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Thank you very much, Mr. Chairman and honourable members, for the opportunity to speak to your committee on behalf of our ICON group.
[Translation]
Given that this issue is complex and that I am not bilingual, my comments and my replies to your questions will be in English.
[English]
I apologize for that.
The ICON group consists of twelve companies in the oil sands, electricity generation, industrial, and chemical sectors. Their logos are on the front of your package, but just as a reminder, they include Suncor Energy, TransAlta, Sherritt, Agrium, Air Products, Nexen, Shell Canada, Husky Energy, Canadian Natural Resources, ConocoPhillips, Syncrude, and Imperial Oil.
This group has a strong interest in carbon capture and storage, and we've been working toward creating a long-term, integrated carbon dioxide network that can handle large volumes of carbon dioxide. We've been working with both levels of government, provincial and federal, on this concept for about eighteen months, and we now believe we need to jointly, with governments, accelerate that effort.
It's important to understand that ICON is not a single project. It's a set of policies, regulations, and ultimately private- and public-sector investments to make large-scale carbon capture and storage a reality. CCS has tremendous opportunity for Canada, and Mr. Robson of Nexen and I are here today to highlight some of the considerations with respect to CCS as the government develops its national environmental strategy and Clean Air Act.
Before I go any further, I'll just briefly provide an overview of carbon capture and storage, or CCS, for those of you who may not be familiar with it. carbon dioxide is available at very large volumes from industrial sources—typically combustion sources or process emissions. That carbon dioxide can be captured, separated from other contaminants, purified, and compressed, and then it can be transported by high-pressure pipelines for hundreds of kilometres and ultimately be injected into rock formations that are typically two to three kilometres below the surface of the earth, well below groundwater level. In addition, that carbon dioxide can be used, if you choose, as an injection agent into oil fields to help promote oil recovery. That's a technique we call enhanced oil recovery.
There is extensive international recognition of this technology as part of the solution to climate change challenges that we're facing. The U.K., Australia, and even the U.S. are moving forward on CCS. The international panel on climate change has said that it's a safe long-term way to reduce carbon dioxide emissions.
If you look at page 2 in your package, the National Round Table on the Environment and the Economy has made some extensive comment on CCS in their most recent report. They are indicating—and we believe this—that CCS is potentially one of the most substantive and cost-effective ways for Canada to reduce its greenhouse gas emissions over the next five to ten years.
In addition, the endorsement of CCS was provided by the NRCan technology roadmap, which was prepared in the spring of this year.
On page 3, we talk about why CCS is so important to Canada. In short, it's a made in Canada solution. The investments will occur here in our country, the carbon dioxide reductions will occur here, and the technology development can occur here. Canada is in a somewhat unique position in terms of being able to embrace CCS, because it has large carbon dioxide sources that are located near suitable geologic sequestration sites where the carbon dioxide can be stored permanently underground. We also believe CCS is a technology that is to a large degree proven, but one that will advance over time. Canada could become a world leader in advancing this technology and employing it in our country.
Page 4 details some of the findings of the work we've done over the last year. We estimate that up to 20 megatons per year of carbon dioxide could be captured and stored by the year 2015. Just as a context, that would be the equivalent of removing 4 million cars off the road, or some 25% of the Canadian light vehicle fleet.
There are also real, substantial, Canada-wide benefits. We believe CCS may have application in Ontario, the Maritimes, and western Canada. Alberta is probably the location where our ICON concept could be started. The ICON that we refer to stands for “Integrated Carbon Dioxide Network”.
The Alberta map on page 4 gives you an indication of what a network for carbon dioxide capture would look like, collecting that carbon dioxide from the large emission sources that are in Fort McMurray, the Edmonton area, and down in the Red Deer area at the chemical facilities, and moving that product to the western side of the province for permanent storage in deep reservoirs.
The ICON Group believes that an infrastructure network like this will be key to the success of a CCS system. Such a network approach allows us to have economies of scale from a large system. It optimizes the efficiency over time, and it will minimize the environmental impact by only building the system once and to large scale.
Our study work also concluded that it's very beneficial to develop this large-scale system from the start rather than starting small and working our way up to a larger scale. In order to do that, as we describe on page 5, we really need a common vision and an approach that involves multiple industry sectors, plus coordinated input from both the federal and provincial governments involved.
We don't really believe that we need to pursue demonstrations or R and D. We want to focus our efforts on deployment of this technology now, but encouragement of carbon capture and storage has to be balanced as well with the Canadian competitiveness of our industries to ensure that investments can be ongoing. This is particularly true with respect to the oil sands upgrader activity, which needs to be competitive with U.S. refineries and other locations where this upgrading activity could take place.
Slide 6 talks about our conclusions with respect to the market influences on this type of activity. Really, we believe that if this is left to market forces, very little carbon capture and storage will proceed even if there's a tightening of carbon dioxide emission constraints. The risk profile of these investments and the economics of large-scale CCS are simply unfavourable. There is, as a result, a transitional role for governments in helping to enable large scale CCS. A true three-way public–private partnership, with two levels of government participating with industry, is essential.
Any integrated system will have to encompass three elements. It will involve the large scale capture that would be installed at multiple facilities where the emission points are, with investments in the hundreds of millions of dollars. It would involve an open access pipeline system that anyone could use to transport the carbon dioxide. And it would involve the storage infrastructure, including, in the near term, the use of enhanced oil recovery as a revenue source. EOR is quite important, in our view, to help to get the system started, and the revenues from that sale of carbon dioxide can help to offset the cost of the system. Ultimately, though, what we call direct storage or injection into underground reservoirs without a revenue source coming back to you is going to be where most of the carbon dioxide ends up.
Slide 7 shows the policy principles that we think are going to be important to help to develop carbon capture and storage. One of the first is that companies should be able to retain the option to undertake CCS, along with other compliance strategies that they might like to choose. We don't believe CCS is the only strategy that Canada needs to reduce its GHG emissions over time. As a result, for companies, it needs to be one of a portfolio of choices that they can make. We also believe that companies that choose to embrace CCS and install those facilities should have no greater compliance burden for carbon dioxide reductions than other companies who choose not to do CCS.
We also want to make the point that our companies do believe that we are going to be exposed to costs in doing this. We're not going to undertake carbon capture and storage with a view to making money from it. It's not a profitable investment, but it is something we are willing to pay a share of.
The point about how these companies will move forward on projects relates to scale to a large degree. It may be quite likely that companies that elect to use carbon capture and storage may be able to have emission reductions that are actually greater than their reasonable share of national targets. We therefore need to ensure that there's a mechanism in place so that this behaviour can be incented by funds or the sale of credits or some similar mechanism. This will lessen the burden on these companies for this environmental investment.
In closing, I would like to emphasize that we believe that the ICON Group, with our broad multi-industry representation, is the important group to engage with in developing the policy around a carbon capture and storage network for Canada. Our group has done a substantial amount of analysis on how such a system could function. We would be happy later on in the afternoon to answer any questions you might have about that.
We encourage the federal government to confirm that carbon capture and storage is a key part of Canada's environmental strategy, and that the ICON concept is a priority.
Developing an integrated carbon dioxide network will be a transformative environmental step, one that can be most effectively taken as a private-public partnership. Collectively we have the opportunity to begin on the largest CCS deployment in the world. We need the federal government to work with us to develop the scope, the size, and the policy options that will enable ICON. Collaboration is essential, and the ICON companies are ready to engage this government in substantive discussions.
[Translation]
Thank you for your attention. I look forward to your questions.
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Thank you very much. I appreciate the opportunity to present to this committee.
I don't think you need any introduction to the tremendous opportunity that the oil sands offers to Alberta and Canada. Nor do I think the committee needs to be told about some of the environmental challenges facing oil sands development. It's clear that innovative technologies and management strategies are needed to significantly reduce the environmental impacts of oil sands development, and they will then result in realizing the full benefits of this opportunity.
Canada has a major green advantage in addressing some of these environmental challenges, and that is the vast biological capital we have, in particular our forestry and agricultural resources. If we were to look over the next 45 to 50 years and think about shifting more of our economic system toward what we call a bio-based economy, I think we could realize some of the potential for Canada to realize environmental, economic, and social benefits. We have the potential within Canada, in the sustainable use of our biological resources, to achieve as much as 240 million tonnes of carbon dioxide emissions reductions by mid-century, or the equivalent of almost ten times the carbon dioxide emissions from current oil sands processing.
The sustainable bio-economy involves a number of things. One is sequestering atmospheric carbon into forests and agricultural soils. This is important not only in taking carbon out of the atmosphere, but it's a key stage in helping these ecosystems adapt to the changes and impacts of climate change they're already experiencing, for example, the mountain pine beetle issues in British Columbia.
Second is to reduce biologically based greenhouse gas emissions that are associated with our existing activity, whether that's agricultural greenhouse gas emissions from cropping systems, from animal manure management and animal production systems, or from landfill sites across the country.
Third is to complement our fossil energy resources with renewable biomass energy and biofuels. Certainly the movement to a sustainable bio-economy involving the things I've just talked about will be a major stimulus to the rural economy in Canada. It will help create healthier communities, improve energy security issues, and result in more productive and internationally competitive industries across the country.
In the main part of my presentation I'd like to talk in more detail about the movement toward a sustainable bio-economy, and the potential that each of these areas offers for Canada to reduce the environmental footprint, not only of the oil sands development, but overall.
First is the issue of biological offsets for greenhouse gas emissions from the oil sands and other human activities. This really comes in three types. The first two of these are biological equivalents, if you like, to the important geological sequestration we just heard about. Forest management for carbon and for addressing greenhouse gas issues is a very major opportunity, especially when taken in perspective across many decades. It's not much use when we're trying to look at the next five to ten years, because trees grow slowly and it takes time to have an impact.
In Canada we have about 400 million hectares of forest land, about 240 million hectares of which are timber productive. We harvest every year about one million hectares of forests in this country. The forest companies, through sustainable forest management, are essentially managing at the present time about 230 million tonnes of carbon dioxide emissions that they are actually stimulating the growth of through their sustainable forest management. So 230 million tonnes of carbon dioxide are going into our forests, and that represents about one-third of all the greenhouse gas emissions currently in Canada. Of course, we harvest those 230 million tonnes of carbon dioxide emissions as biomass and use it as forest products. Some of it is left on the ground as forest residue, or left in mill operations. A significant portion of it is already being converted into energy by the forestry companies.
However, if the forestry industry were to alter the way they manage a portion of our forest lands, and improve the management technologies, it is clearly possible to increase the productivity of that land base over the next 50 years by 50% to 100% or more. If that were done, for example, on 50% of the land area we harvest each year between now and 2050, forest carbon stocks in Canada could sequester anywhere from 70 million to 100 million tonnes of carbon dioxide per year by 2050. Moreover, when the trees finally mature, the biomass would be available for wood products or as a renewable energy source.
It's really important to recognize that we are probably going to have to do this, anyhow. With impacts such as the mountain pine beetle infestation and other climate impacts, we're going to have to change the way we manage our forest ecosystems. What this offers is a way of getting a jump on it and starting to do the management now, in recognition of the fact that we could actually get the greenhouse gas benefits out of it in addition to helping to preserve these ecosystems for the future.
The second area relates to the role of agriculture, especially agricultural soils, in holding carbon and storing carbon. Over the last 15 to 16 years, some of the top-quality science that's been done in Canada has shown that movement to low tillage agriculture has already increased carbon levels in Canada's croplands by 10 million to 20 million tonnes of carbon dioxide. However, there's potential for the soils to hold a lot more carbon while benefiting from the added fertility that this carbon provides.
A number of technologies—some of them have been around for centuries and some of them are very recent technologies--can be incorporated that will actually stimulate the amount of carbon that's stored in the 30 million hectares of agricultural cropland in Canada and in the tens of millions of hectares of pasture land across the country. The estimate here is that at least 30 million tonnes of carbon dioxide equivalents per year could be achieved by 2050. There have been some very interesting papers published recently suggesting that this may be an underestimate, depending on the technologies that are being incorporated.
Reducing agriculture and landfill emissions is a third area, and this is actually a real emission reduction rather than a sequestration. So this is a long-term—what we call grade A—emission reduction. Certainly we have significant—about 88 million tonnes, approximately—carbon dioxide equivalents being produced from agriculture, from landfill sites, from animal production systems, and from our cropping systems. Improved management practices, many of which we already know about, can significantly reduce these emissions. There are serious technologies, which, if implemented on a very wide scale with the appropriate incentives—economic incentives—for farmers, landfill operators, municipalities, and so on, should be able to reduce these emissions by half, or by 40 million tonnes per year by 2050.
Clearly, with these sorts of appropriate strategies, investment strategies, and policies, our biological resources have the potential to provide offsets for fossil fuel emissions.
There's also a very important role that biological systems can play in providing an energy resource. In recent years there has been a great deal of interest in biomass energy, especially with the recent rise in oil and gas prices. In fact, today the wellhead prices for oil and gas are two to three times the farm gate or forest road price for biomass. If oil and gas prices continue to rise, the spread between the farm gate and forest road prices for biomass will increase.
It is true, certainly, that the cost—the economic cost—of converting biomass into a form of energy that is usable to compete directly with oil and gas easily makes up for the benefit of the farm gate and forest road price. However, with new technology and infrastructure investment, there's a very significant opportunity for biomass to play a major role.
Certainly other countries around the world have recognized the potential for biomass and are using it as a key part of their strategies, be it for climate change, as in the European Union, or for energy security, as in the United States.
I just have a comment here. The U.S.A., in the last year, has established a bioenergy commitment for the next 20 years that's equivalent to more than 1.5 times—1.4 times to 1.5 times—all the energy we use in Canada from all sources. The European Union has identified a bioenergy target that is approximately equal to all the energy use of Canada.
If we looked specifically at the oil sands—and the opportunity is specifically for the oil sands to address there—there is a possibility of looking at biomass as a potential for an alternative energy source for natural gas. It could play a significant role in oil sands production.
If we consider a natural gas demand of 800 cubic feet per barrel of oil, producing a million barrels of oil per day with biomass would require about 15 million tonnes of dried biomass per year. This is a very large amount of biomass, a very significant biomass resource. There certainly is the capacity to sustainably produce this amount of biomass in western Canada.
In working with the British Columbia government, BIOCAP has estimated that B.C. itself has the potential to provide over 32 million tonnes of biomass per year, about 11 million tonnes of which would come over the next 20 years from mountain pine beetle wood.
Alberta and Saskatchewan also have very formidable potential for the sustainable production of biomass for energy. Indeed, we've estimated that Canada has the potential for more than 300 million tonnes per year of sustainable biomass energy production for everything from transportation fuels, heat, power production, etc. That estimate of 300 million tonnes may sound like a lot—it's about one-quarter of what we estimate the Americans have already produced from the U.S. Departments of Energy and Agriculture—but it is less than half of estimates that were done for Canada about 20 years ago, when they looked at the bioenergy potential of Canada. It is indeed a conservative estimate.
One of the biggest challenges with biomass as an energy resource is the issue of its low energy density and the fact that it's distributed. It's a transportation challenge. While we have yet to find a resolution to this challenge, there are some very exciting and interesting studies under way demonstrating the fact that technology, if brought to bear with good management strategies and planning, can help to address some of these issues.
For example, an entrepreneur we've been working with in British Columbia has developed a wood pellet technology, where the pellets do not absorb water. Essentially they can be put in water and maintain their thermal energy value, once they're taken out of the water at the end and allowed to air dry.
A university research team we've been working with is exploring the feasibility of incorporating these kinds of pellets into a water-based slurry, essentially using the coal slurry technology that is well known and well developed around the world, and allowing us to pump large amounts of biomass over a long distance through pipelines. This could allow cost-effective transport to the oil sands of excess mountain pine beetle wood or forest residues from B.C., or even biomass crops grown in the prairies.
The side benefits of this bioenergy strategy would include millions of tonnes per year of greenhouse gas emission reductions, as well as the potential delivery to the oil sands, especially if you're looking at a B.C. source, of millions of cubic metres of water per year, helping to reduce demand on local supplies.
I would certainly argue that we're not in the position now to recommend large-scale biomass use for the oil sands. The studies are in the very early stages. But this demonstrates the important role of research and development in finding biological solutions to some of the challenges we're facing in energy and the environment. In many ways, I would argue that the biomass energy field today is where the oil sand technology was 30 years ago. We need to invest now in the R and D to create a valuable resource for the future.
The transformation to this sustainable bio-economy represents a very significant opportunity for Canada. It can reduce Canada’s environmental footprint, not only with oil sands development but for other energy uses. It can also provide a major stimulus to the rural economy, both in the beleaguered forest economy, in terms of the pulp and paper challenges we're having, and in the agricultural economy.
We need three things to move forward. We need arm's-length credible science that will support the policy investment decisions required for a domestic trading system, which will help support the rapid implementation of known and proven technologies.
We need to enlist the role of the research community—university and government researchers, and those in other innovative industries—to develop the skilled workforce, innovative technologies, and management strategies that will increase the environmental, economic, and social sustainability of a wide range of bio-economy solutions, from emission reductions, carbon sinks, and new energy conversion in transportation technologies.
We also need the efficient and effective transfer of the existing and new knowledge among industry, government, non-governmental organizations, and the research communities.
Indeed, this is what the BIOCAP Canada Foundation has been doing. We have a proven track record in this area, and we've brought together the necessary disciplines and sectors to find effective solutions. Certainly we would be very happy working with the federal government to be able to continue our work in this area.
Thank you very much.
:
I'll read it, just for the public record:
That the Committee recognize the valuable role of the BIOCAP Canada Foundation and its partners in creating innovative programs, cooperation and research networks to move Canada toward developing its bioeconomy; and that the Committee respectfully encourages the Government of Canada to provide immediate short term funding to the BIOCAP Canada Foundation in order that it be able to meet its commitments to Canadian university research and launch its 2007-08 research programs on the bioeconomy.
Mr. Chairman, I'm going to speak very.... I think the questions that were asked by Mr. Trost in fact underscore the relevance with respect to the transformation that Canadians and in fact the world have seen with respect to trying to match the technological opportunities that are created—as in our study, for example, on the oil sands—by the production of carbon dioxide.
Mr. Chairman, the presentations made today by the ICON and BIOCAP representatives in fact are giving us an illustration of how research is in fact being bridged with the development of those technologies. Without that bridge, you simply have words and no actions. I think this committee has felt the frustration. We visit the oil sands and we see the tremendous use of technology, but we don't see evidence with respect to what's happening—as Dr. Angus Bruneau pointed out—in matching the innovative capacity, through commercialization, to sequester carbon dioxide or use carbon dioxide in the process of gasification with respect to coal, or in the production of biomass energy capabilities.
These are the challenges this committee's been studying, Mr. Chairman. I have been given to understand that there is a very great frustration on the part of BIOCAP that they are not receiving the last part of their funding, which would allow them to complete the research program they are engaged in at this time.
What I'm suggesting, and I hope the committee will support this, Mr. Chairman, is that we simply ask the relevant minister—in this case I believe it's the Minister of Natural Resources, but I think we're going to have some clarification on that—to meet the $2 million that is required by BIOCAP to meet the research and development schedule they have already embarked upon. It was understood in the original proposal call—albeit it came from another government—that they would be able to complete their research schedule that is presently going on.
When I was on the environment committee we had BIOCAP, and we were impressed at that time that not only had they received federal funding, but they'd been able to enhance that with funding from the private sector. They could see that it was in their interest to have research applied such that development would occur, so they were willing to contribute to that. I think you've seen in the handout from BIOCAP that from the $10 million public investment, they were able to leverage approximately another $27 million, for a $37 million program.
Mr. Chairman, I think it's more than an act of faith; I think it's an act of wisdom for this committee to support them in their interim request. I put that as the motion to activate that request.
Thank you.