Good morning, everybody. Happy Thursday. Everybody is in a good mood today, I see. I think we all know why. This is the last meeting before our constituency week, which is the real reason everybody is so happy.
We have two witness groups joining us today in the first hour. Thank you very much.
From Efficiency One, we have Stephen MacDonald, chief executive officer; and Amelia Warren, director of customer experience and partnerships.
From Energy Services Association of Canada, we have Jean-Pierre Finet, vice-president.
Mr. Finet, I understand that you have provided a presentation which is in English only. It's going to be translated, but I think Mr. Finet is actually going to be delivering a lot of his remarks in French.
If everybody is okay with that, we can pass around the deck.
Some hon. members: Agreed.
The Chair: It will be translated subsequently. Thank you.
Before we get going, the other piece of information to mention is that the minister will be joining us on Thursday, November 22. He is coming to speak to us about the estimates, but also generally about his mandate as he's relatively new to the portfolio. We can look forward to that when we get back.
The process for today is that each group will be given up to 10 minutes to make their presentation, which they can do in French and/or English. This will be followed by a series of questions from members around the table.
Who wants to start us off? I'll leave it up to you.
Good afternoon, everyone.
I can answer questions in French and English. It's fine with me. I will provide you with a translated French version of the presentation as soon as possible afterwards.
My name is J.P. Finet. I represent the Energy Services Association of Canada. I'm here to talk to you about how energy performance contracting, as part of the energy-efficiency mode of intervention, can contribute to the Canadian Paris climate change commitments and also provide economic opportunities other than simply saving energy.
First, I'm going to talk to you briefly about who is part of the Energy Services Association of Canada. Briefly, I'm going to explain to you also very simply what is energy performance contracting and the benefits of energy performance contracting compared to other modes of intervention in the marketplace, and also the economic opportunities and environmental contributions ensuing from our work in the marketplace. Then after, you can ask all the questions you want.
The association was incorporated in August 2010. Our membership was founded by six very large companies. A lot of blue chip companies are in there, including Honeywell, Johnson Controls, Siemens, Ameresco, Trane, and MCW. However, we have more members than that. We also have Engie, which is the former GDF Suez, which is worth something like 60 billion euros. We have other energy service companies, but we also have manufacturers that are members of our association, such as Armstrong Fluid Technology, Philips Lighting, and so on.
These are all large, credible organizations. These companies represent approximately 90% or $300 million per year of guaranteed performance contracts in Canada. We represent where we do the most business.
I'll tell you what an energy performance contract is and what it is not. It's basically a partnering arrangement between a building owner and an energy service company. An energy service company is different from any other engineering firms in the sense that what distinguishes us from everyone else is that we guarantee savings. By the way, we intervene mostly in, I would say 90%, public buildings, so either federal or provincial buildings. Ten per cent would be the commercial sector. Basically we do a comprehensive review with guarantees that the savings will be sufficient to finance the cost of the project. If, for instance, in a case where we said we will save 30%—I say “we”; our members say we'll save 30%—in your building and they don't achieve that 30%, we compensate by writing a cheque for the difference. That's why we say the risk is on us. We transfer the risk and financial performance risk to the energy service company.
If you take a traditional engineering firm with their staff, they can make the exact same project, but they will just not guarantee the savings. That's why we provide over and above the traditional way of doing business.
On financing, there's a point I need to make. Our members don't make money from financing operations. Actually, they prefer not to finance. Many governments, like the Quebec government, for instance, even the federal government, use their own money, their own budgets, and we guarantee savings. But if there are clients...there are also some governments that prefer not to use their own money and use off-balance sheet accounting, then we can facilitate it as a pass on...the financing. We are linked to a lot of financial organizations, large banks that will provide the financing for the projects because they know that we are serious and we achieve savings.
As for how it works, before a partnership, the building owner and manager has an operating budget, with which he pays the utility bills. During our partnership, the operating budget is used to finance the energy-efficiency measures and the monitoring and performance reporting and so on, until the cost of the project is repaid. Then the customer—or the client, the building owner—retains all the savings once they have repaid all the costs of the project.
Our members basically make money on the inefficient use of energy, which we replace with the efficient use of energy. We've done a lot, by the way. There's the federal building initiative, a program of Natural Resources Canada that promotes energy performance contracting within the federal government organization. NRCan also provides coaching and qualifies facilitators who accompany building managers in these types of contracts. A lot of provinces also use energy performance contracting, but more could do so. Also, the private sector would gain by using more of this type of risk-free energy contracting.
There are key benefits. They include measurable accountability through performance-backed savings guarantees, and the mutual success guarantees partnering behaviours. Also, it's often used to offset costs around wider improvement initiatives, for instance, asset management. Regularly in our contracts in Canada and in Quebec, we're being asked to use the energy savings to finance asset management and improve the facility condition index of the building. For instance, a lot of schools in Quebec have suffered from a lack of investment through the years and now need a lot of reinvestment. Basically, energy savings also are used to finance these upgrades.
As well, it's a turnkey process with one contract and less coordination risk. If you want to do energy-efficiency projects within the federal government, you could do that on your own. You can hire people, be the mastermind, contract everything and be the general contractor, or you can hire an engineering firm. You can also hire an energy performance contractor, an ESCO, which will supervise everything, act as a general contractor and guarantee the savings.
Another benefit is that the contract value and energy savings are known before the installation commences, based on a detailed feasibility study. Also, there are full benchmarking, accountability and financial tracking. There's also, as I said earlier, a facilitator who accompanies the client in all of that; so there's a third party verification, if you will. As well, all of that is hedging against future increases in the cost of energy.
In terms of economic opportunities and environmental contributions, yes, we can focus, and this all depends on the RFPs that we answer. The criteria will vary by the function of the building and the priority of the client, but if we're asked to put a focus on greenhouse gas emissions reduction, we will put a focus on the measures that address that. For instance, in Quebec, if a building is heated with electricity, then we won't have as many greenhouse gas emissions, so we'll focus on other fuel sources.
As I said earlier, there's the possibility of allocating savings to asset maintenance and to improve the facility condition index, which is another economic opportunity. The fact is that energy-efficiency stimulates economic development and job creation in all regions of the country. Actually, in your case with the federal government, it's basically about leading by example. When you undertake an energy performance contract, you achieve savings and you show the rest of the marketplace how to do so.
If you have any questions, I would be happy to answer them whenever you want.
Good morning, everyone. My name is Stephen MacDonald. I'm the chief executive officer of Efficiency One. With me is my colleague Amelia Warren, our director of customer experience and partnerships.
Thank you so much for the opportunity to speak with you today as part of your work on studying economic opportunities for energy efficiency. I have some prepared remarks to make, and I am anxious to answer questions as well.
Efficiency One is a North American leader in the design and delivery of energy-efficiency programs and services for households, businesses and institutions. Our model focuses on building industry capacity by partnering with a broad network of local businesses to deliver our services. These businesses include energy auditors, contractors, retailers, technical consultants, architects, builders and many more.
Currently, we work with more than 200 partners to offer advice, technical assistance and financial incentives to over 200,000 customers in Nova Scotia, as the franchise holder of Efficiency Nova Scotia, Canada's first and only energy-efficiency utility. As the franchise holder, Efficiency One has the exclusive right to supply Nova Scotia's electricity utility with reasonably available, cost-effective efficiency and conservation activities for a 10-year period. These activities are regulated by the Nova Scotia Utility and Review Board. Costs are included in electricity rates.
Efficiency One also administers programs to help homeowners reduce their use of home heating oil and other fuels, with support from the Government of Nova Scotia and the Government of Canada's low carbon economy fund. These programs focus on reducing the burden of energy costs on low-income households. They also include several innovative pilot programs and new incentives to support the adoption of solar photovoltaic systems.
One of our pilots focuses on partnering with Nova Scotia's 13 first nations communities to provide energy-efficient upgrades such as draft-proofing and insulation. These upgrades are expected to result in more than $1 million in lifetime savings for participants. The pilot also focuses on education and awareness building to enable future energy-efficiency activities in these communities.
Nova Scotia's focus on energy efficiency to date has reduced our electricity use by over 10%, while generating hundreds of millions of dollars in annual energy bill savings, money that will be recirculated in our economy for years to come. We are also on track to contribute more than one tonne of avoided CO2 for every Nova Scotian, every year. In fact, energy efficiency is one of the main reasons that Nova Scotia is on track to meet its climate change targets.
The Province of Nova Scotia has committed to expanding its energy-efficiency efforts, recognizing that these efforts are an extremely cost-effective way to reduce carbon emissions while supporting growth of the local economy. Our experience in Nova Scotia over the last 10 years is proof of the economic and environmental benefits that energy efficiency delivers.
What we have found is that energy-efficiency activities generate a significant portion of Nova Scotia's gross domestic product, and energy efficiency's share of GDP continues to grow. Our energy-efficiency industry directly provides over 1,400 full-time jobs with direct sector income valued at $83.5 million. The two subsectors that define Nova Scotia's energy-efficiency industry are non-construction firms that derive more than 50% of their revenue from energy-efficiency products or services, and firms that build energy-efficient residential homes or perform renovations to improve the efficiencies of residential and non-residential buildings.
Energy efficiency's share of Nova Scotia's GDP is valued at over $400 million. It's expected to grow by 5% over the next five years. That's compared to forecasted growth of about 2% for the rest of the province's GDP.
Government plays a critical role in helping the energy-efficiency sector achieve its growth potential. Through feedback from industry group participant surveys, respondents identified Nova Scotia's current incentive system as critical to sustaining and growing the industry. Respondents emphasized the continued need for government-supported financial incentives for energy-efficiency activities, including new rebate programs as well as the need for greater public awareness of energy efficiency and a skilled workforce.
Public opinion in Nova Scotia further supports the industry's feedback. Third party polling data shows that a significant majority of Nova Scotians consistently assign a high importance to reducing their energy use. What's more, a significant majority of Nova Scotians express a high level of agreement that adopting a more energy-efficient lifestyle adds to their quality of life.
While public demand for energy-efficiency programs and services is strong, Efficiency One's research consistently shows that cost is the most significant barrier to program participation. We believe there is significant opportunity to increase the adoption of deep energy-efficiency retrofits with innovative financing options and incentive programs.
In Nova Scotia, our most pressing gap, and our greatest opportunity, is in the non-residential, non-electric sector. In many cases, more than 60% of the energy used by facilities in this sector is in the form of natural gas, number two oil or bunker C oil. There are currently no rebate, incentive or support programs available in Nova Scotia to help these customers save non-electric energy.
I'll give you an example. A Halifax business owner, Duncan MacAdams, has invested in reducing energy use at four of his 50-plus-year-old multi-unit residential buildings. He's done this by transitioning from oil to a district heating system that relies on a combination of natural gas, biomass, solar, and ground-source heat pumps. Mr. MacAdams would like to further reduce his reliance on fossil fuels and eliminate his buildings' carbon footprint. He'd like to do this by adding additional solar and biomass capacity. However, support for projects such as Mr. MacAdams' is currently a funding gap in our portfolio.
Gaps like this exist in every province, and the role governments can play to support energy-efficiency activity across Canada goes beyond incentives and rebates. I would like to leave the committee with four recommendations for its consideration.
The first is to address the funding gaps that exist in energy-efficiency programs for industrial and/or multi-unit buildings for customers who use fuels like oil, natural gas or coal and who may wish to transition to low carbon or zero carbon options.
Second, government can play a critical role in training and skills development to grow a workforce that is prepared for a low carbon economy and that will benefit from the job opportunities created by increased energy-efficiency activity.
The third is to work in consultation with the private sector to leverage innovative and private sector financing options to assist in deep energy retrofits and upgrades of our building stock.
The fourth is to ensure there are public policy and regulatory standards, like national building codes, that can help drive demand for energy-efficiency products and services, and support market transformation.
The good news is that we are not starting from scratch. In Nova Scotia, we have a robust energy-efficiency market knowledge. We have expertise and we have industry capacity. We have a well-developed network of trade partners, and we have strong public awareness of and demand for energy-efficiency programs and services. The people, the companies and the know-how are ready and eager to contribute to Canada's economic and environmental prosperity.
Before I speak to how the programs work, I will say that on the residential side, the federal government has recently come to the table through, as I mentioned, the low carbon economy fund to put some additional monies into that sector. I mean, more can always be done, but there has been a recent expansion of activity.
As to how our programs work on the residential side, for a homeowner, for example, we will come and do an initial audit of a home. We do a base-level assessment of that home's energy efficiency. We give the homeowner a report of the energy efficiency opportunities that are available in terms of upgrades they can make and investments they can make. If they increase the level of the home's efficiency to a certain level, we will provide them a financial incentive to help them get there, if you will. That's generally how it works on the residential side.
I want to come back, if I can, to the discussion around why there are incentives. I mean, why don't people do it if it just makes sense? This might be a simplistic example, but there are lots of examples of situations where people or businesses or companies should make rational decisions and they don't. I know I should eat better and work out more, but I don't, even though I know it's the right thing to do.
A voice: [Inaudible—Editor]
Voices: Oh, oh!
Mr. Stephen MacDonald: Yes, that's right. I could use a coach or a personal trainer.
Businesses and institutions are much the same. As Amelia said, they have such a long list of priorities of where they can spend their money and their time. Often, they just don't have the information to know where to start. The programs and services we offer are more than just financial incentives. They're also about education and trying to build capacity in the market with contractors so that they can educate homeowners and businesses about the economic return that's there from energy efficiency.
Okay, thanks, Mr. Chair.
Thanks to all of the witnesses for being here today.
Stephen, I noted that you said one of the biggest opportunities would be in the non-residential sphere, and I was very glad to hear you mention the opportunity in natural gas. It is a particular challenge in Nova Scotia, though, so I have a question for you about those details.
I think it makes good sense for you to say that, of course, because the majority of life-cycle emissions come from tailpipes, and 28% of emissions come from the transportation sector, and I think another 6% beyond that from coal-fired electricity, clearly, transitioning diesel and gasoline-fuelled vehicles to natural gas, and also electricity generation to natural gas is a huge opportunity and a no-brainer for Canada, with almost limitless natural gas supplies.
I am concerned in Nova Scotia's case, in particular, with the decommissioning of offshore natural gas development. Within the next two years, I think supplies there are supposed to end. Of course, the barriers to Nova Scotia's shale gas and other conventional gas opportunities are precisely government policy and legislation. I know there are potentials for LNG opportunities out of Nova Scotia. There are some estimates that it would help reduce the costs for Nova Scotia consumers if Nova Scotia is put into a position where there's a lack of local generation of natural gas instead of having to be brought through a pipeline from western Canada, from the United States.... I think an incentive to develop natural gas and adopt natural gas would be obviously removing high fuel taxes off of natural gas.
I wonder if you could expand on what you meant by that and what sort of opportunities you see there.
There was a lot there. I'm going to speak about the Nova Scotia experience.
Our work and our expertise is on energy efficiency and reducing energy usage. In Nova Scotia, primary sources of energy usage come from home and building heating and cooling, which is a mix of electricity. In our province, about half of our electricity is generated from coal and the other half is a mixture of wind, a bit of hydro—soon to be more—some natural gas and some mix of oil or whatnot. The rest of the energy usage in home and building heating and cooling is primarily oil, a bit of wood, some natural gas predominantly in the Halifax area through our natural gas provider, and I think we have a couple of industrial facilities that may also have access to natural gas.
When we speak to customers, they want to talk to us about reducing all of their energy costs and all of their energy usage. I spoke about some of the gaps earlier. When we go to an industrial facility, if they're using a mix of natural gas for either their building heating and cooling or their industrial processes, or a mix of electricity or a mix of oil, currently we're only able to help them reduce their electricity usage. In many of our industrial facilities, that electricity usage is in industrial processes, if you will, but for building heating and cooling, they're using a mix of oil, sometimes natural gas.
Welcome back, everybody. We're going to get started. We're starting a bit late; I apologize.
Thank you to our witnesses for joining us for this hour.
From Loblaw Companies Limited, we have Mark Schembri, vice-president. Thank you very much, sir, for joining us.
From the Department of Industry, we have Andrew Noseworthy and Gemma LeGresley.
I understand we have a deck from Loblaw. We don't have enough English copies to go around.
Do we have consent to use the French only? It will be translated to English.
Some hon. members: Agreed.
The Chair: It's the first time I've been able to say that. It's usually the other way around.
Each group will be given up to 10 minutes to make a presentation, and then the floor will be open to questions from members around the table.
Mr. Schembri, why don't you start us off.
Good afternoon. My name is Mark Schembri. I head up technical services and store maintenance for Loblaw Companies.
ln my role, I oversee electricity, waste and refrigeration operations within our stores. I'm a member of our company's carbon steering committee and my team focuses a great deal of its efforts on reducing electricity consumption and reducing our carbon footprint.
Thank you for the opportunity to speak with you today. I hope you'll find what we've been doing of interest.
First off, I'll tell you a bit about Loblaw. Loblaw is Canada's largest food and pharmacy retailer. We employ over 200,000 Canadians in our corporate and independently operated stores across the country.
We are a multi-banner format. We trade under such names as Real Canadian Superstore, No Frills, Provigo, Maxi and Shoppers Drug Mart.
Loblaw occupies over 90 million square feet of retail space across the country, with over 2,500 retail stores. Due to our size, the scale of our footprint and emissions is significant and my group focuses on improving that.
In terms of our energy profile, as a business that sells and stores perishable products as its core function, we rely heavily on refrigeration equipment. The operation of our refrigeration equipment constitutes about 50% of our total electricity consumption. Loblaw's national electricity consumption is about three terawatt hours. This represents half of one-tenth of all the electricity generated in Canada. Our annual electricity bill is greater than $300 million a year.
In 2011, we established our baseline carbon footprint. Then in 2016, we worked to establish targets on reducing that footprint. We have set public targets of a 20% reduction by 2020 and a 30% reduction by 2030. In 2011, 50% of our carbon footprint was attributed to the electricity that we consume in our stores.
In terms of big data, we have been installing digital interval meters in our stores in various regions across the country. These meters allow us to track and benchmark electricity consumption on an hourly basis in real time. We've implemented key performance indicators that enunciate utility consumption variances to our business. When these issues are identified, we dispatch our control technicians to investigate and repair the issues in our stores.
We have been investing in energy efficiency. In the area of lighting, the retail lighting business is going through a transformation. We are moving from filament arc and gas lamp platforms to digital ones. lt's a very exciting time to be in the lighting business and we've been very actively converting our stores. We started with our refrigerated case lighting, followed by our exterior parking lot lighting, store ambient lighting and task lighting.
Another area we are focusing on is converting our open refrigerated cases to closed-door cases. We support a retail business with an extensive focus on perishable food. Our merchants' first instinct in putting a barrier between our customers and the product is that it would be an impediment to sales. This, thankfully, is an emotional debate that we are finally starting to win. The reality of it is that putting doors on our refrigerated cases has a substantial environmental and energy benefit. We've been very active in this space. We've converted our open frozen cases to doors. We are in the final stages of converting our dairy cases to doors and we remain active in this area.
On building energy management, we've been installing energy management systems in our stores for decades. We have over 50,000 active sensors pushing real-time temperature readings to a Loblaw control call centre. We can remotely monitor and change set points associated with our store lighting, HVAC and refrigeration through our national maintenance help desk. As these control strategies and systems became more complex, we recognized as a business the need to make supermarket energy management a core competency of our business. We developed refrigeration technicians who were already employed by Loblaws and developed their expertise in the area of controls throughout the country. These individuals ensure our control systems are optimized and operating consistently to drive the most efficient operation in our stores.
Our in-house controls experts and remote monitoring capabilities allowed us to launch in 2017 a nationwide recommissioning program in our stores' building energy management systems. We leveraged our own people and third party contractors to survey every store in the network and recalibrate the control system set points within the stores and make modifications and identify issues where we need to upgrade.
In the area of demand response, we are actively working with a number of electricity utilities across the country. We have installed systems that allow us to instantaneously reduce lighting and HVAC loads in multiple facilities. We work with utilities to reduce our electricity demand during system peak periods, and many of the utilities are advancing in this area.
In the area of renewable energy, we have installed over 70,000 photovoltaic panels on the roofs of our stores and warehouses. We continue to work in various regions throughout the country to investigate opportunities to advance renewable energy initiatives.
In the area of electrical vehicles, we believe that electrification of the transportation sector is coming. We recently hosted the installation of 10 level 3 EV charging stations in British Columbia. These chargers will have a place in the future. They are fast chargers and they are surprisingly electricity intensive. As these expansions and rollouts begin, we think it's very important that the system operators understand the electrical intensity of these charging stations, and that they look towards controlling them to ensure they do not become an impediment on the entire electricity system.
We are seeing the benefits. Since 2011, which was our baseline year, we have recognized 26 quarters of year-over-year electricity intensity reductions. We have reduced our absolute electricity consumption for our network of corporate stores by 21%, which translates to about 400 gigawatt hours.
What's next? We continue to work with our merchants on the adoption of refrigerated doors on cases. We're very hopeful that all of our refrigerated product will ultimately be stored at retail stores behind doors.
In the area of machine learning and the Internet of things, the next steps in the evolution of building energy management control systems, in our opinion, are to leverage variables from the external environment to recognize patterns with respect to energy consumption to control energy-consuming devices. Variables such as power demand, electricity pricing and temperature could be applied and improved upon on an ongoing basis. These tools can then modify and adjust equipment operation to balance energy consumption over the entire day. The machine learning can also take advantage of opportunities in the external environment variables, such as low electricity prices, system demand and low ambient temperatures.
These systems would trigger equipment to consume energy during more opportune times and remain idle when the electricity demand is high. This could be done in the area of cooling and heating.
We are actively testing energy storage initiatives. We have a store that has installed the lithium ion battery system, and we are working with an organization that is developing a thermal storage application, which we're very excited about putting into our stores.
In conclusion, seldom can we identify initiatives where we believe everyone benefits. Investment in energy efficiency generates high-skilled jobs, has a positive impact on the environment and reduces utility costs. If the utilities manage these resources properly, they will improve the effectiveness of the utility systems throughout the country.
Thank you for your time. I would be happy to take any questions, if and when it's appropriate.
My name is Andrew Noseworthy, and I am the assistant deputy minister responsible for clean technology with lndustry, Science and Economic Development Canada. With me today is Gemma LeGresley, acting director of the clean growth hub.
We are here today because energy represents the largest input cost for most companies and industries in Canada; therefore, energy efficiency is important to economic and industrial development.
Our comments today will differ somewhat in their context from those of Mr. Schembri, because our specific interest in coming here to talk about energy efficiency is not around energy as an input to industry. Rather, we'd like to talk about what our office does, which is to work specifically to support technology firms that are advancing new products and services related to energy efficiency.
Energy efficiency is part of a group of technologies commonly known as clean technology, which also includes technologies that reduce carbon emissions and improve air and water quality. Over the past several years, the government has placed great priority on the rapid scale-up and commercialization of clean tech, and it has provided a number of supports to businesses pursuing projects in this area.
Global demand for clean tech is rapidly growing, and the global market for clean tech is expected to grow to $2.5 trillion by 2025. Globally, successive studies have shown that clean-tech sales are growing faster than world economic growth, with double-digit growth in many key markets. The International Energy Agency, or IEA, estimates that the global market for energy-efficiency products is about $231 billion, or about 10% of this amount, and it's also growing.
ln this context, budget 2017 allocated $2.3 billion to support clean-technology development, with funds principally targeted to support commercialization and scale-up. Tied to this, the Business Development Bank, or BDC, and Export Development Canada, or EDC, were given a mandate and new resources to strengthen their work in this area, and Sustainable Development Technology Canada, or SDTC, had its core programs recapitalized. New funding was also provided for specific programs in NRCan and other federal departments, which I understand have been or will be witnesses before you.
The government has also created a new office, called the clean growth hub, as a whole-of-government focal point to help clean-technology companies and projects access federal programs and services. The clean growth hub consists of a physical office, which in fact is just across the street from here, and a virtual connection that is co-hosted by ISED and NRCan and in which the staff of 16 federal departments and agencies are collocated. We have assembled what is in effect a large, multidisciplinary federal clean-tech team. While staff are collocated, they remain employees of their home organization, and our objective is to leverage existing knowledge, expertise and working relationships across the federal system, not duplicate them.
The specific purpose of the hub is to act as an easy access point, or no wrong door, for clean-technology companies seeking to navigate federal programs and services. The idea of the hub was proposed by the First Ministers Working Group on Clean Technology, Innovation and Jobs, which held extensive consultations with industry. The hub in fact engages very closely with provincial governments as part of its work.
We opened the hub's doors on January 18 of this year. Since that time, we have had direct engagement with over 670 clients, and our website has had over 19,000 hits. We are seeing both clients and interest from all across the country, from all aspects of industry, and from tech companies in all stages of development. Companies with a specific focus on energy efficiency are one of our largest client groups, representing about 17% of the people we've seen through the doors to date. This noted, we're also seeing many other clients who have projects or technologies that improve energy efficiency, but who do not codify their work as energy efficiency.
For example, Westport is a Vancouver-based engine technology company that converts diesel fleet engines to natural gas under a joint venture with Volvo. The company's technology can save 30% to 40% of fuel costs over the life of a vehicle, but Westport wouldn't see itself as an energy-efficiency company. In fact, it would identify itself as a transportation technology company.
Similarly, Rockport Networks Inc. is developing a technology called autonomous networking with support from SDTC. While some may see this project as aligned with the digital technologies sector, it is projected that this technology could reduce power consumption by data centres by 33%, a third, which is a significant innovation given that data centres are projected to be consuming nearly 5% of the world's total electricity by 2025.
These projects I think demonstrate the importance of taking a broad view on energy efficiency in the design and implementation of federal supports to business. While it's still very early days in the life of the hub, our early experiences with clients have yielded a few observations that may be helpful to you.
First, our experience is that access to capital is a critical and pervasive issue for virtually every company that we see. Consistently, companies tell us that they continue to face challenges in obtaining project financing from private sources, and that is happening in all sectors, in all parts of the country. In this context, they see government support for commercialization and scale-up as quite important.
Secondly, we are seeing an increasing number of clients who are looking for assistance in other areas, like help with market development strategies or regulatory issues.
In this context, some of you may be aware of the work of the economic strategy tables which were established by government last year. These tables were chaired by and comprised of industry leaders. They were challenged to set ambitious growth targets, identify sector-specific challenges or bottlenecks and lay out actionable road maps to achieve growth.
One of these six tables was specifically dedicated to clean tech. It, along with the other tables, delivered its final report to Minister in September. The clean-technology economic strategy table, or CTEST, as it became known, provided a detailed diagnostique on clean-tech industries in Canada, and made a number of proposals on what is needed to further strengthen Canada's capacity in this area.
While the table's work was focused broadly on clean technology, much of its commentary, I suspect, may be of value to those looking specifically at energy efficiency technologies.
The work of CTEST and the other tables is quite insightful, thought provoking and, in some cases, provocative. The government is currently studying the reports and the related recommendations. This body of work might also prove useful to this committee as it continues its deliberations.
I hope my observations have been helpful to you, and we'd be pleased to answer any questions you may have.
As an industry department, we tend to look at things from the perspective of commercial outcomes. Our view is that achieving commercial outcomes is critical to the success in policy areas like energy efficiency and the reduction of carbon emissions.
When I take a look at the challenges that I've seen facing companies coming through the door on the technology side—and I appreciate this committee may be more focused around issues related to technology adoption, and I respect that, and that is not my forte—my sense is, sir, that catalyzing those companies to grow not only to meet Canadian market demand, but global market demand, is quite critical. There's a shocking consistency in what we're seeing in the needs of those companies. Not surprisingly, they need access to capital.
In this particular area around clean technology, energy efficiency being a part of that, generally speaking, private sector investment has been more limited than we've seen in other technology sectors, like the information technology sector, largely because the timeline to return for clean technology is longer than it would be in, say, the IT sector. Access to capital is always an issue in this space.
There is no question that skills development and skills capacity is an issue in this space. Again, as an industry department, we tend to look at that issue from two perspectives. Clearly there's a need for STEM skills and capacity in engineering in that space, but increasingly, sir, we're seeing the importance of making sure that our companies have good business skills, that companies have a CFO who actually knows how to grow the company when you get to that point when you're about to hit international markets.
Market penetration is important. Having a thoughtful approach to market development in this space is extremely important. Out of all of the companies that I've seen in the course of my time in this work, I can't recall one company that was completely dependent on the Canadian market space. In fact, virtually every company that I see and deal with is export oriented. Helping those companies access markets, recognizing some of the real challenges around IP protection and access in key markets, is really important.
No, I'm going to wrap up at about 10 minutes to, maybe, to give Richard his chance.
The Chair: Okay.
Mr. Jamie Schmale: Witnesses, we'll just be a second.
The motion states, “That, pursuant to Standing Order 108(2), the Standing Committee on Natural Resources, in light of the Federal Court decision to overturn the approval of the Trans Mountain Expansion on August 31, 2018, and in recognition that the economic ramifications of this decision reach far beyond the provincial border of Alberta, the Standing Committee on Natural Resources immediately invite Dennis Darby, the president and CEO of the Canadian Manufacturers and Exporters and chief representative on the Ontario Council of Manufacturing Executives, and Jocelyn Bamford, from the Coalition of Concerned Manufacturers, to appear before the committee to inform the members of how the court's decision may affect future investment in Ontario's manufacturing sector, its supply chain, and the impact on jobs and growth for Ontario's manufacturing firms; and that the meeting take place no later than November 18, 2018; that the meeting be televised; that the committee report its findings to the House; and that, pursuant to Standing Order 109, the committee request that the government table a comprehensive response to that report.”
Richard, I don't know if you've missed it, but I'm going to wrap up so that you have time to do your questions.
The most important economic decision made by this government this year—and perhaps history will show the most important economic decision, period—is the decision surrounding the Trans Mountain pipeline expansion.
This project, which twins the existing 1,100-kilometre Trans Mountain pipeline between Strathcona County, Alberta, and Burnaby, B.C., would create a pipeline that increases capacity from 300,000 barrels per day to 890,000 barrels per day. If built, the expansion would ensure that the Canadian oil industry can reach new markets by expanding the capacity of North America's only pipeline with access to the west coast. If built, the project would inject $7.4 billion into Canada's economy during the construction phase. If built, oil producers would see $73.5 billion in increased revenues over 20 years. All three levels of government would see a share of $46.7 billion in additional taxes and royalties from the construction and 20 years of operation.
According to the Conference Board of Canada's estimates, the project would, if built, create the equivalent of 15,000 construction jobs and the equivalent of 37,000 direct, indirect and induced jobs per year of operations. Direct construction workforce spending in communities along the pipeline route is estimated to be $480 million, should the pipeline ever get built. Overall, the project would generate, if built, more than 800,000 direct, indirect and induced person years of employment during the project development and operations.
A few weeks ago, the National Energy Board laid out the next steps for its review of the Trans Mountain pipeline expansion project's efforts on the marine environment. Federal government departments had until the end of October to present evidence, while other indigenous, industry and environmental stakeholders will have until November 20 to file their submissions. The final cost of the government's Trans Mountain purchase is expected to be released some time this month.
However, the government still doesn't have a plan to get this project built. Getting the Trans Mountain expansion built should be the 's top priority. Instead, he spent $4.5 billion of taxpayers' money and still can't tell workers when construction will start or when this important project will be completed. That's quite a big concern on this side, Chair.
It's not just concerning for this committee, which, considering the amount of taxpayer dollars that have been sunk into buying the project, has yet to address any of the issues raised by members of this committee to examine the report on one of the largest investments of public money in recent years. It's not just concerning for the Canadian workers and families who depend on these jobs to put food on the table. It's not just concerning for the communities up and down the construction route that depend on the revenue generated by the economic activity that the expansion represents. It also concerns Canadians and business sectors from coast to coast, and one of those sectors impacted is the manufacturing sector right here in Ontario
I'd like to take the opportunity to read an excerpt from an article written by Chris Varcoe which appeared in the Calgary Herald on May 24 of this year. The headline is “Moody's warns of economic consequences of Trans Mountain failure”. At that time, committee members may recall that Canadians were unsure where this government would land on TMX, whether they would kill the project outright, find a buyer, nationalize it, or provide the certainty that TMX was really looking for so that it could finish the project for themselves. The article states:
||Federal Finance Minister Bill Morneau has offered to provide...to Kinder Morgan on any further political uncertainty created by the B.C. government. The federal backstop would be available to a third party if the pipeline company decides to withdraw.
||While the federal offer is welcome, there are more [problems] ahead on the file that's already as politically complex as quantum physics.
||“Although this (promise) eases some of the related credit risks, the federal announcement lacks detail”—
That's all in the Moody's report, and that was six months ago. Unfortunately, we're still lacking details. The article continues:
||Cancelling the federally approved venture would increase transportation costs for Alberta oil, forcing more crude to move by rail.
||It would cut into provincial revenues “at a time when the province is already forecasting a prolonged period of deficit and rapidly rising debt,” the report states.
||In his spring budget, Alberta Finance Minister...projected $8.8 billion in red ink this year and another $20.6 billion of deficits before the province sees a balanced budget in 2023-24.
That is based upon achieving success on the pipeline front.
Chair, are we wrapping up at 12:45?
Obviously, I have so much more to say, and I know everyone wants to hear it.