Welcome, everybody, to meeting 35 of the Standing Committee on Industry, Science and Technology. Today we have the honour and the pleasure to have some outside guests here from the Government of the Northwest Territories.
We have the Honourable Robert McLeod, premier. Welcome today, sir.
We have the Honourable Robert C. McLeod, deputy premier, Minister of Environment and Natural Resources, Minister of Finance, and Minister of Human Resources. We have the Honourable Caroline Cochrane, Minister of Municipal and Community Affairs. We have the Honourable Louis Sebert, Minister of Lands and Minister of Justice. We have the Honourable Alfred Moses, Minister of Education, Culture and Employment. Finally, we have the Honourable Glen Abernethy, Minister of Health and Social Services.
We thank you and welcome you to our industry, science, and technology committee.
We understand you have some presentations, so without further ado, I'll give you the floor.
Thank you, committee, for meeting with the Government of the Northwest Territories this afternoon.
We are here for some business meetings with the , ministers, and a number of standing committees about some of the challenges and opportunities facing the people of the Northwest Territories today. We're very pleased to have the opportunity to meet with the Standing Committee on Industry, Science and Technology.
Before we get to the presentation, I would like to take a few minutes to talk about our territory. I was pleased to hear that some of you had been up to the Northwest Territories and visited us.
In the Northwest Territories, 44,000 residents live in 33 communities that stretch from the southern border with the provinces of Saskatchewan and Alberta to Banks Island in the Arctic Ocean. Our biggest community is Yellowknife, with approximately 21,000 people, while our smallest community is Kakisa, with fewer than 50. Twenty-seven of our communities have fewer than 1,000 people, and 16 of these have fewer than 500.
Only 12 of the Northwest Territories' 33 communities have year-round road access to southern Canada, and four of them can only be reached by air or water. Although the Northwest Territories has substantial hydroelectricity potential, only eight Northwest Territories communities are powered by hydro. The remaining 25 are powered by stand-alone diesel generators.
Lack of transportation and energy options drives up the cost of living for Northwest Territories residents far beyond what our fellow Canadians face. In 2015, for example, residents of Ulukhaktok paid $8.25 for a 540-millilitre tin of tomatoes, and residents of Fort McPherson paid $7.85 for a single litre of milk.
People in Fort Smith, a community of 2,500 people near the Taltson hydro facility, pay 16¢ a kilowatt-hour for electricity. Most of the territory pays much more. In Yellowknife, home to half the Northwest Territories population, we pay 30¢ per kilowatt-hour, while the cost in diesel communities is 65¢ a kilowatt-hour—compare that to on-peak rates of 18¢ per kilowatt-hour here in Ottawa.
At the same time, the Northwest Territories is experiencing the effects of climate change at a faster pace than southern Canada. In Inuvik, the average annual temperature has already risen by 4°C since the 1950s, while in the southern part of the Northwest Territories, we are already experiencing annual temperature increases of 2°C.
Climate change is resulting in coastal erosion, thawing permafrost, landslides, increased snow loads on buildings, and drought. Shorter winter road and marine operating seasons as a result of warmer temperatures result in incomplete or more costly community resupplies. Building techniques have had to adapt, resulting in more complicated and costly public infrastructure projects. At the same time, transportation of people and goods is being disrupted, as permafrost degradation contributes to uneven roads and runways.
One thing about northerners though is that we have always had to rely on our own ingenuity. With limited access to outside resources and supplies for much of its history, the people of the Northwest Territories have always had to be creative with their solutions. We continue to use that creativity and innovation to address modern problems and lead the way in applying new techniques and technology for cold-weather building construction, road construction, and renewable power solutions.
We are second in Canada in installed solar photovoltaic capacity per capita and a national leader in wood pellet use. Projects like the Mackenzie Valley fibre optic line and the Inuvik to Tuktoyaktuk highway demonstrate our forward thinking.
We think the lessons that we have learned in the Northwest Territories can be applied to southern Canada as well, particularly in transition to a green economy.
We are here to today to talk to you about three priority projects where we believe there's substantial opportunity for the Government of the Northwest Territories and the Government Canada to work together to bring about transformative change in the north and to achieve national goals with respect to climate change.
Mr. Chair, I would now like to turn you over to Minister Wally Schumann, who will speak about these opportunities in greater detail.
I'm very pleased to be here this afternoon to provide the committee with some perspectives from the Government of the Northwest Territories on areas where we believe the Northwest Territories can make significant contributions to the overall national objectives related to green energy, and can support economic growth and development in the knowledge-based economy.
I would like to begin by speaking about some priorities in the Northwest Territories that we believe will provide benefits for the residents of the Northwest Territories and for Canada.
The first priority is phase one of the Taltson hydroelectric expansion project. This project would see the expansion of the existing Taltson hydroelectric system in the southeast area of the Northwest Territories. The project includes a 60-megawatt expansion of the Taltson hydro site and the construction of a 200-kilometre transmission line to Saskatchewan. This project is a potential game-changer for the N.W.T. and for Canada, in increasing the availability of clean, renewable power.
By connecting NT Hydro—currently stranded—to the national energy grid through Saskatchewan, we could then help reduce the national greenhouse gas emissions by 360,000 tonnes annually over several decades. Given the expected life of the facility, that is a big step forward in achieving the national climate change priorities and in living up to the terms of the Vancouver declaration. The expansion would rely on existing water storage, with no new flooding to generate ongoing revenues. In a territory where aboriginal partnerships are part of our daily reality, this project would be built in partnership with aboriginal governments, creating economic opportunities for them and for aboriginal-owned businesses across the N.W.T.
Our second priority is innovative renewable energy solutions for remote northern communities that currently rely on expensive, carbon-intensive diesel for power. Stand-alone diesel generation is the only source of power for 25 of the Northwest Territories' 33 communities. This situation is costly from both an economic and an environmental perspective. The Government of the Northwest Territories has been advancing solutions for this issue for over a decade now. What we have today are the best and most innovative solutions for addressing diesel-generated power use in Canada's remote north. Like many of our priorities, this one involves several approaches designed to respond to the unique demands of our many communities. It includes a wind energy project in lnuvik, high-penetration solar for projects in 15 off-grid communities, and a hydro transmission line to Fort Providence.
The lnuvik wind project includes the development of up to four megawatts of wind energy and a 10-kilometre transmission line to the town of lnuvik. We estimate that this project will reduce greenhouse gas emissions by 4,300 tonnes per year and will eliminate the need for 1.3 million litres of diesel annually in the largest diesel community in the Northwest Territories. This is a groundbreaking project that would be the first large-scale wind project north of the Arctic Circle in Canada.
The second solution includes the installation of high-penetration solar, with batteries or efficient variable speed generators, in 15 diesel-powered communities in the Northwest Territories. Batteries and variable generators are the only way to significantly decrease greenhouse gas emissions in remote communities, and can achieve diesel and greenhouse gas emission reductions of 20% to 25%, as opposed to the 2% to 4% from solar alone. We have already demonstrated the success of this approach in two High Arctic communities: Colville Lake and Aklavik. Reproducing this success in 15 additional communities in the N.W.T. would provide annual greenhouse gas reductions of 2,600 tonnes per year, would improve energy security for these communities, and would advance our national goal to reduce our reliance on diesel power generation.
The third solution is the construction of a transmission line to connect Fort Providence, one of the N.W.T.'s larger diesel communities, to the Taltson hydroelectric system. This transmission line will reduce greenhouse gas emissions by 4,900 tonnes per year and will permanently supply renewable power to the community.
The final priority I would like to talk about is the construction of all-weather road infrastructure for adapting to climate change impacts. As the premier indicated at the beginning of our presentation, inadequate transportation links are a challenge for N.W.T. communities. With only 33% of our land mass within 100 kilometres of an all-weather road, we are highly dependent on seasonal transportation links such as winter roads and ice roads. Climate change is greatly affecting the reliability of these links, particularly at vulnerable ice crossings.
New road corridor projects, such as the Mackenzie Valley Highway and the Slave geological access corridor, will mitigate the impacts of climate change, connect our communities to each other and to the rest of Canada, and increase the safety, reliability, and resiliency of the transportation system.
At the same time, these new links would enable new trade opportunities and economic prosperity. The Mackenzie Valley Highway corridor will connect several N.W.T. communities to the public highway system and provide reliable access to a wealth of petroleum and mineral resources. Substantial planning work has already been completed. Priority components of this project include the construction of the Bear River bridge, engineering and environmental studies for the remaining Wrigley to Norman Wells phases, and the construction of the Tulita to Normal Wells segment, including the completion of environmental assessment activities.
The Slave geological province is the site of N.W.T.'s existing diamond mines and still contains a wealth of untapped mineral potential. However, climate change has resulted in shortened operating seasons for the existing winter road servicing the region, and this has resulted in significant transportation costs and operational difficulties for mining developments. An all-weather corridor into the region would eliminate these difficulties, lowering the cost of exploration and development for industry and supporting the N.W.T. in reaching its full economic potential.
These priority areas build on innovative work that the Government of the Northwest Territories has already been doing, and I would like to take a moment to highlight a few areas that should be of interest to the committee.
First, we are very pleased that this winter we will see the completion of the Mackenzie Valley fibre link. This fibre optic line will cover more than 1,100 kilometres and bring state-of-the-art, high-speed fibre optic communication to small and remote communities along the Mackenzie Valley Highway. This will support economic development and diversification opportunities for our residents and give the Government of the Northwest Territories innovative new ways to deliver programs and services, such as health and education services, to our smaller communities.
In addition to these benefits, the Mackenzie Valley fibre link will provide high-speed connection to the Inuvik satellite station facility, supporting near real-time transfer of Canadian and international satellite data. The data received from these satellites is used for environmental monitoring, northern science, sustainable resource development, climate change, and security and surveillance, particularly for Canada's vast Arctic regions.
Natural Resources Canada, the Swedish space agency, the German space agency, the Norwegian space agency, and private companies already have dishes at the Inuvik satellite station. We expect that, over the next 20 years, the number of satellite dishes at Inuvik could increase to about 25. I'm sure you would share in our vision of Inuvik becoming a hub of research and the potential that the satellite station has, along with the fibre link project, to provide a variety of economic opportunities in the north.
As has been noted, the Northwest Territories has a particular interest in renewable energy, so for many years the GNWT has been investing millions of dollars into energy projects with a focus on displacing imported fossil fuels. The GNWT has already led efforts to reduce emissions through energy efficiency and by using low-carbon heating sources, such as wood pellets. This extends to our own assets. By 2017-18, nearly 20% of all GNWT heating for facilities like offices, schools, and health centres will be provided through the use of biomass. Overall, our electricity system is powered mainly by hydroelectricity. In an average year, over 75% of community electricity is produced using renewable hydroelectricity. The Northwest Territories is second in Canada in installed solar PV capacity per capita. In a territory that is dark for significant parts of the year, this speaks to our openness to innovation.
Speaking of innovation, I would be remiss if I did not note the work on the Inuvik to Tuktoyaktuk highway. This highway is 138 kilometres long and is a testament to the partnership between the federal and territorial governments and to the need to use leading-edge science and innovation to complete these types of projects. In order to complete the highway construction and protect the permafrost along the highway alignment, typical cut-and-fill techniques could not be used for this project.
These traditional construction methods cut into protective layers of surface vegetation and organics with the possible result of thawing in the permafrost below. To protect the permafrost, our design used fills only. Geotextile fabric was placed between the existing ground and the construction materials along the entire highway. The bulk of construction activities also took place during the winter months to preserve the permafrost.
Also important is that the completion of the Inuvik to Tuktoyaktuk highway will enable the extension of the Mackenzie Valley fibre link to Tuktoyaktuk.
Self-reliance has made northerners innovative people, and the Government of the Northwest Territories is eager to share the benefits of our innovation with Canada and the world. With the partnership of the Government of Canada, we think we can capitalize on the innovative work that we have already done to adapt to climate change, reduce the cost of living, and transition to renewable energy sources to create increased benefits for people of the Northwest Territories and help achieve national objectives.
Thank you, Mr. Chair.
Thank you very much, Mr. Premier and all of the honourable ministers, for being here today.
I did have the opportunity with Aboriginal Affairs and Northern Development to go to the territories as we were studying barriers to development a number of years ago. Certainly we met some amazing individuals. I noticed in some of your material that you were talking about your aboriginal-owned businesses. The people we met, and I've continued to say this for years, are some of the best CEOs you could find; it wouldn't matter where they were. Here in the rest of Canada, we should be proud of the expertise that is there and the great work that is done.
I know that one of the problems we have here is the economy. You're having some problems as well in the same way because you have great natural resources that are taking a hit right now. Coming from Alberta, we're well aware of some of the concerns that are there. Again, you've had $1.281 billion in federal transfers, $44 million in Canada health transfer, $16 million in Canada social transfer, $1.22 million in territorial formula financing, but it's even less. It's less money than it was last year. These are concerns that we have. Even the Canada health transfer is budgeted for less than 3% for next year. Hopefully that's something the federal government is going to take a look at.
Again, when we look at energy, and we look at the situations that occur there, I was speaking with a number of folks earlier today, and I think I was the only one old enough to know about the Mackenzie Valley pipeline debate. If we wanted to talk energy, maybe some of these things could have been of benefit over the years. They may or may not have fit into some of the solutions that we could have had. Again, that's gone by the wayside.
I'm just wondering if you could expand a little more because we are looking at a broadband study later on. We have some unique ideas as far as making sure that you build fibre as you're building roads. I think that's a critical thing that people have to be aware of.
Can you expand upon how your work in that area is going to help the communities that you serve? Perhaps you could comment on some of my other rants as well.
Thank you, Mr. Premier.
We've been working with some of the space agencies in Europe. We have seven dishes in Inuvik right now, if I'm not mistaken, and I think there are plans for four more. The Italians are actually coming on board. That's going to bring some revenue to the community of Inuvik.
Next spring, we should have lights on. We ran into a bit of trouble crossing one of the streams, which held up our winter construction. However, there's a lot of potential to it and we've actually doubled the amount of lines that we're putting into the fibre. They were going to put in 24 lines of fibre, but our minister of finance of the day realized that it wasn't going to cost that much extra to put in another 24 lines, so we have a 48-line fibre. In the future, if we have to expand, we don't have to run another line, because we have the capacity there.
I'm sure you've heard about the location of Inuvik and being able to get satellite information off satellites that are coming over. We were over visiting with DLR and they were saying that, in Inuvik, much like Kiruna, Sweden, you have a half hour to get information off a satellite as it's coming over. They said that, in satellite talk, that's a lifetime, so we're quite pleased with that.
I know it's a high-tech industry, but our kids nowadays are all good on computers and everything. If we can tap into some of that opportunity, if there are opportunities there for some training, I think that's really going to help too. We have a lot of people coming to the Aurora Research Institute in Inuvik, too, doing a lot of studies, especially on climate change, and this is going to be beneficial to them as well.
We're hoping to have lights on next winter. I think we can have lights on right up to Fort Good Hope. Past Fort Good Hope is where we're having some issues with the terrain, but we'll get that resolved this year and it will be lights on throughout the territory. It's going to be huge.
Thank you, Mr. Premier and members, for being here. It's very much an honour to have you here today. I think it's important for a lot of us to see what the challenges are going to be and how the committee can help, hopefully, in the future as well.
I noted with interest your infrastructure projects. Where I come from in the deep south, so to speak, we have a new bridge process going on and I understand the difficulty of trying to get things done. I've been trying to get a new bridge for a number of years. We have about $1 billion of trade going through my riding. Basically it happens along two kilometres, and this is per day that it takes place, in culmination, depending on what's actually being transported. Despite that magnitude, to get a project going has been difficult for a lot of different reasons. We are moving forward, thankfully for that.
In terms of your projects that you mentioned here, the government has talked about an infrastructure bank and public-private partnerships. I'll be quite frank; I'm biased against them. I look at what we're doing and the new border crossing that we have. You're building a layer of profit in there, especially given the fact that for other border crossings we've actually done grants and bonds, especially when we do them bi-nationally with the Americans, and can raise the funds in a more cost-effective way and pay dividends to citizens. However, in your situation, what are the pros and cons?
I have no agenda within that question. I just think you should know what I feel on it. Does that lend any opportunities or does it create other complications in looking at that model for these types of projects?
The tourism sector is defying all of the downturn in the economy. It's the fastest growing part of our economy. In the last few years, especially since Canada received approved destination status from China, the interest of the Chinese in coming to the north has been substantial. In the past six years, since that status was approved, we went from zero to more than 10,000 Chinese coming to visit us.
Before that, we had the traditional forms of tourism, which was what we would call the rubber-tire tourists who come camping and pull their trailers. We also had a lot of hunting and fishing. More recently we've had more adventure ecotourists. But with the aurora, first we had the Japanese—more than 17,000 Japanese come on an annual basis—and now the Chinese have brought that up significantly. With the downturn in the Canadian dollar, tourism has also increased substantially.
We continue to grow by leaps and bounds, and the biggest thing that's holding us back now is the lack of hotel rooms and infrastructure.
Also the Inuvik to Tuktoyaktuk highway, which will open in the fall of 2017, will be part of the Canada 150 celebrations, and we expect to have a significant increase in tourism because it will be the first time Canadians can drive from sea to sea to sea. You will be able to drive to three oceans, at your pleasure, so we expect that will add to tourism in the north as well.
This is something that we've been working at for a long time. At first the focus was on political and constitutional development.
As you may know, we have a different system of government in the Northwest Territories. We have a consensus system of government in which we have 19 members of the Legislative Assembly who run as independents. We form a government. Fifty per cent of our population is aboriginal, so there are seven aboriginal governments. We still haven't figured out exactly how everything is going to look once everything is negotiated and settled.
People say, “Why don't you become a province?” We've looked at the possibility of becoming a province, but the fact is that we don't have a lot of people to become a province. We recognize that in order to become a province these days, you have to have a majority, over 50% of five of the most populated provinces. Having said that, if we could even do that, we realize that the amount of funding we get from the federal government would decrease significantly. We would get about one-third of the funding that we get now.
We recognize that we've also achieved devolution, so we think we have the best of both worlds in the fact that the federal government has delegated or devolved almost all of the provincial-like powers that every province has. We manage the land, the resources, and everything a province does. Now, we pretty well have that authority.
The biggest problem we have is that we're a very large territory of almost 1.5 million square kilometres. We don't have a lot of infrastructure. We have a very large infrastructure deficit. Whenever we talk about infrastructure, we're faced with.... We don't like the term “per capita”. Because infrastructure funds are allocated per capita, we get very little funding, so we prefer “base-plus” funding.
If the federal government could develop all the infrastructure we need, we would be in a very good situation. Basically, we don't have a lot of housing. The funding from CMHC is supposed to disappear in 2028, I think it is. Our aboriginal population is the fastest growing part of our sector, but we're short a lot of houses. I think we're short a couple thousand houses.
We achieved devolution just when the economy took a real severe drop, so the resource revenues that we were counting on have also declined. With oil and gas pretty well shut down, who knows when or if it will come back? It could be 10 years. It could be 15 years. Some people are saying, “Donald Trump will turn it around tomorrow,” but I think that's a bit farfetched.
Basically, we're looking for investment in infrastructure. We're looking for help to develop some of our significant natural resources. We have some very large projects that have gone through the regulatory process and have been approved, but they haven't gone ahead because there's not enough. We can't get capital to build them.
We have the Mackenzie Valley natural gas pipeline, which would be an approximately $21-billion project. It took six years to go through regulatory approval. As soon as it was approved, the natural gas went down to under two dollars per thousand cubic feet. Now it has a seven-year extension to be built by 2022. We have three mines that have been approved: rare earth, Nechalacho, which costs $1.6 billion and hasn't been able to raise any capital; the NICO gold and lithium mine, which needs to raise $600 million; and we have the Canadian Zinc, which needs to raise about $300 million. All those projects have been approved, but they haven't been able to raise the capital to go into the next phase of construction and implementation.