Good afternoon, honourable members of Parliament. My name is Nathan Neufeld, and this is my colleague Jonathan Dueck. We are from Evergreen Solutions, a smaller, mid-size green-chemistry innovation company located in southern Alberta in the lovely riding of Foothills. We're both extremely honoured and excited to be here today, participating in this most exciting process of advancing clean technology in Canada's natural resource sectors. Allow me to begin by sharing with you a little about who we are, beginning with our mission statement.
Evergreen Solutions creates and supplies practical working solutions with an unprecedented optimization of performance to industry, incorporating product, HS and E, and real value to the corporate bottom line. Our core focus at Evergreen Solutions is to create clean chemical technology for industry that outperforms conventional technology while being very much commercially viable. Evergreen Solutions has over 20 years of experience in developing clean chemical technology and currently supplies its products across Canada, the U.S., and throughout the world. Evergreen Solutions and its innovative products have received a very high level of acceptance in Canada's natural resource sectors.
We tackled the question, “How can the federal government effectively and efficiently influence the further advancement of clean technology within Canada's natural resource sectors?” We chose to focus on our past experiences around our efforts in developing clean technology and subsequent efforts to commercialize this technology within these sectors. More specifically, we would like to present four brief case studies, two of which we characterize as successes, meaning that we were able to achieve great commercial success. The final two case studies are characterized as misses; that is, we may have successfully developed the technology but were unsuccessful in gaining an acceptable level of commercial attraction.
In all four cases, as Jon shares them, he'll focus on where we found existing federal government policy instruments helpful in contributing to successful commercialization. We'll also share where we feel policy instruments or tools could have assisted in turning our misses into successes.
For our conclusion, we'll share four suggestions that we feel would be of great benefit to our organization and many others in the quest to de-risk the adoption of clean technology in Canada's natural resource sectors.
The first case study we want to talk about is MegaSol. MegaSol was developed at the request of and with a lot of support from Suncor oil sands. They asked us to develop a new, cleaner degreaser that would work faster and have better EHS characteristics than what was currently available on the market. The development of MegaSol was during a period in our company when we were still quite small, without significant resources to invest, so the SR and ED credits were invaluable in allowing us to make the many blends that brought us to the final composition, and also financed the multiple trips to the site for test conditions in their wash base.
The resulting product reduced the amount of fresh water that was used in cleaning the trucks. It also reduced chemical employee sick days, due to the chemical, down to zero from however many they had before, and also reduced the energy consumption in the wash base. Most of the oil sands locations have also experienced greenhouse gas reduction emissions because they heat their wash water, and with less wash water they use less heat when washing with MegaSol.
Currently, all the mining oil sands operations are using MegaSol, but it's taken us 13 years to get the industry to fully adopt the product into their operations. We believe that a commercialization program that's tied in some manner to the SR and ED program would help to speed up the adoption of new clean technologies and will help the R and D projects that the government is already invested in to achieve full commercialization faster, resulting in quicker returns on investment for both the R and D company and the government through increased tax revenue.
The second product we wanted to discuss is called MudWash. For many years Evergreen Solutions has had a major share of the market for rig cleaners in western Canada and North Dakota. But during the downturn in the economy and the simultaneous drop in oil prices, we saw our position eroding very quickly by more hazardous, less effective, and low-cost solutions.... Initially we believed this was mostly due to low rig counts, but after a few meetings with some of our distributors they confirmed that on the few drilling rigs that were operating, they were going the least expensive option, without concern over how much product they had to use or whether the chemistry was clean or not. The rig operators said they still loved and preferred our products, but they were being given instructions to cut their costs on everything.
With that information in hand, and a target price, we quickly and relatively inexpensively developed MudWash 210 in a matter of a few weeks. We sent out the dozen or so pails of product to various rigs to get their feedback, and then based on that, we finalized a solution and proceeded to commercialize the product. Due to the nature of this market, to commercialize this product we had to supply a significant amount of product at no charge for distribution to the rigs, and in this case we had to invest much more heavily in marketing than we did in R and D in order to make this product a commercial success. We believe that incentives to help companies offset the sometimes significant costs of commercializing their new products would go a long way in de-risking efforts to bring new and clean technologies into the natural resources markets.
The first miss we wanted to talk about is AggreSol-CAP. Coal is shipped across North America by rail, and fugitive coal dust from the railcars poses not only a fire risk on the tracks, but also an unsightly environmental mess, especially in the winter. As a result, railcars loaded with coal must be sprayed with some type of capping solution that will bind the small dust particles to keep them in the railcars under extreme weather conditions and various dynamic stresses. This is typically a latex-based material that is very messy in its application, difficult to clean up, and hazardous to fish if it gets into the watershed.
We were working in southeast British Columbia to develop a lower cost, superior-performing capping agent for use on their railcars, and then expand that application to other locations across North America and globally. After significant R and D work, and development and testing in our own lab, the economics indicated a positive ROI, and we were ready to proceed with on-track testing. However, at about the same time coal prices collapsed and our customer pulled all their funding for this project. To this day, coal prices are still low, and we have not been able to get re-engaged in the project. We believe that if there were legislative guidance for adopting clean technologies when they are available, it would reduce the risk for the adopters and allow them to forge ahead even in difficult economic environments.
Finally, TerraSol was developed during the BP oil spill crisis in the Gulf of Mexico. We were approached by a U.S. company that was aware of our clean technologies. They were looking for a clean chemistry to help them clean up the soil contaminated by the spill. The product works very well, as you can see on the slide from the video, but it needs a mechanical component to really make it a commercially viable product for this type of application. We believe there should be some type of a trigger within the SR and ED program that automatically connects the SR and ED applicants with a technical adviser at the NRC to help connect compatible technology to companies.
Thank you for inviting me for the second time to participate in your committee's work. This is a great honour for me.
My name is Michael Binnion, and I am the chairman of the Quebec Oil and Gas Association, QOGA. Our organization was created to encourage dialogue on the development of Quebec's oil and gas industry. QOGA represents about 20 regular, associate or affiliate members.
QOGA believes that it is possible to develop Quebec's energy resources in a safe and environmentally responsible manner, while contributing to the province's economic growth and social development.
Quebec's new energy policy includes local hydrocarbons and considers them to be part of the solution for the energy transition. It is clear that, since requirements regarding local hydrocarbons are more stringent than those applied to hydrocarbons from abroad, they have much lower emissions.
Therefore, we feel that a balanced energy diet is the best way to meet the numerous needs of the Quebec society.
Before I founded Questerre Energy and discovered one of the largest and one of the cleanest natural gas fields in North America, I was in international oil and gas, and even today I'm working in the Kingdom of Jordan and Papua New Guinea in addition to Quebec.
I've worked in more than a dozen different jurisdictions around the world. In particular, I've had the opportunity to work in the republic of Georgia, working with Eduard Shevardnadze and his government to implement a new oil and gas law just after the civil war.
Over the last few years I've worked successfully through the public consultation process on a new energy policy and a new hydrocarbon law in Quebec.
I had a career before oil and gas. As a very young Albertan, I was inspired by Pierre Elliott Trudeau's words that Canada should stop being hewers of wood and drawers of water for our cousins to the south. His message that Canada should embrace a new high-technology economy captivated me, so I resolved never to work in oil and gas, thinking we would soon run out of it anyway and it was yesterday's industry. I did keep to my word for 15 years.
My early career was as an R and D tax accountant in Toronto, and I graduated to public venture capital and angel investing in the high-tech sector. Along the way I published a peer-reviewed paper in an international geology journal, Marine and Petroleum Geology, and also published one of Canada's first economic research papers on carbon leakage and policy options.
Technology and public policy are my main interests, occupations, and avocations, which is a good thing because, in spite of my early resolve, I ended up in the oil and gas business.
What I've learned over the past 20 years is that oil and gas is more high tech than high tech, and more importantly, there is nothing wrong with being hewers of wood and drawers of water when you're the world's best at it, using world-leading technologies, though I still agree that Pierre Elliott Trudeau was right not to be captive suppliers to our cousins to the south.
This leads me at last today to the eight priority questions. The most important thing I've learned in my public policy experience is that it's far more important to have the right questions than the right answers.
The question on how to de-risk the adoption of clean technology in the natural resource sector implies that Canada's resource sector has not been successful at adopting clean technology. Well before I started in the industry...and our earlier two presenters showed some examples of adoption of technology. The question presumes that the risk of performance of clean technology is blocking resource companies that just aren't quite able to realize the obvious benefits, so the really smart people have to help them out.
This is just simply not true. To those Canadians who say we're not the best and most resourceful people in the world with the respect to creation of resources, I say speak for yourselves. Yet there are even people in our own industry who believe the outdated narrative of our resource industries being old tech and not clean tech.
An interesting story is the story of Imaginea. Ms. West is an inspiring figure. She had a dream to start a new kind of oil company. At first I was interviewed by a documentary filmmaker from California on how Ms. West and Imaginea were going to create the zero-emissions oil and gas company. I have a lot of time for Ms. West and her imagination, and you will understand why in a moment, but her dream ran into a problem. All good stories need a villain, and her villain was the fossilized thinking of oil and gas executives.
Well into her business plan she had implemented a dozen or so clean-tech initiatives on her route to a zero-emissions oil company. The problem was, as I mentioned to the documentary filmmaker, who I think in retrospect had cast me as the villain in his film, my junior company had already implemented every one of her initiatives in our own projects. We just hadn't put it on a web page or in a documentary film. I can tell you some of my junior peers are ahead of Questerre with the use of hydrogen fuel cells and solar automated PLC controls to reduce environmental impacts and increase efficiencies.
The big companies are even further ahead and have created a privately funded technology supercluster equivalent, with over $1 billion in research a year. It is truly progressive and leading thinking on clean tech to co-operate with your competitors on technologies good for the environment and the whole industry. It's why Ms. West has had to adjust her Imaginea story, because there is no fossilized old-tech villain to make her story captivating.
I've reviewed hundreds of high-tech business plans with a view to risking my own money, which I've made from successful investments and high-risk ideas. They all have a story of how people miss the obvious. Occasionally one of them is right, but most of them are not.
“I need help in de-risking” is often code for “I need someone else's money”. When we de-risk an exploration project at Questerre using amazing state-of-the-art technologies, we need a lot of money too. Government has no business doing resource exploration with taxpayers' money. It's too risky, and those with the expertise and experience in risking their own money will make better choices.
Back to the questions, some better questions might be these. First, how can the federal government within its jurisdiction ensure that Canada's resource sector remains the world leader in the adoption of clean technology? Second, what policy instruments have been most responsible for Canada's resource sector's world-leading performance with clean technology? Could other jurisdictions benefit from Canada's leading clean technology and expertise to improve their environmental performance? Third, what institutions have been most successful in furthering the adoption of clean technology, and can the Canadian government further leverage those institutions to enhance Canada's lead in the adoption of the new technology?
I feel the final question about what recommendations the committee should have was a fair and open-ended question without any a priori assumptions, so I chose to answer that one. Here are my recommendations.
First, don't screw it up. If in doubt, when you're the world's best, the best thing you can do is keep doing it.
Second, Mayor Nenshi in Calgary has raised my taxes 30% in three years and is still taking on debt. Nonetheless, he has done a first-class job telling the world that Canada is the best place in the world to live—or Calgary is. Could we ask our government in Ottawa to do the same and promote Canadians being proud of what we are indisputably the best at—resources? International benchmarking studies would assist in doing this.
Third, I think we should keep the R and D tax credit program but consider making small reforms to tighten up credits for what are routine business risks.
Fourth, we should create a high-tech flow-through share as we have in the resource industries, making it easier to find private investment for new clean technologies by being able to pass on the R and D tax credits to investors who take the risk.
Fifth, I recognize markets do fail sometimes and also that there are times for Manhattan projects. Both recent history and economic research have shown that evidence-based regulated targets that allow the market to choose and adapt the best solutions to attain them is the most efficient solution for these problems. Our prior presenters, I think, made a similar recommendation.
Sixth, please heed back to Jean Chrétien's words on the adoption of Kyoto. Canada already does a lot to reduce emissions in the rest of the world, and could have a bigger impact globally than at home. Canada has to look at the problem of carbon leakage as a huge priority and a global problem. There are only three countries in the OECD that are net exporters of high energy-intensive goods: Australia, Norway, and Canada.
Australia realized that Kyoto production-based accounting for carbon was bad for their exports with comparative advantages in carbon and opted out. Norway realized the same and reformed its fiscal terms for its resource sector to substitute carbon pricing for government take. Canada has not done the economic study. If the precautionary principle applies anywhere, it surely applies here.
In conclusion, I'd like to return to Imaginea. I realized in talking to Ms. West and her filmmaker that her dream was possible. She only needed a zero-emission source of electricity or energy. I had seen the fully electric rigs that the Soviets had used in Georgia, and I knew where there was a large economic natural gas discovery with access to zero-emissions electricity.
We are working now to make the Imaginea dream of an emissions-free oil and gas company a reality with Quebec clean gas 2030. Using existing technology, we can drill and produce natural gas in Quebec using emissions-free hydroelectricity. My recommendation is to do the carbon leakage study so policy-makers can understand how Quebec and Canada's carbon policies create emissions incentives to import natural gas from Pennsylvania versus develop cleaner gas locally.
As far as de-risking our Quebec clean gas 2030 project goes, we're really already on it, although reinstating the Canadian exploration expense deduction of 100% for exploration wouldn't hurt at all.
Thank you very much for your attention.
I'll start with your last point and of course, there's been this new report that came out through the David Suzuki Foundation that methane has been under-reported in the industry. I think the Canadian Association of Petroleum Producers has come out quite strongly to refute the underlying assumptions of that report.
I will say that, according to the Canadian Association of Petroleum Producers, even if the United States went forward and was successful under the Obama requirements to reduce methane venting and emissions by 45%, Canada would still have been lower, so we're already well ahead.
I can tell you at the same time that, in terms of technologies, we're well ahead mostly due to regulations and requirements to flare. Restrictions on how much you're allowed to flare are just so much stricter in Canada than they are in many places in the United States, and venting as well.
I'll just offer an example where we could do better. Questor—not to be confused with Questerre, which is my company—Technology has an incinerator technology, not a lot more expensive than flaring, but it is a bit more expensive. As a result, it has not been widely adopted, even though it would clearly reduce these emissions even more.
Just getting back to the great incentive we have to be the world leader by more than 45% on this issue, it's a combination of regulatory approaches and technology that could be adopted elsewhere, and also I acknowledge that there is absolutely room to improve, as I think Evergreen and Nathan were talking about.
Then on the beginning of your question, we're very excited to take the idea of Suzanne West's, and I give her full credit for having had the idea of a new way of thinking about our industry. It may not be a new way of doing things, but a new way of thinking about what we do. I'm excited that in Quebec we do have that zero-emissions energy source. If we can eliminate all the diesel generators, which we can, if we can eliminate all the natural gas or diesel compressors, which we can, we can achieve the dream that she had of zero-emission natural gas in Quebec, yet we have people opposing it on the basis that any new local business in Quebec would increase emissions. It's true in Quebec, but we would have a massive reduction of global emissions, yet that doesn't seem to matter to some people.
We have a seven-phase plan from now until 2030. It aligns with the Transition énergétique Québec, which is their plan and actually goes to 2050 but they have milestones at 2020, 2030, and 2050. We're lining up with the 2030 milestone as a target to be at zero-emissions production of natural gas in Quebec. Just with what we know and what we've been able to accomplish, there have been quite dramatic improvements in technology already, as we've seen in the United States in the shale gas.
In the early stages of our goal of being at zero emissions, zero fresh water, and 100% biodegradable chemicals, where we're at and what we've already developed is that we can electrify the compression, instead of using hydrocarbons to run compressors. We can electrify our dehydration equipment, which takes the excess water out of the natural gas. That can also be electrified. It takes that to near-zero emissions. In fact, most rigs already are called diesel electric rigs. They're electric rigs run by diesel generators. We just take those straight from the grid and eliminate all the emissions from the diesel generators.
We're already over 50% there in terms of reducing existing emissions on the drilling and completions of oil and gas wells, just by what we can do now today. We have 100% recyclable water. In Quebec, we have all the water testing, and that technology we have today. The future state would be to use grey water out of our sewage treatment plants and other places like that, and not use fresh drinking water for fracking. Then, on the biodegradable chemicals, right now, today, we can use frack fluids that are non-toxic but might not be non-bioaccumulable. But we think that by 2030 we can easily get to 100% biodegradable frack fluids as well.
The final step, which is going to take longer, is the adaptation of vapour recovery technology, already well implemented at refineries and other similar installations around the world, but of course those are very large projects, big economies of scale. The adaptation of vapour recovery technology to mobile drill sites would be really the final step toward getting us to zero-emissions production of oil and gas.
The one thing is that we get there in part by saying we're not getting [Technical difficulty—Editor]. We're looking at transportation as being more of a society problem and not directly related to oil and gas because everybody has to transport things. So we're not counting that when we say zero emissions.
Thank you. I appreciate that.
Thanks to all of the witnesses for coming back again today. I think we all appreciate the time you're taking out of your lives and out of your businesses to provide this important testimony for policy-makers and legislators to consider.
I just want to say that both of you have touched on this issue of a definition around clean tech. We've heard that from witnesses previously throughout the course of this study, in terms of wanting some specifics around the definition of clean tech, both for the purposes of this report and also for the future, for the fiscal and policy decisions government might make with regard to so-called de-risking the adoption of clean tech.
You guys had mentioned that, I think, at least for the Conservatives around the table, we do often also ask how government de-risks the adoption of clean tech and we hear that taxpayers absorb risk, rather than innovators and risk-takers and experts in the industry who know best the innovation and technology advancements that will drive the future of Canada's already world-leading environmentally and socially responsible oil and gas and other natural resources development.
On that note, in the last committee meeting, I asked the current directly whether or not he believed that Canadian oil and gas was the most environmentally and socially responsible oil and gas in the world. While he, about 30 seconds prior, had just rightfully been pointing out on a number of measures the way that Canadian mining is first in class in the world in terms of environmental stewardship, engagement and participation of first nations people, benefits to communities, and positive impacts on the standard of living for communities right across Canada, suddenly when I asked him the question about oil and gas, he wanted to know specifics around metrics and said he couldn't answer the question, wasn't sure, and then proceeded to talk all around it, rather than saying that Canadian oil and gas is the most environmentally and socially responsible in the world.
Michael, since you mentioned that issue in your opening remarks, and you touched on this notion of doing international benchmarking studies in order to be able to make this case on Canada's behalf, I just invite you to expand on that and any specifics you'd like to add in terms of Canada's role in the global context as a world-leading oil and gas producer.