Canada needs to launch next generation of national energy projects: report

Help to reverse de-industrialization

A new report is calling for a slate of new large-scale national energy projects to boost the innovative capacity and productivity of the sector and halt Canada's slippage back to an economy primarily driven by the extraction and export of raw materials. Entitled Canada: Becoming a Sustainable Energy Powerhouse, the report argues that the resource boom of the past decade is directly tied to deteriorating business innovation performance, noting that 2013 marked the lowest level of business R&D investment (0.8% of GDP) since Statistics Canada began collecting such data.

The report — a follow-on to the 2012 report Canada: Winning as a Sustainable Energy Superpower — was produced by the Energy Pathways Task Force (EPTF) of the Canadian Academy of Engineering (CAE). EPTF co-chair Dr Clemont Bowman, a veteran researcher and research manager in the energy and environmental sectors and a former senior bureaucrat in the Alberta government, says the report caps nine years of work by the task force, which is largely comprised of retired executives from multinational oil companies.

"We're unhappy about the direction Canada has gone in the area of value-add. We've fallen backward in our upgrading," says Bowman, a co-founder of Pro-Grid Ventures Inc who currently serves as a senior advisor to Bowman Centre for Technology Commercialization at Western Univ's Sarnia/Lambton Campus. "Any government has a reluctance to intercede in the marketplace and that puts governments on the sidelines. The result is we're not getting value for our resources. Trillions of dollars of value is being given away because we're only shipping raw resources."

The report says big projects of this nature are long term and make public-private partnerships a virtual necessity. It calls for nine energy projects to be undertaken between now and 2050 (see chart). They would increase production, reduce carbon content of the Canada's overall energy mix and significantly move up the value chain with new energy products, services and processes.

high priority

The reports says a bitumen upgrading project in the Sarnia region and the development of an east-west national energy grid are considered the highest priorities.

Bitumen upgrading was the focus of a May/13 conference in Sarnia where consensus was reached on strategies to dramatically improve Canada's value-added performance.

"Bitumen upgrading was clearly identified as a current, significant opportunity for adding value to Canada's massive bitumen resources, offering one of those rare opportunities to reverse the country's trajectory of exporting raw materials with little or no added value to the domestic economy," states the report.

Locating upgrading capacity in southwestern Ontario — the heart of Canada's manufacturing sector — would provide access to central and eastern markets in the US and Canada and global markets via the St Lawrence Seaway.

Oil sands upgrading is the report's number one priority. Since the beginning of oil sands production in the 1970s, the amount of bitumen actually processed and refined in Canada has plummeted from 100% to less than 50%. An increase in upgrading could add $68 billion in annual value and position Canada as a global centre of excellence for oil sands exploration, development and value-added upgrading.

"The evidence is clear that Canada's economy, and Canada's international trade, is becoming increasingly concentrated in the extraction and export of unprocessed resources – and that the take-off of the petroleum industry beginning around 2002 has accelerated that process dramatically … our innovation effort and performance has been deteriorating, even as the importance of innovative capacity to long-run productivity and competitiveness is increasingly recognized." our innovation effort and performance has been deteriorating, even as the importance of innovative capacity to long-run productivity and competitiveness is increasingly recognized." — Canada: Becoming a Sustainable Powerhouse

This includes high-value production equipment which is currently foreign sourced but could serve as the basis for a renaissance in domestic manufacturing — a sector that has suffered from the deterioration in business innovation performance.

A national energy grid would allow for large power sales to the US, a lowering of greenhouse gas emissions and the incorporation of renewable energy sources such as wind and solar.

"There's a lot of stranded power right now and an east-west national energy grid would enable us to sell power to the US in large blocks," says Bowman, noting that additional R&D would be required to boost the value of bitumen production and establish an effective modern grid.

"Research would be required to overcome some of the issues these projects would entail ... There are also differences in the various engineering disciplines" says Bowman. "In the oil sands, there are issues of water and land reclamation. COSIA (Canada's Oil Sands Innovation Alliance) is a good example of the approach that needs to be taken."

Bowman notes that the task force was not contacted by the federal government when it was consulting on the forthcoming refreshed S&T Strategy although its members have appeared before the House and Senate resource committees and spoken with various premiers and energy ministers.

Seeking funds for Bowman Centre

In order to move the national projects forward, Bowman says the task force is positioning the Sarnia-based Bowman Centre for Technology Commercialization as the most logical conduit. He and others are currently seeking a $15-million foundation grant to exploit the nine years' work of the task force and lay the groundwork for launching the first two projects.

The Task Force is leading the initiative and is in discussions with several potential commercial partners. If it receives funding it will push forward with a feasibility study on project design and a project slate.

"We started off with the feeling that energy is an extremely important aspect of the Canadian economy and developing value add is even more urgent now," says Bowman. "Manufacturing is slipping. Canada used to be a manufacturing powerhouse in pulp and paper and minerals processing but we always wait for the private sector to do it. It takes investors, a long-term view and private-public partnerships to initiate."

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