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Towards a More Innovative Future

Insights from Canada’s Natural Resources Sector

The Public Policy Forum is an independent, not-for-profit organization

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© 2012, Public Policy Forum

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978-1-927009-29-1

March 2012

i

Table of Contents

Preface ....................................................................................................................................... ii

Challenge #1: Knowledge Development and Dissemination ..................................................... 4

Challenge #2: Community Capacity ........................................................................................... 6

Challenge #3: Resiliency, Growth and Jobs................................................................................ 8

Challenge #4: Environmental Stewardship .............................................................................. 11

Conclusion ................................................................................................................................ 13

Agenda for Action – Specific Roundtable Recommendations ................................................. 15

Appendix: Roundtable Participants ......................................................................................... 17

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Preface

On behalf of the Public Policy Forum and our partners, I wish to thank the individuals and organizations

across Canada who have participated in our dialogue on the future of innovation in Canada’s resources

sector. This report synthesizes the results of six roundtable discussions and a national conference with

leaders from the Canadian mining, forestry, energy, agriculture and fishery sectors along with senior

government officials, scientists, and academics involved in natural resources sector policy, regulation,

and research and development. The regional roundtables were held between June and November,

2011. They were organized as a follow-up to a one-day conference in Calgary in October, 2010 which

focused on uncovering the current state of innovation in Canada’s natural resources sector.

These sessions were convened to deepen the engagement of Canada’s resource industries in exploring

future issues of competitiveness and the role of innovation in improving sector performance. Using the

comments and observations from these discussions, our goal is to help frame a strategy for action to

more fully leverage innovation in a sector that is competitive, resilient and sustainable from all

standpoints: economic, environmental and social. We believe that Canada’s abundant natural resources

are and continue to be a significant advantage, one that can contribute to positioning Canada as an

innovation nation.

I would like to recognize the contributions of key leaders who have inspired us to advance this dialogue.

Stephen Lucas, Assistant Deputy Minister, Natural Resources Canada has been the catalyst for much of

this work; he and his team have provided us with support and encouragement along the way.

Our project partners, including Barrick Gold, the Canadian Association of Petroleum Producers, Suncor,

Teck, Vale and Xstrata Nickel, have provided us with the resources to advance this dialogue. They each

offer important examples of the innovative capacity found within the sector.

Finally, a special thanks to our team at the Public Policy Forum, including Vice-President, Julie Cafley for

leading this project, Mary-Rose Brown for her research assistance, Matt LeBlanc for his project

assistance, Garnet Garven for his counsel, and Sarah Hurman for drafting this report.

David Mitchell

President and CEO

Public Policy Forum

iii

Our Partners

Our Hosts

iv

Roundtable Locations

In order to obtain insights into best practices and barriers to innovation in Canada’s natural resources sector,

Canada’s Public Policy Forum convened leaders from all sectors at a national conference in Calgary October

2010, and in roundtable discussions in six communities between June and November 2011.

1

“It is important to consider, are

Canada’s natural resource

endowments a curse? Do these

assets prevent us from being

innovative and stand in the way

of long-term growth?”

Introduction

The Innovation Imperative

Canada’s resource sector is a vital aspect of

our national competitive advantage. The

sector contributed over 11% of Canada’s Gross

Domestic Product in 2010 and directly

employed about 755,000 workers. Resources

accounted for over half the value of all

Canadian goods exported in 2010, over three-

quarters of which were destined for U.S.

markets including 55% of mineral and metal

exports, 97% of energy exports, and 71% of

forest product exports. Capital investment in

the resources sector accounted for about one-

quarter of Canada’s total in

2010, or about $80 billion.

As of 2009, Canada was the

world’s leading exporter of

potash, the second largest

exporter of uranium,

newsprint, wood pulp and

softwood lumber, and the

third largest exporter of

nickel and natural gas. 1

There are more than a few Canadian resource

firms that rank among the world’s largest in

their respective industries. Still, the sector as a

whole attracts more foreign direct investment

than it invests abroad. In 2010, foreign direct

investment in Canada’s resources sector

exceeded $207 billion or nearly 37% of Canada’s

total, whereas direct investment abroad by

Canadian resource firms was just under $156

billion, accounting for about 25% of the national

total.2 While

1 Measuring Innovation Performance in Canada’s

Resource Sectors – An Overview, Natural Resources

Canada, May 2011 2 International investment position, Canadian direct

investment abroad and foreign direct investment in

While the stats are impressive, they are by no

means the limit of what can be achieved.

Demand is growing, driven by emerging

markets hungry for Canadian commodities. New

sites are being explored and becoming

operational. The private sector, public sector,

and academic institutions are engaging in

intensive research and development (R&D),

testing new ideas for the future of resource

production.

The sector has a key role to play in driving

future growth in the Canadian economy and in

maintaining or even furthering Canada’s

position as a world-leading, G8 nation. Realizing

this vast potential will

rest on the sector’s

ability to create new

value, meet changing

consumer and market

needs, and secure the

social license to operate.

In this sense, innovation

is imperative.

Re-setting the narrative For too long, a single

narrative has dominated perceptions of

Canada’s natural resources sector, epitomized

by the phrase “hewers of wood and drawers of

water.” This narrative maintains that the

extraction, processing and export of primary

resources (commodities) is “old economy”

activity of inherently low value with little

potential for innovation, whereas good jobs,

wealth creation and sustainable economic

development depends on knowledge

generation and innovation in the “new

economy.” i.e. higher value manufacturing and

services sectors. Relying on income and wealth

Canada, CANSIM Table 37-0038, available at:

http://www5.statcan.gc.ca/cansim/a05?lang=eng&i

d=3760038

2

“There is a need to collectively

change the image of the

resources sector.”

from resource industries, so this thinking goes,

is like feasting on empty calories.

This narrative is premised on a false

dichotomy. It ignores the reality that there are

always going to be better ways to hew wood

and draw water – that high-skilled, high-paying

jobs and advanced products, processes and

systems are fundamental to success in resource

industries. There is as much economic potential

for innovation in the natural resources sector as

in any other. Moreover, as leaders in Canada’s

natural resources sector know, there is an

imperative to innovate in this sector because

the stakes are higher – not just for sustainable

economic growth, but for solutions to the very

real challenges facing humanity and the planet

we all share.

Innovation has played a key role in the sector’s

success, some examples of which are

highlighted in this report. The flawed notion

that generating wealth from abundant natural

resources occurs at the expense of innovation is

not something Canadians can or should accept.

Left unchecked, it acts as a drag on investment,

discourages research, and fails to inspire the

next generation of innovators to lead the way

towards a sustainable and resilient future

economy.

Sector leaders recognize that changing this

narrative has to start within the sector itself. As

discussed in more detail in this report, there are

several key steps they agree must be taken.

First and foremost, more collaboration and

information sharing is needed across the

sector. Resource leaders need to work together

to embrace a broader view of innovation and to

step-up efforts to convey to Canadians the

importance of innovation to the sector, to

fundamentally change its image with the public.

More needs to be done with communities,

particularly in rural and remote areas of the

country. Maximizing the sector’s innovative

potential depends on strong community

infrastructure and approaches to development

that ensure communities reap lasting social,

environmental and economic benefits from

sector activity. The remote nature of much of

the sector’s activities means that basic

infrastructure, like roads and

telecommunications, often need to be

developed, and that education and social

services need to be made accessible to ensure

the full engagement of local populations.

The resiliency of the sector and its ability to

keep growing and creating more and better

jobs, demands that it accelerate the pace of

innovation. This depends on everything from

promoting entrepreneurship and risk-taking as

core values, beginning in the K-12 education

system, to attracting more highly skilled talent,

including from abroad, to developing more hubs

and centres for sector innovation across the

country. It also requires a stronger focus on

effective methods to support research and

development through partnerships and

collaborative ventures at regional and national

levels, within the sector and with other

industries.

Finally, the sector must excel in environmental

stewardship. This requires coherent regulatory

frameworks aligned across jurisdictions,

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alongside strong outreach championing the role

of innovation in improving environmental

outcomes. An unequivocal commitment to

becoming recognized world leaders in

environmental sustainability will play a key role

attracting both the investment and the highly

skilled people the resource sector needs to

improve performance and secure

competitiveness well into the future.

4

Challenge #1: Knowledge Development and

Dissemination

Through a number of informal and formal arrangements, resource

industry leaders are collaborating. However, for the most part this is

happening within specific industries such as forestry and mining, and is

generally restricted to identifying and promoting best practices and

sharing some of the risk associated with research and development.

In all of our roundtable discussions, participants stressed the need for

greater collaboration across industries and regions. This was seen as a key

first step in generating ideas and strategies to fuel innovation across the

whole of the sector and build the capacity it requires. Effective

collaboration on a wide range of non-competitive areas offers significant

opportunities to address challenges all industries face, such as building

community capacity; advancing environmental protection, and working

with governments to modernize regulatory frameworks. Cross-sector

collaboration was also seen as a means to share best practices across

provincial jurisdictions—sector leaders cited the area of worker safety and

training as examples of areas where innovative practices can and should be

shared.

Leaders in regions of the country that have experienced strong growth in

recent years see an even greater need to step up knowledge sharing and

collaboration to accelerate innovation and capacity building in the sector.

They argue that during periods of increased productivity, innovation

should be a priority for both industry leaders and the Canadian public. The

fact that there is no apparent “burning platform” during periods of high

productivity and growth only means that the sector must work harder to

share knowledge and get information out to Canadians on the importance

of thinking about the future and investing in innovative capacity now.

The Canadian Boreal

Forest Agreement, 2010

This unique collaboration

between 21 major Canadian

forest products companies

and nine leading

environmental non-

governmental organizations,

applies to more than 76

million hectares of forest from

the provinces of British

Columbia to Newfoundland

and Labrador. It explicitly

recognizes that Aboriginal

peoples have constitutionally

protected treaty rights and

titles as well as legitimate

interest and aspirations.

The Agreement is a three-year

roadmap with mechanisms to

allow for its extension. It

facilitates collaboration in the

marketplace and on the

ground to support

governments in the

realization of a stronger,

more competitive forestry

industry and a better

protected, more sustainably

managed Boreal Forest. Some

of the objectives in the early

stage of the agreement

include identifying the areas

of climate and energy policy

that intersect with forest

management and

conservation, and creating a

work plan for developing joint

positions and producing

ecosystem-based

management guidelines for

integration into existing

practices by participating

companies.

5

Sector leaders stressed the importance of

telling the story of the resources sector – and

the advances that have been made – as

fundamental to its ability to enhance its

innovative capacity and engage Canadians.

Companies across the sector are reducing their

environmental footprint, reducing energy use

and water consumption, achieving process

efficiencies and realising substantial

shareholder returns through innovation. Sector

leaders feel strongly that

these stories need to be

shared more openly,

across the sector and

with the public.

Industries must come

together and find ways

to correct public

misperceptions and

update the sector’s image to more accurately

reflect reality. To attract the human and

financial capital needed to thrive in a tough

global economy, where competitive advantage

will be driven by innovation, the sector must

show Canadians that its industries have been

transformed with the use of advanced

technologies and processes and through

exercising social and environmental

responsibility.

It can take years to realize a return on

investments in innovation, making it all the

more important to engage Canadians on why

these investments matter. Sector leaders felt

much needed information must be provided to

Canadians about current and future activities in

the sector, especially those made possible by

innovation. Positioning potential trade-offs and

opportunities in a global context was also seen

as important, to enable an informed and

mature dialogue about

the challenges facing

sector industries and

Canada’s future

prosperity.

A single national voice

that spans public,

private and not-for-

profit interest must be identified to represent

the sector. In Montreal, participants asked the

basic question, who speaks for Canada’s

resources sector? They stressed that a single

national voice must be identified,

representative of all industries and

stakeholders, to channel multiple and diverse

perspectives into an effective, actionable

strategy.

“There is a public and social

imperative to both communicate

and collaborate – we need to put a

light on what is happening and what

could be happening.”

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“We must build local capacity for

innovation with a long-term

outlook that moves beyond the

purely extractive dimension.”

Challenge #2: Community Capacity Innovation can improve all aspects of organizational performance,

including social performance. Canada’s energy, mining and forest

product industries operate in Canada’s most remote areas, in

topographically challenging locations with some of the harshest

climactic conditions on Earth. Exploring, developing and operating in

remote areas distant from modern infrastructure and transportation

corridors is highly challenging. Resource development is easier when

local communities have a stake in it, and realize direct and lasting

social as well as economic benefits from it.

High functioning education systems and flexible, locally based

education and training opportunities are needed to secure the

future of the sector. However in many of the areas where resource

industries operate, traditional post-secondary and academic

institutions have a limited presence. This challenge is particularly

acute in the North, home to many of Canada’s most significant

resource assets. In the Northwest Territories, for example, GDP is

projected to nearly double over the next 10 years, centred in the

expansion of activities in the resources sector. Gold and diamonds, as

well as oil, natural gas, and rare earth elements are the industries

expected to see the

greatest growth.

Innovation will be

essential to ensuring

the efficient and

sustainable

development of

these resources.

However, to fully

realize this potential, a culture that supports innovation must be built,

and the sector must be able to draw from a reliable and skilled

workforce. Meanwhile, Aboriginal Canadians, who make up the vast

majority of the Northern population, have education participation

and completion rates that fall well below the Canadian average.

Xstrata Nickel – The Raglan

Agreement (Northern Quebec).

Xstrata Nickel is the world’s fifth

largest nickel producer, and is

focused on sustainable, value-

creating growth. The company

pursues this goal within a

framework of corporate social

responsibility. The Raglan

Agreement was signed in 1995 by

the Raglan operation, the Makivik

Corporation and local Inuit

communities to support

harmonious relations and foster

opportunities between Xstrata

Nickel and local populations in

areas such as training, hiring of

local businesses and environmental

management. Yearly profit sharing

is also part of the agreement. To

date, more than $100 million in

profit-sharing payments have been

directed to an Inuit trust fund for

economic and community

development.

The Mine Training Society

This non-profit society comprised of

Aboriginal, industry, and

government partners has a dual

focus: to screen, select, train and

place northerners in diamond

mining jobs, and to build a legacy

of education and awareness about

the employee and skill needs of the

mining industry in cooperation with

the Northwest Territories’

education system and communities.

The Society works closely with

Aurora College and industry

partners to chart a learning course

tailored to the needs of each

applicant. That may mean

attending school, job shadowing, or

apprenticing at a mine site, or a

combination.

7

Sector leaders recognize that new ways must be found to address the

education and skills gap in Northern communities. New, more

innovative approaches to deliver basic education, skills development

and job training to local populations are urgently needed. This requires

strong community engagement, partnerships with public and academic

institutions, and the utilization of information and communications

technologies to deliver learning and training. Some companies have had

success working with communities to provide training opportunities,

and have developed on-site training programs. The mining industry has

taken a particularly strong leadership role in this area. However, a

systematic approach, in concert with governments and local

communities, is required to identify what works and to replicate it

across the whole of the natural resources sector.

While education plays a critical role in community capacity, other

infrastructure matters too, including transportation and

communications. In the North, communications technology lags well

behind the rest of the country. There is a pressing need to improve

communications linkages in the North, including reliable telephone

networks and wireless internet connections, to support business

activities and real-time data exchange. Roads and ports, and supporting

the fuel and transportation needs of rural and remote regions are also

challenges that leaders argue must be addressed to build the capacity

required to support expanding natural resource industry activity, and

strengthen rural and remote communities.

Innovative approaches to exercising corporate social responsibility in

the natural resources sector must be replicated to become the norm,

not the exception. There are compelling examples of resource

companies that have made effective community engagement core to

their business operations. When conducted with respect and flexibility,

these efforts not only develop the social license needed to operate

successfully in remote communities, but lead to lasting improvements in

social capital, community infrastructure and quality of life.

The Oil Sands Leadership

Initiative’s (OSLI) Janvier-

Chard Project - Sekweha

OSLI is a collaborative network

of resource companies operating

in the Canadian oil sands. It

launched this sustainable

community pilot project in the

hamlet of Janvier-Chard, 94km

southeast of Fort McMurray,

with the support and active

involvement of community

leaders, to arrive at a vision of

working together toward a

shared future. As a result of this

collaborative work, the

community formed a voluntary,

non-profit board called Sekweha,

which means “for the youth” in

Dene / Chipewyan. Its vision is to

create a healthy, safe and

sustainable community that

helps children and youth gain the

knowledge, confidence and skills

they need to make a positive

contribution to their own future

and that of their community.

Sekweha provides the structure

for developing youth-led projects

in the community, and has

developed a skilled group of

youth within the community who

are delivering activities and

programming, including youth-

operated summer culture camps;

youth-to-elder councils; the

development and operation of a

youth centre and programs; a

youth-to-industry program; and,

StartSmart, a school program

offered at Father R. Perin School.

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Challenge #3: Resiliency, Growth and Jobs While Canada’s resource industries vary widely, they share a

number of common characteristics. Many operate in notoriously

capricious and volatile global markets – prices can soar one minute

and collapse the next. They are capital intensive. Resource

extraction and production involves large up-front investments in

technology and equipment that remains in service for many years

and is difficult to change. Production processes involve numerous

activities including exploration, licensing, resources management,

harvesting or extraction, processing and/or manufacturing,

transportation and shipping, and preventing or mitigating

environmental impacts. These activities all involve different

upstream suppliers of equipment and services, and many regulatory

actors. The scale and complexity of these operations, coupled with

price volatility, make them inherently high-risk.

Intense competition and production complexity has favoured

process innovations to improve efficiency and lower costs. This type

of innovation will continue strengthening the sector’s

competitiveness and addressing challenges including reducing its

environmental footprint. However, in the face of mercurial markets

and often “razor thin” margins, strengthening the resiliency of

Canada’s resource industries and creating more high paying jobs

means growing and diversifying markets, including by putting more

emphasis on developing

innovative value-added

products. Sector leaders

recognize the importance

of creating new value,

meeting consumer and

market needs. In

particular, meeting

growing demand for

sustainable products and clean technology offers a significant

opportunity for the sector to grow and lead the way for Canada in

the green economy.

Sector leaders want government to support and incent innovation,

but they recognize simply funding research and development is not

enough. More partnerships, joint initiatives, and knowledge-sharing

across jurisdictions are needed to support development and drive

innovation. They point to initiatives like the Geo-Mapping for Energy

Cornerbrook Pulp and Paper

This company operates the largest

newsprint mill in Newfoundland and

Labrador. Over the past decade, it

has improved its pulping and

papermaking systems; enhanced its

wood handling capability; introduced

recycling technology; and made

environmental improvements. These

investments totaling close to $400

million, have increased product

quality, productivity, and helped to

solidify market position for the

company. Its competitive

advantages include its use of modern

pulping technology and the latest in

pulping processes, quality fibre, and

its ability to generate about 70

percent of its own electricity. Quality

fibre together with input advantages

presented by efficient pulping allows

the mill to produce newsprint of

good opacity, meaning that print on

one side of the paper does not

interfere with print on the reverse

side.

Vale Ltd.’s Long Harbour

Processing Plant, Newfoundland

and Labrador

Construction of the $3.6 billion state-

of-the-art nickel processing plant is

expected to wrap up in 2013. It will

use hydrometallurgical technology

developed in Canada by Vale to

process nickel concentrate from its

mining operation at Voisey’s Bay,

Labrador. The processing operation

will employ 475 people. In addition

to the mine and the processing plant,

Vale made a $20 million gift to

Memorial University to establish and

operate a centre for research and

innovation. Vale’s support is

enabling enhanced research and

education in mineral exploration,

mining and mineral processing.

“Canada punches above its

weight globally, because

we are a natural resources

powerhouse. How can we

take these advantages to

the next level?”

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and Minerals (GEM) Program, launched by the Government

of Canada in 2008. This program is developing the

geosciences knowledge needed to guide industry

investments and allow companies to advance their mineral

exploration and resource development activities. Sector

leaders pointed to the success of the Canadian Mining

Innovation Council, as an approach that could be replicated

in other resource industries.

Developing more hubs and centres for sector innovation

across industries and that span the continuum from

research to commercialization is critical to building a

culture of innovation that permeates the sector. Ideas

include developing more regional innovation clusters;

strengthening collaboration between business and

academia to enhance capacity for research and

development; re-evaluating arrangements for the

ownership of intellectual property flowing from joint

ventures; examining potential supply chain improvements;

emphasizing applied research, including by colleges;

incenting entrepreneurial initiatives by new graduates and

experienced professionals; and making strategic

investments in human capital, including by increasing co-

op placements and expanding and diversifying university

and college programs to accept more students in areas

relevant to the sector’s future.

Natural Resources Canada – Geo-

mapping for Energy and Minerals

This program provides public geosciences

knowledge to support investment and

land-use decisions. Focussing mainly on

mapping the Arctic, it provides geosciences

knowledge to guide investment decisions

by private sector exploration companies,

and land-use decisions by governments.

Co-funded by the Natural Sciences and

Engineering Research Council of Canada

and Natural Resources Canada’s Earth

Sciences Sector in collaboration with

industrial sponsors, the program also

emphasizes the training of the next

generation of Canadian geoscientists and

provides funding to Canadian academic

researchers.

The Centre for Excellence in Mining

Innovation

CEMI directs and coordinates step-change

innovation in the areas of exploration,

deep mining, integrated mine engineering,

environment and sustainability for the

metal mining industry. With a seasoned

team of program directors, CEMI identifies,

assesses and manages industry-focused

applied research & development projects

that extend from geology and engineering

to the natural sciences. We recognize

innovation is a three-phase process:

research, development and

implementation (R & D, I). With

implementation, we turn innovative ideas

into best practices.

10

Innovation is not easily defined. Participants agreed that it is

at least as much about culture, as it about science, technology

or process improvement. Innovation is the product of human

imagination and the willingness to take risks. Firing that

imagination and encouraging risk-taking is a function of culture,

and shaping culture is

function of public

education. There was

broad consensus that

the sector has a role to

play in helping to

promote science and innovation in the K-12 system, helping to

embed the values of entrepreneurship and risk-taking in the

next generation of innovators. Developing jointly-administered

programs that pair business, science and engineering

departments; offering grants and seed-funding to young

entrepreneurs; and coordinating mentorships and co-op

placements with successful entrepreneurs were cited as ways

the sector could encourage this. Leaders recognize that inspiring

younger Canadians means highlighting technological

developments related to water, energy and waste management,

positioning the resources sector as a place where young people

can have an impact addressing the environmental challenges

they care about.

Attracting people from diverse backgrounds who offer new

and fresh perspectives is also important in building the sector’s

innovative capacity. Immigration policy is another avenue to

help create a culture of innovation and expand the talent pool,

particularly in cases where immediate demand for skills cannot

be met domestically. Sector leaders mentioned the issue of

foreign credentials recognition to help maximize this avenue for

recruiting talent to the resources sector.

FPInnovations

FPInnovations brings together Forest

Operations, Wood Products, Pulp &

Paper, and the Canadian Wood Fibre

Centre of Natural Resources Canada, to

create the world’s largest private, not-for-

profit forest research institute. It aims to

strengthen the Canadian forest sector’s

global competitiveness through research,

knowledge transfer, and implementation.

For example, through its Performance /

Innovation / Transport Municipal

Program, FPInnovations is sharing the

expertise of its engineers and technicians

with municipal vehicle fleet managers to

help them implement high performance

energy efficiency measures and plans.

Suncor’s Zero Liquid Discharge

Process

At Suncor’s MacKay River in situ facility,

the company demonstrates the only fully

functional Zero Liquid Discharge (ZLD)

system in the oil sands industry. ZLD has a

number of benefits, such as recycling

approximately 96% of the facility’s water.

Like most in-situ operators, MacKay River

uses the steam-assisted gravity drainage

process. Using a pair of wells, steam is

injected underground to heat bitumen,

which flows to a second well (the

“producer”) and then to the surface. But

that’s not all that comes up. In addition to

bitumen, water with a high saline content

also enters the producer well. This water,

plus condensed steam from the injection

well, also flow to the surface. More than

90% of the injection steam required to run

MacKay River is recycled continuously in

this manner, and MacKay River needs to

draw very little water from underground

aquifers for its operation. Combining the

ZLD system with MacKay River’s low

“steam-to-oil ratio” (meaning less water

is required for steaming than at

competing projects), results in the use of

one sixth of a barrel of subsurface water

for every barrel of heavy oil produced.

“We need to capture the

attention and imagination

of innovators.”

11

Challenge #4: Environmental Stewardship There are a range of environmental challenges facing the sector for

which innovative solutions are required. These include the need to

continue reducing operating costs and minimizing environmental impacts

through better energy, water and waste management; adapting

technologies used in other sectors to enable the exploration of potential

mineral reserves with less environmental impact, and finding ways to

minimize the impacts of extractive activities.

In economic terms, the boom in resource industries makes the case for

continuing with a business-as-usual approach relatively compelling.

However, the increasing global focus on climate change and sustainability

provides an opportunity to get ahead of the curve, exploring green

technologies and methods now to make the sector more profitable and

productive in the long-term, positioning Canada as a global leader in

environmental products

and processes.

Governments need to play

the dual role of catalyst

and champion for

Canada’s resources sector.

At times, government

must be nimble and

responsive to the needs of

the sector, to maintain the

growing momentum behind cleantech and environmental innovation.

However, governments must also be sure to provide the push needed

through effective regulation and environmental standards.

ICO2N – Carbon Capture

and Storage (CCS)

ICO2N is a network of Canadian

companies committed to the

deployment of Carbon Capture

and Storage (CCS) in Canada to

help meet climate change

objectives while supporting

economic growth. For six years

the group has been working to

accelerate CCS deployment as a

means of reducing CO2

emissions, and fundamentally

transforming the way Canada

can develop and use its fossil

fuel energy resources in a

sustainable way.

Carbon Capture and Storage

(CCS) — is the process of

capturing carbon dioxide (CO2)

from large industrial sources

before it is released to the

atmosphere, and then safely

transporting the CO2 and

storing it in mature oil and gas

reservoirs or in other deep

geological formations. CCS is a

proven, technically viable and

environmentally safe means of

reducing greenhouse gases

(GHG). It is the country’s

largest potential CO2

mitigation option and is a

critical part of Canada’s GHG

reduction and energy

strategies.

“There is a misconception that the

sector is not ‘cool’ – this needs to

change. These industries are where

the action is happening – where the

future of sustainability lies.”

12

Governments must create policies that better favour and encourage

innovation activities to advance sustainability. It can do this by setting

the competitive conditions for innovation and success through sound

taxation and regulation, recognizing that the driver of innovation is the

private sector. Ideal

frameworks establish

outcomes, but allow

industry to follow its own

path to achieve them. They

create the conditions for

companies to flexibly and

proactively achieve desired

outcomes, while ensuring that the industry as a whole adheres to a

clear standard. Sector leaders identified a number of specific

improvements that could be made, including a redesign of the

Scientific Research and Experimental Development Tax Incentive

Program, and on an international scale, addressing regulatory

impediments including between Canada and the US in the energy

sector.

However, there was strong consensus that the most important

priority for government should be to develop a coherent, evidence-

based regulatory environment to help spur innovation. A clear

regulatory imperative must be set by government in a number of areas,

but most notably with respect to issues of sustainability and

environmental impact. To achieve this, governments need to align their

efforts and move beyond consultation to engagement, bringing

together communities, industries and other stakeholders to provide

meaningful opportunities to shape policy and regulation.

Smart Grid Canada

Canada’s power grid is aging.

Efforts are underway to replace

old elements with new Smart Grid

technology, which meets many of

Canada’s energy and

environment policy objectives by

enabling the capture of more of

Canada’s vast renewable resource

potential. A more intelligent grid

allows utilities to fully incorporate

clean energies such as wind and

solar power, and to distribute

conventional and renewable

power to consumers more

efficiently, reliably, safely and

economically. It integrates two-

way digital communication

technology that analyzes

monitors and streamlines the

system to maximize throughput,

while promoting and enabling a

reduction of overall energy

consumption.

To date, Ontario is the

frontrunner in Canada’s growing

adoption of Smart Grid

technology. Implementation of its

2010 Green Energy Act

encourages the development of

renewable generation by

establishing long-term power

purchase agreements with wind,

solar, biomass and other clean

energy providers.

“Laggards don’t move if there

isn’t a regulatory structure,

but the structure must allow

leaders to get out ahead.”

13

Conclusion

Shaping an Agenda for Action

The history of Canada’s natural resources sector has in no small way shaped Canada as we know it

today. Moving forward, the sector will be at least as instrumental to Canada’s future. In an increasingly

competitive and capricious global economy, one thing is certain: all the goods and services we produce,

or that are produced anywhere else for that matter, will rely on secure supplies of commodities made

possible by industrial activity in the natural resources sector.

In Canada, these primary industries are far more innovative than they’ve been given credit for.

Growth, job creation, and prosperity in all sectors of our economy, demands that we recognize the role

of innovation in the sector’s success, and its importance in making resource industries even more

sustainable and competitive going forward.

Key areas for action emerged from the roundtable discussions. (For a list of the participants, please see

the Appendix.)

• Communication and Engagement: Inform and engage Canadians in a dialogue about the

future of the sector. Lead an honest and open conversation about the impact of resources

on Canada’s economy, environment and position in the world. Tell the story about the

changing face of the sector.

• Collaboration and Institutional Development: Use forums to connect leaders across the

resources sector to promote greater collaboration and information sharing. Facilitate

knowledge transfer among governments, industry leaders, academic researchers, and key

stakeholder groups such as First Nations. This can be done by the creation of hubs and

partnerships. Success in promoting collaboration in specific industries through bodies like

FPInnovations and the Canadian Mining Innovation Council should be replicated at a sector-

wide level.

• Education: Reach out to innovators

early, by promoting science and

engineering in the K-12 education

system. Start building leaders at an early

age, highlighting the fun side of science

and the future opportunities it provides. Encapsulate the cultural values of innovation, such

as risk-taking and collaboration, in our education system and curriculum.

• Skills Training: Explore novel and innovative arrangements in the post-secondary

education system to offer skills training and education to all Canadians. Create

opportunities in post-secondary education to develop the skills and leaders needed for the

sector at all levels – from skilled workers, to researchers, to business leaders. Action items

include co-development of post-secondary programs; industry and academic partnerships

for delivering in-house skills development; and expanding access to education in remote

“We need to think as Canadians – the

sector can’t let regionalism

dominate.”

14

communities and for target populations, especially Canada’s aboriginal population.

• Community Capacity: Invest in the infrastructure needs of remote communities and

resource operations, especially transportation networks, and information and

telecommunications needs.

More work needs to be done and leadership provided in each these areas, especially by the resource

industries, governments, non-governmental organizations, and the research community. While these

roundtables were convened to look at best practices and barriers to innovation at the regional level in

Canada, participants agreed we need a better understanding of what works to support innovation on-

the-ground, in resource communities where sector activity actually occurs. We need to look more

closely at examples of sector innovation in corporate social responsibility and community engagement.

At the same time, the roundtable discussions suggested we should explore international best practices

for insights about how best to mobilize public consensus and modernize the regulatory environment.

To shape an agenda for action and get this work done, the sector as a whole requires “one voice”—

ideally, one that integrates the views and perspectives of all stakeholders: industries, communities,

unions, regulators and non-governmental organizations. An important next step will be for the project

partners to consider how best to convene stakeholders to help make it possible for such a voice to

emerge.

15

Agenda for Action – Specific Roundtable Recommendations

Knowledge Development and Dissemination

• Develop communications and information-sharing campaigns to present an

updated picture of what the resources sector looks like today.

Toronto

• Develop forums at local and national levels to share best practices. St. John’s

• Develop forums for greater collaboration and partnerships through knowledge

sharing and dissemination of best practices.

Yellowknife

• Find new ways to communicate and share successful innovations. St. John’s

• Encourage the resources sector to consider different ways to approach innovation.

Share information about new types of innovation, including product innovation;

process improvement; new marketing methods, and new organizational methods in

business practice, workplace organization, etc.

Montreal

• Initiate a dialogue on what motivates innovation. Encourage and incentivize

innovation in times of surplus or success.

Montreal

• Learn from other jurisdictions that have faced similar challenges (e.g., Australia) Vancouver

• Identify a champion for resources sector innovation with the mandate to facilitate

an ongoing exchange of ideas, and communicate successes and best practices to

the broader public.

Montreal

Community Capacity

• Promote local solutions to developing the skills and talent needed in the sector.

Develop frameworks for the education and engagement of youth, Aboriginals, and

remote and rural populations, exploiting opportunities at both the K-12 and post-

secondary levels.

Toronto

• Develop more training and education opportunities, sensitive to the challenges that

traditional education systems have had in the North.

Yellowknife

• Scale up demonstrated successes in education and youth engagement, as

exemplified by Xstrata and other private sector leaders.

Montreal

• Incent entrepreneurship among new grads and experienced professionals through

the promotion of start-ups.

St. John’s

• Invest in developing information and communications technology systems in the

North.

Yellowknife

• Establish a Northern Innovation Council or annual forum to share ideas and best

practices.

Yellowknife

Resiliency, Growth and Jobs

• Position entrepreneurship and risk-taking as core values in the education system,

through joint programs among business, science and engineering disciplines in

universities and colleges.

Montreal

• Expand and promote relevant academic programs to assist the development of the

regional talent pool.

St. John’s

• Evaluate mechanisms for government to support research and development in a

variety of settings, through a variety of means (financial and other).

Yellowknife

16

• Expand efforts to improve competition in the transportation sector to reduce costs. Vancouver

• Continue to develop partnerships and collaborative ventures, in existing institutions

or through the development of hubs or centres for innovation, similar to

FPInnovations.

Montreal

• Explore unique arrangements to share knowledge, expertise, and if possible,

technology, among industry partners and companies.

Toronto

• Work across jurisdictions – look for partners in other industries and sectors engaged

in research and operations with the potential to be adapted and improved upon.

Toronto

• Reach out to the next generation of workers, including immigrants, aboriginals and

youth, to attract the new talent the sector needs. (For example, develop the

equivalent of a “Top 40 Under 40” program for the resources sector.)

Vancouver

• Explore opportunities and programs for welcoming new Canadians looking to work

in the resources sector.

St. John’s

Environmental Stewardship

• Create a forum to share best practices and knowledge across the sector to address

common challenges faced by all resource companies, and to tap into other fields

(e.g., military, nano, medical and other non-sector specific technologies) as sources

of solutions to reduce environmental impacts.

Vancouver

• Reach out to creative and passionate individuals, highlighting the successes of the

industry and the excitement of solving its challenges, especially in the area of

sustainability.

Toronto

• Exploit more opportunities for innovation in energy, water and waste management

and in extraction with environmental technologies that reduce operating costs and

minimize overall impact

Vancouver

• Articulate a clearer role for the federal government in promoting resource

innovation and competitiveness.

Vancouver

• Address the need for innovation in government (to create policies that better

favour and encourage innovation in the private sector through sound taxation and

science-based regulation).

Saskatoon

• Create conducive regulatory frameworks for innovation, and then vacate the space:

governments set the stage, industry charges forward. Engage all stakeholders in

developing a clear, supportive and results-oriented regulatory environment.

Toronto

• Work towards better harmonizing international regulations for the resources

sector.

Saskatoon

17

Appendix: Roundtable Participants

Innovation in Canada’s Resources Sector

Roundtable Participants

Elyse Allan President and Chief Executive Officer General Electric Canada Colin Andersen Chief Executive Officer Ontario Power Authority Paul Austin Regional Director, Partnerships Sustainable Development Technology Canada Ernie Barber Acting Dean, College of Engineering University of Saskatchewan Allan Baydala Chief Financial Officer Port Metro Vancouver Darrell Beaulieu Chairman Northern Aboriginal Business Association Bob Bleaney Vice President, External Relations Canadian Association of Petroleum Producers Mitch Bloom Vice-President, Policy and Planning Canadian Northern Economic Development Agency Bohdan Bodnar Vice-President Human Resources Spectra Energy Transmission

Pierre A. Bossé Directeur de projets Division Industriel Genivar Anne-Marie Bourgeois Regional Director Sustainable Development Technology Canada Mary-Rose Brown Research Associate Public Policy Forum Murray Brown Development Manager Husky Energy Inc. David Burns Professor of Chemistry and former Associate Dean Research (Science) McGill University Julie Cafley Vice-President Public Policy Forum Kent Campbell Deputy Minister, Energy and Resources Government of Saskatchewan Denise Carpenter President and CEO Canadian Nuclear Association Karen Chad Vice-President, Research University of Saskatchewan Karen Chan Assistant Deputy Minister

18

Agriculture, Food and Rural Affairs Research and Corporate Services Division, Guelph Government of Ontario Ron Crotogino President and Chief Executive Officer ArboraNano Inc. Hervé Deschênes Vice President FPInnovations Michel J. Desrochers Director General NRC Biotechnology Research Institute National Research Council Canada Tom Diment President Potash Producers Association Gavin Dirom President and Chief Executive Officer Association for Mineral Exploration BC (AME BC) Robert Doherty President NWT & Nunavut Construction Association Mary Donlevy-Konkin Chief of Staff Minister of Advanced Education, Employment and Immigration Government of Saskatchewan Brian Doucette Director, Environmental Excellence Suncor Energy Inc. Cassie Doyle Consul General San Francisco/Silicon Valley Foreign Affairs and International Trade Canada D. Tim Doyle Executive Director Yellowknife Chamber of Commerce

Ian Dyck Vice-President Infrastructure and Environment WorleyParsons Canada Julian Edwards Director, Process Engineering & Strategic Studies Vale Base Metals Technology Development Vale Craig Ennis Vice-President Policy and Communications St. John’s Board of Trade Jock Finlayson Executive Vice-President Policy and Analysis Business Council of British Columbia Chaitanyamoy Ganguly President, India Cameco Corporation Garnet Garven Senior Fellow, Western Canadian Office Public Policy Forum Kevin Goldthorp Vice-President, External Relations University of Western Ontario Ida Goodreau Adjunct Professor Sauder School of Business University of British Columbia Ray Gosine Associate Vice-President Research Memorial University of Newfoundland Mark Haney Director, Investment and Economics Analysis Science Policy Evidence and Analysis Natural Resources Canada

19

Bryan Harvey Professor Emeritus, Plant Sciences University of Saskatchewan Lorne Hepworth President CropLife Canada Elise Herzig President and Chief Executive Officer Ontario Energy Association Dan Hewitt President Consulting Engineers of the Northwest Territories Dennis Hogan Assistant Deputy Minister, Innovation Department of Innovation, Trade & Rural Development Government of Newfoundland and Labrador Morag Howell Area Manager Yukon, Northwest Territories and Nunavut Region USC Sandvik Mining and Construction Canada Inc. Ray Hrkac President, Exploration GGL Resources Corp David Katz Acting Director Innovation Saskatchewan Government of Saskatchewan Kim Keating Suncor Energy Inc. Bob Kelly General Manager Duck Pond Operations Teck Resources Ltd

Doug Konkin Deputy Minister Ministry of Forests, Lands and Natural Resource Operations Government of British Columbia Paul Labbe Vice-President and General Manager Saskatoon WorleyParsons Canada Pierre Lapointe Président et chef de la direction FPInnovations Roger Larson President Canadian Fertilizer Institute Martin Lorrion Vice President, Operations, Region 1 Domtar Corporation Stephen Lucas Assistant Deputy Minister Science and Policy Integration Natural Resources Canada J. Hugh MacDiarmid President Killin Management Corporation Fiona Macfarlane Chief Inclusiveness Officer Managing Partner Western Canada Ernst & Young LLP Peter MacKinnon President and Vice Chancellor University of Saskatchewan David Malloy Associate Vice-President and Director Research Services University of Regina

20

Carmine Marcello Executive Vice President, Strategy Hydro One Inc. Tina Markovic Senior Project Manager Operational Readiness BHP Billiton Canada Inc. Katrina Marsh Policy Analyst Science Policy Integration Natural Resources Canada Alasdair Martin Acting President Diavik Diamond Mines Inc. Dan McGillivray Toronto Hydro Distinguished Fellow Centre for Urban Energy Ryerson University Brent Meade Deputy Minister Innovation, Trade and Rural Development Government of Newfoundland and Labrador Tony Mercer Senior Project Manager WorleyParsons Canada Trish Merrithew-Mercredi Regional Director General Northwest Territories Region Aboriginal Affairs and Northern Development Canada Suzann Méthot Directrice régionale - Québec Initiative boréale canadienne David Mitchell President and Chief Executive Officer Public Policy Forum Don Montalbetti Head of Projects, EKATI Diamond Mine

BHP Billiton Canada Inc. Phil Moon Son Executive Director NWT & Nunavut Construction Association Garth Moore President Potash Corporation of Saskatchewan Inc. Paul Morris Assistant Deputy Minister Department of Natural Resources Government of Newfoundland and Labrador Geoffrey Morrison General Manager of BC Global Public Affairs A.J. Nichols Director, Corporate Affairs Vale Hon. Rob Norris Minister of Advanced Education, Employment and Immigration Government of Saskatchewan Eden Oliver Partner Bennett Jones LLP David O’Toole Deputy Minister Northern Development, Mines and Forestry Government of Ontario Engin Özberk Vice-President Innovation and Technology Development Cameco Corporation Joel Page Manager, Sustainable Development Raglan Mine Xstrata Nickel

21

Chuck Parker President NWT Chamber of Commerce G.R. (Gay) Patrick Executive Director Saskatchewan Potash Producers Association Inc. Greg Payne Vice President, Portfolio Management Greenchip Financial Ian Pearce Chief Executive Officer Xstrata Nickel Gordon R. Peeling Independent Director/Consultant and past President of the Mining Association of Canada Bob Rappolt Vice-President, Mining Stantec Chris Ryder Vice-President, External Affairs BHP Billiton Canada Inc. Eric Sanscartier Director Science Policy Evidence and Analysis Branch Natural Resources Canada Bryan Schreiner Chief Geoscientist and Manager, Minerals Saskatchewan Research Council Pam Schwann Executive Director Saskatchewan Mining Association Kevin Scissons Strategic Advisor Directorate of Nuclear Cycle and Facilities Regulation Canadian Nuclear Safety Commission

Joy Senack Director, Strategic Policy Natural Resources Canada Colm Seviour Partner Stewart McKelvey Kent Smith-Windsor Executive Director Greater Saskatoon Chamber of Commerce Bruce Sprague Partner, Tax Ernst & Young LLP Barb Steele Director of Strategic Partnerships Network for Business Sustainability Bill Swett Research and Development Lead Coordinator Commercial and Joint Interest ExxonMobil Gray Taylor Partner and Co-Leader Climate Change and Emissions Trading Group Bennett Jones LLP Eira Thomas Chairman Stornoway Diamond Corp John Thompson Vice-President, Technology and Development Teck Resources Ltd Tom Tiedje Dean, Faculty of Engineering University of Victoria Kirsten Tisdale Partner, British Columbia Advisory Service Ernst & Young LLP Doug Trask Executive, Strategy and Program Development RDC Research and Development Corporation

22

André Tremblay Président-directeur général Conseil de l’industrie forestière du Québec Gordon Van Tighem Mayor City of Yellowknife Brian Veitch Associate Dean Research Engineering and Applied Science Memorial University of Newfoundland Peter Vician Deputy Minister Industry, Tourism and Investment Government of the Northwest Territories David Waldron Partner SECOR Consulting

John Walsh Director General Science Policy Evidence and Analysis Natural Resources Canada Allan Ward President and Chief Operating Officer Alberta-Pacific Forest Industries Joanne Wong Director, Village Project Canada Cisco Systems Canada Co Sarah Wright Cardinal President Aurora College Zoe Younger A/President and CEO Mining Association of British Columbia

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