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Ian Thomson
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Ian Thomson
2021-06-21 11:10
Thank you, Mr. Chair.
My name is Ian Thomson, and I am the president of Advanced Biofuels Canada. I'm joined here by my colleague Fred Ghatala, the director of carbon and sustainability for our organization.
I wish to convey this morning two core ideas relative to the committee's study.
The first is that the advanced biofuels and renewable synthetic fuels made by our members have improved dramatically on all fronts in the past decade and are being deployed at commercial scale here and around the world, yet the revolutionary nature of these innovations is not widely known and old perceptions prevail.
My second message is that the clean fuel regulation, or CFR, currently under final review has immense potential, but needs several straightforward amendments to deliver on its promise.
Renewable fuel regulations of a decade ago had only a handful of solutions, but these regulations worked as intended. They kick-started widespread efforts to deploy a new generation of low-carbon, energy-dense fuels.
Today these fuels can be 100% substitutes for, or blended with, fossil fuels, fully functional in existing engines and infrastructures, and some are indeed produced at existing petroleum refineries. Clean fuel feedstocks have expanded beyond sustainable crops to include household and industrial wastes and residues, and even CO2 captured from air or from industrial flue stacks. Clean liquid fuels complement an array of other low-carbon transportation energies now also being scaled up.
The results of these innovations are that advanced biofuels made today in Canada can be carbon competitive to, for instance, electric vehicles on a full life-cycle basis. A vehicle running on these fuels can be a zero-emission vehicle, reducing greenhouse gases from 80% to 120% below those of fossil.
We know that electricity and other low-carbon energies will have a rapidly growing role in transportation. The IEA's sobering report of last month starkly noted that, even under fully executed, ambitious, global net-zero pledges, by 2050 more than 80% of final energy demand in transportation can rely on the internal combustion engine. Marine, rail and aviation sectors may be reliant on those fuels even longer. In short, we can't wait until 2030 or 2050 without the rapid scale-up of these liquid fuels.
The new clean fuel regulations can play a key role in Canada's net-zero future, and we have two recommendations relative to its design.
Our first addresses an inescapable fact that 75% of vehicle greenhouse gas emissions is from crude oil in fuel combustion and the other 25% is from the energy that goes into extracting and refining fuels. In plain terms, the CFR will fail to get Canada on the path to net zero unless it addresses, proportionately, these combustion emissions. The only solutions capable of delivering zero combustion emissions are advanced biofuels, renewable electricity, low-carbon hydrogen, renewable natural gas, and bio-crude for refineries. Put another way, you can't capture and store a car's tailpipe exhaust.
Unfortunately, the CFR draft design offers many incentives for fuel suppliers to focus their actions on reducing upstream emissions that will never be able to take us more than 25% of the way to net zero. In addition, other provisions will award credits for activities that have nothing to do with liquid fuels or transportation. I would be happy to describe the straightforward solution to this misalignment, but it roughly follows the precedents set by other global clean fuel regulations.
Our second recommendation relates to CFR feedstock criteria and the new greenhouse gas measurement tool. Canada's providers of sustainable crops, agricultural and forestry residues and waste resources are concerned about market access requirements and seek clarity on carbon intensity scoring under the new LCA tool.
The practical solution is to align the life-cycle assessment model and feedstock criteria with established industry standards in the North American fuel trade and to adopt it with an orderly transition.
Clarity on how Canada's farmers, foresters and clean fuel producers can participate will support new investments. Our recent analysis indicates that a well-designed CFR can create over 20,000 new jobs and add $10 billion in new economic output.
Last, I'd like to add that several of the clean energy tax measures and funding programs in the strengthened climate plan in budget 2021 need refinement to create competitive conditions for private sector investments.
In closing, let me reflect again that Canada's advanced biofuels sector is helping drive Canada's economic recovery and underpin climate plans. Our task is clear: to decarbonize the internal combustion engine.
We appreciate your work on low-carbon fuels and the invitation to meet today. My colleague and I look forward to your questions.
My thanks to the members of the committee.
Scott Lewis
View Scott Lewis Profile
Scott Lewis
2021-06-21 11:28
Excuse me if I read Malcolm's presentation on his behalf just to get it going.
On behalf of Renewable Industries Canada, Malcolm West wishes to thank the chair and distinguished committee members for the invitation to present as part of your study on renewable fuels. In addition to Malcolm's role at RICanada, he is the executive vice-president and CFO of Greenfield Global, Canada's largest ethanol producer.
RICanada members produce more litres of renewable fuel right here in Canada than any other organization. As Canada moves towards implementing its own net zero by 2050 objectives, one sector is often top of mind. The transportation industry is too massive to slow down, but too impactful on the environment to ignore.
Members of Renewable Industries Canada, such as Greenfield Global, have found a way to thread the needle through innovative, modern biofuels. We continue to develop increasingly efficient biofuels that meet or exceed net-zero emissions on a life-cycle basis. Over the past 35 years, our technology has substantially reduced transportation's carbon footprint.
A key focus of this committee's study should be the need to implement affordable, market-ready technologies to achieve climate objectives. The value proposition offered by biofuels is incontrovertible. Ethanol is typically cheaper than gasoline, acts as an octane enhancer promoting vehicle performance, burns more efficiently and can be used with existing infrastructure. Existing technologies, including the use of biogas to replace natural gas in ethanol production, carbon capture and sequestration, and enhanced farming practices can make ethanol a net-zero fuel or even net beneficial for the environment.
All cars on the road as of 2001 can use ethanol blends of at least 15%, with others comparable with levels in the 25% to 85% range. These flex-fuel vehicles cost roughly the same as regular fossil fuel-burning cars and represent the most affordable way for consumers to reduce emissions from their commute.
Policy that favours modern biofuels also stimulates new R and D. For example, Greenfield Global has recently invested in a joint venture that uses anaerobic digestion of solid municipal waste to create biogas for its ethanol plant in Varennes, Quebec. Next steps include producing green hydrogen to meet increased renewable fuel demand.
So far I've spoken to you, on Malcolm's behalf, mostly about light-duty transportation and renewable gaseous fuels. I will now continue with my part of the presentation, about the heavy-duty and aviation sectors.
I echo Malcolm's words of appreciation for this important opportunity to discuss renewable fuels together. I am the EVP of commercial operations and strategy at World Energy, a global leader in the production of biomass-based diesel and sustainable aviation fuels.
Some might worry that Canada's climate goals are too ambitious, while others might want the government to move faster. I'm here to tell you that net zero is real and possible. Today, right here in Ontario, my company produces a biodiesel that exceeds net-zero standards as measured by the Government of Canada's life-cycle analysis model. We're able to do this by taking waste, such as used cooking oils from restaurants and animal fats from rendering plants, and transforming them into biomass-based diesel. We also have the technology right now to make renewable diesel using other ingredients that would meet net-zero requirements.
You don't need to turn over the existing fleets of heavy-duty diesel trucks, buses and trains. The renewable diesel that RICanada members make is already 100% compatible. The same goes for diesel generators in northern and remote communities. They can all produce low-carbon power tomorrow, simply by putting in the right fuel.
Advanced biofuels are a here-and-now solution to significantly reduce carbon emissions.
Sustainable aviation fuel is another example of instant decarbonization. Right now, global demand for sustainable aviation fuel is off the charts, but supply is low because we do not have the right policies in place. Our renewable fuels are proven to be compatible with existing air fleets and are currently being used by many airlines, including United, KLM and Alaska, to name just a few.
As we aim to build back better coming out of the pandemic, Canada needs to ensure that sustainable aviation fuel is leveraged to attain important GHG reductions. Ultimately, this kind of policy will stimulate investment and grow the Canadian economy.
Mr. Chair, thank you for the opportunity to present to the committee. It will be a pleasure for Malcolm and me to answer any questions.
View Mario Simard Profile
BQ (QC)
View Mario Simard Profile
2021-06-21 11:47
Okay.
So eight billion euros invested around the world to produce and transport hydrogen, with all that implies in the value chain.
I am wondering about regulation. Perhaps you could tell us about the regulations in Europe. Let's start with the famous hydrogen colour scheme: blue, grey and green. Do the projects you are investing in make that distinction between the different types of hydrogen?
Bertrand Masselot
View Bertrand Masselot Profile
Bertrand Masselot
2021-06-21 11:47
Yes. We can certainly talk about the various colours of hydrogen. I would rather describe hydrogen in terms of its lack of carbon. Green hydrogen will always keep a portion of a carbon molecule, whereas other types of hydrogen will have more carbon.
Today, if we consider the projects among which we are positioning ourselves, we see projects based on electrolysis first and foremost. That does not make green, or low-carbon hydrogen by itself. It first needs the electricity in order to do so, including intermittent and other kinds of power.
We are also positioned for carbon capture, using more classic hydrogen-producing units. We have already conducted projects of that kind. An example is with natural gas steam reforming units. Since 2018, we have been recovering carbon dioxide from a natural gas steam reformer.
Most of our investments are being made in the hydrogen with very low carbon emissions. As I have told you, we are looking at investments in the order of three gigawatts of electrolysis, compared to the 20 megawatts we have just invested in Bécancour.
View Bob Zimmer Profile
CPC (BC)
Right.
I'll just get in one more question for you, Dr. McKitrick.
Six to one doesn't seem very effective to me at this point. Like you said, maybe in the future it will be.
Being an economist, how do you make it effective? What needs to be done to make it effective, where we actually are seeing a dollar-for-dollar efficiency?
It's interesting on this side to hear all the complaints. I hear other members of the committee talk about incentivizing or subsidizing this when they decry subsidizing oil and gas. I would agree with them. I don't think we should be subsidizing oil and gas, but then, in some respects, we have to expect it on the other side of the coin.
Can you explain what can be done to make this an effective policy?
View Bryan May Profile
Lib. (ON)
View Bryan May Profile
2021-06-21 12:23
—but I think we can definitely have that conversation off-line.
If I could get back to my questions, that would be great.
My question is for Mr. McKitrick.
You talked a little bit about the idea of carbon leakage in one of your answers. I'm wondering, sir, if you could talk about that a little bit more. I'm concerned about the idea that we should be waiting to see what countries like China or the United States do before we set environmental policy. I'm wondering if that's what you're suggesting.
Ross R. McKitrick
View Ross R. McKitrick Profile
Ross R. McKitrick
2021-06-21 12:24
We don't have to wait and see what China or India or even the United States are doing. We can see not only is China building its coal-fired plant capacity, they have enough planned and on the books to exceed the current coal-fired power plant capacity in the United States just with the additional increment. They are also investing—
View Bryan May Profile
Lib. (ON)
View Bryan May Profile
2021-06-21 12:25
Sir, you also bring up the idea of regulations not contributing to advancements. I was a little bit surprised by that, given, frankly, what we've seen over the last five years, especially in industries like the auto industry where we've seen the complete transition in the auto industry moving toward electrification.
Could you maybe cite some research you were talking about that connects those two things and shows that regulations don't in fact contribute to the advancement of technology?
Ross R. McKitrick
View Ross R. McKitrick Profile
Ross R. McKitrick
2021-06-21 12:25
What I said was that if you're going to use carbon pricing, you should let the pricing mechanism do the work of picking the most cost-effective strategy. If you put a carbon price in place and then you also add in a lot of regulations where you then try to direct industry over and above the carbon price, you're undermining the economics of the carbon pricing system.
Bora Plumptre
View Bora Plumptre Profile
Bora Plumptre
2021-06-18 13:14
Thank you, Mr. Chair.
Good afternoon, members of the committee. Thank you for the invitation to speak today.
My name is Bora Plumptre. I'm a senior analyst at The Pembina Institute in the federal policy program, and I'm really excited to take this opportunity to speak about the need and the opportunity to facilitate greater supplies and consumption of low-carbon and renewable fuels in Canada.
I'd also like to acknowledge that I'm speaking to you from the traditional unceded territory of the Algonquin Anishinaabeg Nation, whose presence here in what is also known as Ottawa reaches far back in time.
I will focus my comments on two areas: first on the urgent necessity of accelerating a shift toward low-carbon and renewable fuels, particularly for transportation; and second on the regulatory powers of the federal government and the contribution that the judicious exercise of those powers could make toward the objective that, I would submit, unites the whole committee in conducting the present study, which is to say a vision of a net-zero society in which affordable clean fuels proliferate throughout our country's energy systems and beyond to our partners in international trade.
To me, this is a praiseworthy vision that would see us shift our energy economy into areas where investors are already going, positioning us to compete in the rapidly growing global market for clean energy and enabling us to finally meet our responsibility to eventually eliminate our ongoing contribution to the worsening effects of climate change.
Canada can and must do much more to decarbonize its transportation sector, which remains heavily reliant on petroleum-based fuels. Our emissions of greenhouse gases from mobile combustion sources remain stubbornly high, having grown 54% since 1990 and 16% since 2005, which is our base year for climate target setting.
Today, transportation is our second-highest-emitting economic sector, responsible for one quarter of our national GHG emissions. In most provinces and in all territories, it is the highest emitting sector. These figures are drawn from the federal Department of the Environment, and what they tell us is that right now, despite recent policy innovations, on a biophysical level, we're not headed in the right direction.
Whether in pursuit of our nearer-term emissions reduction target for 2030 or in pursuit of our longer-term aspiration to build a net-zero society, the decarbonization of fuels must be a key element of our strategy for transportation. Vehicle-focused policies are necessary too, but they are not sufficient to decarbonize the whole system. Government must pay attention to the core energetic component of mobility, namely fuels.
How do we do this? Electrification appears increasingly likely to solve the problem of emissions from passenger road transport, but given the deep uncertainty about which fuelling solutions will propel medium and heavy duty freight vehicles in the long term, we still need to approach this challenge in a way that provides a clear investment signal while remaining technology neutral.
Thankfully, we have a policy coming into place in the form of the clean fuel regulations, sometimes still called the “clean fuel standard”, which will fundamentally reorient the regulatory paradigm for the fuel market across Canada around the criterion of life-cycle carbon intensity. This reorientation is long overdue, and I was really pleased to see this type of policy approach, a low-carbon fuel standard, also recently endorsed by the Leader of the Official Opposition.
This is an important contribution because it helps provide certainty about the path forward for both the obligated and voluntary participants in the market this policy will create. Certainty and risk minimization for investors are essential to making progress on both technology and deployment, and the best way to minimize risk is by means of a regulatory program such as the clean fuel regulations, which act effectively as a non-subsidy transfer from high-carbon to low-carbon fuel producers. In other words, without resorting to public spending, the policy will shift capital flows on an ongoing basis to companies that can accelerate our transition to net zero. Subsidies, by contrast, of course have a habit of going away.
Another essential virtue of the clean fuel regulations is that they enable a portfolio-based approach to decarbonizing the national fuel supply. Many models have attempted to project what the energy system might look like by mid-century, and many scenarios of our energy future remain possible, but where the models converge is on the basic finding that we will need a portfolio of cleaner fuel options in order to achieve our climate goals. Increasingly stringent clean fuel regulations will enable the cost effective build out of this diverse portfolio without government having to pick winners.
Whether your interests—or, perhaps more properly, those of your constituents—are to promote one type of low-carbon fuel or another, the most important aspect from both a business and a climate perspective is to ensure a stable investment environment for projects to get done. There is a virtuous circle to enable between financial dependability and emissions reductions. A properly administered clean fuel regulation will provide the financial architecture for accelerating direct investments in the market-ready solutions and promote innovation in the more expensive, earlier-stage technologies that need to be scaled up.
Thank you. I'll stop there, and I look forward to your questions.
View Patrick Weiler Profile
Lib. (BC)
Thank you, Mr. Chair.
I want to pick up on a point that my colleague was just mentioning. You mentioned earlier in your opening, Mr. Wolinetz, the potential for substantial abatement if we're using more grassy or woody products.
I think the previous member mentioned a key point in terms of what type of support or regulation it is going to take to incentivize or move us more in the direction of using those products that are now going to waste or otherwise.
Michael Wolinetz
View Michael Wolinetz Profile
Michael Wolinetz
2021-06-18 14:22
I think policies like the clean fuel regulation are very helpful. That said, the clean fuel regulation, to get to a point where we're using those wastes, would need to be stronger. We need to be thinking about where it's going after 2030.
Something more in line with where California and B.C. expect to be with their similar policies by 2030 should do it. B.C., for example, has already provided enough of a transitional signal for the refinery in the greater Vancouver area to start doing co-processing. They're looking at how to actually use these materials and process them at the same time as our fossil crude in order to make a blended renewable fossil product in such a way that we could eventually transition over to a fully renewable product.
I think we're on the right track with the clean fuel regulation, but we need to expect that it will need to get stronger.
View Patrick Weiler Profile
Lib. (BC)
Thanks for that.
My next question is for Mr. Plumptre.
You mentioned in your opening the importance of things like the clean fuel standard and other policies to ensure that we're not picking winners and that we're going to have a portfolio-based approach and have the certainty for investment going forward in some of these lower-carbon products in the future.
My question to you is this: What risk do you see to investment today in the technologies that we're going to need for this type of a low-carbon future when you see other parties perhaps putting out policies or suggesting policies that would be less ambitious or that would eliminate some of these different mechanisms that are proposed?
Bora Plumptre
View Bora Plumptre Profile
Bora Plumptre
2021-06-18 14:24
It's a great question. Thank you.
To take the example of the federal low-carbon fuel standard or clean fuel regulation, actually we have a proposal from the leader of the opposition that would see the stringency of the signal of that policy actually go beyond what is currently proposed in terms of the average life-cycle carbon intensity of fuels by 2030. The CFR right now, as proposed, is aiming for about 13% by 2030. In B.C., provincially, it's already at 20% and it's similar in California. They're already into the second phase of their program.
I would say that it's understandable that Canada is just starting to get going, but other jurisdictions are already moving ahead, and the potential risk lies in some of these fuels that do present an opportunity to make a near-term contribution to our emissions reductions, as Mr. O'Connor was emphasizing in his remarks. Some of these fuels, such as renewable diesel, are promising and could play a large role in mitigating those residual emissions that still occur in the transportation sector and passenger transport as they are increasingly electrified, but we're still going to be dependent on liquid hydrocarbon fuels in both the light- and heavy-duty sectors for a long time to come. Those residual emissions could be substantially reduced if we increased our shares of things like biodiesel and renewable diesel.
The risk right now is that other jurisdictions are moving ahead. In just the past year, I think, U.S. petroleum refiners—and there have been several including Marathon, Phillips 66, Chevron, Renewable Energy Group and HollyFrontier Corporation—have been making multi-billion dollar investments in upgrading their refining operations, and we're, so far, not seeing too much of that type of activity here in Canada, although it does seem to be the case that some investments are starting to be announced now that we're getting to the point of actually implementing the regulation, so I'm encouraged by that.
View Richard Cannings Profile
NDP (BC)
Thank you very much for that.
Turning to Mr. Plumptre, you mentioned that these clean fuel standards were more stringent in some places and that we needed regulations that were increasingly stringent. I'm wondering whether you could elaborate on where Canada needs to go with our clean fuel standards to achieve the best results.
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