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Notes for a Speech by
The Honourable Joe Oliver, P.C., M.P.
Minister of Natural Resources
Ontario Energy Association - Breakfast Speakers Series
November 18, 2011
Check against delivery
Thanks very much.
It's good to be here, and I want to thank the Ontario Energy Association for inviting me.
This association plays an important role in promoting the interests of the Ontario energy sector, and I would like to personally thank you for the great work you accomplish year after year.
Over the past few months, I've been covering a lot of ground.
I was in China and Japan earlier this month. I attended the APEC Energy Ministers meetings in San Francisco in September.
I've been to Sacramento, Los Angeles, New York, London, Paris, Washington, Houston and Calgary a couple of times. I've even managed to get home to Toronto on occasion.
No matter where I go or whom I'm meeting — businesspeople, politicians, government officials — I have conveyed the message that Canada's resource sectors are responsible, sustainable, innovative, and open for business.
And that there are a lot of good reasons to invest in Canada.
Strong, stable economy
Making Canada an attractive place to do business is a key priority for our government.
From the start, we focused on the fundamentals — getting the basics right, including lowering personal and corporate tax rates and paying down debt.
Because of our strong economic and fiscal fundamentals, Canada came through the global downturn of 2008 and 2009 a lot better than most.
Because we had a solid foundation, our government was able to deliver an unprecedented fiscal response to protect Canadians from the worst of the downturn.
We were able to do that without painting ourselves into a fiscal corner. In fact, the Government remains on track to eliminate the federal deficit over the medium term.
While some countries are looking to protectionism in an attempt to stabilize their economies, Canada is lowering trade barriers.
Where some are turning to higher taxes to pay down deficits, Canada can offer the lowest overall tax rate on new business investment in the G7.
Both output and employment are above pre-recession levels. In particular, since July of 2009, Canada's economy has generated almost 600,000 jobs.
We know the global economy is fragile, the European fiscal situation is still vulnerable and U.S. growth is sluggish. Canada is not immune to the economic storms that are buffeting other parts of the world, but we are in a better position than most to manage the risks.
So it is important to continue a disciplined approach.
Our focus remains firmly on the economy — a low tax plan for jobs and growth, and a return to balanced budgets.
This is essential to maintaining Canada’s advantage in the global economy, and to ensuring we have maximum flexibility to respond to whatever the world may have in store into the future.
An energy superpower
The energy sector has been, and continues to be, a major contributor to the economic stability we enjoy in this country.
Canada has been endowed not only with substantial energy resources, but with innovators and risk-takers who have built one of the strongest and most advanced energy sectors in the world — people who have turned Canada's energy endowment into a pillar of our economy.
Energy now accounts for nearly 7% of our GDP. It is a key driver of our prosperity, and its importance will only grow in the future.
You have probably heard us call Canada an energy superpower.
That is not an idle boast.
The numbers speak for themselves:
- Canada is one of the world’s largest producers of uranium.
- We are the third-largest producer of both natural gas and hydroelectric power.
- We are the 6th largest producer of crude oil, and we have 174 billion barrels of proven oil reserves. Only Saudi Arabia and Venezuela have more.
- Our renewable energy sector — wind, solar, biomass— is growing at a steady pace.
Pan-Canadian Approach to Energy
As an energy superpower, we must show leadership – both at home and abroad.
Our world is undergoing unprecedented change. There is rising energy demand, a growing need for energy security, and the longer-term transition towards a lower carbon economy.
For Canada, this means we must broaden and deepen our partnerships, build on the strengths of our vast resource endowment and grow our status as a global energy leader.
In July, I met with my provincial and territorial counterparts in Kananaskis, Alberta to endorse a shared vision that positions Canada as a recognized global leader for the secure and sustainable supply and use of energy.
This is an important step to support collaboration on energy across Canada.
Our vision is founded on enduring principles including a market-oriented approach and mutual respect for jurisdiction.
We agreed to pursue some common objectives, such as responsible energy supply, economic prosperity and knowledge and innovation.
Some of the areas we identified for collaboration include: regulatory reform, energy efficiency, new markets and international trade, building energy awareness, smart grids and reliable electricity.
Collaboration will put us in a better position to harness our country’s energy potential, grow our status and a reliable energy supplier and create prosperity and jobs for Canadians.
I look forward to discussing this approach for energy cooperation with my federal and provincial counterparts when we meet again in Charlottetown next September.
In the meantime, officials are working to advance our shared agenda.
Oil sands benefit Ontario
There is no question that our oil reserves are the most strategic of our energy assets — the oil sands in particular, where 170 of our 174 billion barrel reserve is found.
I use the word strategic because Canadian oil plays a major part in U.S. energy security. The U.S. imports more oil from Canada than from anywhere else — two-and-a-half million barrels a day of crude oil and products, close to 15 percent of U.S. consumption.
That number will almost certainly increase.
But in a changing global energy market, one where the IEA forecasts a one third increase in demand over the next 25 years, there is also the potential to diversify markets for western Canadian crude.
Currently, virtually all our oil exports go to the U.S. While the importance of the U.S. market is undeniable, so too is the need to not have all our eggs in one basket.
That truth was underscored last week when the U.S. State Department announced a decision to delay the proposed Keystone XL pipeline until early 2013. The pipeline would carry up to 700,000 barrels of oil sands crude from northern Alberta to refineries in Texas.
Asia-Pacific is a huge and growing market. During my recent trip to China, the message to Canada was clear: China very much wants and needs our energy exports.
That's good news for Alberta and for Canada, and it's good news for Ontario.
I'm sure many of the firms represented here this morning have had a share in the millions of dollars worth of technologies, products and services that oil sands operators have sourced from Ontario suppliers over the past few years.
Looking ahead, the Canadian Energy Research Institute projects that the oil sands industry will buy some $65 billion worth of goods and services from companies in Ontario over the next 25 years.
Right now in Ontario, there are about 35,000 people working in jobs linked to the oil sands.
It is projected that future development could support an additional 10,000 jobs per year in Ontario as more projects are developed and come on stream over the next 25 years.
As an engine of our economy, the oil sands industry is a tremendous consumer, which is why I'm pleased so many Ontario companies are taking advantage of the opportunity. And it's not only companies like Aberfoyle Metal Treaters and Aecon Industrial that you'd expect to see involved out there.
Cancard, Inc., for example, has found a new market for its heavy duty embossed metal identification tags that remain readable in the harshest industrial environments.
In addition, more of western Canada's oil may be headed to Ontario.
Enbridge has applied to the NEB for a partial reversal of its Line 9 pipeline. If approved, the flow of this crude oil pipeline would be reversed in an eastward direction from the Sarnia Terminal to the North Westover Station near Hamilton, Ontario.
In addition, over the past five years, the oil and gas industries have delivered an average of $22 billion a year to governments in royalties and corporate income taxes.
That's money governments invest in the things that make Canada one of the best countries in the world — from building roads and schools, to supporting healthcare and funding cutting-edge research.
Energy Innovation in Ontario
And these funds are also contributing to public investments in promoting energy innovation and alternative energies in Canada.
We know that fossil fuels will be the dominant source of the world's energy for many years to come, but the transition to a low-carbon future is also underway.
Our government is committed to ensuring Canada is a leader in this transition, because the opportunities are there — developing and commercializing clean technologies; exporting our knowledge around the world — enhancing Canada's reputation as both a first-class place to invest, and as a responsible citizen of the world.
This is another point I make wherever I travel — Canada is already a leader in clean energy. And people are often genuinely surprised to learn that 75 percent of our electricity supply is generated without emissions — 75 percent and growing.
A significant part of that growth is here in Ontario.
Ontario's first commercial wind farm went online in December of 2002 — all nine megawatts of it.
Today, less than 10 years later, Ontario's installed wind capacity is rapidly approaching 2,000 megawatts.
Ontario has made a strong commitment to clean energy development, and our government has played its part in creating opportunities.
Since 2007, through the ecoENERGY for Renewable Power program, we've invested in a total of 47 renewable energy projects in Ontario — wind, low-impact hydro, solar, and biomass — a federal investment of more than $465 million over 14 years.
This places Canada among the global leaders in energy-efficient building construction.
Ontario has been a strong supporter of this code and its adoption will complement other clean energy efforts.
This new energy code for buildings is one of the many activities under our ecoENERGY Efficiency initiative that are helping to improve energy efficiency in our homes, industries, vehicles and equipment.
In August, I was at Ryerson University to announce our new ecoENERGY Innovation Initiative — a total of up to $97-million to be invested in clean energy technology projects, and promote new collaboration among industry, colleges and universities, and government.
This is part of the Next Phase of our Government’s Economic Action Plan to help create high-quality jobs.
Even as the renewable sector grows, it's safe to say natural gas is going to play a significant role in the energy mix here in Ontario and across Canada for a good long time.
About 75 percent of homes in Ontario are heated with natural gas, which is a cleaner alternative to the coal-fired electricity plants the province is closing down.
This province is in some ways a natural gas hub. Almost half of Canada’s underground natural gas storage capacity is in Ontario, and there is a large natural gas market at Dawn, Ontario, run by the Natural Gas Exchange.
Ontario accounts for about 30 percent of natural gas consumption in Canada, and more and more of it is coming from the U.S.
Ontario’s natural gas imports from the U.S., have doubled since 2006, - a reflection of rapid development of shale gas resources in the U.S. now affecting North American markets.
Shale gas development in the U.S. has also led to proposals to ship U.S. Natural Gas Liquids to the petrochemical complexes in Sarnia.
However, we have a very large domestic supply of shale gas so we can become self-sufficient.
Shale gas development is growing in Canada. Like the oil sands, shale gas must be recognized as an important strategic resource that can provide significant economic benefits to Canada as a whole.
I can tell you, as well, that our Government sees a strong, continuing role for nuclear in Canada and around the world.
Demand for electricity will continue to grow and countries will continue to seek ways to meet the increasing demand without increasing greenhouse gas emissions.
The International Atomic Energy Agency estimates that by 2030 nuclear-generated electricity will increase from the current 367 gigawatts to between 501 and 746 gigawatts. This would require an increase of 90 to 350 operating reactors from the current global total of 433.
I know how important the nuclear industry is to Ontario, generating 58% of the province’s electricity.
It’s also why our government committed to the restructuring of Atomic Energy of Canada.
The sale of AECL’s CANDU Reactor Division to SNC-Lavalin establishes a more competitive Canadian reactor business under private ownership — the ownership of a world-class Canadian company with proven entrepreneurial capacity and global reach.
The transaction is already showing positive results — a $440 million contract to refurbish a CANDU reactor in Argentina, and more new projects are under active consideration.
The restructuring also brought an end to what had been a long period of uncertainty for AECL’s CANDU division, and the many companies that make up Canada's nuclear industry.
The Fukushima accident in Japan reminded all nations of the need to ensure that safety and security are paramount in the development of their energy supply infrastructure.
In a recent released report, the CNSC has concluded that Canadian nuclear power plants are safe. At the same time, it recommended measures to further enhance their safety.
Canada is also fully engaged with Japan and its international partners to enhance nuclear safety around the globe. And we will continue to work with our international counterparts to identify and apply the lessons learned from Fukushima.
For its part, the Government of Canada continues to believe that nuclear energy can play an important role in achieving global energy security and sustainable development goals. But, it must be developed within robust international and domestic frameworks that adequately address security, non-proliferation, safety and waste management.
It appears that the global economy will be in an uncertain condition for some time — adding yet another variable as we make a slow transition to a low-carbon future.
The never-ending quest for energy security will continue and global energy demand will continue to rise.
It is difficult to know how new, unconventional sources of energy may emerge to satisfy that demand.
But the federal government understands the importance of Canada's and Ontario's energy sector — and remains committed to a market-oriented approach to energy policies.
Markets, governed by effective, efficient and transparent regulatory systems, are the best way to determine supply, demand, prices and trade. Markets are the best guarantee that our energy system is efficient, competitive, innovative, and responsive to our needs.
Open, transparent markets are also one of the keys to making sure this country remains one of the best places in the world in which to do business — in energy or anything else.
That means political stability, competitive taxes and regulation that is efficient and non-discriminatory as well as effective. And now, more than ever, what attracts investment is a stable economic climate.
That's what we've committed to continue to deliver.
Thanks very much for your attention.
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