Thank you so much, Mr. Chair. It's a pleasure to be here and launch this particular study. We do have a short deck to present, which is on the screen, and I will provide a brief commentary around it. I understand that you have copies of it as well.
I hope to cover three key elements in this overview: first, to do a quick overview of the oil and gas sector in Canada, then talk about the importance of innovation in that space, and lastly speak about some actions taken by the Government of Canada relating to innovation and oil and gas.
If I may kick off with the overview, on slide 3 and others you will find some numbers and figures, which I will analyze succinctly.
First, in terms of the resource endowment of Canada, both in oil and gas, Canada is blessed with very large resources. In oil, we are blessed with the world's third-largest resource endowment, after Venezuela and Saudi Arabia. Similarly, with natural gas, we also have a very abundant supply, which actually keeps growing as technology progresses in that space.
The oil and gas sector represents an aggregate close to 8% of GDP, $137 billion of annual exports, a large amount of investments as well, and 200,000 in direct employment across the country. It is a fairly sizeable source of wealth.
Needless to say, in the current context, the price environment is rather challenging for commodities. We all watch this in the news regularly, and that's been very true lately on the oil side in particular, as we've seen significant price drops during the past year.
In the bottom right corner, you will see a picture that shows the trend over the medium to long-terms. We've seen on one hand a significant increase in renewable energy happening in Canada and globally. If we look at some of those estimates from the International Energy Agency and other world-leading bodies, we still have an expectation that oil and gas will represent a significant part of the global energy mix.
The next slide shows the importance of innovation in the sector, both in terms of improving Canada's environmental performance and in terms of reducing costs and increasing productivity.
One interesting thing to mention is that many of the greatest innovation opportunities have a dual effect. There is an effect with respect to both reducing greenhouse gases and reducing production inputs. This is especially the case in the oil and gas sector because many of these opportunities relate to reducing the energy to extract the resource or to process it into derived products.
The evidence in this case is particularly striking. It is also important to mention that there are opportunities not only domestically but also in exporting these technologies abroad.
The global clean technology market is growing rapidly. According to the latest estimates, it will be worth about $2.5 trillion, or 2,500 billion, by 2022. This represents significant export opportunities for our companies, which are world leaders in many areas.
It may also be important to mention that many of these activities, both in the production sector and in the development of these technologies, are carried out in remote areas in Canada. This may well generate opportunities for our communities, including indigenous communities.
If we look at the recent history of the oil and gas sector in Canada, it's already known to be a knowledge-intensive industry with lots of advanced technology, but also a lot of know-how that is worth acknowledging. We've seen this, whether in the oil sands or in many other dimensions of the oil and gas sector.
You see here on the slide a yardstick of the performance improvements over the past 20-year period in terms of GHG emissions, where we have seen reductions in the order of 30% of the GHG emissions per barrel, but also in terms of water use, where we've seen very significant reductions in the use of fresh water in production.
Another domain that perhaps is less known among parliamentarians and Canadians alike is the expertise that Canada has in carbon capture and use. Canada is seen as one of the top nations in not just large scale deployment of those technologies—we have 4 of the 15 largest large-scale projects in the world—but also in significant expertise in helping the future technologies in that space.
On slide 6 I have tried to capture for you a sense of those areas where we see the greatest potential for technology development. Starting in the oil sands domain, I thought of using, as an anchor, the recent report published by the Council of Canadian Academies, which came out less than a year ago. It showcased six of the most promising technologies in this space. I could describe a couple of those that are particularly significant in changing the landscape, both in terms of performance and cost.
The first one is around the use of solvents, basic extraction technologies, which have the potential to reduce GHG emissions by the order of 50% and reduce by 30% the capital cost requirements to develop such resources. Another one that the Council of Canadian Academies highlighted is the direct contact steam generation technology, which actually is being developed in our CanmetENERGY facility here in Ottawa, working closely with Suncor, which is a major oil producer out west. There, the potential for GHG reduction is in the order of 70% to 80% and the cost reduction per barrel between $2 and $8, so it's also quite significant.
Beyond the oil sands space, methane is another area where we see significant potential. It does represent about 10% of global GHG emissions in the country, for the simple reason that from all those gases that are either flared or vented in the country, the methane emissions have a much more potent impact in terms of GHG emissions by a factor of about 32 times greater than CO2. Every bit of progress we can make with regard to methane reduction has a very significant impact on our greenhouse gas emissions pattern.
There the good news is that there has been significant progress in technology development to capture those gases and hydrocarbons, and finding ways to avoid those emissions into the atmosphere. This is a key priority for the Government of Canada and the Government of Alberta, which has already gone public about its commitment to reduce those emissions by the order of 45% between now and 2025. Many of our partner countries, like the U.S., have put methane at the top of their list for reductions because the payback from that is very compelling. We think this should be a priority area.
Other areas that are actively being pursued concern the use of renewable energy as a source of power for the extraction sector, whether it's bioenergy, solar, or wind. There is a lot of activity in that particular space.
I've mentioned before the strength that Canada has in carbon capture and use. Again, this is an area where we do considerable work with our university and industry partners to further that technology and lower the cost, which is our main challenge in this space.
In the next slide, we highlight how important it is that this research be conducted in partnership with industry and academia. This is an opportunity to draw on the expertise of all these stakeholders and reduce the risks surrounding the development of such technologies, which are complex and require substantial expertise from all sides.
In our view, another opportunity is to seek partnerships abroad. An agreement was signed as recently as last month at the meeting of the North America energy ministers. The U.S., Canadian, and Mexican ministers met and agreed to establish a closer partnership in the coming years precisely to carry out the development of such technologies, both in the fossil energy sector and in green energy and renewable energy in Canada and North America.
The following slide gives you a bit of a snapshot. I do acknowledge that this is very succinct, but I understand that the committee will hear from other witnesses over the coming weeks.
We'd like to acknowledge the leadership taken by the industry, particularly the members of COSIA, the Canadian oil sands industry alliance, who have been somewhat bold in their vision of bringing some technology, initially developed separately, to be shared among the companies involved in the space. That accounts for about 800 technologies worth over $1.3 billion. We think this effort should be applauded and pursued with vigour by the industry, especially now that we face such a predicament in terms of the environment. Now is the time to pursue those efforts. We have seen some recent announcements, which will be referenced in the presentation.
The next slide emphasizes some of the contributions from the Government of Canada in that space in two orders.
The first is by using our scientific expertise, and we're fortunate to have present today one of our directors general, Nicole McDonald, from the CanmetENERGY Lab out in Devon, Alberta, who is leading a lot of the work around that research. We also do a lot of that work here in Ottawa in our facility at CanmetENERGY, and we have a third lab in the Montreal region in Varennes. Those labs obviously deal with oil and gas, but also the broad spectrum of energy R and D in the country. They have significant expertise in that space
The second tool that I want to emphasize is some of our programs in both NRCan and SDTC, to name those two. They have been committing a significant amount of resources over the past years to developing those technologies across the country.
If I may, Mr. Chair, I will close my remarks by emphasizing one announcement that took place in Paris at the COP 21 meetings back in late November when Prime Minister Trudeau was accompanied by 19 other world leaders to commit to Mission Innovation. There were so many announcements happening during this time period that it was hard to keep track of them all, but this one was actually quite significant.
This announcement committed those 20 nations, which included not just Canada, the U.S., and Mexico, but also Germany, Italy, France, China, Japan, South Korea, and pretty much all of the key nations involved in energy R and D on the global stage, to do three things. The first is to double the level of energy R and D over the next five years. The second is to bring patient capital from the private sector to the mix—and there Bill Gates showed some leadership in committing some of his own money but also brought along a number of large investors from around the world to contribute to funding in this space among the signatory countries, which include Canada. The third is to encourage more collaboration across borders precisely to deal with those advancements of transformative technologies that are so challenging to develop. These nations felt that this was one of the most powerful vectors to get our nations a step closer to meeting the Paris ambition that had been laid out by those nations.
With that, I will turn the floor back to you.
The committee member, Mr. Chair, is right to point out some of the shortcomings or challenges we face.
Before I answer the question, it's also worth remembering that Canada also has competitive advantages with regard to its oil production. We are a stable economy, we have plentiful supplies, and we're steady suppliers. We have a lot of strengths in our game that we shouldn't lose sight of. We only need to be reminded by looking at those other world producers out there. Whether it's in Iraq or in Venezuela, there are a lot of trouble spots where that oil is being produced. It's just something well worth keeping in mind.
On the dimension you touched on with regard to progress, cost reduction is at the top of the priority list for the industry. So is addressing environmental performance. I think there's an acknowledgement, now more so than ever, from industry leaders that we need to act on both fronts. There's also very strong support on the part of the provinces. We understand that we need to move the yardstick significantly in terms of environmental performance and cost to keep the industry running not just for the short-term environment we're in but also to make sure we're competitive in the long haul.
The kind of technologies I've described, the so-called transformative technologies on the extraction side, are in my view probably the most attractive. Right now the industry is more focused on looking at marginal or incremental improvements to costs of production, which are certainly well worth looking into, in terms of project management, marginal improvements to use of energy, and production processes.
To address the gist of your question, there's been more effort lately, during the past year or two, to look at more of those transformative technologies that would give us a step change in terms of both environmental performance and cost. The good news is that we have in our arsenal, if I may say, half a dozen or so technologies that could get us there and bring us to a significantly lower cost of production and lower emissions. Water should not be lost in terms of that equation; it's also a top priority for the industry.
That line of sight is there, but again, it will take us many years to bring those technologies to market. We are committed to do our part as government, and the industry appears to be also very much onside to pursue those efforts.
I would like to thank the witnesses who joined us here today, of course.
You gave an excellent presentation. Your information is relevant. This gives us a good foundation to build on and move forward. As you mentioned, and as we know, the price of oil has really dropped in recent years and that is a challenge for the industry and for us as a government. I would also like to make the following clarification.
I want to comment on the earlier remarks about our Prime Minister. I'm very proud of the efforts that our Prime Minister and the government have made. We have been in government now for five months, 150 days or so, and we participated heavily in COP 21.
As you mentioned earlier, our Prime Minister is visiting with the U.S. President this week to dialogue, to grow our economy, to put forward the initiatives that we talked about in a positive way. It's the first time this has happened in 12 years. We have a lot of success stories in all of our natural resources sectors that are very positive.
We also had a first ministers' conference for the first time in seven years. Now you also mention the energy that we had for the Canada, U.S., and Mexico meeting. There's a lot of good collaboration happening. It's something that we could build upon, as you mentioned earlier with regard to the innovation sector.
I look at the reports that you have identified here, and I appreciate you condensing a lot of this. Earlier, you mentioned a clean technology fund of about $100 million. You also mentioned another fund that was for all natural resource sectors. You also mentioned tax measures. Are you able to summarize those three elements and what has been done in the last four or five years for the committee? Do you have all that information to provide to us?
Thanks, all of you, for being here and apologies again for the delay.
I know it's going to come as a total shock to my colleagues that I am going to try to focus on the importance of the oil and gas sector to Canada's economy overall, which I want to thank you for underscoring so substantially in your opening presentation. I also want to thank you for highlighting Canada's global leading role in developing innovation and technology that reduce greenhouse gas emissions, increase production efficiencies, lower costs, and make us a beacon for innovative and technological development of energy resources.
I want to thank you too for noting the critical role of the oil sands in Canada's overall energy picture that will enable us in the future to meet the world's growing energy demands as we continue to increase our responsible development of that resource as well as other crude oil resources.
I thought maybe we could try to get into a few more specifics about exports and imports. I'll just give you a couple of questions in a row and then we can figure out how we're doing for time. Maybe the chair can give me a heads-up as to where we're at.
In terms of exports, are you able to give us the breakdown between crude oil, synthetic crude oil, bitumen, natural gas, electricity, and refined petroleum products? Can you give us an estimate on what those accompanying export revenues are and the breakdown of which countries those exports are going to?
Can you also give a little more specifics on the countries Canada imports its energy products from and their related breakdowns? I would be especially interested in looking for facts relating to the oil and gas imported for use in eastern Canadian refineries. I agree with you that Canada has the world-leading skills and technology to continue to provide energy to the world. I wonder if you have any estimates or predictions of global energy demand, and also about the potential value of our exports to other countries, if we are able to achieve access to diverse markets beyond the U.S.
Thank you to the presenters today. I appreciate the information you're bringing forward.
I'm from the Northwest Territories. The Northwest Territories, as you probably know, are still relatively pristine. There are diamond mines and there is oil and gas exploration that has happened there for a number of years. We've seen a lot of boom and bust cycles.
Of course, the people in the north have always expressed concern when it comes to projects in regard to making sure that the environmental aspects are scrutinized very closely. At the same time, job creation is also very important to us. We're quite fortunate to have diamond mines that are providing a lot of opportunity for us. Half of the population of the Northwest Territories is aboriginal, so including aboriginal people is also very important.
I think the key to moving forward on a lot of the projects is having a trustworthy regulatory process. In the Northwest Territories, I think we have a model that people in other jurisdictions can look at, a model that does all of that and captures all of the areas that we want to make sure are covered.
While we welcome the opportunity to see our resources developed, we are still challenged by a number of factors. They are factors that can be dealt with. We have a lot of resources in terms of diamonds, precious metals, emeralds, and oil and gas, all these things that have not really been explored to their fullest yet. We don't really know their potential. The reason for a lot of the exploration not happening is that our transportation infrastructure in the Northwest Territories is not yet developed.
There is an opportunity to develop a road down the Mackenzie Valley Highway. That would open up the whole valley to oil and gas opportunities to help lessen the costs of building pipelines and for tourism. A lot of economic opportunities would come as a result of it. There is an opportunity to build a road into the Tlicho area, which would allow for the community to be connected. Gold mines that are working in the area would be able to make their projects viable.
We've also been looking at a road to the current diamond mines, which would allow the mines to explore other pipes in the area that don't produce as well or wouldn't have the returns, but a road in the area would certainly make it more viable. This road could also connect with Nunavut, which is very much in a position where all of their resources are trapped unless they get a road. They have talked about building a road into Grace Lake, which would open up their part of the country to creating opportunity and jobs. That's something that's really important for us to see.
I wanted to ask you about how you see this government's role in moving this investment in transportation infrastructure in the Northwest Territories—I'm talking not only about the Northwest Territories, but about Nunavut—as a priority.