development and polluter-pays principles.

Response

The Government accepts this recommendation. Sustainable development principles have been integrated into federal legislation through the 1995 amendments to the Auditor General Act.  These amendments established the office of the Commissioner of the Environment and Sustainable Development and the requirement for federal departments and agencies to prepare sustainable development strategies, which outline departmental commitments to sustainability in the context of policies, programs, science and technology and operations, every three years.

Sustainable development is central to the mandate of NRCan.  The Department of Natural Resources Act states that Ain exercising the powers and performing the duties and functions assigned to the Minister ... the Minister shall have regard to the sustainable development of Canada=s natural resources and the integrated management thereof. @   In advancing the mandate of the Department, NRCan contributes to sustainable development through its policies, programs, science and technology, legislation and operations.

Specifically related to the oil sands, Natural Resources Canada=s CANMET Energy Technology Centre (CETC), located in Devon, Alberta, provides:

• Leadership to industry through a scientific understanding of how tailings management and water chemistry affect oil sands development and reclamation;
• Expertise for the development and evaluation of new technologies to reduce the effect of oil sands development on water resources;
• Expertise for the scientific evaluation of new oil sands developments during the environmental assessment process.

The Polluter Pays Principle is embedded into the Government=s approach to environmental protection as one of the guiding principles of the Canadian Environmental Protection Act. In this regard, the Polluter Pays Principle represents one of many mechanisms that the Government uses to support sustainable development.

The Committee also recommends that the federal government recognize the jurisdiction of the provinces with respect to the pace of development in the oil sands, and that it reject any suggestions of nationalizing the oil sands.

Response

«The Government accepts this recommendation. The Government recognizes provincial jurisdiction as it applies to the ownership of natural resources. This principle underlies the energy policy of Canada. While there are areas of shared federal, provincial and territorial responsibility, all governments are partners in an effort to ensure the sustainable development of Canada=s natural resources and to ensure a policy framework conducive for investment.

Their respective mandates are based on responsibilities set out in Sections 91 and 92 of the Constitution Act, 1867 as amended in 1982. In 1982, Section 92A was added, confirming provincial legislative competence in areas relating to exploration, development, conservation and use of natural resources, including laws affecting the rate of primary production. The federal government is responsible for broad environmental, health and Aboriginal concerns, particularly as they relate to Section 35 of the Constitution Act.

Without question, the Government recognizes the jurisdictional responsibility of the provinces of with respect to the pace of oil sands development, and clearly rejects any suggestions of nationalizing the oil sands.

The Government supports the Standing Committee=s view that any proposal to build a nuclear facility for use in the oil sands and other applications be thoroughly examined before being allowed to proceed. While the federal government has important responsibilities relating to nuclear energy, electricity and the ownership and management of natural resources are under provincial jurisdiction. As such, provinces and utilities, acting under provincial laws, are responsible for determining the generation mix. As well, the provincial jurisdiction over resource management includes the technology by which extraction is performed, including the method of steam production for a steam-based process. Thus, it will be industry, working within the framework of provincial laws and regulations, that will determine whether nuclear energy is used to extract oil from the oil sands.

The Government of Canada regulates all aspects of the nuclear fuel cycle including activities, materials and facilities. To this end, the Government has established one of the most stringent regulatory regimes in the world, administered by the Canadian Nuclear Safety Commission (CNSC). Any proposal to build new nuclear power stations in Canada would have to meet all requirements of the Nuclear Safety and Control Act and the Canadian Environmental Assessment Act in additional to relevant provincial laws, regulations and policies.

The Committee further recommends that the federal government introduce a regulatory framework that would place constraints requiring the industry to introduce technologies to drastically reduce greenhouse gas emissions, along with mechanisms such as emission credits trading, as incentives for financing these technologies.

Response

The Government agrees with the intent of the recommendation, and is implementing a regulatory framework to address both greenhouse gases and air pollutants.  Regulations will limit the emissions of greenhouse gases and air pollutants from industry, including oil sands.  Firms will have several options for meeting their regulatory obligations, including contributions to a climate change technology fund and emissions trading for greenhouse gases and some air pollutants.  The regulatory framework encourages industry to invest in transformative technologies to reduce greenhouse gases, both through in-house emissions reductions and through the technology fund.  Emissions trading, by establishing a market price for carbon, will also play a key role in driving technological change.

Moreover, the Committee believes that any future expansion of oil sands development should be done in a way that it does not jeopardize Canada=s international Kyoto obligations on GHG emissions and climate change. We call upon the federal government, in keeping with an emissions reduction strategy for large final emitters, to introduce hard emissions caps for the oil sands for 2008 to 2012, 2020 and 2050, based on absolute levels and not based on Aintensity.

Response

The Government appreciates the underlying intent of the recommendation, but disagrees with its details.  The Government is putting in place short-term emission-intensity reduction targets for greenhouse gases that will come into force in 2010.  These targets will result in absolute reductions in the emissions of greenhouse gases from industry as early as 2010 and, not later than 2012.

As Canada's annual greenhouse gas emissions are currently 32.7 percent above its Kyoto target, the Government has made clear that Canada will not meet its target by the period of 2008 to 2012. Rather, it has put in place a regulatory framework that will make a vital contribution to the government=s commitment to reduce national absolute greenhouse gas emissions by 20 percent from 2006 levels by 2020.

The Committee recommends that the government of Canada eliminate the accelerated capital cost allowance (CCA) currently applicable to the oil sands industry in order to place it on an equal footing with the broader oil and gas industry.

Response

The Government agrees with the recommendation and has already taken action to implement it.  The transitional arrangements and timelines announced in Budget 2007 ensure a stable investment climate and recognize the long time lines involved in some oil sands projects.  It announced the phase-out of the existing accelerated CCA for assets in oil sands projects, leaving in place the regular 25 percent CCA rate for these assets.  This will improve fairness and neutrality among the oil sands and other sectors, particularly other oil and gas and renewable energy resources.

To ensure a stable investment climate, the existing ACCA will be fully grandfathered for oil sands assets in project phases that commenced major construction prior to March 19, 2007.  For other projects that have not yet begun major construction, in recognition of long project timelines, Budget 2007 will allow companies to maintain the ability to claim accelerated CCA until 2010, with the rate being gradually reduced between 2011 and 2015.

Recognizing the importance of energy to our economic and environmental objectives, Budget 2007 will also extend and expand the scope of incentives for clean energy production.  The existing accelerated CCA that encourages industries, including the oil sands, to invest in equipment that generates energy more efficiently or by using renewable energy sources will be extended to equipment acquired before 2020.  It will also be expanded to cover wave and tidal energy, and additional solar energy and waste-to-energy technologies.

Going forward, the Government commits to identify additional areas where accelerated CCA and other measures can be used to help industries like the oil sands invest in promising new clean energy technologies like CCS.

Based on the evidence heard, the Committee recommends specifically that Natural Resources Canada, together with its various partners, step up its research and development (R&D) efforts to stimulate innovation in the area of replacing natural gas with clean sources as regards greenhouse gases in the extracting and processing of oil.

The Committee further recommends that the government implement a joint public/private task force to find solutions as quickly as possible to reduce the use of natural gas in oil sands production, thereby conserving this resource for a more valuable use.

This committee is concerned that the public sector has borne too great a proportion of oil sands research and development in comparison to the private sector. This committee therefore calls upon the industry to increase its commitment to research and development to meet the Canadian industrial average, and further calls upon the federal government to shift its research focus to emerging renewable and sustainable technologies.

On the basis of the evidence heard, the Committee recommends that Natural Resources Canada acknowledge and follow up on the first two priorities identified in the Report of the National Advisory Panel on Sustainable Energy Science and Technology, that is, gasification technologies and CO2 capture and storage technologies.

Moreover, recognizing that the federal government plays a recognized and indisputable role in R&D, the Committee feels that it must maintain its participation as it relates to the various facets of oil sands development.

The Committee therefore recommends that the Government of Canada continue to fund government, university and industrial research into important carbon sequestration measures such as improved forest management, agricultural and landfill practices, the use of algae, and the use of biomass as fuel.

Therefore, the Committee recommends that the federal government work together with its partners in the Governments of Alberta, Saskatchewan and the Northwest Territories, universities and industry to step up research in order to:

b)    accelerate the treatment of toxic wastewater that has accumulated in the retention ponds so that these waters can be re-used in industrial processes and ultimately returned to the river; and,

c)    accelerate the introduction of technologies that will radically reduce the use of water in bitumen extraction and treatment processes.

While acknowledging the major commitment made by the  CANMET Devon Centre to research reclamation issues, the Committee believes it is incumbent upon the industry itself to take the lead and to accelerate research and action in land reclamation, particularly with respect to the potential toxicity of tailings and water.

Response

The Government agrees with the science and technology related recommendations of the Committee. The Government of Canada understands that investing in energy science and technology is a key requirement for Canada to produce and use its vast energy resources cleanly and efficiently.  The Federal government has committed  to play a leadership role and along with industry and provinces, to step up Canada=s research and development efforts and to use these partnerships to find more innovative ways to reduce the environmental impacts of oil sands development in a timely manner and a collaborative framework.

The Government has already taken firm action in this area.  In November 2006, Canada's federal government released Advantage Canada, an economic plan to make Canada a world leader for current and future generations. Advantage Canada is based on the premise that Canada already has tremendous strengthsCincluding the drive and ingenuity of our people, the relative strength of our fiscal position, and our strong research base. It also recognizes that Canada can and must do more to turn our ideas into innovations that provide solutions to environmental, health, and other important social challenges, and to improve our economic competitiveness.

This new direction places Canada in a strong scientific and technological leadership position by:

• Targeting new investments in R&D to areas where Canada has the potential to be a world leader, such as energy, mining and environmental technologies;
• By strengthening links between Federal and Provincial government, organizations, universities, colleges and the private sector to enhance the commercialization of Canadian ideas and knowledge; and,
• Better aligning research investments with the needs of business to make a real impact in the market

The S&T initiatives announced in the Budget Plan 2007 demonstrate the Government's commitment to take early action to implement this agenda.

The Government=s science and technology (S&T) strategy - Mobilizing Science and Technology to Canada's Advantage - which was announced May 17, 2007 sets out a new and focused approach to mobilize science and technology to our long-term economic and social advantage.

The Strategy has four core principles:

• Enhancing Accountability: Through stronger governance and reporting practices to deliver and demonstrate results: create A Modern Approach to S&T Management;
• Develop a streamlined external advisory system: AScience, Technology and Innovation Council@;
• Consolidate existing advisory councils; and,
• Improve measuring and reporting of the results of federal S&T expenditure.

Above all, it recognizes the important role that the private sector and others play in Canada.  Collaborations involving the business, academic, and public sectors, at home and abroad are essential if we are to effectively turn knowledge into the products, services, and production technologies that will improve our wealth, wellness, and well-being.  Key areas of the strategy include focused research in areas of national interest, socially and economically including environmental science and technologies, natural resources, and energy.

The Government of Canada=s approach to science, technology, and innovation in Canada=s oil sands production is fully consistent with this overall strategy. The importance of technology and innovation in reducing the cost of oil sands production since it began over the forty years ago has been long recognized.  As well, technology and innovation have made a major contribution in reducing the environmental impact of the industry through new tools, techniques and systems that improve energy efficiency and reduce emissions (SOx, NOx, VOCs, and GHGs).  Moreover, the application of innovative technologies has improved the efficiency of resource recovery and use, the efficiency of water resource use (e.g. effective tailings pond management), has improved resource management and sustainability, and has deepened the understanding of the role of forests (deforestation).  The government believes that S&T and innovation will continue to play an important role in achieving the ultimate goal of clean fuel from oil sands while eliminating the negative environmental impact of its production and use.

As identified by the National Advisory Panel on Sustainable Energy Science and Technology, the Government of Canada recognizes that gasification of carbon-based fuels, such as coal and heavy crude from the oil sands, and subsequently CO2 capture and storage (CCS) are among the key technologies for reducing the environmental effects of traditional energy sources.

In response to this guidance, the Government of Canada is partnering with the Government of Alberta to lead a national effort to ensure Canada takes full advantage of its status as a global leader in CCS technology.  The joint Canada-Alberta ecoEnergy Carbon Capture and Storage Task Force was announced on March 8, 2007, whose mandate is to report back to the Federal Minister of Natural Resources and the Alberta Minister of Energy by the end of 2007 on a plan for implementing CCS technology on a large-scale in Canada.

This Task Force will build on successes such as one of the world's largest commercial CCS operations in Weyburn, Saskatchewan, which also includes the multi-million dollar and multi-participant (including the government of Canada, the provinces, USDOE, industry and universities) IEA Weyburn-Midale CO2 Monitoring and Storage Project , for which the Government of Canada is a co-founder and lead funder.  The Task Force recognizes this project is a flagship R&D and demonstration initiative for CCS technology, including the study of long-term risks.  Other important Government of Canada initiatives related to CCS include the on-going work of the Geological Survey of Canada to better understand the geological structures in Canada into which CO2 can be injected for long-term storage.

More specifically, the Canada-Alberta ecoEnergy Carbon Capture and Storage Task Force is examining the economic, regulatory, and technical barriers for advancing the large-scale implementation of CCS technology in Canada, and subsequently recommend how government and industry can work together to overcome these barriers.  Canada is uniquely positioned to advance CCS technology, particularly in Western Canada where a large concentration of CO2 emitters, including oil sands operations, are located in close proximity to world-class opportunities for safely and securely storing CO2 in underground geological formations for essentially an eternity.  In taking advantage of this opportunity, the recommendations of the Task Force will help Canada to use technology and innovation to be good stewards of the environment by mitigating greenhouse gas emissions, while at the same time enhancing Canada position on the cutting edge of energy production.  With organizations such as the U.N.'s Inter-governmental Panel on Climate Change recognizing that CCS is key to the overall global effort to mitigate greenhouse gas emissions, the Government of Canada also recognizes the growing potential to export our CCS expertise abroad.

In addition, as part of the government=s action plan to improve Canada=s environment, the Government announced the ecoENERGY Technology Initiative in February of this year.  This $230 million investment in clean energy science and technology will mobilize expertise, facilities and funding to find new long-term solutions to reduce and the negative environmental impact of oil sands operations including water use and discharge and air pollutants from energy production and use.  This four year Initiative will fund research, development and demonstration (RD&D) to support the development of next generation energy technologies needed to break through to emissions-free fossil fuel production, as well as for producing energy from other clean sources, such as renewables and bio-energy, and efficient use of energy in end-use sectors.

The ecoENERGY Technology Initiative will address the continuing technical challenges in the oil sands industry such as improving the energy efficiency of operations, finding alternatives, such as gasification of hydrocarbon by-products, to replace the use of natural gas in operations, and for tailings and water management, emissions reduction, as well as carbon sequestration and storage initiatives.

The Government is also active on other CO2 management fronts.  Federal-provincial partnerships are in place to support the I-CAN Centre for the Conversion of Carbon Dioxide (CO2), a project led by the Alberta Research Council, in collaboration with the Saskatchewan Research Council, Manitoba's Industrial Technology Centre and a Quebec industrial research centre (Centre de recherche industrielle du Québec).  The Government of Canada announced its support of this initiative whose objective is to help develop micro algae systems that could capture up to 100 million tonnes of CO2 from industrial sources, such as coal-fired plants and oil sands projects. The micro algae, a valuable source of biomass, would then be converted into a range of industrial products and by-products such as renewable natural gas, hydrogen and biofuels.

Agriculture is also an important contributor to climate change mitigation through carbon sequestration.  The Government of Canada through Agriculture and Agri-Food Canada (AAFC) funds research to develop and adopt beneficial management practices that support increased carbon storage in areas such as reduced tillage, increased production of perennial crops and permanent cover, less use of summer fallow in crop rotations, and shelterbelt planting.

The Government is also active in forest management as a key to increased carbon storage and reduce emissions. Recent research by the Canadian Forest Service (CFS) predicts that Canada's managed forest is more likely to be a source of CO2 than a sink over the next few years.  However, forests could help address greenhouse gas emissions as they provide wood products that can substitute for more emissions-intensive materials, and as a renewable source of biomass for cleaner energy.

The Government of Canada considers that a longer term and broader perspective on the role of forests is necessary to optimize the role of forests in addressing our climate change and other environmental issues. In this context, the Government of Canada is working through NRCan with the provincial and territorial Canadian Council of Forest Minister (CCFM) on initiatives to address the role and impacts of forests in relation to climate change.  Together, we are working on issues such as forest fire, pests and R&D in forest management - all of which have climate change and greenhouse gas implications.

Additional federal partnerships with Industry Canada, Environment Canada, Health Canada, Fisheries and Oceans Canada, Parks Canada, and other government departments and agencies ensure that the research is a relevant integral part of the Canadian innovation system and can meet the increasing demands associated with the sustainable development of our fossil energy resources in a carbon-constrained world.

Industry also recognizes that step changes in technology will be required to achieve sustainable development objectives, and looks to partner with the government=s long-term research capabilities for developing the necessary transformative technologies.  It is the intention that NRCan continue and step up its S&T contribution to environmental issues in the oil sands sector with respect to air emissions, water use and terrestrial issues working through federal laboratories and through collaborative arrangements with provinces, universities and industry.

As such, the Government of Canada is committed to providing on-going support for the advancement and development of such technologies which will make widely available, to all stakeholders, a body of knowledge and alternative solutions.   CETC-Devon has been the research performer of choice for the oil sands industry and as such been a leader in developing and promoting R&D solutions that help to mitigate the negative environmental impact of oil sands production.  Several successful implementations have been achieved through strategic partnerships with its key industry and provincial stakeholders. The Canadian Oilsands Network for Research and Development (CONRAD), and the Petroleum Technology Alliance Canada (PTAC), universities (Oil sands Technology Research Facility, OSTRF) and industry have become an essential component of the Canadian energy S&T innovation system which has resulted in major economic and environmental advances in the industry and multi-billion dollar capital investments in oil sands and heavy oil developments since 1996.

The Government clearly recognizes that strong private-public collaborative arrangements involving all players in the national energy innovation system B federal, provincial and territorial governments, universities, and the private sector are necessary to ensure the commercial demonstration and implementation of innovative and transformative technologies that contribute to significant reductions in GHG and CAC emissions for Canada.

The Committee therefore recommends that Natural Resources Canada, through the Geological Survey of Canada, and working together with the province, ramp up and accelerate work on research into aquifers in Alberta, particularly in the current and potential oil sands operations areas.

Response

The Government agrees with the Committee that accelerating research into aquifers is a priority, particularly in areas with a heavy reliance on groundwater resources, such as in Alberta.  Collaborative work between NRCan and the Province of Alberta is underway in the oil sands region.  The principal objective is to consolidate existing information on groundwater presented in previous Environmental Impact Assessments (EIA), which will enable more efficient and accurate EIA on groundwater in the future.

The Geological Survey of Canada (GSC) is also working with provincial, industry, and university partners in Alberta to characterize sections of the Paskapoo Aquifer system. This aquifer, located in the south-west part of the province, supplies 28 percent of all well-water drawn in Alberta and covers 10 percent of the province=s area.

The Government of Canada through the GSC and NRCan are committed to providing a comprehensive up-to-date characterization of groundwater resources in 30 key aquifers to address a range of pressures on water resources across Canada.  The Government of Canada recognizes that this work is important and is looking into how it could accelerate and ramp up research in this area.

Therefore, the Committee recommends that the federal government work together with its partners in the Governments of Alberta, Saskatchewan and the Northwest Territories, universities and industry to step up research in order to:

$   determine the true impact of oil sands activity on the Athabasca River ecosystem, as well as on Aboriginal fisheries in the Peace and Athabasca river delta;

Response

The Government accepts the Standing Committee recommendation that the federal, provincial and territorial governments work collaboratively with industry and universities to conduct further research in order to determine the impacts of oil sands activity on the Athabasca River ecosystem, as well as on Aboriginal fisheries in the Peace and Athabasca river delta (PAD).  Furthermore, the Government of Canada also recognizes that not only does 80 percent of the PAD lie within a National Park of Canada, the PAD is also designated as a Ramsar Convention >Wetland of International Importance= and is part of a UNESCO >World Heritage Site=.  Additionally, the Crown has a legal obligation pursuant to >The Cree Band of Fort Chipewyan Land Claim Settlement Agreement= to AY make every reasonable effort to correct man-induced changes to the natural water regime in the Peace/Athabasca Delta basin@.

Recently, Fisheries and Oceans Canada (DFO) and Alberta Environment (AENV) released the jointly developed Water Management Framework for the lower Athabasca River that is intended to: guide regulators in their decision-making regarding the cumulative effects of withdrawing water from the Athabasca River; provide certainty to industry; and ensure the protection of the aquatic environment.

The Cumulative Environmental Management Association (CEMA), a multi-stakeholder group that includes environmental groups, Aboriginal groups, industry and regulators has also contributed to the Water Management framework.  With respect to the involvement of the Saskatchewan and the Northwest Territories government in this regard, DFO is aware that a representative from the Saskatchewan government has previously participated on CEMA.  However, DFO is not aware of any Northwest Territories government representative participating on CEMA.  The issue of the Northwest Territories government representation on CEMA could be raised for consideration by CEMA members.

AENV and DFO are taking a precautionary approach in managing the river and have divided water management objectives into two phases. This approach preserves the river over the short-term while allowing for innovation and leading research to help guide future management actions to safeguard the river.  Phase 1 uses leading scientific information on in-stream flow needs (IFN) as well as information on current water use to outline management actions for varying flow conditions in the lower Athabasca River. Phase 2 will determine what modifications may be required to meet environmental and socio-economic goals over the long-term. It will be based on a review and an adaptive management process with set timelines and regulatory backstop dates. This phase will allow for the additional development of science (e.g. related to IFN), integrated water management options and socio-economic considerations. This phase includes developing research programs to reduce uncertainties in the determination of IFN.

As part of the information required to support the Water Management Framework, a regulator-led Fish Habitat Requirements Working Group has initiated studies on the lower Athabasca River (including the delta) to further our understanding of the effects water withdrawals have on the aquatic ecosystem. It is also recognized by the Government of Canada that pursuant to the Canada National Parks Act, broader ecological integrity (which includes non-fisheries aquatic ecosystems and deltaic ecology) is also a priority.

DFO and AENV recognize that IFN is a developing science and that much research work remains in order to better understand the complex relationships between IFN and the health of the aquatic ecosystem.  DFO and AENV will continue to work with industry, aboriginal groups and leading scientific experts in order to improve our understanding in this area.

Through ensuring the protection of fish habitat, DFO will ensure the protection of the Athabasca River ecosystem and fish populations and thus the Aboriginal fisheries in the Peace and Athabasca River delta.  This objective is also facilitated by measures being pursued by Parks Canada to maintain or restore the ecological integrity of the PAD.

In addition, Environment Canada and Alberta Environment have had preliminary discussions to explore opportunities for coordinated activities on water science in the Peace and Athabasca Rivers and Peace Athabasca Delta.  It is too early to speculate on the direction and decisions that may come from these discussions.  However, both organizations are interested in creating a better understanding of current water science activities in the oil sands region, and identifying potential areas of research to fill knowledge gaps. Additionally, it is recognized that other federal government departments, other provincial and territorial governments, as well as non-governmental organizations may be able to make valuable contributions to any future water science research in this region.

Environment Canada, Fisheries and Oceans and Parks Canada have participated in the past decades in several research and information-gathering collaborations/partnerships in the Peace and Athabasca Rivers and the Peace-Athabasca delta. Examples include: the Mackenzie River Basin State of the Aquatic Ecosystem Report, the Northern Rivers Basin Study, the Northern Rivers Ecosystem Initiative, and Peace-Athabasca Delta Technical Studies. Departments will participate in similar programs in the future.

Therefore, the Committee recommends that the federal government, in partnership with the provincial government, assess the impact of all oil sands development projects on the boreal forest, and that it consider the introduction of compensatory conservation methods for the creation of protected areas in the region surrounding the oil sands, as well as in the broader region of the Mackenzie River watershed.

Response

The Government accepts the intent of the recommendation.  While the oil sands are a strategic resource for the country, there are a number of environmental issues associated with their development. Conservation, land reclamation methods and water usage are at the forefront of public concerns. Oil sands projects are subject to strict federal and provincial environmental and regulatory review, with approvals only being granted once environmental issues have been addressed. While investments by industry will be a key driver in determining the pace of development, environmental and technological challenges will need to be addressed as the oil sands potential is realized. In this context, NRCan supports the need for more coordinated science, engaging a broad range of stakeholders in dialogue on sustainable forest management, and supporting sustainable forest management practices. The CFS of NRCan is currently addressing these elements through its work on the boreal region.   Along with identifying key science and policy priorities within the boreal region, the CFS Management Committee has recently agreed that one of the main roles of CFS in relation to the boreal region is to ensure that accurate science-based and socio-economic information is available and used for decision-making related to the boreal forest.

Concerns regarding conservation and land reclamation include the likelihood that proposed future reclaimed landscape will be significantly different than the original boreal forest, with an estimated 10 percent less wetlands, more lakes, and no peat lands.  There are currently divergent views regarding the ultimate success of reclamation efforts. In-situ processes require no excavation and disturb less surface area for operation, however the related infrastructure of new roads, seismic lines and exploration wells results in fragmentation of the forest.  The Province of Alberta, which owns the oil sands and sets the framework for its development, is currently leading a public consultation process on the future development of the resource with economic, social, environmental, and First Nations and Métis issues being considered.

The issue of compensatory conservation methods (i.e., the establishment of new protected areas/habitat around the oil sands) was not discussed in depth in these consultations, but will likely be part of future discussions.  Although the national park system contains the only forestland in Alberta (lands which are suitable for restoration compensatory measures, but not appropriate for artificial enhancement) over which the federal government has direct jurisdiction, NRCan and Environment Canada have been actively engaged in this process.

In view of the level of development reached in the Wood Buffalo region and the many projects that are either already underway or planned, the Committee recommends that the federal government, working together with the Government of Alberta, undertake a comprehensive assessment of the cumulative impacts of oil sands development projects already underway and planned for the future. The Committee further recommends that the federal government, through in-house resources or through a specific mandate to an organization, conduct a full and detailed assessment of the socio-economic and environmental impacts of oil sands activities, analogous to the macroeconomic analysis conducted by the Canadian Energy Research Institute (CERI) to cover a 20-year period (2000-2020).

Response

The Government agrees with the Standing Committee on the need to better understand the nature and extent of cumulative impacts affecting northern Alberta. Currently, the Government of Canada participates in several processes established to address social, economic and environmental impacts of resource development in Northern Alberta. This includes participation in project-specific environmental assessment under the Canadian Environmental Assessment Act, support for the provincially-led Regional Sustainable Development Strategy for the Athabasca Oil Sands as a member of the Cumulative Effects Management Association (CEMA), and membership on Alberta's Multi-stakeholder Committee for Oil Sands Development.

In addition, the Government of Canada has been involved in the Regional Aquatics Monitoring Program (RAMP)  multi-stakeholder initiative since its inception in 1997. RAMP is mandated to determine, evaluate and communicate the state of the aquatic environment and any changes that may result from cumulative resource development within the Regional Municipality of Wood Buffalo (this region includes the oil sands area of northeastern Alberta and the lower Athabasca River). The program is frequently adjusted to reflect monitoring results, technological advances and community concerns.  As well, recently the Government of Canada (as represented by DFO) and Alberta Environment (AENV) released the jointly developed Water Management Framework for the lower Athabasca River that is intended to guide regulators in their decision-making regarding the cumulative effects of withdrawing water from the Athabasca River, provide certainty to industry, and ensure the protection of the aquatic environment.

Similarly, the Government of Canada (through Parks Canada) is actively involved in the Peace-Athabasca Delta Team, which arose as a result of the British Columbia-Alberta Memorandum of Understanding Bilateral Water Management Agreement Negotiations.   The Government of Canada (Parks Canada) also works with the Mackenzie River Basin Transboundary Waters Master Agreement, and is involved with >An Integrated Resource Management Proposal for the Special Management Area in North-Central Alberta=. 

This initiative will provide data and models for the development of an integrated resource management plan, for the traditional lands of the Little Red River Cree Nation in the north-central region of Alberta. The Government of Canada is also actively involved in the Beaver Hills Initiative for the region surrounding Elk Island National Park of Canada, which includes part of the airshed in which many of the upgraders will be located.

In general, the Government of Canada is interested in exploring how the concept of regional assessments may contribute to the analysis of cumulative effects and to the achievement of sustainable development objectives.  Given shared jurisdiction for the environment and diverse, multiple interests in regional planning and development, where there is agreement amongst relevant orders of government and support from Aboriginal peoples and other interested parties, Canada is willing to participate in processes that contribute to cumulative effects assessment and sustainable development, including the potential for a regional assessment.

Given the diverse interests in the Wood Buffalo Region, assessment of the socio-economic and environmental impacts of oil sands activities are being undertaken through a number of multi-party processes, most notably those mentioned above. Moreover, as part of a number of federal departments' responsibility to provide expert policy advice on Canada's natural resources, detailed analysis of the impacts of natural resource development, including the oil sands, is carried out on a regular basis.  This ongoing analysis is a fundamental component of the development of good public policy decision making and the effective regulation of Canada's natural resource industries.

Moreover, this Committee calls upon the Government of Canada to employ existing legislation such as the Canadian Environmental Protection Act (CEPA) and the Canadian Environmental Assessment Act (CEAA) in a more comprehensive way to address such environmental concerns as trans-boundary air pollution, greenhouse gas emissions, and harm to waterways and fisheries. Use of such legislation should, wherever possible, be done in cooperation with the province, and should respect areas of provincial jurisdiction.

Response

The Government agrees with the intent of the recommendation. The Canadian Environmental Assessment Act CEAA) lays out a legislative framework for assessing and identifying mitigation for the potential adverse environmental effects of proposed projects. While project environmental assessment is an effective tool for  identifying local environmental concerns associated with a specific development proposal, it is not designed for debating broader environmental, regional or policy issues.  The Government of Canada recognizes the important need to consider and refine the suite of tools available to understand and address the cumulative effects of multiple projects and induced development on a regional scale.  To this end, and in the lead up to the next legislative review of CEAA, Government will explore options and opportunities for building a more integrated federal environmental assessment framework, including regionally-based approaches to assessment and strengthened linkages across the spectrum of available assessment tools.

Additionally, in regards to air emissions, on April 26, 2007 the Government of Canada announced its Regulatory Framework for Air Emissions.  This framework is comprehensive and includes mandatory and enforceable reductions in emissions of greenhouse gases and air pollutants that will deliver tangible benefits to the health of Canadians and their environment.  This regulatory framework is proceeding under the powers and authorities provided by the Canadian Environmental Protection Act, 1999.

With respect to fisheries, the Government of Canada and the Province of Alberta work collaboratively in order to protect and manage fish and fish habitat in Alberta.  Alberta has been delegated responsibilities for the management of their inland fishery however the federal government retains responsibility for the management of fish habitat in all fisheries waters of Alberta, pursuant to the federal Fisheries Act.  In addition, the Policy for the Management of Fish Habitat provides guidance for the administration of the habitat provisions of the Fisheries Act and a comprehensive framework for the management of Canada's fish habitat resource base in the context of sustainable development.  It includes the overall objective of net gain for habitat for Canada's fisheries resources and outlines the three goals to reach this objective: fish habitat conservation, fish habitat restoration, and fish habitat development. It also includes a guiding principle of "No net loss" which balances unavoidable habitat losses with habitat replacement on a project-by-project basis so that further reductions to Canada's fisheries resources due to habitat loss or damage may be prevented.

Furthermore, for those waterways and fisheries that lie within the boundaries of a National Park of Canada, the maintenance or restoration of ecological integrity of these aquatic ecosystems (both fish-bearing and non-bearing) also falls under the jurisdiction of the Canada National Parks Act, and this ecological integrity shall be the first priority of the Minister when considering all aspects of the management of parks.

In addition, the Committee strongly endorses the goal of the Pembina Institute  that the oil sands should become carbon neutral by 2020 through the adoption of new technologies such as carbon capture and sequestration, and/or through the purchase of offsetting carbon credits. Furthermore, this committee believes that being able to sell a Acarbon neutral@ barrel of oil will help the industry to maintain access to markets where there is concern about greenhouse gas emissions.

Response

The Government supports the goal of the recommendation, that is, reducing the carbon footprint of the oil sands industry.  On April 26, 2007, the Government of Canada announced its Regulatory Framework for Air Emissions. This framework is comprehensive and includes mandatory and enforceable reductions in emissions of greenhouse gases and air pollutants that will deliver tangible benefits to the health of Canadians and their environment. As a result of the framework, Canada will have one of the most stringent regulatory systems in the world.

The Government's regulatory framework to reduce industrial emissions of greenhouse gases and air pollutants includes, for compliance purposes, a climate change technology fund.  The fund will invest in technology deployment and related infrastructure projects, such as a carbon dioxide pipeline, which will reduce greenhouse gases, as well as research and development projects.  It also allows firms access to offset credits and to certain credits from the Kyoto Protocol=s Clean Development Mechanism.  The regulatory framework will results in significant reductions in oil sands greenhouse gas emissions from projected levels.

This Committee endorses the plea of Pat Marcel not to forget the aboriginal peoples in the Wood Buffalo region whose traditional lands are impacted by oil sands development. The Committee strongly encourages industry and government to continue and expand consultations with residents, both aboriginal and non-aboriginal, whose communities are affected by these developments. Further, the committee recommends that the federal government take necessary measures to improve living conditions for the aboriginal communities whose way of life has been impacted by extensive oil production on their traditional lands.

Response

The Government agrees with the recommendation. The Government is committed, when exercising its regulatory responsibilities, to engaging with all residents, both Aboriginal and non-aboriginal, whose communities are affected by the oil sands developments. In relation to Aboriginal and treaty rights, the goal of the Government of Canada is a coordinated and consistent federal approach to consultation with First Nation and other Aboriginal communities and, where appropriate, accommodation that promotes reconciliation, supports sustainable economic growth and also meets Canada=s common law duty to consult in all parts of the country.

Existing consultation practices are continually assessed within the context of each situation to ensure the Government of Canada is fulfilling its common law duty to consult. Fisheries and Oceans Canada (DFO), as the main federal regulator for oil sands projects, undertakes Aboriginal consultation with potentially effected Aboriginal communities on a project-by-project basis in order to discharge the Government of Canada duty to consult. DFO also consults on regional initiatives such as the development of the Canada/Alberta Water Management Framework. DFO is also currently working with the Government of Alberta to determine efficiencies in our consultation undertakings.

As development continues in the oil sands area, further changes in consultation practices may be needed, including adjustments made to environmental assessment processes when Crown consultation to fulfil the legal duty to consult is also required. While the majority of regulatory decisions for oil sands development are provincial, work has been underway, in conjunction with the province, to improve the nature, efficiency, and relationship building associated with oil sands projects.

The recent announcement of funding for a Major Projects Management Office to improve the regulatory system for major resource projects is another approach which should help improve consultation.

Through the Athabasca Tribal Council Core Agreement signed in 1999, the federal government has worked together with the province, industry and the Aboriginal Communities to increase Aboriginal participation and benefits from oil s ands development through training, education, employment, contracting, business development, and mitigating environmental issues.  This partnership agreement and other federal initiatives for skills and business development seek to assist the Aboriginal Communities in their goal towards self-reliance.  The Core Agreement was also a significant step in the advancement of consultation and capacity building particularly with the establishment of the Industry Relations Corporations in the five ATC First Nation communities to identify and assess industrial development issues.

Based on the evidence heard, the Committee recommends that the federal government, in cooperation with the Government of Alberta, renew efforts to fill the shortages of specialized and non-specialized workers in the oil sands sector.

Response

The Government accepts this recommendation. Implementing the policy directions outlined in Advantage Canada, the Government of Canada has a number of programs and initiatives that help industry with their skills and labour needs B activities that increase the quantity of skilled workers, that increase the quality of skilled workers and that increase the efficiency of the labour market.

Initiatives that increase the supply of workers include:

• Integrating aboriginals into the labour market through the Aboriginal Skills and Employment Partnership and the Aboriginal Human Resources Development Strategy;
• Integrating foreign-trained workers into the labour market with the Foreign Credential Recognition Program;
• Addressing labour market demand through the Temporary Foreign Worker Program; and
• Increasing the domestic supply of trades-people with the Apprenticeship Incentive Grant.

Initiatives that increase the quality of workers include:

• Increasing the basic literacy and essential skills of low-skilled workers through the Essential Skills and Workplace Literacy Initiative;
• Increasing the skill level of the Aboriginal labour pool via the Aboriginal Skills and Employment Partnership and the Aboriginal Human Resources Development Strategy; and
• Increasing the skills of workers in a sector via systemic changes through the Sector Council Program.

Initiatives that increase the efficiency of the labour market include:

• Provision of labour market intelligence to help individuals and firms make informed decisions about employment, training, investment and hiring;
• Removing barriers to inter-provincial mobility via the Agreement on Internal Trade and the Red Seal Program.

The Government of Canada works with provinces and territories and other parties to ensure these programs and initiatives address needs both nationally and regionally.

It is aware of the specific needs in Alberta right now and has made some special provisions, such as:

• The agreement signed by the Governments of Canada and Alberta in May 2004 to allow temporary foreign workers to enter the country to meet the urgent need for qualified workers for oils sands projects;
• Changes to the Temporary Foreign Worker Program to speed up the hiring process; and
• The new Agreement for Canada-Alberta Cooperation on Immigration signed May 11, 2007 by the Governments of Canada and Alberta that will establish mechanisms to make it easier and quicker for Alberta to get the foreign workers it needs to meet its growing labour force demands.

The Government of Canada is already doing a lot towards building an effective and efficient labour market in Canada and it will continue to explore specific options to do more to alleviate labour shortages associated with the oil sands development.

The Committee recommends that the Department of Natural Resources carry out a study and propose a human resources action plan to retain experts within the Department and mitigate the brain drain to the oil and gas industry.  

The Committee recommends that the federal government, and Natural Resources in particular, develop and implement measures to ensure that the highly qualified scientific personnel needed to carry out its mission and its various mandates are retained and replaced when they leave.

Response

The Government agrees with the Committee=s recommendations concerning highly qualified personnel.  Demographic shifts in society and in the Public Service present new challenges.  Moreover, the Canadian economy currently offers a wide selection of employment opportunities.  Many employers, including, NRCan, as well as other science-based departments and agencies, face much greater competition than in earlier decades for new entrants into the labour market.  NRCan is in the process of developing a human resources plan that will be completed by the fall of 2007.  During the human resource planning exercises (currently underway), the department is studying the key business areas as well as the talent needed to ensure continuity of that business in mission critical areas given present and future constraints.  This means that NRCan is working towards integrating business planning with human resources planning.  This will then provide a holistic, end-to-end approach to development, growth, and talent management.  Those individuals in the scientific and technical streams will be  targeted for special developmental consideration, in particular the development of leadership and/or flexible scientific and technical staff, capable of working on horizontal, collaborative initiatives.  The plan for NRCan builds on the work of the federal science community.  The community has completed several studies, prepared a human resources plan and created four Task Groups that are looking into recruitment, leadership, retention and professional development.  NRCan, in conjunction with other science-based departments, is making progress in identifying solutions and evaluating various options to attract and retain highly qualified personnel.  For example, under the Research Affiliate Program, NRCan provides a bursary and collaborative opportunities for university postgraduates to experience the challenging and creative research opportunities available within the field of sustainable development of natural resources while working toward a Masters or Doctorate degree.  Another example is the new Career Progression Management Framework for Federal Researchers that focuses on career progression and contributes to recruitment and retention of researchers.  The Framework integrates departmental research activities with human resource management legislative and policy requirements.