Joint Committee on Environment, Culture and the Gaeltacht debate -
Tuesday, 9 Oct 2012

EU Fuel Quality Directive: Discussion with Canada-Europe Parliamentary Association

Chairman

I welcome the delegates from the Canada-Europe Parliamentary Association of the Canadian Parliament: Mr. David Tilson, Ms Annick Papillon and Ms Joyce Bateman, Members of the Canadian House of Commons; and Ms Joan Fraser and Mr. David Tkachuk of the Canadian Senate. Delegates are informed that by virtue of section 17(2)(l) of the Defamation Act 2009, they are protected by absolute privilege in respect of their evidence to the joint committee. However, if they are directed by it to cease giving evidence on a particular matter and continue to do so, they are entitled thereafter only to qualified privilege in respect of their evidence. They are directed that only evidence connected with the subject matter of these proceedings is to be given. They are asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against a person, persons or an entity by name or in such a way as to make him, her or it identifiable. They are further advised that the opening statements they have submitted will be published on the committee's website after the meeting. I remind members of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the Houses or an official either by name or in such a way as to make him or her identifiable.

There is a great deal to discuss. We are all looking forward to Ireland's forthcoming Presidency of the European Union which will allow us to play our part in facilitating co-operation between member states in 2013. It is especially important for this country, given the many problems we face, that there is an ongoing successful engagement within Europe. We are particularly interested in the continuing development of the European Union and the future of the eurozone, of which we are and intend to remain an integral part. Like Canada, the European Union is a major economic power and has an important role to play in the world economy. Our relations with each other are very important and I am very interested to hear the delegates' views on the comprehensive economic and trade agreement and the strategic partnership agreement. The particular focus of this meeting will be the European Commission's proposed measures for the implementation of the fuel quality directive. Ireland is in favour of these proposals, but I realise they are a source of concern for Canada. We are eager to hear the representatives' views in this regard. I call on Mr. Tilson to make his opening statement.

Mr. David Tilson, MP

I thank the Chairman for the invitation to attend the meeting. Members have had a long day and undoubtedly have other places they would prefer to be. We will try to be brief as possible and, in the main, restrict our comments to the fuel quality directive which, as the Chairman observed, is a source of concern for our country.

The Canadian oil sands are the centre of a major development in our economy, one which is creating a lot of jobs. Members of the European Parliament have come to Canada to visit the oil sands and acknowledged that they are environmentally sound. Our immediate concern relates to the vote taken in February this year on the proposed fuel quality directive implementing measures. The oil sands consist of crude oil suspended in an ore that is a mixture of sand, clay and water. The majority of Canada's oil sands reserve is a type of extra heavy crude oil known as bitumen and located primarily in the province of Alberta, with smaller deposits to be found in Saskatchewan.

The oil sands resource underlies a landmass of 55,000 square miles and is divided into three deposits, the Athabasca deposit, the Peace River deposit and the Cold Lake deposit. The Government of Canada's policy towards the development of the oil sands and other natural resources has its basis in an open market, where companies make business decisions within a regulatory framework designed to protect current and future Canadian environmental, economic and social interests. In Canada, the provinces of Alberta and Saskatchewan have jurisdiction over the development of the oil sands within their provincial boundaries. The Canadian Government shares responsibility with the provinces for environmental protection and it is committed to ensuring that the economic and energy security benefits of the oil sands are balanced by sound environmental stewardship.

What is Canada's position? I suppose we could jump to the vote that took place. I will try to be as brief as possible. On 23 February this year, the European Union member states voted on whether to pass the proposed fuel quality directive, FQD, implementing measures. There were 89 votes in favour of the proposal, 128 votes against and there were 128 abstentions. For the purposes of the vote the effect of these abstentions was to block the Commission's proposal. Ireland voted in favour of the European Commission's proposed implementing measures. We hope that the vote will be modified somewhat as a result of Ireland taking the Presidency of the EU Council in the coming year.

In short, our position is that during the study of the implementing measures - it is going on as we speak - the issue of science should be followed. We should be treated the same as any other country that provides oil to Europe, whether Nigeria, the Russians or whoever. That is all we are asking. We call for the same science that is applied to other countries which are providing oil to be applied to Canadian oil or the products that come from Canadian oil. Most of our oil goes to the United States to be refined but these products could eventually find their way to Europe. That is it in a nutshell. The committee has had a long day and our message is brief: we wish to be treated fairly and in a non-discriminatory fashion; the same as any other country that is providing oil to Europe.

Chairman

We will begin by being fair and by going on Canadian time, which means it is early in the morning for meetings. We have plenty of time. I am not a geophysicist or a petrochemical expert either. Can the delegation explain in layman's language how Canada is being treated unfairly? Is this an issue of the type of oil and the extraction process used in acquiring it, or is it the substance or composition of the crude oil that Canada is placing on the international market? I am unsure what the difficulty is.

Mr. David Tilson, MP

Oil sands development has come under increased scrutiny from environmentalists. It is a subject that many organisations try to discredit as detrimental to the environment.

Chairman

Is that like fracking?

Mr. David Tilson, MP

No. Our Government is committed to making improvements in the environmental performance of oil sands development in areas such as land and water and the reduction of greenhouse gas emissions. We are as concerned about these environmental issues as much as the next person or the next organisation or state.

Senator Joan Fraser

I am not a geophysicist either but my clear understanding is that once it is refined, the oil sands oil ends up being exactly the same as all the other fuels we use. My understanding is that Canada has concerns with the fuel quality directive because of the decision to put oil sands oil into a category of its own and that this is based on a double standard. As a country we take into account the whole process from the first time something gets stuck in the ground to the end of the road, including by-products. This is not done for all other sources of hydrocarbons for the EU.

One example strikes me as being illustrative of our difficulties. In Canada by law the natural gas associated with the production of crude oil bitumen must be captured and disposed of safely. In fact, much of it is captured and sold commercially as natural gas. In Russia or Nigeria they tend to flare it off, producing large quantities of greenhouse gases which are not counted by the European Union. However, we count them in our production and as a result the EU counts them. The EU takes our numbers which include the effects of the natural gas but they do not do the same for other suppliers. My party believes that it would be appropriate to continue to develop the oil sands but to do so cautiously such that we can be absolutely certain that we are being environmentally sound. Everyone in the country believes that we should be treated according to the same scientific basis as everyone else.

Deputy James Bannon

There is a good deal of public concern and interest in hydraulic fracturing or gas exploration in the counties of north Roscommon, Leitrim, Cavan and parts of north Longford. People want best practice to prevail because they are concerned about the effects it could have on the human race as well as on animals. Has Canada regulated the fracturing industry? Have any independent surveys been carried out in respect of the effects it has on farmers or the wider Canadian community?

Chairman

I wish to clarify one point. The process of acquiring sand oil is not a fracking process. Is that correct?

Senator Joan Fraser

Exactly.

Deputy James Bannon

Yes, but I gather it is an exploration process. Can we get some guidelines from the delegation?

Senator Joan Fraser

The oil sands are very different from fracking, which, at least in Canada, seeks natural gas. There has been a great deal less of it. It is regulated largely by provincial governments and therefore there is variation throughout the country. Thus far there has been little of it and it has taken place mostly in Alberta. There is considerable political resistance in eastern Canada, where the oil and gas companies have been eager to get going with fracking.

Mme Papillon may have something to add in this regard. There is a new provincial government in my province which, as I understand it, has simply declared that there will be no fracking. I am unsure whether there have been any unique Canadian studies. There may have been some but I am unfamiliar with most of them. We rely to a significant extent on work done elsewhere.

Ms Annick Papillon, MP

I understand that there are many environmental issues which raise questions in Canada and these must be observed. Perhaps because I represent the opposition I maintain that there are many things that we should do better and improve.

There is no way of not doing this in Alberta. As my colleague stated, it is a provincial issue also. Better regulation is all that we can do about that but there is no way to shut it down. The oil sands in Alberta are so big that there is no way to not explore it. It is so big that we can endure it. All that matters is investing more in Government regulations.

Chairman

I am still trying to get my head around this. The methods of extraction that we are familiar with in this part of the world, particularly in this part of the Atlantic, are offshore oil extraction by oil rigs and gas extraction by the same method. We are familiar with how oil processes in North Africa, the Middle East and Saudi Arabia have worked. What is different about sand oil? Is Canada the only country engaged in this? Are there are other countries, such as the United States, which would be geographically similar, that are engaged in this process or is this a unique Canadian process?

Ms Annick Papillon, MP

It is not unique but we are definitely one of the most significant producers in the world.

Chairman

Is Canada a world leader in sand oil?

Mr. David Tilson, MP

Yes.

Deputy Michelle Mulherin

I welcome the delegation. Bienvenue.

If I understood Senator Fraser correctly, she explained that the full set of criteria is not being applied to Canada and it is not being considered in the same fashion and subject to the same criteria as Russia and Nigeria, the examples she cited. That sounds fairly straightforward. What is the answer Canada is being given? Why is this not the case?

Mr. David Tilson, MP

In a nutshell, we want to get rid of the issue. There is no question. I do not know when this issue is coming back but we are simply asking that we be treated the same way that other oil-producing countries are being treated and based on the same science. That is all we ask.

Deputy Michelle Mulherin

That is fair enough. That message is fairly clear. The delegation is making its case to the Oireachtas Joint Committee on the Environment, Culture and the Gaeltacht and I am sure there is a case being made at many levels, but it is a fairly basic question. Obviously, Europe is not ignoring the case the delegation has made here, which is that they wish to be treated equally. What is its response to that and why is it picking on Canada, which is what it sounds like?

Mr. David Tilson, MP

Those are our questions.

Senator Joan Fraser

Excellent questions.

Mr. David Tilson, MP

We have even asked those questions. We were at the Council of Europe and in the UK in the spring and we spoke to a number of countries which abstained. Those were not Deputy Mulherin's questions; those were our questions. We asked why they were discriminating against Canada. Those were our questions.

Deputy Michelle Mulherin

What were the answers?

Mr. David Tilson, MP

They did not have an answer. I am hopeful that whoever is studying it now will come back with a resolution that the same science will be applied to all those oil-producing countries. That is all we ask.

Senator Denis Landy

Mr. Tilson is obviously exercised by the question put by Deputy Mulherin. With due respect to him, perhaps he could share with us the responses rather than the answers he got when he put those questions at European Council level and to the UK Government or whatever level of UK governance he met. Obviously, he had a discourse with them and got responses. Rather than dwelling on the answers to the questions, perhaps he might share with us the responses he got when he raised the issues to help us inform ourselves a little better. With respect to Deputy Mulherin, that is what she is trying to ascertain here. It might be helpful if Mr. Tilson could do that so that we could continue to have a discourse on the matter.

Mr. David Tilson, MP

I am not trying to be flippant about it. I am simply telling the committee-----

Senator Denis Landy

Mr. Tilson made a good job of it, if he does not mind me saying so.

Mr. David Tilson, MP

Excuse me?

Senator Denis Landy

Mr. Tilson made a good job of it, if he does not mind me saying so.

Chairman

Please, Senator. We need clarity here. Mr. Tilson raised this issue previously and received responses from other European member states. In summary, what are the responses that he is getting to those issues?

Mr. David Tilson, MP

The responses simply were that the matter would be studied further and they would report back. That is the best answer that was given to us. That is why we are here. We did not understand the answers that were given to us. Ireland voted against it. Maybe the committee can tell me why it did.

Deputy Marcella Corcoran Kennedy

I welcome the delegation.

I can see the case Mr. Tilson is making. Clearly, it is a natural resource that Canada has in a regional area. I myself live in a region where there is a small population and high unemployment. It is important to make the most of the resources that they have and I can see that is where Mr. Tilson is coming from. It is a matter of trying to balance that against the bigger picture, which is the question of whether the oil being produced is more polluting than other fuels and how one manages that in terms of trying to reduce greenhouse gas emissions and halt global warming, which, as they will know, is becoming difficult. From all of the delegation's meetings, can its members tell us whether it is the case that these countries are putting Canada into a category of producing something that is potentially more polluting and, in the long term, more damaging to the planet?

Mr. David Tilson, MP

I guess I am going to start repeating myself. We are simply asking that the same rules that are applied to other oil-producing countries be applied to Canada. That is all we are asking.

Chairman

I will summarise Senator Landy's point. The delegation has come a long way. We would hope it has something to say rather than just asking us questions.

I attended a number of EU Presidency meetings in Copenhagen earlier this year. One of the points the delegation made that interested me, of which I have taken note, is that Canada is taking the carbon footprint of the full production process and is getting a carbon rating on that basis - there is the extraction process, the cleansing process and all the rest of it.

Ireland has no oil or gas loyalty. We are not big players on the international stage. We are not like Russia, north Africa or anywhere else. This is not a sector, such as whiskey, software or IT technology, in which we are a world leader. We are a small player in this sector. If we have taken a position on this, it would not be on the basis of self-interest because we are not major stakeholders in it.

We will have to push Mr. Tilson on the question. His response has been that he has gone to a number of EU member states and they told him they were having a look at the issue. I would imagine he has met not so much with their committees but with their environment Departments. The issue would not have come across the desk of this committee if the delegation had not brought it before us today.

If I were in Mr. Tilson's position, all I would be asking is that they examine all oil on a full-carbon-footprint basis. Is Mr. Tilson making that argument? Can he present a scientific argument that a pint of Saudi crude has a greater carbon footprint than a pint of sand oil from Quebec, Alberta or wherever?

Mr. David Tilson, MP

For environmental purposes, we are simply saying we would put our oil up against anyone's. That is why we were almost shocked at the decision that was taken. However, we are hopeful that the issue will be studied and that those countries will reconsider their position. The statistics were 89 in favour, 128 against and 128 abstentions. It does not seem as though everybody was agreeing with the proposal.

Deputy James Bannon

Is the witness insinuating that the Irish Government is giving credence to bad EU law?

Mr. David Tilson, MP

No; I am just asking the question.

Chairman

Mr. Tilson can make that accusation if he wishes.

Mr. David Tilson, MP

I am not saying that at all. Ireland voted in favour of the proposed implementation measures and I am simply wondering why.

Chairman

I have one last question concerning the process of extracting sand oil from the ground. Is it done by an oil rig or is it done by one of those pumps that we saw on "Dallas" that goes back and forth?

Senator Joan Fraser

There are two methods of extraction. It can be mined using open-pit mining and, by law, once the open-pit mine has been exhausted, the land must be restored to its original condition.

Chairman

Is it in a well structure?

Senator Joan Fraser

No, the oil is inextricably mixed with sand. Approximately 20% can be extracted by open-pit mining. The rest is done in situ because it is too deep for open-pit mining. The companies drill down and use steam to melt the oil in the sand and then extract it.

Chairman

That sounds like fracking.

Senator Joan Fraser

No, it is not fracking. It really is not fracking. I know it is not because in the same province fracking for natural gas is also taking place. In the United States, they use fracking for oil.

Chairman

The steam separates the oil from the sand, is that correct?

Senator Joan Fraser

Yes, and up comes the oil. Data suggests that the Canadian sand oils' average life-cycle greenhouse gas emissions are about 10% above the European average baseline but they are far from the worst in the world. They are significantly lower than Middle East heavy oil, Californian heavy oil and Venezuelan partial upgrade oil, for example. There are numerous sources of oil that have a greater life-cycle greenhouse gas emission rate than our sand oils do. That is another reason we find it very strange that our sand oils were singled out and put in a category all by themselves under the European fuel quality directive. It seems to us like a double standard.

Deputy Marcella Corcoran Kennedy

Is it that the production of sand oil uses more energy than the production of crude oil?

Senator Joan Fraser

What one gets at the end of the process is crude oil, which is then refined. On site, it takes more energy to produce sand oil but not over the full life-cycle. If one takes the whole process into account, that is how one arrives at the figures I quoted earlier regarding greenhouse gas emissions.

Ms Annick Papillon, MP

It is true, however, that the process uses a lot of water.

Senator Joan Fraser

The water use is possibly a more serious concern but the oil companies are not foolish and they have been working very hard to reduce the amount of energy and water used to produce the oil. They have made great strides in recycling the water they use. Most sand oil extraction is done in the province of Alberta, which tends not to have a great deal of water. It is not Saudi Arabia, but it does not have an abundance of water like eastern Canada. In Alberta, they must be careful with their water and the oil companies are working very hard to minimise their net end consumption.

Chairman

Henry Kissinger once said that when he picked up the phone to ring Europe, he did not know who to call. Who, in Canada, is phoning Europe on this? Is it just this delegation or are discussions taking place at a higher level on this issue?

Senator Joan Fraser

Discussions are taking place at every level.

Chairman

At what levels are they taking place?

Mr. David Tilson, MP

They are taking place at the highest levels. The Minister for Natural Resources, Mr. Joe Oliver, is having discussions with the European Commission and the European Council.

Chairman

Do members of the delegation have anything further to add?

Mr. David Tilson, MP

No, I do not think so. It has been a very interesting meeting. Thank you, Chairman.

Chairman

I thank the delegation for coming before the committee. We are not geophysicists or chemists but we need, at a global level, to start measuring the full carbon footprint of all production processes. If I buy a plug from China, Canada or Ireland, I need to know its full environmental impact. In terms of the sand oil issue at a European level, if the delegation can make their claim regarding greenhouse gas emissions stand up, then they may get somewhere. However, if their argument does not stand up, then they will not progress their case.

The joint committee adjourned at 6 p.m. until 2.10 p.m. on Tuesday, 16 October 2012.