Good morning, everybody. Welcome to today's meeting.
We have one set of witnesses. Two individuals are joining us today. From Ecovert Corporation in Toronto, we have Jim Lord, who is the founder and principal, and Mr. Barsoum.
Welcome, gentlemen. Thank you for joining us. No pressure, but you are our very last witnesses on this study. You have to tie up all of the loose ends for us.
The format is that you will be given up to 10 minutes to make a presentation, following which you will be asked questions from around the table.
I will remind everybody that we have to stop at 11:45. We have some committee business to take care of before the second hour. We'll try to be efficient.
The floor is yours, Mr. Lord. I assume you're going to start us off.
Good morning, and thank you for inviting us to appear before you. My name is Jim Lord, and with me is Ragui Barsoum. We are from Ecovert and Ecovert CX, and are the founders of those companies.
We started in 2007. We are, I think, an environmental success story. We've grown to 22 employees in three offices—Toronto, Kitchener-Waterloo and Ottawa. Our main lines of business are green building certification, with things like the LEED certification; building commissioning; and building energy audits and building energy models.
Just to give you an idea of our clients, we have both public sector and private sector clients. We have done everything from a small bank branch to a prison to hospitals to such things as nursing homes and long-term care facilities. Probably about two-thirds of our work is with new buildings, new construction, where we're able to make a significant difference in the way they operate from an energy standpoint. The other third is in existing buildings. We've so far worked on about 150 million or so square feet, which is quite a good bit of space.
We've seen a real change since 2007 in terms of going in and talking to clients building a building. I remember there was one client who said, “We have to do this green stuff, but we're not really sure if our heart is in it.” A year or so later, when we went to see the same client, they said, “Can we do rainwater harvesting? Can we put solar on our roofs?” I asked the client what had changed in the last year that made them want to do all these things. It was interesting, because in that client's case, they'd been to a couple of functions where all their fellow developers were talking about all the great things they were doing. It would go around the table, and when it got to them they would say nothing. In order to be part of that group, they were motivated to do what the others were doing. Peer pressure can be a big motivator when it comes to getting on board with things like sustainability and green buildings. Certainly, when they see the financial savings later on with operating costs and maintenance of the building, that helps.
That being said, we got a call a few months ago from a guy in Ottawa. He was like, “What is a green building? What is energy efficiency? I have no idea where you even start.” We have the big players, with the big buildings and the big portfolios, who really understand it. They have their energy people as part of their teams. Then we have the smaller and medium guys, who make up the huge percentage of the market, who have no idea what to do and how to get started. I think that's probably one of the biggest opportunities when it comes to energy savings.
There are some things that are helping us right now. We have mandatory energy benchmarking in Ontario. That is certainly getting people to look at their existing buildings and ask what's happening and how they can be better. We have also seen changes in the building code across the country and in municipalities that have helped to spur energy-efficient design of new construction. Programs like high-performance new construction and savings by design have also helped organizations get on board with the green building call to action.
Earlier you had Thomas Mueller, president of the Canada Green Building Council, present to you. He presented on the CaGBC and their report entitled “Building Solutions to Climate Change” and their road map for retrofits. Really, in that study they looked at existing buildings in Canada and how they can help towards meeting our climate change goals. They came up with four main recommendations out of there.
The first one looked at recommissioning 60% of the very large buildings and 40% of the smaller buildings. That's 25,000 to 200,000 square feet. Recommissioning helps to optimize the use of their equipment and systems. That can create significant savings in energy.
The second thing they looked at was deep retrofits in 40% of buildings over 35 years old and buildings with electric resistance heat systems, particularly in areas where the grid is less clean. They also looked at switching to low-carbon fuel sources, particularly in buildings that are over 35 years old, and at on-site renewable energy solutions.
Their challenge, as they looked at that, was building owners having the confidence that when they implemented these items they actually would get those savings. In their report, which you would have received I think a month or so ago, they put a whole bunch of recommendations as to how that could happen. With this they're talking about, in their view, about $30 billion in economic opportunity through this retrofit economy on existing buildings.
I'm going to pass it over to my colleague, Reg. He'll tell you a little bit about himself and some of the work that they're doing on commissioning.
Hello. I'm Ragui Barsoum, Reg for short. I have some 30-plus years' experience in the building automation industry. I worked on computerized control systems first introduced to Canada in the 1980s. Back then computers were mainframe computer systems with punch cards.
I wanted to give you a short rundown on my opinion of things that, from my experience, are key to effective building retrofits on existing buildings. Number one, I think we need a holistic approach to equipment replacement versus the present-day habit of replacing equipment one to one, even if it's more efficient equipment. I've seen a lot of 50-year-old boilers. They're built to last, obviously, but one should not replace a 50-year-old boiler with a newer, higher efficiency one, without having a wider look at how the other components in this 50-year-old building would behave.
Particularly for buildings with 50,000 square feet plus, it's my opinion that the extra cost to have this more in-depth look would result in significant gains and I think that it's part of what the CaGBC report was talking about when it's talking about deeper retrofits.
Number two, I think we need to focus on utilizing the people who work on site. I think many people already do that. They obviously have day-to-day knowledge and can ID the weak points. They may not know the solutions, but that's an excellent starting point.
Number three, there are all sorts of products that can save energy, but many are quite complex to operate and don't lend themselves well to a harmonized building. Lack of harmonization, in my opinion, is the most common problem. That's the one I see the most.
The fourth item that I have is more of a complaint rather than a recommendation. It's that the current standard for energy benchmarking is to compare building performance based on type of occupancy, size, location and a couple of other things, but there is not a way to compare types of building systems or operating strategies. I think that's a weakness in the benchmarking system and I think it's an opportunity for future improvement.
I think the number one thing is building commissioning for existing buildings. Commissioning is really going in and optimizing all the systems, relooking at how they work together.
You build a building and it comes with a manual showing how it all works, but 35 years later, the tenants are configured differently, the number of occupants in the building is different, some of the systems have been changed and quite often you're still running it the way you were running it on day one. There's no right or wrong way to run a building, but there are ways that use more energy and ways that will use less energy.
There is a whole bunch of studies around different successes with building commissioning, where you might save 20% of your energy, in a good case, without changing any equipment, just changing the way that you actually run the building. I think things like that are low-hanging fruit. If we could do that across all of the buildings in Canada, there would be tremendous savings.
Good afternoon, everybody. Thank you for joining us today.
I'd like to welcome our Minister of Natural Resources. Thank you, sir, for joining us today. I know this is the first opportunity you've had to come and speak to us since you've assumed this position. We are very grateful for that. I know you've expressed an interest since the summer in coming to talk to us. Our schedule and your schedule make it difficult sometimes to make that happen. On behalf of the committee, I'd like to express our gratitude.
One thing about this committee is that we are very proud of the fact that we are collegial. We get along well. We work well together. We identify issues that we have in common and solutions that we like to work towards together. That is going to be the prevailing theme today, I believe, on both sides of the table, which I would like to emphasize.
You know the process. We certainly don't need to explain that to you, sir.
I'm going to open the floor to you now and then we will get to questions after that.
Thank you, Mr. Chair. Thank you so much for having me.
Good afternoon to all the committee members and everyone else who is present in the room. Thank you for inviting me to make this presentation. As you said, this is my first appearance at the committee as Canada's Minister of Natural Resources.
I would like to begin by making two important acknowledgements. The first is to acknowledge that we are gathered here on the traditional territory of Algonquin people. The second is to acknowledge and the extraordinary work that he did as my predecessor in this portfolio.
As we all know, Canada's natural resources—oil and gas, wind, solar, forestry and mining—have been a source of well-paying middle-class jobs. It is our government's goal to ensure that this growth continues for decades to come. In Canada, we also have an advantage that goes well beyond the abundance of natural resources. It is the expertise and the experience we have in developing them sustainably and competitively.
It was Canadian resourcefulness that unlocked the secret of getting oil out of sand. It is the same innovation that is reducing the industry's environmental footprint. I saw that innovation first-hand at Goldcorp gold mine in Chapleau, Ontario, where all vehicles are run on electric battery, reducing the environmental footprint as well as creating clean jobs. This innovation has occurred in part because of the investments we are making in the adoption of clean technologies, helping not only to lower emissions but to reduce long-term operating costs.
Canada's advantage will continue to grow with the increasing global demand for raw materials that are produced sustainably and responsibly, the raw materials that we have in abundance in Canada: wood and wood products that will help us combat a changing climate; metals and minerals such as lithium, graphite, cobalt, nickel, copper and rare earth elements that are used in everything from solar cells and wind turbines to the batteries for electric cars.
Canada has one of the world's cleanest electricity mixes to power our low-carbon future. Our government is building on all of this by investing $26.9 billion in clean infrastructure, which includes investments in renewable energy, energy efficiency, smart grids and more.
Canada's natural resources are not just the historical backbone of our economy, they are the key to our clean growth future and creating good, well-paying jobs, the kinds of jobs that expand our middle class, that raise our standard of living and improve our quality of life in every province and territory.
That is why our government also supported LNG Canada's $40-billion project on the west coast of British Columbia, paving the way for the single-largest private sector investment in Canadian history. It's a project that will create 10,000 jobs at the height of its construction and millions of dollars in new contracts for indigenous businesses. This project will open new global markets for Canadian natural gas, displacing other fuels that emit higher levels of greenhouse gas emissions, offering greater global energy security and a greener future.
Our fall economic statement will support more of these opportunities with the new tax incentives and investments to enhance the competitiveness of the resource sectors, making Canadian companies better able to invest in their own growth and making Canada a more attractive place to do business.
A number of these new measures directly target emerging challenges in the natural resources sector, such as softwood lumber prices that have certainly fallen off recent peak highs, and a dwindling timber supply in areas ravaged by the mountain pine beetle and wildfires. That is why we announced an additional $100 million in the strategic innovation fund to support Canada's forestry sector.
We have also renewed the mineral exploration tax credit for a full five years, to maintain Canada's position as one of the world's most competitive jurisdictions for investing in exploration.
We have responded to recommendations from leaders in the oil and gas industry, including new tax incentives to permit the full writeoff of machinery and equipment used in the refining and processing of oil and gas, allowing for the creation of even more value-added products.
Now, let me turn to the price differential on Canadian oil. This price differential is the direct result of previous governments' failure to build pipelines, expand to non-U.S. markets and reduce our dependency on a single customer: the United States. This problem was further compounded by the scheduled seasonal maintenance at four refineries in the U.S. Midwest that caused a temporary drop in demand. This, combined with increasing production from the oil sands, created an extraordinary price discount on Canadian resources.
I want to reassure you that our government has made the price differential—and the issue of market access in general—an urgent priority. That is why we established a working group of senior officials from the federal government and western provinces to lead our efforts.
While we welcome the news that all four U.S. refineries, and the million barrels per day they process, are back online, we know that additional pipeline capacity is required to address increased production. This is why our government approved the Line 3 replacement project. Construction of this project is under way, and will come into operation in the fourth quarter of 2019. That is why we have always supported Keystone XL. I spoke with Secretary Perry to offer our ongoing support last week.
It is also why we purchased the Trans Mountain pipeline and related infrastructure when it faced political headwinds, because we know market access to customers other than the United States is the long-term solution to the price differential.
We know we need to get our oil resources moving, and all solutions are on the table to accomplish that, from increasing rail capacity to rethinking how access to existing pipelines is allocated. In fact, I have written to the National Energy Board, asking it to report on options for optimizing pipeline use in western Canada. Earlier today, I met with and rail shippers to discuss rail solutions.
I am a proud Albertan. I am seeing first-hand the pain this price differential is causing for hard-working men and women in my home province. It is affecting families, neighbours and friends. The status quo cannot and will not continue. The good news is that when Canadians work together, as we are on the price differential, there is nothing we cannot overcome.
Mr. Chair, this might be a good place to stop and welcome any questions that committee members may have. Thank you once again for having me here today.
Mr. Chair, I would like to thank the minister for coming to committee today. I know he understands the Canadian energy sector and that it is very important to him. It's very close to his heart. He and I have discussed this in great detail, and we understand that neighbours of ours, friends of ours and people we've worked with are deeply affected by the downturn in the Alberta economy. I know he gives a great deal of thought to this. I'm just pleased he's here today.
The price differential—the money we receive—for Western Canadian Select is about 15% of its real value. What has caused this? Well, it's been decades in the making. The private industry always thought the United States would need our oil, and they built pipelines to fill that market. We understand now that we need to open and access new markets. Further, we understand that to get pipelines built in the 21st century, we need to treat the environment as a serious concern, as well as getting indigenous consultation right.
On this point, the Conservatives failed for 10 years to get our oil to non-U.S. markets. In 2006, when they came to power, 99% of our oil went to the United States. Ten years later, 99% of our oil was still going to that singular market. As any economist will tell you, if you have only one customer, you have to accept the price they're willing to give. Today, and every day, we see the consequences of this decade of inaction.
Minister, I know you've given great thought to this. What are we doing to end the decade of failure by the former Conservative government to get our energy products to new markets, and a second thing I think it's important to know, to correct the failed approach to regulatory approvals instituted by that government?
Thank you so much for that question. As I said earlier, I know many people in Alberta who have been struggling for the last number of years, starting with the downturn in oil prices that started in 2014 and has led to thousands of layoffs, families struggling and people worrying about their future and the future of their kids.
We started taking action immediately upon coming into office. We extended stabilization funding of $250 million to the Province of Alberta. We extended EI benefits, beyond regular EI benefits that Canadians qualify for, to 22 weeks, which has led to additional support of $1.3 billion for struggling families during those difficult times.
Now we are taking action on pipeline capacity. Also, Alberta is a province that exports many commodities, including oil and gas, to other countries, so the conclusion of NAFTA is absolutely a benefit to the oil and gas sector. Through those negotiations, we were able to eliminate unnecessary tariffs and fees, resulting in a saving of $60 million per year for the oil and gas sector, particularly the oil sands sector.
We will continue to work to improve our regulatory process. What we have in place has led to failure—a lack of pipeline capacity that we're seeing today, which is causing so much pain and grief and costing billions of dollars that we are losing. That's why Bill is a very important piece of legislation that will fix the broken system we currently have. It creates a balance between the environment and the obligation to consult with indigenous peoples, at the same time allowing us to grow our economy.
This is a good example of how economic growth and environmental sustainability can go hand in hand. That's exactly what we are focused on, moving forward: to fix the flaws of a regulatory process that we inherited.
Thank you, Minister and officials, for being here today.
Minister, I just want to clarify the record on the northern gateway.
You've said multiple times this fall that the court quashed the northern gateway pipeline. In fact, recently in an interview, you said that “any intelligent person” would know that the court quashed the northern gateway.
Let me just read from that court ruling. The court said, “remit the matter back to the Governor in Council for a prompt redetermination”. The Governor in Council, of course, being the Prime Minister and the cabinet. The court did not kill this pipeline. It gave your government the chance to redo consultations.
On November 29, 2016, the personally said the Government of Canada “has directed the National Energy Board to dismiss” the application of the northern gateway pipeline.
The Liberal cabinet order says, “the Governor General in Council”—that being the cabinet, including you—“on the recommendation of the Minister of Natural Resources...directs the Board to dismiss Northern Gateway Pipelines Limited Partnership's application”.
Your own personal website says you “are fulfilling our environmental responsibilities by rejecting the Northern Gateway proposal and imposing a moratorium on crude oil tanker traffic along British Columbia's north coast”.
Will you tell Albertans why you vetoed the northern gateway pipeline, which would have allowed access to the Asia-Pacific?
Thank you, Minister, for being here today.
You mentioned you're from Alberta. I'm from British Columbia, so I'm glad you touched on forestry. We hear precious little about forestry in the news and from this government, so I'm glad you mentioned it.
We've heard a lot about the low price of oil over the past few months, but as you mentioned, the price of lumber has been almost cut in half in the last six months. I don't hear anything about it from this government. We have mills closing everywhere across the country. We have mills cutting back on their hours. As you touched on, this isn't just the low prices, but they're paying illegal tariffs that weren't fixed under the new USMCA agreement. Fires and pine beetles are now attacking Alberta and threatening the rest of the boreal forest.
I'm going to try to offer some practical solutions here and see what your government is prepared to do.
One practical way the federal government could help these forest communities across the country is by providing funds for thinning of forests at the urban-forest interface. We had a film and report in British Columbia 14 years ago that basically told British Columbia they had to do all this work around communities to make them fire safe. Only 10% of that work has been done because the provincial government felt they didn't have the funds to do it. We've seen the results. We're talking about billions of dollars here. It is not cheap work, but it would put thousands of forest workers back to work and it would make our communities safer.
You mentioned the strategic innovation fund. How much money is allocated in that fund—as I say, we need billions—to do this sort of work? It would be something the federal government could do today to help forestry workers across Canada.
Thank you, Minister, and your staff, for being here today. Thank you for leading a department that is really committed, in a government that is committed to natural resources and the mining industry.
Last year, many of our colleagues here attended PDAC in Toronto, the largest mining conference in the world. There was a lot of optimism last year, and this year, with the direction of our government. I also attended round tables on Bill , which was strongly supported by the Canadian Mining Association. Also, I attended last year the launch of the Canadian minerals and metals plan, which was overwhelmingly supportive and very positive.
Also last year at PDAC we heard from the mining industry, which is really looking for certainty on the exploration side. The Conservative government for the last 10 years only extended the mineral tax credit for one year. I want to give you the opportunity to explain what we've done to expand the mineral exploration tax credit.
Also, can you tell us where we are with the minerals and metals plan? When can we expect the final report?
Thomas Edison came to Sudbury to prospect in 1901. I'm sure he would be proud of the five-year mineral tax exploration credit. Industry, I know, is very supportive and very pleased with it.
Talking about Sudbury, which I represent with my colleague Paul Lefebvre, Greater Sudbury is as you know the largest municipality in Ontario and the fifth-largest municipality in Canada. We also have the largest city-contained lake in North America, Lake Wanapitei. We have 330 lakes, great for fishing and hunting, that have been restored. We have a really rich history with our first nations communities.
The mining companies in Greater Sudbury and northern Ontario have been leaders on environmental stewardship, even when leading the fight against acid rain, with Inco at the time and the PC Mulroney government. Sometimes I think the “P” has been removed today from the Conservative Party, but Mulroney really understood the need to work with...and the government at that time.
In Sudbury we prioritized the greening of the land, the partnership with the city. We looked at the community and the mining to create a green and cleaner footprint. I have today here on my lapel pin “40 years”. That's not my age. It's the 40 years of regreening in Greater Sudbury.
Minister, can you explain to us what Natural Resources Canada had done to incentivize, to promote the mining industry to continually be more sustainable in the future?
This is why I raise this. I just returned from New Brunswick. New Brunswickers want a west-to-east pipeline, as do Canadians right across the country, and certainly the provinces of Alberta, Saskatchewan, Manitoba and Ontario. The energy east application was submitted in October of 2014. In January, 2016, your government froze all those applications, including the energy east application. Then a year and a half later, in August, 2017, it was announced that both upstream and downstream emissions would be applied as a condition to the energy east application.
It was at that point shortly after that TransCanada said specifically that the significant changes to the regulatory process might make the application for the energy east pipeline untenable.
A month later, they were forced to abandon the application for energy east. The reality is that downstream emissions have only ever been applied to the energy east pipeline application by your government, in order to kill it. If it was needed in that case, why would it not be included in Bill ? If a proponent comes back to the table for a west-to-east pipeline, will you ensure that downstream emissions do not apply as a condition for its approval and review?
Okay. Thank you, Chair.
Thank you, Minister, for appearing today. We appreciate it.
Minister, I noticed in your comments that much of what you referred to seems to be a common theme that we have here, in question period and otherwise, whereby it's always the Conservatives' fault and always Harper's fault.
You're three years into your mandate. Before, in the previous government, we had four pipelines approved, we had three in the queue, and now we have two that were cancelled and one that was nationalized. How do you keep saying that your plan is working and keep blaming the previous government? You have to fix this for me here.