The Canadian Energy Sector and the Role of the Natural Gas Delivery Industry: An Interview with Kim Rudd

Kim Rudd, Parliamentary Secretary to the Minister of Natural Resources Canada (NRCan) and Member of Parliament for the region of Northumberland Peterborough South (ON) took some time with us recently to discuss the Canadian energy sector and the role the natural gas delivery industry will play in Canadas energy future. Here is an excerpt from that conversation.

Photo courtesy of Kim Rudd’s (M.P.) office.

1. The next federal election is just over a year away, what can you tell us about the governments priorities over the remainder of the term?

The recent 2018 National Liberal Convention involved a lot of discussion on a number of the programs and policies that we have put in place, like the Canadian Child Care Benefit and the Guaranteed Income Supplement for single seniors.  Both have had a huge impact on communities across Canada.

There was also a lot of discussion about the natural resources sector. For instance the approval of pipelines, Bill C-69 – the legislation aimed to ensure good projects go forward in a timely and effective manner while protecting the environment and ensuring effective engagement with Indigenous, Métis and Inuit communities.  There are a whole lot of other areas to move forward yet to be determined based on conversations that we had.

We still have a lot of work to do growing the economy, growing the middle class, and of course increasing our trade opportunities. We are such an integrated economy, and getting our resources to market sustainably is all part of that trade and economic development growth opportunity.

2. Cleantech is a top priority for the natural gas distribution industry. Our industry created the Natural Gas Innovation Fund to support investments in natural gas cleantech. NGIF has a vision to make Canada the world-leading innovation hotbed for natural gas cleantech companies to ensure the benefits of clean and affordable gas and create new jobs, attract investment, and generate export growth. What do you think our next steps with government should be to realize this vision?

One of the things that we have been doing as a government, is helping to push the innovation ecosystem by challenging companies across the spectrum in natural resources to look at what those opportunities are to improve productivity, drive sustainable practices, and reduce emissions.  As I see it, the federal government along with the provinces and territories, industry associations and industry need to be committed to working together to accelerate the development and commercialization of innovative clean energy technologies to support those goals.  We all know that natural gas will play an integral role.

“Natural gas will play an integral role.”

3. Can you give more details around the governments plan around the Canadian Energy Strategy? How will this support the Canadian natural gas industry?

The Canadian Energy Strategy supports the Pan-Canadian Framework on Clean Growth and Climate Change. When we come together as Ministers across the country, we talk about a number of things and agree to work on a number of things, for example energy efficiency and energy infrastructure which we continue to see as very important pieces in our Canadian Energy Strategy. We also discuss the need to focus on energy technology and innovation, reducing emissions, and international collaboration.

At the Energy and Mines Ministers meeting last year, the Ministers endorsed a study on the role of natural gas in a lower emitting energy system. We decided to explore possible contributions for Canada’s conventional and renewable natural gas (RNG). Both of these resources are extremely important and so we are assessing the potential for natural gas to replace higher emitting energy sources in specific end uses such as electricity generation, transportation and space heating.

I should mention Generation Energy, an initiative we launched to create a broad conversation about what Canada’s energy system could look like in 2050.  Through it we heard from more than 380,000 Canadians – stakeholders, industry, women, youth, indigenous communities – and one of the major themes from that dialogue is that technology and innovation is at the heart of it all. The next step will be the report coming from the findings of what was heard.  We expect that report in June.  The Canadian Gas Association and the natural gas sector have been contributing to this discussion and performing a very important role within this process. I expect you will hear a lot more about this report at the next Energy and Mines Ministers meeting in August in Iqaluit.

4. The Government of Canadas off-diesel strategy for Canadas North has largely been focused on renewables. However, many argue including northern leaders that conventional renewables alone cannot meet the energy needs of communities and industry in Canadas North.  In your opinion, how can NRCan work with industry to deploy LNG projects for northern and remote communities?

I have been to Nunavut, and to Labrador and other remote areas of Canada where the off-diesel program is key to improving quality of life and opening up economic development opportunities that can’t be realized at this moment because of a reliance on diesel energy. We understand that diesel is not the most clean or efficient fuel source, and that natural gas is much more efficient and cleaner for these communities. What we see as a priority for the North is reducing the reliance on diesel. In fact there are significant amounts of money in both the off-diesel program and other areas of innovation that are responding to this. The encouragement of energy efficiency will also help reduce the reliance on diesel fuels. There are technical, economic and regulatory policy constraints, all of which go back to your question about what does that look like and is natural gas part of that conversation. I would argue that conventional renewables, in the space we are in at this time, can’t do it alone. So it makes sense for us to look at partners for renewables in the North such as co-gen models, biogas or RNG. There are a number of ways that we can look at this, but it is also important to remember that no two communities are alike and the geography will impact how we support an off-diesel strategy in these communities.

Indigenous leaders in the North see natural gas as promising. They understand that solar is not an option for their communities as they do not get sun for half the year. However, the leaders note that they sit on large reserves of gas and that there could be a potential to tap into that down the road.

What we need is to look at all of this and recognize that we won’t be able to do it all tomorrow, understanding that maybe these reserves of natural gas in the North for example, will take a number of years before they can be developed, but we should look at what those transitions to those opportunities look like.

“We know diesel is not the most clean or efficient fuel source, but natural gas is much more efficient and cleaner for northern and remote communities.”

The low carbon economy challenge run by Environment and Climate Change Canada can also support fuel switching which has been done in some communities, meaning going from diesel to natural gas. I expect that more of it can be done.

I would also like to mention the Arctic Energy Fund that is being managed by Infrastructure Canada, which is currently being negotiated with the territorial governments. This is about looking at energy security in the North and could certainly include natural gas options.

When the Energy and Mines Ministerial meet in Iqaluit in August, they have already made a commitment to further study what those barriers are to investment in the oil and natural gas sectors to make sure that we are seizing those opportunities to both grow our economy and reduce our emissions.

Furthermore, NRCan has undertaken a study to further look at the role of LNG in northern and remote communities.

5. Across the country there has been a significant interest in advancing green gas supplies like renewable natural gas and renewable hydrogen to further improve the environmental performance of natural gas.  What in your view are the critical next steps to make Canada a world leader in renewable gas production?

Under the clean fuel standard, “green gas supply” like RNG and hydrogen, will be one of several options that will be used for transportation, building and industry. I believe that this standard will further spur innovation and increase the investment to help drive the demand for RNG across Canada.

We do have an abundance of natural resources in this country and we have a variety of renewable feedstocks, including in my riding, east of Peterborough, where some work is being done on this. The forest and agriculture-based opportunities and the technical knowhow is quite remarkable. Twenty years ago, we didn’t really think this (RNG and biomass production) was possible, but we have come quite far in a relatively short period of time. We have to keep being flexible in our thinking about what the future opportunities are.

In order to be a global leader in the production of RNG, it will be critical for us to strategically locate production. Given that the various end uses will compete for the same feedstock, it will be important that we are strategic about where we place these facilities.

NRCan is currently taking on a study to quantify domestic biomass feedstock supply and explore how those various feedstocks supplies can be used to produce fuels like RNG. From our perspective, given what we think are the anticipated investments, innovation, growing expertise and the demand for greener gas, Canada has the potential to further solidify our role as a leader in the bio-economy. This will look different across the country depending on your access to feedstock and what the opportunities are to grow that particular option for fuels.

We should not forget to mention the economic opportunities and collateral benefits for our communities in rural Canada as that is where the feedstocks are, and that is where we are trying to move off-diesel. There is an economic spin-off with the work that your association and your members and others are doing to move opportunities in RNG.

As an industry you have been extremely proactive in this area and you have a voluntary target of 5 per cent RNG in your systems by 2025.  It is industries like yours that push themselves that will help Canada get that leg up on opportunities in international and domestic markets.

6. In the 1980s and 1990s, federal support was provided to connect rural communities to natural gas supply.  Today, millions of rural Canadians still do not have access to natural gas and rely on higher cost, higher emitting fuel sources.  What does the energy policy landscape look like for rural Canadians and are there ways to partner to bring needed natural gas infrastructure to these communities?

Any time you want to bring natural gas to my riding and many rural ridings across the country, we appreciate it. I do know it’s a challenge. Rural communities have a number of challenges for accessibility to services that those in urban areas might take for granted. Opening up a variety of options opens up competition and helps lower prices. Those living in agricultural areas have shown to be extremely innovative around the use of a number of things, whether its fertilizer, energy, water. What we tend to forget is that people living in rural and agriculture centres are often early adaptors of innovation.

As we look at natural gas, it has made a big difference in rural communities that have been able to access it because it is reliable and affordable. As a government we recognize that for rural and remote communities, the affordability, reliability and security of natural gas plays a big role in their sustainable growth.

Natural gas has also played an important part in Canada’s electricity mix. There are a number of programs in place that either involve working with the private sector to build that energy infrastructure that is needed and to prioritize the infrastructure. As you know, the province of Ontario in 2017 implemented a $100 million grant program for natural gas to help expand that infrastructure to more communities in Ontario, which has been very well received.

Federally, we are investing in Canada’s infrastructure in many ways also, with specific investments in a number of programs that could indirectly support the extension of natural gas infrastructure into remote communities.

There is also $22 billion over 11 years to support green infrastructure projects and to drive clean growth.

The other thing we are in the process of doing is setting up the Canada infrastructure Bank, which will be another vehicle for provinces and territories to access capital and attract private sector investment for much needed infrastructure.

7. Any final thoughts?

Going back to where I started, this is really about having different levels of government and industry working together to reduce greenhouse gas emissions and improve access to clean energy sources.  We will need to be creative in our thinking in how we address some of our challenges as some of the work we have in front of us will be hard, but there is a willingness to work together.  Not everyone shares our vision for Canada and there will be nay-sayers as we move to reduce greenhouse gas emissions, put a price on carbon pollution, etc. But I will tell you that as the country that has the lowest debt to GDP ratio in the G7, the fastest growing economy in the G7, having created 600,000 jobs in two and half years as well as the lowest unemployment rate in 40 years, we are sitting in a place that tells us that you can grow your economy, get your resources to international markets and protect the environment while increasing the standard of living and opportunities for communities across the country. It’s an integrated approach that is working.