Mr. Chair, ladies and gentlemen, good morning. Thank you for this invitation.
The members of the Aluminum Association of Canada are responsible for 100% of the primary production made by Alcoa, Rio Tinto and the Alouette aluminum smelter. This morning, my talk will focus on our industry's needs to answer the call to decarbonize North America through electrification.
As part of the decarbonization of our North American continent, aluminum produced here in Canada is set to play a highly strategic role. Indeed, Canada produces 80% of all primary aluminum manufactured in North America. According to the World Bank, this material is the only critical, high-impact, cross-cutting material required to meet the electrification needs leading to decarbonization. Aluminum is found in solar panels, wind turbines, transmission lines—where it makes up 100% of the material—and electric vehicle batteries. Ultimately, the electrification of America only makes sense if it is based on materials that are themselves decarbonized, of which aluminum is one.
Facing carbon-intensive competition from India, the Middle East and China, Canadian industry, in partnership with the governments of Canada and Quebec, is developing the inert anode, which will enable us to completely eliminate greenhouse gas emissions from our processes.
While our competition—China, India and the Middle East—is vying to get where we are today by 2040, we are leapfrogging into the future to keep the edge by developing the Elysis game-changing technology taking us from low to no CO2. It also means developing here in Canada an entirely new world-class industrial manufacturing ecosystem providing jobs of the future and for the future for Canadians.
Elysis changes the aluminium production process to avoid CO2 emissions while releasing only oxygen into the atmosphere. At term, this technology could eliminate the remaining 6.5 million tonnes of GHG emissions from our plants, potentially setting the mark and displacing our high carbon-based competition from India, China and the Middle East.
We are in a high-stakes, high-risk environment leading to industrial scale-up and deployment. Being there today is the result of a partnership between Alcoa and Rio Tinto, as well as Canada and Quebec. The capital intensity and high risk involved are such that they can only be achieved through a partnership. Such a highly capital-intensive undertaking needs de-risking all along, and without access to enabling tax policies, the pathway becomes less certain.
This is as large a strategic industrial transition as electric vehicles and batteries. We deserve the same attention and investment tax credit for clean technologies and for clean technology manufacturing.
While we make aluminium with the lowest carbon footprint in the world here in Canada, we are also an emission-intensive industry. For every one tonne of aluminium we make, we produce two tonnes of CO2. We want to eliminate this entirely.
As China and Russia have recently announced merging their research capacity to accelerate the development of the Russian inert anode technology, Canada must keep its momentum going and accelerate the pace of the demonstration and deployment phases. This is our race to the moon. This is Canada's moment. Zero-carbon aluminium is currently out of scope for federal tax credits in Canada, while the IRA supports the aluminium industry and clean-tech manufacturing, such as inert anodes, with a 10% tax credit on production costs.
Recognizing the critical importance of aluminium to energy transformation, the need to decarbonize aluminium production to achieve carbon neutrality by 2050 and the opportunity for Canada to become the global anchor for carbon-free aluminium smelting and supply chain technologies, the Aluminium Association of Canada recommends that governments include all aluminium sector decarbonization technologies in their lists of tax-credit-eligible technologies. More specifically, the following types of equipment should be eligible for the credit: equipment intended to produce aluminium by a process that eliminates substantially all of the greenhouse gases resulting directly from the electrolysis of alumina. This material includes the goods necessary to manufacture, transform and assemble the materials required for this aluminium production, such as anodic and cathodic materials.
Activities related to clean-technology manufacturing in the aluminium value chain should also be eligible. As we fast-forward this game-changing technology development and industrial scale-up, massive investments in the billions of dollars are required and will only materialize in an enabling fiscal environment, de-risking and grounding the technology here in Canada.
This is Canada's moment to be world first and world leading through its 100-plus years of aluminium legacy.