Remarks Before the Senate of Canada on the National Clean Energy Opportunity

The following is a transcript of remarks made by Merran Smith before the Senate committee on Energy, the Environment and Natural Resources, Parliament of Canada, on March 8, 2012.

Merran Smith Senate TestimonyThank you Chair.  Good morning Senators and thank you for inviting me to speak with you and the members of your committee today.

My name is Merran Smith, and I am the director of the energy initiative at Tides Canada. I would like to tell you about the program I lead, which is working to ensure Canada remains prosperous and competitive through the ongoing global transition to clean energy.

Now, I appreciate that there is a lot wrapped up in that statement, and so I would like to take a moment and unpack it for you.

As a global society, we are at the start of a transformation in the way we produce, use, and think about energy. At Tides Canada, we call this shift the new energy transition.

In the current commodity-based energy model, we dig, drill, and ship physical resources, such as coal, oil, and gas, and then burn them—either here in Canada or elsewhere—to provide us with energy services such as mobility, heat and hot water for buildings, and manufacturing. This system has dominated the economy for the last century. Today the model employs hundreds of thousands of Canadians, and provides the government with billions in public revenue that in turn helps fund critical social services from coast to coast to coast.

However, this model is changing.

It is being replaced by a new model, in which leading economies such as China and the United States will provide their citizens with those same energy services—again, mobility, heat and hot water, and manufacturing—via energy sources that are clean, safe, renewable, abundant, generally locally available, and ultimately cheaper than commodity fuels.

This shift won’t happen overnight. Look out onto the streets of any Canadian community and you won’t see much evidence that this energy transition is underway. But if you follow the investment money, and take note of the targets that large economies are setting for themselves, you start to see that that the writing is on the wall.

Take China as one example. We often speak about the importance of China as an energy market. It’s true that the country has a fast growing and urbanizing population, but I would suggest that it doesn’t actually have a growing thirst for oil.

In truth, China has a growing demand for the services oil currently provides—chiefly the service of mobility. If China (or any other economy) can deliver that service – mobility – in a way that is easier, safer, and cheaper, and does not depend on the whims of the global oil market, make no mistake, China will do so. And China is working to do just that. According to one recent government estimate, the nation will spend $313 billion in the coming five years to grow a low-carbon economy.

The Chinese aren’t the only ones. According to Bloomberg New Energy Finance, global investment in renewable energy projects is expected to reach $395 billion by 2020, and $460 billion by 2030. The shift will mobilize nearly $7 trillion of new capital within the next 20 years.

All this investment is spurring innovation that is in turn helping to accelerate this new-energy transition. Every month there are announcements about improvements in these low carbon technologies. For example, last week, Envia Systems, a California-based lithium-ion battery maker (that receives funding from the U.S. Department of Energy), announced a major breakthrough.

Their breakthrough will not only significantly slash the cost of electric vehicles, but also allow them to go much farther on a single charge.  It is these kinds of break-through technologies that will spur the clean energy transition.

There are many good practical reasons why this transition is occurring, including a desire for greater energy security, a desire to address climate change and threats to ecosystems, and reduce the public health risks associated with smog, mercury, and other pollutants.

I want to take a moment to note that oil has an important role to play in this transition. Petroleum will remain a part of our energy mix for many years to come.

But Canada’s focus on this resource—at the expense of clean alternatives— is placing our nation at profound risk.  And this is something that others are also concerned about.

I’d like to quote David Emerson, the former federal minister of international trade. In a report prepared last year for the Government of Alberta’s Premier Stelmach, Mr. Emerson said:

“We must plan for the eventuality that oil sands production will almost certainly be displaced at some point in the future by lower-cost and/or lower-emission alternatives. We may have heavy oil to sell, but few or no profitable markets wishing to buy.”

Senators, our nation is positioned well to prosper and remain competitive into this future. We have excellent universities, a history of innovation, a wealth of renewable resources, and a stable financial system. We have a number of established clean-tech clusters and renewable-energy manufacturing capacity in several provinces, enabled by supportive policy environments.

But there is no coordinated strategy, no policy certainty to draw a portion of the billions of clean tech investment capital to our shores, no clarity on how we will meet our climate change commitments. Instead, Canada is for the most part betting its future on the energy system of the last century.

Last year, we consulted with more than a hundred leaders in a wide variety of sectors to create A New Energy Vision for Canada. It is a vision of a healthy and prosperous nation that has fully captured the opportunities of this energy transformation. Ultimately more than 150 organizations, companies, and local governments endorsed the document, together representing the interests of about 1.2 million Canadians.

This year, we are hitting the road again, and developing a set of policy priorities that will put Canada on the path of the clean energy transition, and position our nation to prosper and remain competitive through and beyond this energy transformation. We will identify the first steps we need to take, and the framework we need to use for an energy strategy.  One that ensures that we are prepared to provide and be exporters of the energy services that Canadians and others need: mobility, heat and hot water for buildings, and manufacturing.

To recap, the global new energy transition is not wishful thinking on the part of environmentalists and dreamers. It is very real. It represents a multi-trillion dollar opportunity for those who embrace it—and disruption and uncertainty for those who deny it. Canada needs a coordinated plan to ensure our nation will prosper and remain competitive into this new energy future.

If we keep telling one another that business as usual will carry us forward, then we will find ourselves in for a rude awakening. We will wake up one day, and find ourselves, as David Emerson said, “Sitting on the sidelines watching the world economy go by.”

We believe that Canada can lead in the transition to a low carbon energy future, and we are willing to work across civil society and with all levels of government to put the policies in place that will position us to do so.

I would be pleased to try and answer any questions you may have. Thank you for your attention.

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