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Towards a More Innovative Future Insights from Canada’s Natural Resources Sector

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The Public Policy Forum is an independent, not-for-profit organization dedicated to improving the quality of government in Canada through enhanced dialogue among the public, private and voluntary sectors. The Forum’s members, drawn from business, federal, provincial and territorial governments, the voluntary sector and organized labour, share a belief that an efficient and effective public service is important in ensuring Canada’s competitiveness abroad and quality of life at home. Established in 1987, the Forum has earned a reputation as a trusted, non-partisan facilitator, capable of bringing together a wide range of stakeholders in productive dialogue. Its research program provides a neutral base to inform collective decision making. By promoting information-sharing and greater links between governments and other sectors, the Forum helps ensure public policy in our country is dynamic, coordinated and responsive to future challenges and opportunities. Š 2012, Public Policy Forum 1405-130 Albert St. Ottawa ON K1P 5G4 Tel: 613.238.7160 Fax: 613.238.7990 www.ppforum.ca 978-1-927009-29-1 March 2012


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

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Our Partners

Our Hosts

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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.

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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.

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 threequarters of which were destined for U.S. The sector has a key role to play in driving markets including 55% of mineral and metal future growth in the Canadian economy and in exports, 97% of energy exports, and 71% of maintaining or even furthering Canada’s forest product exports. Capital investment in position as a world-leading, G8 nation. Realizing the resources sector accounted for about onethis vast potential will quarter of Canada’s total in rest on the sector’s 2010, or about $80 billion. “It is important to consider, are ability to create new As of 2009, Canada was the Canada’s natural resource value, meet changing world’s leading exporter of endowments a curse? Do these consumer and market potash, the second largest needs, and secure the assets prevent us from being exporter of uranium, social license to operate. innovative and stand in the way newsprint, wood pulp and In this sense, innovation of long-term growth?” softwood lumber, and the is imperative. third largest exporter of 1 nickel and natural gas. Re-setting the narrative For too long, a single narrative has dominated perceptions of There are more than a few Canadian resource Canada’s natural resources sector, epitomized firms that rank among the world’s largest in by the phrase “hewers of wood and drawers of their respective industries. Still, the sector as a water.” This narrative maintains that the whole attracts more foreign direct investment extraction, processing and export of primary than it invests abroad. In 2010, foreign direct resources (commodities) is “old economy” investment in Canada’s resources sector activity of inherently low value with little exceeded $207 billion or nearly 37% of Canada’s potential for innovation, whereas good jobs, total, whereas direct investment abroad by wealth creation and sustainable economic Canadian resource firms was just under $156 development depends on knowledge billion, accounting for about 25% of the national generation and innovation in the “new total.2 While economy.” i.e. higher value manufacturing and services sectors. Relying on income and wealth 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

Canada, CANSIM Table 37-0038, available at: http://www5.statcan.gc.ca/cansim/a05?lang=eng&i d=3760038

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from resource industries, so this thinking goes, is like feasting on empty calories.

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.

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.

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.

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.

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.

“There is a need to collectively change the image of the resources sector.”

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.

Finally, the sector must excel in environmental stewardship. This requires coherent regulatory frameworks aligned across jurisdictions, 2


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.

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The Canadian Boreal Forest Agreement, 2010 This unique collaboration between 21 major Canadian forest products companies and nine leading environmental nongovernmental 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.

Challenge #1: Dissemination

Knowledge

Development

and

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.

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Sector leaders stressed the importance of It can take years to realize a return on telling the story of the resources sector – and investments in innovation, making it all the the advances that have been made – as more important to engage Canadians on why fundamental to its ability to enhance its these investments matter. Sector leaders felt innovative capacity and engage Canadians. much needed information must be provided to Companies across the sector are reducing their Canadians about current and future activities in environmental footprint, reducing energy use the sector, especially those made possible by and water consumption, achieving process innovation. Positioning potential trade-offs and efficiencies and realising substantial opportunities in a global context was also seen shareholder returns through innovation. Sector as important, to enable an informed and leaders feel strongly that mature dialogue about these stories need to be the challenges facing “There is a public and social shared more openly, sector industries and imperative to both communicate across the sector and Canada’s future and collaborate – we need to put a with the public. prosperity. light on what is happening and what Industries must come A single national voice could be happening.” together and find ways that spans public, to correct public private and not-formisperceptions and profit interest must be identified to represent update the sector’s image to more accurately the sector. In Montreal, participants asked the reflect reality. To attract the human and basic question, who speaks for Canada’s financial capital needed to thrive in a tough resources sector? They stressed that a single global economy, where competitive advantage national voice must be identified, will be driven by innovation, the sector must representative of all industries and show Canadians that its industries have been stakeholders, to channel multiple and diverse transformed with the use of advanced perspectives into an effective, actionable technologies and processes and through strategy. exercising social and environmental responsibility.

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Xstrata Nickel – The Raglan Agreement (Northern Quebec). Xstrata Nickel is the world’s fifth largest nickel producer, and is focused on sustainable, valuecreating 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.

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 “We must build local capacity for essential to ensuring innovation with a long-term the efficient and outlook that moves beyond the sustainable purely extractive dimension.” 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.

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The Oil Sands Leadership Initiative’s (OSLI) JanvierChard 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 youthoperated 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.

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.

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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 stateof-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.

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 “Canada punches above its products. Sector leaders weight globally, because recognize the importance we are a natural resources of creating new value, powerhouse. How can we meeting consumer and take these advantages to market needs. In the next level?” 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 8


Natural Resources Canada – Geomapping 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.

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 coop placements and expanding and diversifying university and college programs to accept more students in areas relevant to the sector’s future.

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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-forprofit 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.

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 “We need to capture the education. There was attention and imagination broad consensus that of innovators.” 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.

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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.

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.

“There is a misconception that the

Governments need to play sector is not ‘cool’ – this needs to the dual role of catalyst change. These industries are where and champion for the action is happening – where the Canada’s resources sector. future of sustainability lies.” 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.

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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 twoway 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.

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 “Laggards don’t move if there outcomes, but allow isn’t a regulatory structure, industry to follow its own path to achieve them. They but the structure must allow create the conditions for leaders to get out ahead.” 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, evidencebased 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.

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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 sectorwide level.

“We need to think as Canadians – the Education: Reach out to innovators early, by promoting science and sector can’t let regionalism engineering in the K-12 education dominate.” 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

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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 onthe-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.

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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. Develop forums at local and national levels to share best practices. Develop forums for greater collaboration and partnerships through knowledge sharing and dissemination of best practices. Find new ways to communicate and share successful innovations. 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. Initiate a dialogue on what motivates innovation. Encourage and incentivize innovation in times of surplus or success. Learn from other jurisdictions that have faced similar challenges (e.g., Australia) 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.

Toronto St. John’s Yellowknife St. John’s Montreal

Montreal Vancouver 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 postsecondary levels. Develop more training and education opportunities, sensitive to the challenges that traditional education systems have had in the North. Scale up demonstrated successes in education and youth engagement, as exemplified by Xstrata and other private sector leaders. Incent entrepreneurship among new grads and experienced professionals through the promotion of start-ups. Invest in developing information and communications technology systems in the North. Establish a Northern Innovation Council or annual forum to share ideas and best practices.

Toronto

Yellowknife Montreal St. John’s Yellowknife Yellowknife

Resiliency, Growth and Jobs •

• •

Position entrepreneurship and risk-taking as core values in the education system, Montreal through joint programs among business, science and engineering disciplines in universities and colleges. Expand and promote relevant academic programs to assist the development of the St. John’s regional talent pool. Evaluate mechanisms for government to support research and development in a Yellowknife variety of settings, through a variety of means (financial and other).

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• •

• • •

Expand efforts to improve competition in the transportation sector to reduce costs. Continue to develop partnerships and collaborative ventures, in existing institutions or through the development of hubs or centres for innovation, similar to FPInnovations. Explore unique arrangements to share knowledge, expertise, and if possible, technology, among industry partners and companies. 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. 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.) Explore opportunities and programs for welcoming new Canadians looking to work in the resources sector.

Vancouver Montreal

Toronto Toronto Vancouver

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. 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. 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 Articulate a clearer role for the federal government in promoting resource innovation and competitiveness. 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). 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. Work towards better harmonizing international regulations for the resources sector.

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Vancouver

Toronto

Vancouver

Vancouver Saskatoon

Toronto

Saskatoon


Appendix: Roundtable Participants

Innovation in Canada’s Resources Sector Roundtable Participants Pierre A. BossÊ Directeur de projets Division Industriel Genivar

Elyse Allan President and Chief Executive Officer General Electric Canada Colin Andersen Chief Executive Officer Ontario Power Authority

Anne-Marie Bourgeois Regional Director Sustainable Development Technology Canada

Paul Austin Regional Director, Partnerships Sustainable Development Technology Canada

Mary-Rose Brown Research Associate Public Policy Forum

Ernie Barber Acting Dean, College of Engineering University of Saskatchewan

Murray Brown Development Manager Husky Energy Inc.

Allan Baydala Chief Financial Officer Port Metro Vancouver

David Burns Professor of Chemistry and former Associate Dean Research (Science) McGill University

Darrell Beaulieu Chairman Northern Aboriginal Business Association

Julie Cafley Vice-President Public Policy Forum

Bob Bleaney Vice President, External Relations Canadian Association of Petroleum Producers

Kent Campbell Deputy Minister, Energy and Resources Government of Saskatchewan

Mitch Bloom Vice-President, Policy and Planning Canadian Northern Economic Development Agency

Denise Carpenter President and CEO Canadian Nuclear Association

Bohdan Bodnar Vice-President Human Resources Spectra Energy Transmission

Karen Chad Vice-President, Research University of Saskatchewan Karen Chan Assistant Deputy Minister

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Agriculture, Food and Rural Affairs Research and Corporate Services Division, Guelph Government of Ontario

Ian Dyck Vice-President Infrastructure and Environment WorleyParsons Canada

Ron Crotogino President and Chief Executive Officer ArboraNano Inc.

Julian Edwards Director, Process Engineering & Strategic Studies Vale Base Metals Technology Development Vale

Hervé Deschênes Vice President FPInnovations

Craig Ennis Vice-President Policy and Communications St. John’s Board of Trade

Michel J. Desrochers Director General NRC Biotechnology Research Institute National Research Council Canada

Jock Finlayson Executive Vice-President Policy and Analysis Business Council of British Columbia

Tom Diment President Potash Producers Association

Chaitanyamoy Ganguly President, India Cameco Corporation

Gavin Dirom President and Chief Executive Officer Association for Mineral Exploration BC (AME BC)

Garnet Garven Senior Fellow, Western Canadian Office Public Policy Forum

Robert Doherty President NWT & Nunavut Construction Association

Kevin Goldthorp Vice-President, External Relations University of Western Ontario

Mary Donlevy-Konkin Chief of Staff Minister of Advanced Education, Employment and Immigration Government of Saskatchewan

Ida Goodreau Adjunct Professor Sauder School of Business University of British Columbia

Brian Doucette Director, Environmental Excellence Suncor Energy Inc.

Ray Gosine Associate Vice-President Research Memorial University of Newfoundland

Cassie Doyle Consul General San Francisco/Silicon Valley Foreign Affairs and International Trade Canada

Mark Haney Director, Investment and Economics Analysis Science Policy Evidence and Analysis Natural Resources Canada

D. Tim Doyle Executive Director Yellowknife Chamber of Commerce

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Bryan Harvey Professor Emeritus, Plant Sciences University of Saskatchewan

Doug Konkin Deputy Minister Ministry of Forests, Lands and Natural Resource Operations Government of British Columbia

Lorne Hepworth President CropLife Canada

Paul Labbe Vice-President and General Manager Saskatoon WorleyParsons Canada

Elise Herzig President and Chief Executive Officer Ontario Energy Association

Pierre Lapointe PrĂŠsident et chef de la direction FPInnovations

Dan Hewitt President Consulting Engineers of the Northwest Territories

Roger Larson President Canadian Fertilizer Institute

Dennis Hogan Assistant Deputy Minister, Innovation Department of Innovation, Trade & Rural Development Government of Newfoundland and Labrador

Martin Lorrion Vice President, Operations, Region 1 Domtar Corporation

Morag Howell Area Manager Yukon, Northwest Territories and Nunavut Region USC Sandvik Mining and Construction Canada Inc.

Stephen Lucas Assistant Deputy Minister Science and Policy Integration Natural Resources Canada J. Hugh MacDiarmid President Killin Management Corporation

Ray Hrkac President, Exploration GGL Resources Corp

Fiona Macfarlane Chief Inclusiveness Officer Managing Partner Western Canada Ernst & Young LLP

David Katz Acting Director Innovation Saskatchewan Government of Saskatchewan Kim Keating Suncor Energy Inc.

Peter MacKinnon President and Vice Chancellor University of Saskatchewan

Bob Kelly General Manager Duck Pond Operations Teck Resources Ltd

David Malloy Associate Vice-President and Director Research Services University of Regina

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Carmine Marcello Executive Vice President, Strategy Hydro One Inc.

BHP Billiton Canada Inc. Phil Moon Son Executive Director NWT & Nunavut Construction Association

Tina Markovic Senior Project Manager Operational Readiness BHP Billiton Canada Inc.

Garth Moore President Potash Corporation of Saskatchewan Inc.

Katrina Marsh Policy Analyst Science Policy Integration Natural Resources Canada

Paul Morris Assistant Deputy Minister Department of Natural Resources Government of Newfoundland and Labrador

Alasdair Martin Acting President Diavik Diamond Mines Inc.

Geoffrey Morrison General Manager of BC Global Public Affairs

Dan McGillivray Toronto Hydro Distinguished Fellow Centre for Urban Energy Ryerson University

A.J. Nichols Director, Corporate Affairs Vale

Brent Meade Deputy Minister Innovation, Trade and Rural Development Government of Newfoundland and Labrador

Hon. Rob Norris Minister of Advanced Education, Employment and Immigration Government of Saskatchewan

Tony Mercer Senior Project Manager WorleyParsons Canada

Eden Oliver Partner Bennett Jones LLP

Trish Merrithew-Mercredi Regional Director General Northwest Territories Region Aboriginal Affairs and Northern Development Canada

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

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

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Chuck Parker President NWT Chamber of Commerce

Joy Senack Director, Strategic Policy Natural Resources Canada

G.R. (Gay) Patrick Executive Director Saskatchewan Potash Producers Association Inc.

Colm Seviour Partner Stewart McKelvey

Greg Payne Vice President, Portfolio Management Greenchip Financial

Kent Smith-Windsor Executive Director Greater Saskatoon Chamber of Commerce Bruce Sprague Partner, Tax Ernst & Young LLP

Ian Pearce Chief Executive Officer Xstrata Nickel

Barb Steele Director of Strategic Partnerships Network for Business Sustainability

Gordon R. Peeling Independent Director/Consultant and past President of the Mining Association of Canada

Bill Swett Research and Development Lead Coordinator Commercial and Joint Interest ExxonMobil

Bob Rappolt Vice-President, Mining Stantec Chris Ryder Vice-President, External Affairs BHP Billiton Canada Inc.

Gray Taylor Partner and Co-Leader Climate Change and Emissions Trading Group Bennett Jones LLP

Eric Sanscartier Director Science Policy Evidence and Analysis Branch Natural Resources Canada

Eira Thomas Chairman Stornoway Diamond Corp

Bryan Schreiner Chief Geoscientist and Manager, Minerals Saskatchewan Research Council

John Thompson Vice-President, Technology and Development Teck Resources Ltd

Pam Schwann Executive Director Saskatchewan Mining Association

Tom Tiedje Dean, Faculty of Engineering University of Victoria Kirsten Tisdale Partner, British Columbia Advisory Service Ernst & Young LLP

Kevin Scissons Strategic Advisor Directorate of Nuclear Cycle and Facilities Regulation Canadian Nuclear Safety Commission

Doug Trask Executive, Strategy and Program Development RDC Research and Development Corporation

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André Tremblay Président-directeur général Conseil de l’industrie forestière du Québec

John Walsh Director General Science Policy Evidence and Analysis Natural Resources Canada

Gordon Van Tighem Mayor City of Yellowknife

Allan Ward President and Chief Operating Officer Alberta-Pacific Forest Industries

Brian Veitch Associate Dean Research Engineering and Applied Science Memorial University of Newfoundland

Joanne Wong Director, Village Project Canada Cisco Systems Canada Co

Peter Vician Deputy Minister Industry, Tourism and Investment Government of the Northwest Territories

Sarah Wright Cardinal President Aurora College

David Waldron Partner SECOR Consulting

Zoe Younger A/President and CEO Mining Association of British Columbia

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Towards a More Innovative Future: Insights from Canada’s Natural Resources Sector  

This report explores the opportunities for action in advancing innovation in Canada's natural resources sector are great. We have identified...