Environment Committee on April 12th, 2021

[Bob Masterson, President and Chief Executive Officer, Chemistry Industry Association of Canada]

Thank you, Mr. Chair and members of the committee, for this opportunity.

I'm pleased once again to be joined by my colleague, Elena Mantagaris.

As we mentioned the last time we spoke just a few short weeks ago, Canada's chemistry and plastics industry does share Parliament's and Canadians' concerns and views that plastics have no place in the natural environment. Our industry accepts its shared responsibility for addressing the issue of post-consumer plastics. We're designing products for recyclability. We're using recycled content. We're advancing industry-led producer responsibility programs from coast to coast, investing in technology infrastructure, and taking action to address marine plastic litter, especially in developing countries.

Our industries do believe that a circular economy for plastics is possible and achievable within a relatively modest time frame. Once again—and I'm sure Mr. Roter will reinforce this—our customers are demanding it.

One purpose of this study is with regard to the economic impacts of the federal government's proposed approach to listing plastic manufactured items on CEPA's schedule 1 list of toxic substances and banning certain single-use plastics. I'd reinforce that it's important to recognize that the chemistry and plastics industry is very heterogeneous, but for the purpose of trying to simplify this for you, I'll just talk about two distinct components.

First, we have the large upstream resin manufacturers. These are very large global multinationals with massive facilities in Ontario, Alberta and Quebec.

Second—and these companies will be impacted very differently—we have the downstream plastics product manufacturers. They take the resins and convert them into the plastic products that we all use in our lives every day. These downstream companies are widely dispersed. There are nearly 2,000 of them across Canada. Eighty-six per cent of them are small and medium-sized enterprises, and the vast majority of those are family-owned companies. Many of those companies specialize in single products, such as plastic bags, or a small suite of products. The ban will disproportionately harm these companies and their employees and, in some cases, close off domestic markets entirely.

Moreover, Canada is a relatively small country in terms of the number of people and the size of markets. Like most Canadian industries, these companies, to remain profitable and to operate at scale, serve both domestic and export markets. One thing that's proposed or discussed in the federal government's approach is a ban on the export of plastic products, even to economies that don't have bans similar to what Canada is proposing. Those companies will be left with no choice but to either relocate or shut down entirely, because it won't be feasible to produce products if there's no export market either.

I think, however—and you've heard me say this on past occasions—that the biggest economic impact that will arise from the proposed federal actions will be the effect on future investment opportunities. Canada is a global-scale, low-carbon-producing plastics producer. We're the third-largest manufacturer in Canada. We're a top-10 global plastics resin producer. This industry is expanding globally, as I've said, at twice the global GDP. We think it sends a very negative signal to the global industry to list all plastic manufactured items as CEPA-toxic. It sends the message that Canada is ambivalent at best, if not actually in opposition, to growth and investment in this sector.

We cannot achieve a circular economy and we cannot achieve the investments necessary for a circular economy without attracting that global investment here. It will come out of the sector we already have.

Canada has a great opportunity. You've heard me say that we've seen $300 billion of investment in the United States in the last six years. Canada should have seen $30 billion of that in its own chemistry sector. We have largely become a flyover destination for chemistry sector investment, and a toxic designation and the listing of all plastic manufactured items as toxic will exacerbate that problem.

We see our largest provinces—Alberta, Ontario, Quebec and British Columbia—all prioritizing economic growth, partly based on recovery through the COVID pandemic and partly on the basis of new chemistry investments. As we did with the COVID epidemic, we need the federal government and the provincial governments working hand in hand with industry and other stakeholders in a consistent and integrated manner.

Thank you.

[The Chair, Liberal, Francis Scarpaleggia]

Thank you.

We'll go now back to Mr. Roter.

Mr. Roter, I think you have the right headset, but we can't hear you and I don't think you're on mute. We'll go to Mr. Galt and then we'll come back to Mr. Roter.

[John Galt, President and Chief Executive Officer, Husky Injection Molding Systems Ltd.]

Thank you, Mr. Chair, for giving me the time to represent my viewpoints on this critically important subject.

I see three key gaps in the proposed CEPA legislation.

The first one is that plastics are not toxic, especially when the alternatives are considered.

The second one is that dealing with the root cause of the environmental issue, Canada's hopelessly outdated and ineffective waste management practice, isn't addressed to the extent it needs to be.

Finally, there are the economic and employment impacts.

On the first one, in terms of why plastics are not toxic, plastics are not toxic in any traditional sense of the word. They are extremely stable chemically and do not interact easily with other substances. They are one of the most commonly used materials within the medical industry. Fully 73% of medical disposables on a worldwide basis are made from plastic. Plastic is medical grade. Compared to aluminum or glass, when broken into smaller pieces, plastics do not cause the same level of cutting hazard that either of those materials do. The combination of medical-grade qualities and unbreakability is exactly why plastics have displaced other materials in food and beverage packaging. Plastics deliver products safely, they minimize food waste and they are well suited for transportation.

Aluminum, unlike plastic, is chemically very reactive. That's why every aluminum can produced is supplied with a plastic liner.

Paper is also a wonderful material, but its application is highly limited. Paper-based products cannot perform in applications involving liquids like water or oil without additives or multi-layer structures, including plastic linings. Many polycoated pulp packaging containers use perfluorinated chemicals, PFAS. PFAS do not decompose.

The uncontrolled release, therefore, of waste into the environment is at the core of the toxic argument, and addressing that is something I agree with completely.

When we talk about putting an end to the outdated concept of the linear economy and why the circular economy is key to protecting our natural resources, I would like to offer the following on plastics.

The term “single-use plastics” is a misnomer. The only things keeping the majority of plastics in use today from being used repeatedly are updating Canada's waste management policies into a resource management policy focus, incentivizing investment in recycling, and establishing minimum recycled content standards for all articles, plastics or otherwise.

Nationally, the beverage industry recycles close to 75% of all plastic containers. The technology to recycle PET plastic, the one used in those containers, is mature. It's effective and it needs to be expanded.

Recycling and reuse are a proven solution, but the legislation falls short in addressing this critical issue to the extent I believe it should.

Finally, when we think about the environmental impacts, plastic has the lowest melting point of any packaging material and therefore requires less energy to produce or recycle. Relative to the PET plastic used in a beverage container, paper composites have 1.6 times the carbon footprint, aluminum 1.7 times, and glass 4.4 times the carbon footprint.

PET plastic does also not require deforestation or open-pit mining the way paper and aluminum do.

In terms of jobs, Husky is part of Canada's $35-billion plastics industry, which employs directly and indirectly 370,000 people, most, as has already been stated, in small or medium-sized businesses, a segment that has been devastated by the COVID lockdown structure.

Husky, as part of that, employs roughly 1,100 people in Canada and 4,000 globally. We invest $60 million annually through 190 different suppliers that employ 10,000 Canadians. Over the last 10 years, Husky has paid out over $1.8 billion in Canadian payroll. We are a world leader in Industry 4.0 and on a three-year basis are on track to invest $190 million in our Canadian operations while upscaling our workforce for digitalization. Our goal is to ensure that our Canadian operations can compete with any in the world.

However, since this legislation has been tabled, Husky, and many of our customers and co-suppliers to the industry, have put our investments in Canada on hold.

The right solution, in my opinion, is to engage our industry and its 1,700 small and medium-sized businesses in the solution. The development of the circular economy will create jobs.

In summary, the era of take, make and toss, otherwise referred to as the linear economy, is over, and I think we can all agree with that. We—and I mean all 7.8 billion people on this planet, each striving for a better standard of living—have passed the point of no return. We simply extract more from mother earth far more quickly today than she can hope to replenish. Through public-private partnership, we can consider turning what we call waste today into the resources we use tomorrow over and over again.

Plastics represent a family of materials that are ideally suited to a circular economy. Many plastics are infinitely reusable. They are purified and sanitized during the recycling process.

[The Chair, Liberal, Francis Scarpaleggia]

Your time is almost up, Mr. Galt. Perhaps you could take five minutes to wrap it up.

[John Galt]

I'm just wrapping up. I'll just take a few seconds on the last couple of points.

Fundamentally, plastics have the lowest carbon footprint and recycle well relative to the alternatives.

Finally, I think in the time it's taken so far in the last year and a half to debate this, a public-private partnership could have been established and meaningful inroads could have been made in establishing Canada as a leader in the circular economy. What's unique is that Canada has the opportunity on a global scale, as we're a global company that deals with customers everywhere.

Canada actually absorbs more carbon than it produces—

[The Chair, Liberal, Francis Scarpaleggia]

We're going to have to stop it there, Mr. Galt. There will be ample time to provide information during the Q and A period.

Mr. Roter, how are we doing?

[George Roter]

Maybe the third time is a charm. What do we think?

[The Chair, Liberal, Francis Scarpaleggia]

I think you're going to get the thumbs-up on this one. I'm just looking at the clerk.

[George Roter]

I'm just going to continue talking, and then we'll make an assessment as to whether the volume is good. I think that I'm now on the correct interpretation channel, so we can make sure that's going through.

[The Clerk]

It's good.

[The Chair, Liberal, Francis Scarpaleggia]

Perfect.

Go ahead, Mr. Roter. Take it from the top, as they say.

[George Roter]

I'll take it from the top. Third time's the charm.

Thank you so much again for your patience.

I'm very pleased to join you as the managing director of the Canada Plastics Pact.

The Canada Plastics Pact is tackling waste and pollution at source. We're a member of the Ellen MacArthur Foundation's global Plastics Pact network and an independent initiative of The Natural Step Canada, a national charity with 25 years of experience in fostering a strong and inclusive economy that thrives within nature's limits.

Over 50 leading organizations are part of the Canada Plastics Pact, all taking action to achieve a circular economy for plastics. This is a growing network with expertise ranging from chemical and resin manufacturers to packaging and consumer goods producers to retailers, collectors, sorters and recyclers. It includes for-profit, not-for-profit and public sector organizations. This is the only network that brings together all of Canada's plastics value chain under one roof.

We recently completed a study showing that about 1.9 million tonnes of plastics packaging is produced in Canada each year. Of this, 88% ends up thrown away in landfills, burned in incinerators or lost to the environment. Just 12% is recycled.

That 88% represents waste, not just garbage. It's a wasted economic opportunity, a wasted chance at investing in innovation and industrial development and wasted greenhouse gas emissions.

If the question is how to address the make, take, waste reality of plastics today, the answer is with a circular economy—as we've heard from the other speakers—in which we keep plastics in the economy and out of the environment. This would mean eliminating the plastic packaging we don't need while innovating to ensure the plastic packaging we do need is reused or recycled. A circular economy for plastic turns waste into tens of thousands of jobs and billions of dollars in economic value while stimulating innovation and benefiting the environment.

A 2019 Recycling Council of Alberta report identified that increasing recycling in that province alone could generate $700 million per year in economic value and nearly 6,000 jobs. This is also true elsewhere in Canada, where a circular economy for plastics can produce high-quality, future-fit jobs. Imagine well-paid, safe, and secure jobs in sorting, recycling and industrial facilities from Kelowna to Kitchener, coast to coast to coast, in urban, rural and remote areas.

For the petrochemical sector, this poses an opportunity to develop world-leading innovation. Take, for example, a recent partnership between B.C.-based Merlin Plastics and Calgary-based NOVA Chemicals to turn recycled polyethylene into food-grade plastic resin.

Canada has an R and D infrastructure in place, supported by leading academic institutions, that is already driving this type of innovation in established companies and start-ups. More is possible.

The environmental benefits are also clear. Keeping plastics out of landfills and incinerators benefits our communities and animal and human health. Recycling plastic reduces greenhouse gases by over two-thirds compared to making resin from fresh, virgin resources.

If the early stages of the Canada Plastics Pact have proven anything, it's that industry is highly invested in bringing about a circular economy for plastics in Canada.

The involvement of all levels of government is also key. Bans on single-use plastic items are one possible tool on the menu of options available to governments. While partners in the Canada Plastics Pact have a range of views on this topic, our signatories have committed to designing out plastic packaging that is problematic for collection and recycling supply chains.

I would, however, like to shine a light on some additional approaches that the federal government can consider.

First, there's a clear role for the federal government in coordinating an effort to collect and share plastics data. Currently, data is inconsistent and insufficient on what plastics are flowing through the system and where they're ending up. Simply, you can't manage what you can't measure.

Second, there's an opportunity for the federal government to establish an industrial policy agenda for a circular plastics economy. Specifically, it can create national definitions in performance standards for the collection and recycling of plastics; support the provinces as they set out performance-based regulations, such as extended producer responsibility; and establish national recycled content standards while using public procurement to drive demand. These supply- and demand-side policies will set the basis for technological innovation in the circularity of plastics.

Third, no one part of the plastics value chain can address the challenge of waste alone, so it's important for governments to invest in the multi-stakeholder platforms for collaboration that are crucial for driving holistic systems change.

To conclude, let me be clear that the Canada Plastics Pact members do not speak with one voice on the proposed bans. What we are agreed on is that there is a broader agenda and a set of policies that the government will need to put in place to realize the benefits of, and position Canada as a leader in, the essential transition to a circular plastics economy.

Thank you.

[The Chair, Liberal, Francis Scarpaleggia]

Thanks.

First of all, I'd like to thank our analysts for putting together such an interesting panel. A lot of discussion and debate are going to be generated..

We'll start the question period with Mr. Albas for six minutes, please.

[Dan Albas, Conservative, Central Okanagan—Similkameen—Nicola, BC]

Thank you, Mr. Chair.

I'd also like to pass on my thanks to all the good work that's been going on to make sure we have these great witnesses today.

First I'd like to address Mr. Masterson. Would you say this action of declaring plastics—

[The Chair, Liberal, Francis Scarpaleggia]

I'm told—

I'm so sorry. Madame—

[Dan Albas, Conservative, Central Okanagan—Similkameen—Nicola, BC]

Did we miss someone?

[The Chair, Liberal, Francis Scarpaleggia]

Yes, and it's entirely my fault.

You are to hear from the representative from RECYC-QUÉBEC. This is very important. I was wondering why we were ahead of schedule, but I understand now.

I apologize, Ms. Langlois-Blouin. You have the floor.

[Sophie Langlois-Blouin, Vice-President, Operational Performance, RECYC-QUÉBEC]

Thank you.

As I will be presenting in French, if I may, I would like to make sure that the interpretation into English is working well.

Is it working?

[The Chair, Liberal, Francis Scarpaleggia]

For my part, I can hear you just fine. I imagine everything is fine for the interpreters as well.

Madam Clerk tells me that this is the case.

[Sophie Langlois-Blouin]

Good afternoon, everyone.

Thank you for inviting me to appear before your committee.

I am Sophie Langlois-Blouin, vice-president of RECYC-QUÉBEC. I am responsible for operations.

RECYC-QUÉBEC is a government corporation that reports to the Minister of the Environment and works every day to reduce, reuse and recycle as much material as possible by guiding both citizens, municipalities and businesses in the adoption of responsible production and consumption practices. Our vision is to make Quebec a waste-free society.

You are studying the issue of plastics and single-use products. This is an issue in which RECYC-QUÉBEC has been very active for many years. All of our interventions, whether for plastics or other materials, are essentially based on the 3RV hierarchy, which you may be familiar with. So our main actions touch on reduction at source and reuse.

Over the past year, RECYC-QUÉBEC has offered financial support to concrete projects that reduce plastics and single-use products. Ten projects were selected last February, in 10 regions of Quebec, for just under $900,000.

I would say that there is genuine enthusiasm on the part of citizens, businesses and municipalities, who want to make the transition and reduce plastic or single-use products at the source. These can be completely eliminated by raising awareness. There is a buy-in to this kind of initiative. It is very important for us to continue to support and document this. We are also working to promote reuse, which is the transition to sustainable products. It's about moving away from single-use and disposable products. We've prepared different information sheets on that.

We've also done outreach in the past to show that not only are there environmental benefits from reducing plastic or single-use products and using reusable products, but also economic benefits. It's important to talk about this. Businesses and merchants that make the transition to sustainable products can quickly see savings, especially in their acquisitions.

More and more new companies and business models are emerging. The Quebec example I want to talk about is La tasse, created by the organization La vague. It's a visually recognizable blue mug that has been adopted by many retailers and cafés in many cities. It allows consumers to pick up the mug at one location and take it back to another. It's really this kind of initiative that we want to support and roll out on a larger scale in different regions of Quebec.

When it comes to plastics and single-use products or packaging, there are two things that our work has led us to pay particular attention to.

First, reducing plastic products is good, but we must be careful not to create a rebound effect, especially when we want to reduce food packaging. We know that packaging can play a role in preserving and extending the shelf life of food. It is possible to reduce both packaging and food waste, but it must be done in an informed manner. In particular, RECYC-QUÉBEC participated in a study by the National Zero Waste Council that focused specifically on the link between packaging and food waste reduction.

Second, when looking for solutions to replace single-use plastics, we need to be careful about the impacts of those solutions. In the past, we conducted a life-cycle analysis of shopping bags. We looked at reusable bags and single-use bags, and found that the single-use plastic bag had the least environmental impact over its entire lifespan. It is often said that replacing one disposable product with another disposable product is not the best solution. You should first look at whether you can reduce their use or even switch to sustainable products.

In closing, I would like to point out that RECYC-QUÉBEC is also very active in the field of transitioning to the circular economy. This is a set of strategies to achieve our goal. Recycling is part of it, but, for us, it is one of the last strategies to look at.

In Quebec, we are working to update and modernize our recovery and recycling systems, particularly selective collection and the refundable deposit system. Last March, legislation was passed to modernize both of these systems under an extended producer responsibility approach. Deposits will also be expanded to include all types of beverage containers. So we are talking about an expanded and modernized deposit.

In summary, source reduction and reuse are our priorities.

[The Chair, Liberal, Francis Scarpaleggia]

Thank you, Ms. Langlois-Blouin.

We can now move in good conscience to the question and answer period.

Mr. Albas, you have the floor for six minutes.

[Dan Albas, Conservative, Central Okanagan—Similkameen—Nicola, BC]

Thank you, Mr. Chair.

Thank you again to all the witnesses.

Mr. Masterson, would you say this action of declaring plastics toxic is going in absolutely the wrong direction and increasing uncertainty for industry?

[Bob Masterson]

Absolutely that's true, and I think you've heard that from Mr. Galt as well.

Mr. Albas, I want to be clear. Our industry is not against government action in this area. In fact, we encouraged the Government of Canada and Minister Wilkinson to look at the right tools to do this. The issue was that the Canadian Environmental Protection Act is not the right tool.

We all know that the last Parliament did support a private member's bill for a national framework for zero plastic waste. We support that, and we think Parliament should introduce the right tools, but the CEPA schedule 1 list of toxic substances is not the primary tool that will effectively [Technical difficulty—Editor].

[Dan Albas, Conservative, Central Okanagan—Similkameen—Nicola, BC]

[Technical difficulty—Editor] tool. That's interesting, because during the Bill C-204 debate, MP Bittle opposed the bill by arguing it would increase the level of uncertainty and MP Longfield argued that the bill was bad because industry was saying we were going in the wrong direction.

Mr. Masterson, you represent industry. Why do you think they are ignoring your claims in this case?

[Bob Masterson]

I think I started by saying society and Parliament demand action in this area, and we agree. I'm not sure why the government is making the choices it is; it is expeditious to act quickly with the tools you have rather than to develop new ones. There are also issues around the role of the provinces versus the role of the federal government. We have not seen the federal government actively involved in post-consumer materials, except for the import and export of hazardous wastes.

It's a whole new area. It would obviously be time-consuming to develop new legislation, but, sir, that's a question better left for Minister Wilkinson, I believe.