My name is Steve Martin. I'm the founder and CEO of a company called Pond Technologies. I have to confess, I may have misunderstood the format of this presentation a little bit, from the discussion I had earlier. My impression was that we were meant to discuss sort of broadly those kinds of innovation vehicles and policy instruments that could be implemented by government to help assist the adoption of new and sustainable technologies.
In that regard, my impression was that it was to be more of a discussion than a formal presentation. I do have a formal presentation, which I can give, but I think it would be more useful if you heard my comments more directly from someone who's doing innovation on a daily basis, developing technologies that can help the environment.
My company, Pond Technologies, uses algae to mitigate carbon emissions from smokestacks. We take untreated stack gas emissions and put them through bioreactors that were designed and built in this country, using technology that actually came out of the fibre optic industry a number of years ago.
Surprising as it may seem, the key technology that we have came from a heads-up display of a fighter jet, designed by me about 20 years ago. That technology allows us to grow algae, strange as it sounds, faster than anyone else, and to take carbon emissions out of any arbitrary smokestack and turn them into something that's green, literally.
The algae that results is useful for any number of purposes. It's a very high protein animal feed; it can be used for soil amendment; and it can be used for biofuel.
We have a number of partners across the country that include Canadian Natural Resources on the oil sands. Most importantly, our partner is the National Research Council of Canada, through the algae carbon conversion program announced a number of years ago. We are the sole technology provider to that program.
We have an ongoing demonstration site at St. Marys Cement in Ontario, where their stack emits over half a million tonnes of carbon dioxide per year. We're able to take a small portion of that—small because of some of the impediments in existence for innovation adoption—and turn it literally into a green product. The National Research Council participates with us on that.
In answering the questions that were presented to me, I was asked what the risks were that government could take on within its jurisdiction to help with the adoption of clean technologies. One of the things I like to say is that industry is very much looking to adopt clean technologies. It just has to make financial sense.
One of the unfortunately realities is that, in the absence of regulations or other instruments wielded by government, there is nothing cheaper than polluting. The cheapest thing you can do is pollute, and accountants like cheap things.
If the government has an opportunity to implement real taxation, carbon pricing, or something in a universal way that doesn't impede industry but in fact rewards the adoption of new innovations, I think you'll find very willing participants across all the jurisdictions that you oversee.
We are not limited to our work with Canadian Natural Resources, the National Research Council, and St. Marys Cement. We have also worked with U. S. Steel Canada, now Stelco, and we've also used our technology on very small combined heat and power plants. Our solution is applicable across the board, but we're only one part of an ecosystem of solutions that are available to help mitigate carbon emissions.
The next question I was asked was what the best practice policy instruments are for de-risking clean technology in the natural resource sector. I would say it is a direct understanding of the limited capital available for implementing technologies.
All of the large final emitters across this country, resource-based or otherwise, exist in largely commodity-based industries. They're squeezed at both ends. They don't have free capital for implementing technologies, particularly if they're new.
We have a solution that works. It has been validated. The National Research Council is behind us. We are semi-finalists in the Carbon XPRIZE. We're recipients of many government dollars in terms of support. There is still a barrier to the application of our technology for industry. They just can't bear the cost.
The term best practice implies that there's an answer. I don't think there is a best practice; I think there are practices.
In terms of looking at new policy instruments, governments need to be very open-minded, see what other jurisdictions have done, and be flexible. Do what works, drop what doesn't, and don't stick to any one plan. I think the best policy in this case would be to be innovative.
I was asked what instruments exist in Canada. There are direct taxation and carbon pricing, either implemented or proposed. The direct taxation, as it was implemented in British Columbia, gutted the cement industry. I don't think that was the intention, but it nevertheless did it. Whether that had a positive impact on environment or not due to reducing carbon emissions is questionable. It's not really known to me if that's the right way to go; nevertheless, that is one of the instruments the government has.
Regulations in general have to exist, though, within the confines of what's available to industry. We could simply regulate now that industry no longer emit carbon, but we all know that what you're doing is regulating them out of business, so there has to be a way to foster innovation.
One of the things that's come up in my own company—and we've raised tens of millions of dollars—is that government likes to invest in new technologies. They're terrific. One of the problems is that government wants to be the last dollar in. There's a dearth of investment in Canada in technologies. It's been the same for years. When fibre optics exploded, we found this technology to be very interesting to Canadians, and we developed many companies that were very good. Since then, however, we have been really good at investing in mines.
When I go out to seek investment, I meet with investment bankers, and they say to me, “You're not a mine.” I say, “No, we do technology. We can help the mining industry.” They say, “That's fantastic, but you're not a mine. We don't have models to invest in you. We don't really know what we're doing.” If there were a government program or a government initiative that could encourage investment at the front end—and I'm not talking about dollar-for-dollar matching, I'm talking about venture capital from government—that would be very helpful.
What institutions can the federal government leverage to de-risk clean technology adoption by natural resource firms? I'll tell you: the National Research Council. They've been an extraordinary group of people to work with. I can't believe the researchers they have there. Industry—and you probably hear it a lot—does not have a very high expectation for government in terms of their productivity and what they're doing. I think that's entirely wrong, as evidenced by the work done by the NRC. I've never worked with a bunch of people who were as good at what they're doing. They have a 60-plus year history in doing the work that I do. I discovered them by accident. Any support that can be provided to the National Research Council....
One of the things I would recommend for this committee is to start to advertise what they do. When I go to meet with investment bankers and I say, “We work with the NRC”, they say, “Who's that?” That's a big problem. It's a billion-dollar organization with 4,000 researchers who are very good at their jobs.
The last thing is what recommendations I have for the Government of Canada that the committee should consider for their final report. I think they should consider an ongoing consultation with heavy industry, the people who know what they're doing in terms of emitting carbon and what they have to do in terms of the realities of business. If you can have a permanent committee that looks at these regulations and is quite flexible in how they move forward, you'd be well served.
I would say that's the end of my little monologue.
Thank you for inviting the Canadian Geothermal Energy Association. We call ourselves CanGEA.
I'll be presenting on behalf of CanGEA. I'm with my colleague Alex Kent, who is the policy manager. I'm the chair of the association.
Bonjour from our membership. I'm excited to see here so many of the MPs from our constituents' project bases. Right now, we have projects in Saskatchewan, the Northwest Territories, Yukon, Alberta, British Columbia, and Nova Scotia, so we truly are a pan-Canadian resource.
We also represent the whole supply chain. When you look at our membership, as shown on our slide, you'll see that we have everybody from the explorationists' side and the engineering to the people who drill the wells, as well as the accountants, financiers, and lawyers, and also the people who build turbines, equipment, and piping. If you didn't know that I was talking about geothermal, you might think that I was talking about oil and gas. That's one of our main comments today. Through the energy transition, it's about looking at what geothermal can do not just for the renewable economy, but also in terms of a job transition economy for out-of-work oil and gas workers across the country.
One of the things we find, though, is that most people just don't understand what geothermal is. It's hard to understand the promise of geothermal if we don't yet know how it can be used. The slide in front of you now is a really quick snapshot of the different types of geothermal.
One of the first things we say is that geothermal itself has a really bad name. As an industry for oil and gas, we have become more sophisticated, and now people don't really call it “oil and gas”. We'll maybe call it “tight oil”, “oil shale”, “oil sands”, “sour gas”, or even “peat moss” or “coal”. Think about all the different types of hydrocarbons. They all exist in different types of rock. All the different hydrocarbons are also harnessed by different technologies and at different costs.
For geothermal itself, we're disfavouring ourselves, really, by using just that one word “geothermal”, because what we really mean to say is that geothermal can be many things. Later, I'll have a slide showing where it exists across Canada.
Like the oil and gas industry or the coal industry, we do need a bit of a specialized policy because, again, we need different technologies, and there are different costs to harness them. The best thing to know about geothermal is that we're not just about electricity. Canada is actually doing a wonderful job with renewable energy. Usually when people are talking about renewable energy, they mean renewable electricity, but we also offer renewable heat. I'll go into what renewable heat is.
We have three advantages. The first one would be heat. Heat itself is a larger market in Canada than electricity is. I've mentioned that we are doing I think quite a good job with renewable electricity programs, but we've barely scratched the surface for renewable heat, if at all.
We can look at the statistics. About a quarter of all energy used in Canada is non-fossil-fuel based, so that's a renewable base. Our market share would be about 75% more to support more renewable electricity and heat. We can look at an average household. They spend more money on heat than they do on electricity.
In the north, almost all of their heat comes from oil or diesel. You hear about ice roads or people flying in diesel. It's quite polluting to have a diesel generator, and it's noisy. Also, of course, it's just giving us that one product: it's either electricity or heat.
With geothermal, though, we can have micro power plants that are the right size for communities and for small communities in the north. We can provide all the power they need, as well as all the heat they need. We can right-size these projects across Canada as well.
I don't think that geothermal will be a large electricity-based utility, but in places that are looking for both electricity and heat, our “co-gen” makes us very affordable and also gives two products.
If you're thinking about why we haven't heard about this in Canada, just this morning, Paris, France, announced another 200,000 homes right in the city of Paris that will be converting to renewable geothermal heat from natural gas. Right now, in terms of geothermal heat progressing in their city, they're about 30 years in. France itself has very supportive policies, which we'll talk about later in the presentation. Poland also announced just this morning that 30% of their country can be heated by geothermal heat.
While we don't know very much about it in Canada, the industry itself is over 100 years old. There are 80 countries around the world, many of them in Europe, that are using renewable heat from geothermal. Around the world, about 25 of them use it for electricity.
Of course it's wonderful to have climate change mitigation methods and get off fossil fuels. The natural gas industry might say it can take care of that and burn natural gas and it's clean burning. However, we can do all the things that natural gas does at a similar price; do it at a renewable, sustainable level with no emissions; and give jobs as well. Canada itself has grown up as an oil and gas country over the past almost 100 years, and we have a lot of stock built up in human capital. People have gone to university; they've had jobs; they've trained maybe as a geophysicist or a geologist or a pipeliner, and it's hard to ask them to retrain to be a dentist. These people are the best at what they do and better than in most other countries in the oil and gas industry, and that technology and expertise exists in Canada.
Our energy forum maps 100% on oil and gas so you will find all those professions in oil and gas can also be deployed in geothermal. The best part is shown on this graph, and these graphs are not CanGEA statistics. With the industry being so emergent in Canada, we have to rely upon other countries; we're speaking about France, Germany, and the U.S.A. You can see in the slide about jobs that for the same amount of heat or electricity output several times more jobs are created, and again, the right type of jobs in the professions: geologists, geophysicists, geoscientists, drillers, pipeliners, tradespeople, field staff. You can have your cake and eat it too, which is what the other countries are finding. We're thrilled to have a very close partnership with the oil and gas industry. They don't see us a threat; workers themselves see us as the next step in their career. Certainly our industry couldn't even exist at the technological level that we have had the oil and gas industry not come first. We're not here to shame the oil and gas industry; we're here to stand on their shoulders and take Canada in the same direction using the skilled workers toward a more renewable and sustainable, and we believe lower-cost, future.
Another advantage, of course, is what do you do with all this heat? You may hear in the wind industry or the solar industry that sometimes there's too much of it and at other times there's not enough of it on the grid. It's the same thing with geothermal; there's so much of it that when you drill a well, you often have to find things to do with the heat. That's why you don't just need the engineers; you need the entrepreneurs. We need the people who are the imagineers to figure out what they might do commercially with heat. We think one of the most poignant things that Canadians can think about with this excess amount of heat from these drilled wells would be to use it for food; especially in the north where there are issues of food affordability, food diversity, and food security. Imagine having a well, and it just takes one well, in every northern community—and there are over 200—that are now able to provide heat economically to a greenhouse or a fish farm or any other imaginable thing they would like to do commercially in their village. We know how to drill wells; we have all the infrastructure and all the drilling rigs and all the personnel. The technology is not the barrier. At times, cost could be a barrier but with the carbon tax in Canada, as well as people just simply saying no to fossil fuels, this comes into play. Again, even before the Paris agreement, these other countries around the world had been aggressively building their geothermal for things like food security, jobs, and food diversity for over 100 years.
We believe this is not just a Natural Resources Canada issue. This could be an agriculture issue as well; something we could all agree on. Here you have an energy form that is liked by the oil and gas industry, the workers, NRCan and Environment Canada, agriculture, and of course, the ministry of northern affairs as well.
Why are we not doing this more in Canada? Simply, like many things, as our colleague Steven just said, sometimes policies stand in the way. We have an associate here in the room today who wrote one of these reports and this is the “International Geothermal Policy Mechanisms Best Practices”. Again, we can stand on the shoulders of other countries that have already gone further. We have excellent resources in Canada; that's not the issue. We have excellent technology in Canada, and we have the people to do it. We're coming up against the policy disparity. We don't quite have the things in place to help either bring people awareness about what geothermal can do or how we can help foster it. Looking at international policy, we have CanGEA reports and we also have European Union reports. They're all pointing to how to support geothermal energy to get going.
We went through the benefits, that geothermal gives not just electricity but heat. We talked about the jobs, we talked about food. I now have three areas of policy I'd like to go through.
Supportive technologies would be having things like the geological survey of Canada and CanMET Energy support more demonstration and de-risking for the industry in the same fashion they have for oil and gas in the past.
We also have the financing tools. Two weeks ago in the budget we saw that geothermal heat is now considered a renewable resource. However, there are at least four or five other things we do not have parity with. They're pretty basic things—things that oil and gas, or wind and solar, already have. These are things like the Canadian resource property, the ability to claim test equipment, the ability to use transmission expenses as eligible expenses, and having supportive incentives such as the wind power production incentive program, which later became the renewable power production incentive and then became the ecoENERGY innovation initiative program. These are things that our industry, geothermal, missed out on. We call that the activation energy that's missing.
For financing tools, we're also looking for low-interest loans or grants that convert into low-interest loans if we're successful. A large one the federal government and the provincial and territorial governments could do right now would be to buy renewable heat. Most of the bills for energy are not actually electricity, they're for heat. One way the government can step in right now is to create a market for our members that have several projects in the pipeline, to get them off the ground.
In North America, America is a number one producer, Mexico is now the number five producer, and Canada still stands pretty much at zero on the world scene. We do have lots of heat available. We just need to go after it with our skilled workforce and take advantage of that resource.
I want to maybe broaden the discussion to include Ontario, Saskatchewan, Alberta, northeast B.C., and wherever we have a robust oil and gas industry.
MP Barlow, we just talked about abandoned wells. Abandoned wells, or end-of-life wells, have actually been cemented. There's been money spent on them to put them to rest. Before they get to be abandoned, they're producing, so one of the easiest things to do is co-production. Have your cake and eat it too. Have the oil and gas still being produced and—as opposed to using the waste water as a waste and having to pay money to dispose of the waste hot water—actually use that hot water.
You can pipe hot water and keep its heat anywhere from three to 10 kilometres, but of course the piping costs would be fairly high, or you can bring people to your wells. If you think about these oil and gas wells, they're already on farmers' fields. They're not in urban centres. They're in the agricultural areas of our country. Asking the agriculture industry to do more with what is already on their land to begin with, through co-production, would be a wonderfully low-hanging-fruit activity. It would increase the economy of the wells. Now they're not just selling oil and gas, they're probably selling CO2 credits as well as the heat, and also perhaps paying the farmer some more royalties or rent for the infrastructure on their land.
Before we get to the abandoned ones, though, what happens with an oil and gas well is that if a company goes bankrupt—and there's lots of that going on right now—or even if the well itself waters out and it's the end of the life, they become suspended and possibly even orphaned. Those wells are still viable candidates, but the ownership or the economics can slip below zero. They're now negative. The idea of bringing the suspended and orphaned wells back to life by using them as renewable heat wells, or perhaps even electricity wells, just allows that infrastructure to be repurposed and those employees who are already working on the well to go back to their jobs.
Abandoned wells are a subset, but they're actually probably the hardest thing to do. They could be done once we get a vibrant industry going, with the co-production and the suspended and orphaned wells, which are growing in numbers as well—I think now we probably have more suspended wells than we do abandoned wells. Attacking that allows us to reimagine and rethink infrastructure.
Again, we can use those exact same workers. For sure, we can do it in Alberta—and we thank MP for having the foresight to represent that initiative—but it also can be used in Ontario, Saskatchewan, northeast B.C., and anywhere we have the oil and gas infrastructure right now.
One of the things to understand is that, much like for oil and gas, the resource itself is governed by the province or territory. As much as what Enercan or the geological survey of Canada or CANMET can do, they can be supportive. We need your help to bring the provinces along at the same time. If they are the ones giving the permit for the resource, you can't drill without the provincial or territory permit.
British Columbia does have a Geothermal Resources Act, so companies like mine were able to get these permits and start financing and do the exploration.
For a mining company to also do geothermal, they'd have to go back to the territory or province and get that piece of paper that gives the company the exclusive use of the resource. For that privilege they may pay royalties as well, possibly to the federal government as well as to the provincial government.
It is a type of industry that needs federal support the same way you've supported oil and gas, but at the resource level it's owned by the province or territory. We'd like to have parallel meetings, such as this, with our counterparts in the provinces and territories. It's a little bit of the cart before the horse. We need to see that the federal government is in place and supporting it.
When they look at our slides and we have so many points of not having parity with the other industries, that becomes a challenge, I think, for the provinces to see that the feds are serious. Right now you can have, again, the Canadian resource property, and if you're a natural gas well you get to write off or claim the expenses for the very same permit I'm talking about, that lease. However, if I'm a geothermal person trying to sell heat against natural gas, they inherently have an economic advantage and so on.
We have the technology, the people, and the resources, but we don't have policy parity and we don't yet have the provinces and territories where they need to be, with the exception of British Columbia.
I think government finds itself in a difficult position. Innovation as a sort of science is misunderstood entirely.
There's this view that innovation equals invention It's promulgated in the popular media. We watch Dragons' Den, somebody has a better mouse trap, “Give me money, we'll move forward.” It has nothing to do with innovation. Innovation is slog; it takes decades to get from beginning to end.
The work that we are doing at my company began in the United States in the 1970s and ended in 1998, when the U.S. government declared that, well, you know, we don't need this because there's an infinite amount of oil and it's always going to be $10 a barrel, so why bother with this biofuel mess that you're dealing with?
It sat on the shelf for 10 more years. I discovered reading the Washington Post, and decided I was going to try to do it. Lots of people have tried what we're doing, we've just gotten the furthest.
There's this idea amongst legislators that they can legislate innovation. On Thursday, we will all be creative and we will all find a solution, and this will result in the next generation of jobs. That's kind of not how it works. There are innovation investment models that do work. The problem is that they're unfortunately difficult for governments to adopt, because they require a lot of failure, and governments don't really like failure on their investments.
I don't think the understanding is there that there is no failure in innovation. What you have is a lack of success, which is very different. If government were willing to lose money on its investments in innovation, it would be much more successful in achieving the innovation it seeks. That's not how programs are designed. They're designed so that they have....As keepers of the public purse, quite correctly, government works hard to make sure it is not throwing good money after bad, but most innovation occurs by throwing good money after bad.
We've talked about having to address some of the risks with geothermal, but in one sense geothermal is very predictable. Every three kilometres it's about 100°C no matter where you go on earth. I could be drilling in Poland or I could be drilling in Hinton, and if I go down three kilometres I'm going to hit about 100°C. In the Hinton area, and all across Alberta, in the Rocky Mountain Trench, some of the wells are five kilometres deep, so they're already at the 150° level. There are some wells in northeast B.C. that approach 180°C. In our industry we'd say they found geothermal, but what they're after, of course, is natural gas.
I'll go back to this idea about using infrastructure for more than one thing. The well has already been drilled, mainly for natural gas prospecting, and now we want to co-produce that well to not only use the natural gas and pipeline that away, but to send the hot water waste from that well first through a community. We do a heat exchange at the community, so their heat is transferred into something more benign, like a glycol loop. They can use that for productive measures as opposed to having to burn fossil fuels, and then that water is returned to the oil well or the gas well, where it had come up originally, and the oil and gas company itself was already processing it and dealing with it on site. It is a very closed loop. We're sending heat away to a community in the form of water, but the water itself comes back to the disposal well of the oil and gas site.
We have, literally, 800,000 wells that have been drilled in Alberta alone, not to mention Saskatchewan and northeast B.C. Right now there are several tens of thousands that are abandoned and several tens of thousands that are suspended. The producers have gone bankrupt because of commodity prices, not because the well went bad. We can repurpose what's coming out of those wells to perhaps just be a geothermal product, or the geothermal product may add enough revenue to now allow the operator to also sell its natural gas at a profit.
We're looking at having more revenue per infrastructure, so you get more capital intensity, in a positive way, out of the infrastructure. Hinton is really the poster child in Alberta, as well as northeast B.C., for infrastructure that's already penetrated useful temperatures to make both power and heat.