:
Thank you very much, Chairman Benoit.
And good morning, everyone.
I will try very hard to stay within the five- to seven-minute presentation time, but we're politicians. We'll do our best.
It is a welcome opportunity to appear before the committee today. The Government of Alberta has been undertaking an advocacy campaign for the past year relative to responsible energy development, especially as it relates to the oil sands in Alberta. I view this as another opportunity to ensure that Canadians better understand how important this resource is to the country.
The International Energy Agency expects the world's energy demand will increase by 40% over the next 20 years, and oil will remain the dominant fuel to meet that demand. There are 170 billion barrels of oil in the oil sands that are recoverable with today's technology. That accounts, however, for only one-tenth of the total reserves. And if we're even able to double those recoverable reserves—and I believe we will soon, through new technologies—Alberta would place well ahead of Saudi Arabia, the world leader today in total proven reserves.
One in every six Albertans owes his or her livelihood directly or indirectly to the energy sector. And it's not just Albertans who are benefiting. Tens of thousands of Canadian jobs across this great country are directly or indirectly tied to the success of our industry. There are some 28,000 workers who live in camps in northern Alberta, and more than half of them fly in and out every week or every two weeks from their homes east of the Manitoba-Ontario border. This industry requires billions of dollars in pumps, valves, motors, and other equipment that is manufactured in central Canada. So these jobs mean that Canadians are paying taxes to the federal and other provincial governments, not just to Alberta.
In 2009 Albertans paid an estimated $40 billion to the federal government in taxes and other payments, while getting back less than half that amount, $19 billion, in federal services. So that's a net contribution of $21 billion that is used to support federal programs outside of Alberta.
A healthy economy is also the means to drive high-tech environmental changes. It's only because we have a thriving economy that we can afford to fund research into renewable technologies. It's only because we have a thriving economy that we can fund a $2 billion carbon capture and sequestration initiative to meet more stringent emission controls. And we're the only government in North America that places a CO2 cap on large emitters. Companies that exceed the cap must pay into a fund, which now has collected almost $200 million since it was created in 2007, and the proceeds are allocated to new environmental technologies.
Now over 3.5 million people choose to call Alberta home. They love their forests, rivers, and valleys and will not allow irresponsible resource development. Albertans care deeply about their environment, and they want their government to make that commitment as well. So ensuring responsible development of oil and gas is a provincial responsibility that we take very seriously. Albertans own the resources, they want them developed responsibly, and they will accept nothing less.
The Energy Resources Conservation Board is the province's regulator of oil and gas development, and it's recognized as a world leader. It is adaptable to changing circumstances to deal with new unconventional discoveries, such as oil sands, shale gas, and horizontal drilling.
While the National Energy Board has jurisdiction over such things as regulating cross-border transmission, the provincial agency ensures that our industry is in compliance. Environmental protection is a more shared responsibility, with provincial and federal regulators working closely together. A good example is in air quality, where the comprehensive air management system is developed by the Council of Ministers of the Environment and reflects shared responsibility for air quality in Canada.
Canadians can be assured that we have a clean, secure supply of energy. The federal minister and I, as co-chairs of next year's federal-provincial-territorial energy ministers' meeting, have committed to working toward a national clean energy strategy. This call has also come from other organizations, the most recent being the Canadian Council of Chief Executives.
So Alberta, in conjunction with Natural Resources Canada, will lead the coordination of this work toward a set of common goals and objectives that all governments in Canada can agree on, which will shape a clean energy strategy. This is another example of how we must all work together for a common goal. No one is served by political leaders not respecting each others' jurisdiction in our federation, and we can work together from a foundation of trust that only comes from respecting federal, provincial, and territorial authority. With this trust, we can build and enable the amazing diversity and strengths we have regarding energy right across our country.
In conclusion, I would like to invite your committee to visit Alberta and tour the oil sands. But I would say maybe wait until next spring.
:
Thank you for having me. Good morning.
My name is Ben Parfitt, and I am a writer and researcher based in Victoria, British Columbia.
Recently, I authored a report for the program on water issues at the Munk School of Global Affairs, called “Fracture Lines: Will Canada's Water be Protected in the Rush to Develop Shale Gas?” The report was released in mid-October at a conference that officials from Natural Resources Canada, the natural gas industry, and professional hydrologists and geologists attended and at which they spoke. I am currently researching a report for the B.C. office of the Canadian Centre for Policy Alternatives that will examine the increasing water demands and power needs in the province's expanding natural gas sector.
As all of you have heard, a significant increase in development of unconventional shale gas resources is under way in Canada and is at its forefront in British Columbia. The province offers a taste of what may be coming down the pipe, as it were, elsewhere in the country.
British Columbia, as you may know, has two major shale gas zones situated in the northeast of the province. The southern-most of those zones is known as the Montney basin. It is in proximity to the communities of Fort St. John and Dawson Creek. The Horn River basin is far to the north and is centred around the community of Fort Nelson.
Most people in the province live 1,000 or more kilometres away from these zones and have little understanding of the extent of industry activities, including industry water usage. I should add here that this is a very different situation from what may apply in the province of Quebec, as Utica shale in that province is developed.
Shale gas production is highly energy intensive, and much of its energy intensity is inextricably caught up in the use of water that is pumped underground in large volumes to fracture or create cracks in tightly bound shale formations. During my research, I obtained information from B.C.'s energy regulator, the B.C. Oil and Gas Commission, on water assignments to the natural gas industry. The information showed that as of April 2010, the OGC had issued energy companies approvals to divert water from 540 different points on creeks, rivers, lakes, and reservoirs in the northeast of the province. If the maximum volume of water assigned to energy companies under those permits were used in a single day, it would exceed by two times the daily water usage by all residents and businesses in Victoria combined. However, this only scratches the surface of what water is being used.
Companies such as Encana and Apache Canada now pump water from deep saline aquifers in the Horn River basin to complete their fracking operations. Others draw water from near-surface freshwater aquifers. Others obtain water from private landowners' wells or borrow pits, and still others are building massive borrow pits, some more than a half kilometre long by 200 metres wide by 13 metres deep, which are intended to infill naturally from near-surface waters in the surrounding muskeg.
Nowhere is information on all water assignments or water takings gathered into one place for the public, a situation common to other Canadian provinces. This is troubling, because these are early days yet for shale gas exploration and development. Yet we know that the industry is setting records for water usage. At just one well site, between January and April of this year, in the Two Island Lake area in the Horn River basin, roughly 900,000 cubic metres of fresh water was used to set a world record for fracking operations at a single multi-well pad. Requests for information that your committee has filed with Encana, will, moreover, I believe, show that the record has subsequently been broken in the Horn River basin.
As the committee may also know, the Peace River, its major tributaries, and many other waterways overlaying the Montney shale resource were in the midst of a drought zone this year. Yet evidence I have obtained from the Oil and Gas Commission shows that fracking companies received substantial increases in water-taking approvals from the energy regulator, despite record low water levels in the region.
It is important to note that the Peace River and its tributaries form part of a vast water system that crosses provincial and territorial boundaries and in which the federal government could and ought to be playing a role.
A great concern is that information made available to the general public by the Oil and Gas Commission has downplayed the industry's increasing needs for water, and on at least one occasion, the energy regulator has failed to disclose significant water withdrawals by fracking companies to a British Columbia first nation that formally requested information on water takings within its territory, which is covered by Treaty 8.
I would like to suggest that as shale gas exploration and development intensifies, there is a pressing need to ensure that both the federal and provincial governments act honourably with first nations, as is their legal duty. A key element to acting honourably is to disclose information, information that the provincial governments have or ought to have on water assignments and water withdrawals.
In interviews with professional geologists, hydrologists, and legal experts, I concluded that both the information gathered on water assignments and the powers to issue water approvals ought properly to rest with provincial environmental regulators, not energy industry regulators, if the primary objective is to ensure safe, renewable supplies of water and sustainable water use. But do governments have all the information they ought to be reasonably expected to be able to provide?
In my “Fracture Lines” report, it is noted that Natural Resources Canada, through the geological survey, is in the midst of analyzing and characterizing 30 key aquifers, mostly in southern Canada, some of which overlay shale formations, but this work is well behind, as respected scientific bodies such as the Council of Canadian Academies has noted. This is why, in the “Fracture Lines” report, the first recommendation made is for the federal and provincial governments, in collaboration with the fracking industry, to immediately fund studies of all aquifers prior to shale gas exploration or sustained hydraulic fracturing.
I would be happy to answer questions about the other recommendations in that report that address other aspects of water usage and waste water treatment and disposal in the fracking industry. Thank you very much for the opportunity to speak with you today.
:
Thank you very much for inviting us, Mr. Chairman.
I would also like to thank my colleague Vincent for preparing this presentation with me. We will be pleased to answer any questions you may have.
I want to recall that the Montreal Economic Institute is an independent, and thus non-partisan, government policy research centre and that we receive no government funding.
What is required to ensure Canada's energy security is the development of our natural resources, both natural gas and oil. If that development is based on the principles of the market economy, private property and entrepreneurship, it will be possible for Canada to achieve sustainable economic growth.
The development of the natural gas industry is an excellent job and wealth creation opportunity for Canada. Canada is ideally placed to benefit from its resources as it is home to the Utica formation in Quebec and the Horton Bluff formation in the Maritimes as well as the Horn River, Montney and Colorado deposits in western Canada.
In Quebec, nearly 600 wells were drilled and developed between the 1960s and 1990. This means that the industry has acquired significant expertise, particularly in horizontal drilling. This gigantic potential must be developed further. Since 2007, 28 wells have been drilled in Quebec, including oil wells, representing nearly $200 million in investments. Quebec's department of natural resources and wildlife estimates that 200 horizontal wells represent $1 billion in investment, not to mention thousands of jobs and good prospects for corporate profits.
Economic potential potential on this scale cannot be summarily dismissed when assessing the costs and benefits involved in developing this resource. Of course, an attempt must be made to minimize the environmental risks for this kind of project. However, it is important to say that there is no such thing as zero risk. This is as true for energy development as it is for most human activities. Of course, it's not easy to strike an acceptable balance between risk and economic benefits, but that has to guide decision-makers' actions. If we allow ourselves to be paralyzed by development risks, we will in fact prevent all progress. One need only think of the automobile, airplanes and hydroelectric dams. All these things are now an integral part of our lives and well-being, and they necessarily involve a significant share of risk when they are being developed.
It is also important to mention that natural gas development also has environmental benefits, since gas produces 31% less greenhouse gas emissions than residential fuel oil, for example, and nearly no atmospheric contaminants that are harmful to health. By developing gas, we will be able to reduce our emissions, and, if it is possible to develop these resources within our own borders, supply will only be more stable and secure.
Now, how should the resource be developed? In our view, development of our energy resources is clearly the best way to ensure greater energy security while promoting economic development.
There is a simple and legitimate way to ensure respect for individuals and businesses concerned in this development, and that is respect for private property. Respect for property presupposes that all orders of government refrain from adopting unwarranted barriers to free negotiation between the various players. There are two things: we must avoid granting excessive expropriation authority and, second, special regulations must not be used to block businesses wishing to negotiate with landowners, just as there must be no regulations preventing individuals from enjoying or using their property as they wish.
Whether it be the federal or provincial government or municipal governments, no one should intervene to compel or prohibit the development of shale gas. Authorities must simply allow free negotiations between businesses and landowners. Businesses wishing to develop this resource must have a right to negotiate for the purpose of compensating individuals for the use of their property, in whole or in part, whether it be to lease it or to purchase it. Individuals who are ready to negotiate with businesses must simply have a right to profit from their property in the manner they consider most profitable.
This kind of negotiation may be conducted on a one-to-one basis, obviously, among a number of parties or based on the bidding principle. Whatever the case may be, landowners and businesses must neither be compelled to work together nor prevented from doing so by legislation. Such negotiations based on the right to property, make it possible to assess the real costs of these undertakings more effectively, reduce the risk of conflict, permit healthy arbitration and help determine the best locations for this type of business and avoid the "not in my backyard" phenomenon.
I will conclude my presentation by saying that a property-rights-friendly approach can assist in the economic development of our resources, with the cooperation of all parties involved. Energy security inevitably depends on the development of our resources and on legislation that promotes economic exchange free of unwarranted obstacles.
Thank you very much.
:
To some degree, that was one of the reasons why we felt it was important to appear before this committee. In some ways, it's my understanding that what this committee is considering here is an extension of that.
I go back to my first comments. There are clear jurisdictional responsibilities between provinces, territories, and the federal government; there are also overlapping jurisdictional responsibilities. I don't think anyone is served by reduplicative efforts. We have a very good working relationship with the federal Department of the Environment, as I mentioned, and there are a number of areas that we're working together on. The most recent one, as I said, was the review of the water.
I would like to see more specifics on exactly what might be referenced in the motion, but in Alberta, when it comes to shale gas, our Energy Resources Conservation Board, as I said, is adaptable. We have made some significant changes to accommodate the formations.
Fracturing has been around for a long time, especially in Alberta. It's just that we're talking, in shale, about different formations. I know that especially in Quebec, but to some degree in B.C., some of this work is new. I have made the offer to the minister, my counterpart in Quebec, that whatever help we can provide them with in developing the legislative framework they need and that they can learn from us, we're more than happy to cooperate on.
I guess it really comes down to what particular area you're referring to, but we have to be, in this country of ours, respectful of jurisdictional responsibilities.
:
Thank you, Mr. Chairman.
The Hansard isn't out from the last committee meeting, so the questions I have require a bit of background information for the witnesses today, Mr. Chairman.
I'd like to say from the outset that I believe environmental groups are necessary, that they perform a very important function in ensuring that our environment is taken care of and that large corporations that are taking our natural resources from the air, the ground, etc., are doing so in a respectful way that is not going to cause harm to people.
What puzzled me last day was that when I quite innocently asked a question as to how one of the witnesses received their revenues—that was Environmental Defence—she was very defensive and suggested that I go to her website. So I did, and to understand how the environment works and what's really at play here, even the reason why we have the oil sands as an unconventional source of oil as our subject matter, this does come into play.
What I learned was that one of the donors for Environmental Defence is called Tides Canada. I had never heard of Tides Canada, so I looked up a bit about Tides Canada and found out that Tides Canada is actually funded through the U.S. Tides Foundation, of California, and that its Canadian counterpart has paid millions to at least 36 campaign organizations. Tides U.S. isn't alone; they have other charity bases as well, in California and New York, and they have had $50 million since 2003 specifically for campaigns against Alberta oil and against oil tanker traffic and pipelines through British Columbia.
The purposes for these grants are clearly outlined in the tax filings. For example, Tides U.S. received U.S.—
Hon. Denis Coderre: I have a point of order, Mr. Chairman.
Mrs. Cheryl Gallant: This is background information and is very important—
:
I'm just trying to follow the dollars so that everybody understands who's trying to do what and perhaps understands why.
Tides U.S. received $700,000 U.S. in 2009 from the Oak Foundation of San Francisco to raise the visibility of the “tar sands” issue and slow the expansion of tar sands production by stopping new infrastructure development.
Now, I could go through the explanation of why “tar sands” is an inaccurate description of the oil sands, but I think just about everybody here was present last week, so I won't repeat that.
The Oak Foundation was created by a duty free shop founder, an American, and he in turn paid Greenpeace Canada an undisclosed sum of money to leverage the growing interest of ranchers and landowners in limiting unbridled oil and gas exploration and production in southern Alberta. Apparently, Greenpeace was also funded to conduct specialized opinion research and media work and to identify messaging for maximum information value among Albertans.
Even the World Wildlife Fund has kicked in. World Wildlife Fund Canada was paid an unreported amount by the Oak Foundation for a campaign to mobilize Canadians and send a politically compelling message.
The U.S. tax returns show that Tides and Tides Canada have paid $4.3 million for a “tar sands” campaign. The top recipients were: the Sierra Club, which was U.S. $909,000, approximately; Corporate Ethics International, with U.S. $750,000; the Natural Resources Defense Council, with half a million U.S. dollars; and ForestEthics, with U.S. $400,000.
Many of these grants that were put forth for the tar sands campaign are far larger than the grants for the other important causes. For example, a rape intervention project in sub-Saharan Africa got $9,000, and a project to support people with HIV in Indonesia, who were on the Hill yesterday, got $9,098. In comparison, Greenpeace got U.S. $186,000, and the World Wildlife Fund got $160,000.
Unlike many of the charitable foundations, Tides U.S. doesn't have a large endowment. In practice—and this is what is being reported now in different media—it behaves less like a philanthropy than a money-laundering enterprise, taking money from other foundations and spending as the donor requires.
What that means is that we have situations in which we have a witness such as we had last day, Environmental Defence. Right on their website they have Tides Canada Foundation and the Tides Foundation listed as their donors. Tides Canada in turn get their money, $56 million since 2000, from Tides U.S.
When Tides U.S. funnels money to Tides Canada, it tells them how they want to spend the money. The Oak Foundation gives money to Tides U.S., and what we don't know are who the foreign contributors to the Oak Foundation are. We don't know whether they're companies competing with the oil companies in Alberta, whether it's offshore, whether it's Middle East, or some other group, but what we do know is that there's an active, well-oiled campaign against the industry in Canada, specifically in Alberta, and actually against Canadians in general—a campaign against jobs here.
My question, first of all to Mr. Liepert, is—
An hon. member: Time's up.
Mrs. Cheryl Gallant: It's just a yes or no.
Prior to applying for a charitable tax status, an organization must be either federally or provincially incorporated. Do you know whether or not Alberta has any anti-oil sands organizations provincially incorporated?
:
First of all, I'll make maybe just a quick comment on your very first remark.
I think there is this sort of belief by some that there is a diminishing demand for oil in the world. The U.S. energy department just released statistics about two days ago, and it said that the usage of oil last year, from the year previous—and keep in mind we're in a recession—increased by 936,000 barrels a day. So there is no decreased demand for oil in the world.
So how do you deal with it? You either rely on it from offshore or you develop your own energy security supply.
This is a national treasure of the country. It was described by an American senator as a national treasure. It creates jobs not just in Canada but in the United States. I like to say, “We don't build any caterpillars in Alberta, but we sure use a lot of them.” They're built across North America.
I think the most telling statistic is the one I quoted in my remarks, that there are 28,000 people today who are working in camps in Northern Alberta on construction sites. Half of those Canadians are flying in and out every week or every two weeks from east of the Manitoba-Ontario border. It is creating jobs. it is creating tax benefits to those communities. And I'll tell you that it's a win for everybody because those workers are able to stay in their communities, their families are able to stay in their communities, whether they're in Quebec or Newfoundland, and their children go to the same schools they're used to going to, and they're working.
I think that's the part of this whole discussion that is overlooked, that this isn't just a benefit to Alberta. This is a Canadian treasure that we should all be very proud of.
:
Thank you very much, Mr. Chairman, and good afternoon, everyone. Thank you for the opportunity to speak to you this afternoon.
I'm speaking from the perspective of New Brunswick, a place apart from the rest of Canada. In New Brunswick, we have more than 1.4 million hectares under licence for shale gas development, which probably you haven't heard much about. We have been working with local communities. Some 90 communities fall within the leased and licensed area, in a wide arc sweeping across the province, from Chebucto, on the Northumberland coast--nice swimming, beautiful beaches--all the way to the Maine border, by McAdam and St. Stephen, near where I live.
We have been working with many of those communities. They've banded together and created a coalition called the Citizens for Responsible Resource Development. We've been in conversation with our provincial government on this issue for almost a year now, and we've been in conversation with the industry since they arrived in New Brunswick.
We have a tiger by the tail with this issue. This is not the natural gas of our childhood—our communities are out there flicking on the end of the tail of that tiger.
I apologize to the translators; I'll try to minimize my asides from my notes.
We don't have the regulatory framework. Today, we want to try to identify some clear roles for the federal government, which we believe are important, and some of the needs that could be filled.
Last Monday night, the New York State Assembly passed a piece of legislation by overwhelming majority to suspend, until May of next year, the issuance of permits for shale gas drilling using hydraulic fracturing and horizontal drilling. This is a resource that could enhance their energy security. So why did they do that? In the United States, the U.S. Environmental Protection Agency, an august body recognized internationally for its work over the years, has launched a major study on the impacts of shale gas drilling and hydrofracking, which they expect to finalize some time in 2012, with some significant public engagement as they go along.
Why have they done this? Because experience in the United States has demonstrated that exploration for, and the development of, shale gas poses a host of risks to public health, the environment, water supplies, and the social fabric of rural communities, which conventional gas exploitation does not. We're talking about something very different. I say it's a sleeping tiger, because natural gas prices are low right now. When those prices rise, that tiger will wake up and we will see very rapid development, I expect, in places like New Brunswick and Quebec.
What are the problems? For one thing, we're talking about huge depths, drilling down to two kilometres. Doing something that in the conventional industry is quite straightforward, like cementing around the well casing to protect water supplies, is very difficult when you're in that deep. When you're fracking, that raises questions about the integrity of the cementing around it and whether in the long term it's going to protect water supplies.
So it's very different. You have to withdraw something like four million litres of water from somewhere for every frack. That's two Olympic-sized swimming pools' worth. In New Brunswick, just about every stream goes into the ocean and contains migratory fish. The Bay of Fundy salmon are protected under the Species at Risk Act, because their numbers have dwindled so much. So there are questions about, for example, the kind of stream flow that we require to maintain habitat for those endangered Atlantic salmon. It depends a lot on information that we don't have. Clearly, the federal government has a responsibility to address this situation.
That's one of the reasons we're concerned about these water withdrawals.
The millions of litres of water are mixed with sand and chemicals. These chemicals are pumped under pressure, as has been mentioned earlier, and something like 40% or 50% of that mixture is left underground. We don't know what the long-term fate of this might be. And we don't have the geological studies or hydrogeological mapping to help us understand what might happen if this flows through existing fractures or fissures, which we haven't characterized necessarily before this happens, to ensure that we don't create long-term environmental risks.
So by intentionally pumping this down, deep into the ground, and leaving it there, below the water supplies, the question is, what's the long term fate?
Then, of course, you have within that mixture, potentially, some CEPA toxic substances, like benzene. And there's no requirement at this point for companies to publicly disclose the chemicals they're using in these mixtures. Of course, when this comes back out—about 50%, or roughly so, of it comes out—you have a hazardous waste stream, a large hazardous waste stream that actually is of a different consistency than when it went in because you're scavenging other naturally occurring contaminants like heavy metals from deep in the geology.
In New Brunswick right now this hazardous waste stream is being trucked across interprovincial borders for treatment in Nova Scotia. What will happen when this takes off? How will it be treated? We're talking about thousands of wells in New Brunswick likely, if this takes off. What does that mean? How will it be managed as hazardous waste?
The high moisture content of this gas means that the water has to be stripped out as it comes to the surface, which produces volatile organic compounds, emissions, some of which are CEPA toxic.
As far as greenhouse gases go, there's been some work to suggest that in fact this kind of natural gas exploitation may have as big a carbon footprint equivalently as coal. So that's an important issue when you're thinking about this from an energy security perspective.
The stated purpose of the moratorium in New York is simply to afford the state and its residents the opportunity to continue to review and analyze the effects of hydrofracking on water and air quality, environmental safety, and public health. This is not happening in Canada. There are no plans for a national investigation into the consequences of Shell gas development, and there should be.
So let me quickly go to what I think the federal government could do here.
We see in New Brunswick—
My name is Barbara Pike, and I'm the vice-president of the Atlantic Institute for Market Studies, commonly known here as AIMS. Thank you for the invitation to speak to your committee.
As a quick background, AIMS is an independent, non-partisan public policy think tank. We're one of the most decorated think tanks in the world. We just celebrated our 15th anniversary. We're a registered charity in both Canada and the United States. We accept no money from government. About 70% of our money comes from philanthropic foundations, about 20% from corporations, and the rest from private individuals.
Our papers and research are peer reviewed in a double blind process. In addition to that, we basically do not take any contract work. We basically take a look at our projects by asking ourselves a few questions before proceeding. These questions include: is anyone else doing that work, and can AIMS add value to it? We also sometimes add in the question, is it fun?
Others are going to talk to you about the oil sands. They're going to talk to you about natural gas, or shale gas, or deepwater drilling.
Today I want to concentrate on one topic, electricity, and more specifically, the transmission of electricity.
We sit here in Atlantic Canada at the end of the grid, a grid that is not conducive to the free flow of electricity. Just last month, AIMS released a commentary by energy consultant Gordon Weil called “Freeing the Flow: Proposals for Reform of Canadian Electric Industry Regulation”. The conclusion: it’s long past time for Canada to reform the regulation of its electric industry.
Weil reviews the options to improve regulations governing Canada’s electrical industry. He says that while it's not necessary to go as far as a single national regulator, there does need to be reform, so that all provinces are treated fairly. He identifies a number of essential elements for the reform of the existing system.
There is no doubt that the current system of regulation discriminates against Newfoundland and Labrador. It discriminates against P.E.I., Nova Scotia, and New Brunswick. That’s because the federal system of review of interprovincial transactions does not function and offers no real protection for any province. As we witnessed last year with the failed NB Power-Hydro-Québec MOU, there is no federal regulatory regime for transactions from one province through another to a third, or to markets in the United States.
That’s not to say there should be a single Canadian system, like FERC in the United States, but rather that we should use the existing National Energy Board as the review agency that treats electricity transmission, just like we do oil or gas, so that one province can't block the transmission of electricity to another market.
AIMS has said for years that we need to lower the barriers to interprovincial trade across the country. Electrical transmission needs to be at the top of the list. The free flow of electricity is an important element of Atlantic Canada’s prosperity.
In the absence of regional cooperation on common regulation and open borders, a Canadian federal regulator could review transactions involving power flows originated in one province and crossing another on its way to a third market. Given our geography, and the current market conditions in North America, this authority would apply mostly in eastern Canada. For example, if Hydro-Québec wanted to sell power to New England by transmitting across New Brunswick, the transaction could be regulated. An impartial body might block Hydro-Québec, or allow it, from monopolizing the New England interconnections, thus encouraging new green power resources in Atlantic Canada.
Imagine if this proposal had applied to the original Churchill Falls transaction. Newfoundland and Labrador could have sold to the American market instead of being forced to sell to Hydro-Québec, and a regulator, i.e. the NEB, could have set a reasonable rate for both parties. Hydro-Québec reportedly wants to sell power to Nova Scotia and P.E.I across the New Brunswick system. A regulator could assure a fair deal for all parties.
For transactions between two neighbouring provinces, such regulatory review could be optional. The parties could choose federal regulation or make the deal without such a review. The regulator could also have the authority to approve mergers across provincial borders. It could provide neutral assurance that customers would be no worse off because of a merger.
Let’s take a look at the benefits of the announcement two weeks ago for Muskrat Falls on the Lower Churchill in Labrador. The Nalcor-Emera deal has the potential to benefit New Brunswick as well as Prince Edward Island. This is a win-win scenario. Yes, there is still work that has to be done. But most heartening on this file is the level of regional cooperation, seeking a win for everyone in the region. Now, I'm not saying parochialism is dead in this region, but this proves that it can be overcome for a common good.
As you know, the deal is between Emera, which is a publicly traded company, and Nalcor, which is a Newfoundland and Labrador crown corporation. The Newfoundland government obviously has a hand in the deal, but the support and participation of the Nova Scotia government is essential.
More to the point, the provinces have made it clear that while Ottawa’s participation is welcome, it is not a precondition. Premier Dexter has been particularly blunt: the deal will move ahead with or without a contribution from Ottawa.
That's what energy security sounds like in Atlantic Canada, and it sounds very good these days.
I'm not sure that there is a more secure or greener energy source for Atlantic Canada, in fact Canada as a whole, than hydro generated electricity.
Freeing the flow, opening the transmission corridors, and enabling provinces to transmit across interprovincial barriers and borders could mean that rather than having two new nuclear plants in Ontario supplying future energy needs, there could be electricity generated at Gull Island in Labrador powering homes in Toronto rather than in New York. Transmission is what enables this.
For the current deal, the fact that transmission exists in New England and that Emera is a player there helps. And it’s not just this project on the Lower Churchill at Muskrat Falls that benefits or the possibility that a second Lower Churchill project at Gull Island would benefit. It's also the independent producers of renewables in Atlantic Canada. Those include wind power and the wind technology being developed and researched on Prince Edward Island. Those include the tidal power that is being developed and researched in Nova Scotia. But transmission, as I have said, is the key to that, and it's the key to energy security.
Last April, Emera, Nova Scotia Power, NB Power, and the Governments of Nova Scotia and New Brunswick struck a deal to expand transmission between the two provinces. It too is an essential piece to the whole free flow discussion and indeed the question of viable energy security on a national scale.
Getting back to Premier Dexter's position that federal investment is warranted but not required for the Muskrat Falls project, he is right on both counts. Transmission capacity as nation-building is the principal foundation for the requested investment from P3 Canada of about $375 million for the transmission line to bring power from Muskrat Falls to the Maritimes. Such an investment does precisely what the P3 fund was intended to do, leverage private investment driven by a business case in needed public infrastructure, a far cry from the pointless largesse of traditional, politically driven, federal investment and stimulus programs.
The willingness of traditional “tin-cup” federalists to go it alone on this project speaks volumes to the current and future business case. The new energy source and the associated transmission infrastructure are huge boons for Atlantic Canada.
If Nova Scotia is to be weaned off fossil-fuel–generated electricity, it needs hydroelectricity. Biomass is an option, but it is not as green as hydro. Apart from one generating station at Tufts Cove, the existing plants are too far from the existing natural gas pipeline for natural gas to be a viable option in Nova Scotia. On top of that, Nova Scotia Power is a cost-of-service utility, so if oil is cheaper, it's required that oil rather than natural gas be burned.
With regard to tidal energy, we've talked about it for generations. Acadia has been doing work on it for decades. This is still, for the most part, in a research and development phase, but the potential is huge. Work is progressing in the Bay of Fundy. The environment is harsh, and the technology is in its infancy, but if it can work in the Bay of Fundy, it can work pretty well anywhere, and that means that we would be world leaders in tidal generation, an industry that can be exported around the globe.
Without the free flow of electricity in this region, such development just stalls. There is no doubt about Nova Scotia’s reliance on coal-fired generating plants. Foreign coal is an issue both from a greenhouse gas perspective and with respect to security of supply. The province's over-reliance on coal is the result of federal--
:
Thank you, Mr. Chairman. I'm going to share my speaking time with my colleague Scott Andrews.
I'm a member for a Quebec constituency, but I know that energy security is important for all regions of the country. Without necessarily sharing this interpretation of the Quebec's situation, I understand that the important point is to ensure that two provinces can agree. I'm obviously sensitive to what the National Assembly and the Government of Quebec have said about the societal choice they made at the time regarding hydroelectricity.
I'm going to ask our friends from New Brunswick some questions. The situation we're in with regard to shale gas is somewhat the same.
[English]
There is an issue regarding the perception. People are scared because—I don't know about New Brunswick, but in Quebec they had a feeling that because the industry started first...frankly, they lectured people too much, instead of educating.
I'm at the federal level, and it is a provincial jurisdiction, but I would just like to understand how things are going in New Brunswick. How is the government working with the population on that situation? I have a lot of people in Quebec who are saying the same thing, that they want to have a moratorium, for all the same reasons that you're saying. They've been seeing all the documentaries, Gasland and all that, but at the same time this is a strategic resource, and if it's well done and environmentally okay, you might have something there. There is also a relationship with the municipalities and all that.
How are things going truly? Is there a compensation process? How does it work? What is the relationship with the people?
The second question is to Ms. Merrill, regarding water--water as the main issue, the way you treat it and use it. How are things going in your province from that perspective?
The Chair: Ms. Merrill, go ahead.
Yes, absolutely. As in Quebec, the areas being drilled and explored now are very similar to those in the St. Lawrence lowlands. You pretty well can't throw a stone in New Brunswick without hitting someone's house. We have agricultural areas and areas that are full of woodlots and communities. We're very spread out. So what people are concerned about is essentially the industrialization of their rural communities.
Certainly, in some parts of the United States, that's been the experience with the intensive development of shale gas. I say so because it's not just the pumping of the gas out of the ground that happens, but there's all of this ancillary equipment—the compressors, the condensers, and the pipelines, and so on and so forth—and the trucking, which is huge, to bring the water in and to take the waste out, all of which can really, truly industrialize communities. That's the issue there.
On an inquiry, we absolutely support having one, and in fact we think it's essential, because, as Madame Brunelle said, the issues are very similar across jurisdictions. We think an inquiry would help shine the light of day on the issue for all Canadians, so we can all work from a common set of information and ideas about how this can move forward in a way that, first, would be in the public interest of Canada in the regions where it's being developed, and, second, in a way that's safe for people and their environment.
Ms. Pike, if I can ask you a couple of questions, being a Newfoundland and Labradorian, I, too, am pretty excited about the agreement announced last week between Emera and Nalcor Energy and the Newfoundland and Nova Scotia governments, which will, as you say, bring 98% renewable energy to Newfoundland and Labrador. I think there's a small number, maybe in the twenties, of remote, isolated diesel stations that will probably remain, but that's a remarkable achievement. And the 300-megawatt bunker sea-burning outfit in Seal Cove, which we've been criticizing for many years, will be taken out of the system as well, as well as some of the coal in New Brunswick.
This is an interprovincial project, perhaps eventually involving all four provinces using the electricity and making these agreements to make this project happen.
You indicated it may go ahead without federal support, because the drive is there for it, but this is a project of national significance. But do you support the federal government providing some assistance for that through the PPP program, or perhaps through a loan guarantee of some kind that would reduce the cost?
And can you comment on the energy security side of things with respect to what Newfoundland is doing by using some of its revenues from the offshore oil, the fossil fuel, to actually invest in renewable energy? Does that contribute to energy security, in your mind, and do you see that as a goal?
:
Thank you, Mr. Allen. Our time is up.
I have two minutes. I have a couple of things I want to ask the committee.
But I will first thank the witnesses very much--Barbara Pike, David Coon, and Stephanie Merrill--for being with us today. Your input was very helpful and is much appreciated.
Before I adjourn the meeting, I would like to remind people that tomorrow noon is the deadline for getting your witness lists to the clerk on the regional economic impacts of oil and gas development and on offshore oil and gas drilling off Canada's west coast. So perhaps you could get the witness lists in tomorrow.
Two other things. We'll try to get witnesses for the meetings on Tuesday, December 14, the second last day, and December 16. We'll certainly invite witnesses on the regional economic impacts and offshore oil and gas, but whether enough will come is the question.
Do you want to book a meeting for Thursday, December 16, the last Thursday before the Christmas break?
Some hon. members: No.
The Chair: Okay, we won't book that. We don't want to invite witnesses only to have them find out there's no meeting. There's a consensus that we don't invite witnesses for that meeting, so we'll do our best for December 14. The others are pretty much arranged.
Thank you all very much for your input.
The meeting is adjourned.