Environment Committee on Dec. 4th, 2024

[Sophie Chatel, Liberal, Pontiac, QC]

To date, the net zero accelerator has provided $4.5 billion in financing for 23 projects, including those of three major issuers. Explain to us the importance of investing in such projects to position Canada well in this economy and technology and have a prosperous economy in the future.

[Francis Bilodeau]

So far, among the three projects that have been funded under pillar 1 is Algoma Steel's project to replace its blast furnace technology, which will enable the company to transition to a low-emissions economy, while continuing to run its operations, create jobs and advance Canada's economy. The second project is with ArcelorMittal. This project will help modernize practices and reduce greenhouse gases in the steel sector. Finally, the third project, from Heidelberg Materials, will capture greenhouse gases at the cement plant.

[Sophie Chatel, Liberal, Pontiac, QC]

If you hadn't removed the confidential information from this report and the Conservatives had made it public, it could have jeopardized the competitiveness of Canadian companies. Could Chinese or other companies have stolen technology from Canadian companies?

[Francis Bilodeau]

There are reasons why certain information must remain confidential. Firstly, we have a legal obligation to do so. Secondly, companies have considered that disclosing this information could jeopardize their competitiveness.

It's important for the government to be a trusted partner in attracting and making investments. For example, the willingness of large issuers to work with the government depends on how much trust they have in it, and how well it will fulfil its obligations enshrined in agreements with them.

Making this information public could therefore jeopardize our ability to act effectively in the future.

[Sophie Chatel, Liberal, Pontiac, QC]

It is therefore very irresponsible of the Conservatives to ask for this information to be made public. This could not only harm current companies and their global competitiveness, but also prevent others from participating in our programs.

[Francis Bilodeau]

As I said, first we have a legal obligation to do so. Secondly, these companies expect the government to respect the obligations set out in the contribution agreements, notably the protection of the companies' commercial and confidential information, so as not to harm their competitiveness. This will enable the government to maintain companies' confidence in it, and to act now and in the future.

[The Chair, Liberal, Francis Scarpaleggia]

Thank you, Mrs. Chatel.

Ms. Michaud, welcome to the committee. It's your turn to speak.

[Kristina Michaud, Bloc, Avignon—La Mitis—Matane—Matapédia, QC]

Thank you, Mr. Chair.

Witnesses, thank you for being here. I appreciate it.

I'm replacing Ms. Pauzé. I'm not very familiar with the net zero accelerator. I understand that this program was set up to encourage or incentivize Canadian companies to contribute to national efforts to reduce greenhouse gases. The government has targeted a greenhouse gas reduction range of 40% to 45% by 2030. As I understand it, the program calls for investing $8 billion for a reduction of 19 to 20 megatonnes of greenhouse gases.

Mr. Commissioner of the Environment and Sustainable Development, I'm particularly interested in your audit findings. You were quite critical of the method of calculating emissions reductions, as well as the follow-up that is done, or less done in this case, with the various companies.

One of your findings is that the accelerator is not attracting Canada's largest emitters, because the process is perhaps too long and too complex to obtain financing. We're talking about an average process time of one year and eight months. Considering this, do you think the accelerator is achieving its objective of going after the biggest emitters, who could make a bigger effort to reduce greenhouse gases? Can you tell us more?

[Jerry V. DeMarco]

Thank you for the question.

As I said in my opening statement, we have found that the net zero accelerator is failing to attract the largest emitters. It has steel mills and a cement plant, but that's not a lot of companies when you look at the 55 largest emitters in Canada. This is one of the concerns we expressed in our audit.

The lack of a horizontal industrial policy for Canada and value for money, from a value-for-money perspective, are also among our concerns. The calculation of the value Canada's taxpayers are getting for their money from this fund has not been made public. These examples illustrate the biggest concerns we have about the net zero accelerator.

[Kristina Michaud, Bloc, Avignon—La Mitis—Matane—Matapédia, QC]

Thank you.

According to your observation, Mr. DeMarco, how does the government follow up with companies to ensure that the subsidies given actually lead to a reduction in greenhouse gases? I'm talking about the follow‑up done by the people who oversee the program, through the Department of Innovation, Science and Economic Development, or the Department of Environment and Climate Change.

How can we be sure that there will, in fact, be a reduction in greenhouse gases emitted by the company, once the subsidy has been awarded? Is close monitoring carried out? If so, how is this monitoring or calculation carried out? The fact that the calculation or tracking method used at the moment does not correspond to international standards is also, I believe, one of your findings.

Do you have any concerns in this regard? I'll leave it to you to explain.

[Jerry V. DeMarco]

We are concerned about the lack of compliance with assessment standards.

Mr. Blouin, can you add some clarification on this subject?

[Nicolas Blouin, Director, Office of the Auditor General]

Thank you, Commissioner.

With regard to the monitoring of projects as such, the department could tell you more about the details. However, there are indeed provisions in the agreements that provide for follow-up and accountability of the companies, which ensures in a way that the companies that commit to reducing their greenhouse gas emissions will honour these commitments within the framework of the project.

The second part of your question concerns calculation methods. As part of the program, we detail a number of shortcomings in internationally recognized standards for certain calculations used to estimate the greenhouse gas reduction impact of particular projects.

[Kristina Michaud, Bloc, Avignon—La Mitis—Matane—Matapédia, QC]

If I'm not mistaken, the program was introduced in 2020, or perhaps it was announced that year. I imagine that the greenhouse gas reduction target was set at 2030 because that's the government's target.

Mr. DeMarco, do you think we're on track to reduce greenhouse gas emissions by 19 or 20 megatonnes? Will the $8 billion make it possible to achieve this reduction, as the government has estimated?

[Jerry V. DeMarco]

I'm not sure the department is on the right track.

We looked at the agreements, and only five of them had a reduction of a certain number of megatonnes. When we looked at those five agreements, we calculated that they represented only six or seven megatonnes of carbon dioxide equivalent. It's possible that there will be further emissions reductions, but the agreements only guarantee a reduction of six megatonnes. We don't know if we'll be able to reach 19 megatonnes.

[The Chair, Liberal, Francis Scarpaleggia]

Thank you.

Ms. Collins, you now have the floor.

[Laurel Collins, NDP, Victoria, BC]

Thank you to all of our witnesses for being here today, especially Commissioner DeMarco. Thank you so much to your whole team.

One thing that was shocking to me when I sat down to look at the documents was the number of pages that were redacted.

Mr. DeMarco, when you looked at those, it was completely unredacted. Is that correct?

[Jerry V. DeMarco]

The audit team goes through the piles of documents in a digital format. Mr. Blouin can explain to you the nature of the free access provision that we have in the Auditor General Act and what he obtained.

[Laurel Collins, NDP, Victoria, BC]

I have a very short amount of time. Were they unredacted documents?

[Nicolas Blouin]

They were unredacted.

[Laurel Collins, NDP, Victoria, BC]

Thank you.

When it comes to sending parliamentarians unredacted documents, I'm curious. When I looked at the information, it said “minimal redactions”. Despite the theatrics of some of my colleagues, I do agree that 360 pages...and those were just the ones that were removed. When I looked at other pages, huge sections of them were redacted.

It does leave me with this question: Why aren't parliamentarians being given more information? Were all of those redactions absolutely necessary?

A connected question to that is this: If we hadn't had our staff in with us, would there have been fewer redactions?

[Francis Bilodeau]

I appreciate the question. There are two elements to the answer.

Number one is with regard to the statutory standing of the OAG in its own act.

Number two is the parameters under which they're provided. It's under an NDA, which the committee, in the second session, will not be under. In the context of our obligation vis-à-vis the proponents, our requirement is that we consult with them and seek their permission. That's what we did.

With regard to the nature of it, 300 pages may seem a lot, but these are 300 in the context of multiple thousands of pages. The type of information is almost identical across the sections that have been redacted, and they're primarily around the statements of work.

[Laurel Collins, NDP, Victoria, BC]

I did notice that there were a few contracts that weren't redacted as heavily. I was curious about the difference. Was it just the permission given by those third parties or...?

[Francis Bilodeau]

The items that were redacted are of two natures.

Number one is private, personal information and number two is primarily commercial information. The commercial information for almost all of them is around the statement of work and how they anticipate doing their work, which could be prejudicial, or they feel is prejudicial, to their capacities to remain competitive. That is based on requests of the recipients.

[Laurel Collins, NDP, Victoria, BC]

As my final question, if it had just been members of Parliament who were accessing the documents, would the redactions have been...?

[Francis Bilodeau]

I believe the legal.... I understand it is the same.