:
Thank you very much, Mr. Chairman. Merci. Thank you all for this opportunity to meet today with the Standing Committee on Natural Resources.
This is my first appearance before the committee, and I'm pleased to discuss my department's portfolio and supplementary estimates.
You've already introduced the deputy minister of Natural Resources, Mr. Serge Dupont.
[Translation]
Mr. Chair, members of the committee, our government's top priority continues to be supporting jobs and growth, and sustaining Canada's economy.
[English]
As we are all aware, Canada is not immune to the uncertainties of the global economy, but Canada is continuing to outperform our G-7 colleagues. We're the only country in the G-7 to have gained back all of the jobs and all of the economic output lost during the recession. In fact, we’ve gained it all back and then some—over 600,000 jobs.
A large part of Canada's success is the result of our strong natural resource sector. In 2010 the energy, mining, and forest sectors accounted for 11.3% of Canada's real GDP, or $140 billion. These sectors provide significant employment in communities right across the country. In 2009 the energy, minerals and metals, and forestry sectors were responsible for directly employing close to 760,000 Canadians.
Canada is a leading exporter of natural resource commodities and resource-based technology and knowledge. On the world stage, we are seen as a global mining giant and an energy superpower.
[Translation]
That's why the Government of Canada is making targeted investments to support innovation in the resource sectors, and the jobs and economic growth that these sectors provide.
[English]
Mining and mineral processing are directly responsible for the jobs of well over 308,000 Canadians. Thousands more work in related industries. In 2010 mineral production contributed more than $35 billion to our GDP. Canadian mineral exports accounted for $84 billion, and 21% of total exports came from minerals.
Many Canadians would be surprised at just how big a presence Canada's mining sector has in the world, with over 50% of equity raised in Canadian stock exchanges.
[Translation]
I was recently in China attending the China Mining Forum where numerous Canadian companies operate. I was impressed by their level of awareness of Canadian expertise in the mining sector. While there are issues surrounding sub-national governments, there is great potential for Canadian companies in China.
[English]
I'd like to acknowledge the work of this committee on this important file. I know that your current study of resource development in Canada's north will be beneficial, and I look forward to your final report.
NRCan is pleased to cooperate with the committee's study in any way we can.
[Translation]
With regard to the North, our government is making progress on many of the issues this committee has identified, such as the economic impact of mining in the north, shared responsibilities, aboriginal involvement, the environmental assessment process and regulatory system.
[English]
These numbers are all of vital importance to Canada's economy. Much of Canada's resource wealth—gold, silver, copper, zinc, diamonds, and oil and gas, and even rare earth elements—can be found in our vast northern lands.
I witnessed the potential of the north first-hand this summer when I joined the on his annual tour, and visited Meadowbank gold mine. The mine is providing great opportunity to the surrounding communities. Indeed, the mayor of Baker Lake told me that the unemployment rate in their community, which was over 40%, is now 2%—and he assured me that he wouldn't hire either of those two people either.
Just like mining, the forest sector represents the lifeblood of hundreds of Canadian communities. So our government is making unprecedented investments to help transform Canada's forest sector towards higher-value activities and global markets.
During my trip to China and Japan, I saw first-hand the dramatic progress we are making in growing and diversifying markets for Canadian forest products through initiatives such as Canada wood export program. Canada's lumber exports to China have doubled every year during the past five years. This year alone, exports in the first nine months of the year are up nearly 120% from levels just a year ago.
[Translation]
Thousands of Canadians are working in the forest sector today as a result of our efforts to expand demand for Canadian forest products in the fast-growing Asian markets.
[English]
Some of the initiatives covered in supplementary estimates (B) are supporting these important market expansion programs. In supplementary estimates (B), $59.4 million will assist the continued transformation of Canada's forest sector through innovation, product diversification, and expanded opportunities for exports.
Finally, Canada's energy sector is a cornerstone of our national economy, and in an energy-hungry world, this sector is poised for great growth.
[Translation]
It is a dynamic industry with the right resource base, workforce, innovative spirit, leadership, and it's in the right environment to thrive like it never has before.
[English]
Canada is the second-largest producer of uranium, the third-largest producer of natural gas and hydroelectric power, and the world's sixth-largest producer of oil. We have the third-largest proven oil reserves in the world—almost all in the oil sands. These enormous energy assets are generating economic wealth across the country. In fact, energy represents roughly 7% percent of our gross domestic product, and creates hundreds of thousands of direct and indirect jobs throughout Canada.
Last year, for example, the energy sector provided direct employment for more than 270,000 people. It is estimated that last year Canada's oil and gas industry paid more than $4 billion in taxes and $12 billion in royalties. These funds are being used across Canada to support our social systems, including our health and education systems.
[Translation]
And thanks to Canada's highly skilled work force and strong innovation, we are capable of increasing our energy production in an environmentally and economically sustainable manner.
[English]
This includes a growing portfolio of renewable energy, including hydro power, bioenergy, and wind. Many of our investments in innovation are in clean energy, and they're being funded by allocations through supplementary estimates (B). Additional NRCan funding included in the $469.7 million in supplementary estimates (B) will support clean energy programs to strengthen Canada's economy and improve its environmental performance.
Another incredibly important energy sector is Canada's strong nuclear industry. As the members of this committee are aware, we have now completed the sale of the CANDU reactor division to an entrepreneurial Canadian company, SNC-Lavalin. This is a critical step in strengthening Canada's nuclear industry while reducing taxpayers' exposure to nuclear commercial risks.
Supplementary estimates (B) is requesting significant funding for Atomic Energy of Canada Limited. This funding will enable AECL to meet operational requirements, including isotope production, ensure safe and reliable operations at the labs at Chalk River, and meet contractual obligations and cover costs associated with the divestiture of the CANDU reactor division. I can assure this committee that this funding is necessary to ensuring that we meet our obligations.
[Translation]
Mr. Chair and members of the committee, Natural Resources Canada has an immense and diversified portfolio—all directly linked to Canada's economic health and prosperity.
[English]
Nevertheless, I don't want to leave you with the impression there are no challenges ahead. Clearly, we must continue to expand our markets beyond our current base of strength in North America. In order to realize the full potential of our abundant resource endowment, we need a timely, effective regulatory regime to develop the projects and infrastructure to diversify our markets into the Asia-Pacific region. This is urgent.
[Translation]
No matter how large our assets or our advancements in technology, they are of little benefit if our regulatory environment acts as a deterrent to their development. We're working on that.
[English]
We must also continue to increase the environmental performance of our energy sector, which our government has supported with over $10 billion in investments. As I've recently promoted in my travels abroad, Canada is a reliable, environmentally friendly source of energy and natural resources. Everywhere I go my message is the same: Canada is a market-based, responsible, and reliable supplier and we are open for business and investment.
Thank you again for this opportunity to speak to this committee. I would be pleased to answer your questions.
:
Thank you very much for the question.
I've been hearing and receiving strong feedback from our forestry sector. There have been many positive developments in forestry since the very difficult recession that hit the industry quite hard.
The positive feedback includes an increase of 600% in exports to China and over 13,000 more employees. Of course, there is still work to be done, and the industry is still in a period of transition. I have had a number of round tables with forestry companies to listen to their concerns, from coast to coast, and the message I've been receiving is that our programs are having a positive effect and that we need to stay the course.
The Forest Products Association Canada recently said the following:
The forest sector has been aggressively re-inventing itself with government as a critical partner. We are now at the point where industry efforts to transform are making an impact. However we still need an ongoing partnership so that industry can build on the existing momentum, and help protect jobs and rural communities.
Our government has been and will continue to be an ongoing partner with the forestry industry. I should just say that in a suite of market programs including Canada Wood, North American Wood First, and the Value to Wood, we are supporting the expansion of market opportunities for Canadian wood producers. As I mentioned in my remarks, I was recently in China and Japan, where I witnessed these programs in action.
I was at the Tianjin economic development area, or what they call TEDA, for a celebration of the first four-storey wood-frame building. There was much fanfare, dragons, banners, and so on, and they were very pleased. Of course, it really showcased our wood and our cross-laminated technologies, as here we had the first four-storey wood building in China. This really creates great hope for the industry.
In Japan, I visited Sendai, which was one of the areas hit by the tsunami—and I have to say in that regard that the courage, dignity, and resourcefulness of the Japanese people is truly awesome. I was there when the first foreign ship had just arrived, carrying Canadian lumber. The Government of Canada had invested some $2 million—the Government of British Columbia as well, and the forest industry. And so Canadian wood is going into the construction of community housing, because there are literally thousands, many thousands, of Japanese who are in temporary housing, and they can now see the beauty and durability of Canadian wood.
I heard a dismissive remark from another party that we don't want to promote wood because wood rots. Let me tell you that in Beijing, it was 1,400 years ago that the forbidden city was built, and it remains a source of tremendous pride to the Chinese to this day. So, talk about durability.
:
Thank you, Mr. Minister.
Here is an excerpt from you presentation: "[...] Canada is a reliable and environmentally friendly source of energy and natural resources."
As far as asbestos is concerned, you realize that the international community does not think that it is environmentally friendly. You must know that, for nearly a month now, mining production in Quebec has come to an overall halt. No one has been working in the asbestos mines for almost a month now.
You must certainly know that a lot of elected representatives, actually more and more, including some in your own caucus, no longer support the idea of financing this industry. You are aware, I hope, that a large part of civil society in Quebec—which is after all the province most concerned—no longer supports asbestos. Everyone in the CSQ, the CSN and the Coalition pour que le Québec ait meilleure mine no longer support asbestos.
So we have before us a historical moment to do what should be done, that is, to finance a transition plan for the asbestos workers in order to diversify the economy for the younger ones and help the older ones make it to their retirement, and stop operations.
Mr. Minister, do you plan to take advantage of these historical circumstances? If not, how can you justify a decision that would be so harmful for the health of hundreds of thousands of workers around the world, and now clearly as harmful for the economy of the asbestos region?
Diversifying our markets is a key strategic objective of this government. Currently, 97% of our energy exports go to the United States, and while the U.S. has been a strong customer, its energy growth is stagnant. It is absolutely essential, a key strategic objective of this government, that we diversify our customer base.
Emerging economies such as China have a very fast growing appetite for our energy exports. China is now the largest consumer of energy in the world. We have the third largest oil reserves in the world, which need to go to market. There is a tremendous complementarity. We want to diversify our customer base and it wants to diversify its sources of energy.
To get it to market, infrastructure will need to be built. And for all proposed pipelines, this will of course go through the regulatory process to ensure the pipelines are environmentally sustainable and safe.
It's important to note that pipelines remain the safest form of transportation of our energy products. In fact, if I may just add an aside, the final Keystone XL environmental impact statement from the U.S. State Department said that Keystone would be safer than any of the domestic pipelines already built in the United States, because of some 57 conditions imposed on TransCanada Pipelines and because of technological improvement in the pipeline.
So we need to move quickly; we can't afford to move slowly. The expansion of our energy sector means hundreds of thousands of jobs for Canadians, billions of dollars for our government, and trillions of dollars for the economy, and we're committed to moving forward in a socially and environmentally responsible way.
:
Mr. Chair, I could say a couple of things related to that.
It's the policy of the Government of Canada that decisions related to upgrading and refining are made in the private sector. There are a number of factors that come into play when the industry makes those decisions, particularly related to the oil sands.
There is a decision on whether they take the raw bitumen and upgrade it to what they call synthetic crude, and then on where synthetic crude goes to become refined product. What the industry looks at is the margin between what they can sell diluted bitumen for, and what synthetic crude sells for. Sometimes, if it in fact costs more to upgrade than the price of synthetic crude, there's no return on their investment, so they won't do it. If there's a big gap between the two prices, it's more worthwhile for the private sector to invest. We see the margins. Sometimes they get bigger; sometimes they get smaller.
There are other factors, as well. Sometimes, for example, refiners will prefer to be closer to the markets, because it's cheaper to transport, for example, crude oil by pipeline. I'm talking about the difference between crude oil and refined product. What comes out of refineries is gasoline, jet fuel, and diesel. Those are separate streams. They either have to batch them in the same pipeline, or they require dedicated pipelines. For example, some refineries will have a pipeline that will go directly from the refinery to a nearby major international airport, which is the case in a number of cities.
A third factor is that gasoline varies, depending on temperature and the region of the country. The gasoline you put in your car in the winter is a slightly different blend from what it is in the summer. Of course, the difference between Texas and Ontario at different times of the year can be considerable. Gasoline refineries will actually tailor their product to the local market. That's another reason that the refiners, rather than shipping refined products long distances, will choose to be a little closer to the markets.
Another factor is that crude oil is more easily shipped long distances than gasoline, for example, because impurities getting into gasoline can be a major problem. Sulphur, for example, can get in. You have to clean it out at the other end. It's not as much of a problem when you're dealing with crude.
The final thing is the cost of infrastructure. A lot of the oil that would move, for example, down the Keystone XL pipeline would be moving to refineries on the Gulf coast, where they're already set up to do heavy crude. Just as a matter of reference, the price of a new refinery for 250,000 to 300,000 barrels a day can be in the range of $7 billion to $8 billion. They have existing refinery capacity already set up to deal with heavy crude. Oil sands oil is heavy crude. A significant investment like that is one of the commercial reasons for moving it to those refineries.
As an example, if you're moving a refinery from dealing with light crude to heavy crude, you need to introduce a coker. One of those can be worth $2 billion. It's a very capital-intensive business. What happens a lot of times is that the crude will go to the refining capacity, which again is a decision we leave in the hands of the private sector.
Those are some of the factors behind the private sector's investment decisions.
:
I can actually provide answers to some of those questions, but I believe we should take notice and get back to you with more details. I think that's fair.
As for the new funding that's in supplementary estimates (B), it's $469 million. I think I went through a lot of the various parts of that.
One of the things that is actually available on the Internet was this. We went through and did an evaluation of the energy efficiency programs that ran for the last five years. For example, just on some of the reductions we got coming out of that, we anticipate that the total anticipated reductions to date are about 30 megatonnes annually by 2020. For instance, for energy efficiency initiatives, we're calculating that there will be about 20 megatonnes. For renewable energy and clean electricity programs, we're estimating about 6 megatonnes. For clean fossil fuels and alternative funding, we're estimating about 4 megatonnes. In Tom's area, in pulp and paper transformation, we're estimating 1.4 megatonnes.
Again, we do that calculation. It's one of the measures we use to see if these programs are targeted. We looked at how much it cost for the programs, per megatonne, to determine whether they were effective or not effective. That was one of the factors that drove the whole new generation of programs we're funding through supplementary estimates (B).
In terms of carbon capture and storage, we are committed to a number of major projects. We can get you the specifics on those. It's about $1 billion, federally. On some of the numbers—and here again, I am going by memory—when you look at federal, provincial and private sector funding, I think the total spending on carbon capture and storage is about $7 billion. There is a significant investment.
In my three minutes, that's an overview of what we're spending.