Environment Committee on April 16th, 2026

[Ellis Ross, Conservative, Skeena—Bulkley Valley, BC]

Okay, thank you.

In September 2023, the government announced that it would provide $1.3 billion in a capital commitment toward the project and, not even a year later, Northvolt was declared insolvent. This was in September 2025, which ended this proposed gigafactory outside of Montreal.

Did the government know that this was an unstable company to begin with and, if so, why did it invest this money?

[Benoit Tessier]

The government did a due diligence and risk assessment on the company, for sure. For that reason, it had some very specific mitigation measures in place. Among other things, we did not—

[Ellis Ross, Conservative, Skeena—Bulkley Valley, BC]

Excuse me. Before I lose a note, there was a mitigation assessment done. Were there any red flags to show that this might not be a good investment? Given that the assessment was done, was there anything there?

[Benoit Tessier]

It was a few years ago. At the time, the sector was booming. That particular company was still successful and was hoping to establish in North America, and Canada was competing with other jurisdictions—

[Ellis Ross, Conservative, Skeena—Bulkley Valley, BC]

Did the government look at this in terms of a healthy company? They were speculating that this would be a good economy, a good market and a good company, as opposed to looking at the financial stability or the viability of the company itself. Is it safe to say that?

[Benoit Tessier]

It's safe to say that the unfolding of events after the fact, if you rewind the history of—

[Ellis Ross, Conservative, Skeena—Bulkley Valley, BC]

I get all that. I'm just talking about the viability of the company itself. There was an assessment done that didn't talk about emerging markets or what's possible. Anybody can do that. We're really talking about the financial health and the viability of the company itself. The assessment didn't raise any flags in that respect.

[Benoit Tessier]

That's what I'm trying to say. At the time of that negotiation, which was before all this happened with the company, there was certainly some risk, as with any deal or investment. However, it was deemed mitigated in order for us to make an offer.

I will repeat the fact that we never signed an agreement with that company, and that's as a result of what happened after, in terms of the financial stability of Northvolt.

[Ellis Ross, Conservative, Skeena—Bulkley Valley, BC]

Thank you.

In that same context, what was your role in the deal between the federal government and the $5-billion Stellantis-LG joint venture plant in Windsor?

[Benoit Tessier]

It was similar.

[Ellis Ross, Conservative, Skeena—Bulkley Valley, BC]

It was very similar, in terms of.... Could you repeat your specific role in that?

[Benoit Tessier]

Like I said, my team and I are supporting the policy assessment of the automotive sector, including the battery sector.

[Ellis Ross, Conservative, Skeena—Bulkley Valley, BC]

Okay.

Given that the government promised to pay Stellantis up to $529 million, $268 million of which has already been paid out, what protections did you negotiate into this agreement? Even if it was just policy advisement, what protections were there?

[Benoit Tessier]

I'm not in a position to answer that question, unfortunately, at the moment. There's a lot of commercially sensitive information in an agreement between the government and a company like this, and I certainly don't have it in front of me at the moment.

[Ellis Ross, Conservative, Skeena—Bulkley Valley, BC]

To your recollection, did you advise any policies in terms of protecting this $5-billion commitment?

[Benoit Tessier]

Absolutely. There's always some protection negotiated with companies like this.

I will remind the member that this was in 2022, if I recall, so it's a number of years ago.

[Ellis Ross, Conservative, Skeena—Bulkley Valley, BC]

However, there was some policy to—

[The Chair, Liberal, Shannon Miedema]

Thank you very much, Mr. Ross.

We will now turn to Mr. Grant for five minutes.

[Wade Grant, Liberal, Vancouver Quadra, BC]

Thank you, Madam Chair.

Thank you to the witnesses. It's always great when an Olympic medal-winning person is in the witness chair. I follow my Olympic history, and I was watching, Ms. van der Kamp.

Mr. Cauchi, transportation remains one of the largest sources of greenhouse gas emissions in Canada. It is also a major driver of local air pollution in our communities. As outlined in the government's automotive strategy, we are moving away from prescriptive sales mandates and instead strengthening greenhouse gas emissions standards, which were described by the department as some of the strongest tools we have right now to support emissions reductions while giving industry flexibility. These standards are designed not only to reduce emissions but also to cut the pollution that is breathed in every day by Canadians, especially children, seniors, and people who live near busy roads.

From ECCC's perspective, why is the light-duty vehicle sector such a critical focus for emissions reduction, and how do strengthened vehicle GHG standards contribute to both climate goals and improving air quality and public health across Canada?

[Mark Cauchi]

I think it's fair to say, and the facts are pretty clear on this, that transportation is the second-highest emitting sector in Canada, so it is clear that we are not going to achieve our climate goals unless we do address emissions from the transportation sector. Light-duty vehicles are a major contributor to those overall sector emissions.

Net zero by 2050 is, obviously, the end goal here. While we also have interim targets along the way, we appreciate that there needs to be some flexibility and consideration given to the economic health of our manufacturing and import vehicle sector. We are trying to take that into consideration as we develop regulations.

You mentioned air pollution. I addressed that before. There are major gains with respect to air pollution associated with these regulations; that's on top of existing air pollution controls for vehicles. Increased EV deployment in Canada will help to further decrease harmful air pollution for Canadians.

We will be seeing benefits and not just social and health benefits. We also see very important benefits for consumers. We know that an EV, for example, is about 40% to 50% less costly in terms of maintenance and operations than an ICE vehicle is. While upfront costs may be higher, over the life cycle or the lifespan of a vehicle, total ownership costs will be lower for consumers, so there is an economic gain, as well, for consumers.

Then, of course, we see really strong growth in the EV market globally. If Canada is going to be a major player in the global auto sector, it will need to be part of that global transition. We have a lot of confidence in our ability to innovate and to make the cars that the world wants, and we think this policy is also complementary to those innovation and competitiveness objectives.

[Wade Grant, Liberal, Vancouver Quadra, BC]

Mr. Cauchi, we've often heard the term “range anxiety”. Opponents often argue that electric vehicles are impractical outside of major urban centres, despite growing evidence to the contrary. What data or analysis does ECCC rely on to assess the real-world viability of electric vehicles across different regions, including northern and colder climates, and long-distance travel corridors in our country?

[Mark Cauchi]

Certainly, when you look globally at countries that have the highest EV adoption, you see that those countries are actually Nordic countries. We see countries such as Norway, Denmark, Sweden, Iceland and even the U.K. with very high adoption of EVs. We think this does show that northern climates are not necessarily an impediment to EV sales but quite the contrary.

We also see that the average Canadian does not drive more than 40 kilometres to and from their house in a day. While we do appreciate that range anxiety is a major barrier to increased EV uptake, statistics show that as more and more models come to market with greater range and as Canadians become more familiar with EVs, those range anxieties will, hopefully, decrease over time.

[The Chair, Liberal, Shannon Miedema]

Thank you very much.

We will now turn to Monsieur Simard for two and a half minutes, please.

[Mario Simard, Bloc, Jonquière, QC]

Thank you very much, Mr. Chair.

I'm sorry, Mr. Cauchi, I didn't give you a chance to respond earlier. We'll make up for that.

I'll try to be clearer.

I really liked your exchange with my colleague. You made it clear that if we don't address the issue of transportation, we won't be able to meet our greenhouse gas reduction targets.

When the standard was in place, we had projections regarding the greenhouse gas reduction target to be achieved. I assume projections were also made for the scenario where the standard would be abolished. I believe that with the standard, this implied a reduction of 362 megatonnes. Without the standard, I assume you have projections.

Would it be possible for you to provide the committee with a brief comparative table? Can you explain how the government's new policy will effectively reduce greenhouse gas emissions?

I'll stop there to give you time to respond.

[Mark Cauchi]

It must be acknowledged that there was some overlap between the programs. There were two regulations for light-duty vehicles: the standard on the availability of electric vehicles and the greenhouse gas performance standards. We've consolidated these two regulations into a single one to eliminate the duplication. That's important.

Our modelling indicated that the approach announced by the Prime Minister would make it possible to achieve more than 300 million megatonnes in cumulative reductions by 2050. That's also important. We need to set out the details of this modelling in the Canada Gazette in the coming months.