Environment Committee on April 23rd, 2026

[Nadine Frost]

The scenario in the fertilizer sector, as we described, is that we are competing against a lot of other jurisdictions that don't have a comparable carbon pricing system in place. Our main competitors, when we're looking at the production of potash fertilizers, are Russia, Belarus and China. When we're looking at nitrogen fertilizers, it's a lot more diverse, but, again, Russia, the U.S. and China are big players.

Part of the analysis we did last year with PwC was to look at those jurisdictional competitiveness risks. In the case in which we have a rising price on carbon and a rising cost of production here in Canada, other jurisdictions that don't have those added costs but have comparable incentives to bring fertilizer production in or to decarbonize existing production are where we're really seeing a lot of those investments fall. It's a real risk and it's a slow risk. It's a lagging indicator of a lot of these policies, but it's something we're certainly keeping close tabs on.

[Carol Anstey, Conservative, Long Range Mountains, NL]

Thank you.

Quickly—and this is my last question—do you have real-world examples of instances in which the carbon price got too high, and then it had a negative impact on your industry?

[Nadine Frost]

Perhaps one of the easiest examples is the lack of investment we've been seeing in Canadian fertilizer production, in terms of being able to decarbonize. We're seeing a lot of investment right now going to the States, and not a lot coming into Canada, in terms of major projects.

[The Chair, Liberal, Shannon Miedema]

Thank you very much.

We will now go to Mr. Grant for six minutes.

[Wade Grant, Liberal, Vancouver Quadra, BC]

Thank you very much.

Thank you to the witnesses for providing testimony.

Mr. Clark, in your testimony, you talked about New Economy Canada bringing together labour, business and indigenous leaders, as they focus on Canada's economic transition. You also talked about the importance of a clear, strong and predictable industrial carbon price. Could you elaborate further on what a clear, strong and predictable carbon price would actually do for their investment decisions?

[Jason Clark]

Sure, I'm happy to do that

We look at a predictable carbon price as a competitiveness strategy and not a cost burden. When global investment is increasingly flowing towards low-carbon jurisdictions—last year the annual investment in the clean transition was over $3 trillion—this is a significant opportunity for the country, particularly when the Prime Minister is seeking to secure over a trillion dollars in investment into our economy.

The way we see it, decarbonization investments are really productivity investments. We've seen examples of that in the steel and cement sectors. I believe you heard that from the cement sector at your last meeting. The industrial price signal is designed to incent avoidance and encourage exactly those types of productivity investments that we've seen in those two sectors.

[Wade Grant, Liberal, Vancouver Quadra, BC]

Thank you.

When investors are deciding whether to build a clean steel facility or a net-zero cement plant in Canada versus another jurisdiction, what factors matter most and where does industrial carbon pricing fit into that calculation?

[Jason Clark]

I wouldn't want to speak on behalf of those specific sectors. I would point to work that has been done by Clean Prosperity. There was a survey of heavy industrial facilities that found the majority of those under the OBPS.... Actually, for the facilities that were exposed, it had a positive impact or no impact on their profitability, their capital spend and competitiveness.

The challenge that we see is uncertainty impacting this long-term investment. Things like having a rapid conclusion of the negotiation around the Alberta-federal government MOU to give certainty to investors is a significant, important step forward.

[Wade Grant, Liberal, Vancouver Quadra, BC]

If pricing industrial pollution sends a market signal to industry that invests in clean technologies, they'll cut their emissions. It also sends a signal to innovators to develop those technologies.

What would a strengthened system mean for clean technology investment in Canada?

[Jason Clark]

I think there are a number of opportunities there. When we look at how the system across the country could be enhanced, we really look at three things. I mentioned improved FPT collaboration. I think we've seen positive developments there with the streamlining of regulatory approvals, the “one project, one review” agreements that have been signed across the country. Business needs that certainty, not only around expanding the carbon credit trading market, which is significant, but also, as we and other witnesses have talked about, around implementing financial mechanisms that give that certainty. Whether they are carbon contracts for difference or a price floor mechanism, this is really important for making those decisions, both in traditional and emerging sectors, I would say.

The last thing to note that we've seen the government move on—and we saw this in budget 2025—is that a clear industrial carbon pricing signal isn't the only consideration. What we've seen with the clean economy investment tax credits is not insignificant. That is quite an important piece across a range of sectors. It is a significant incentive as well.

[Wade Grant, Liberal, Vancouver Quadra, BC]

Let me shift a little bit, Mr. Clark. Some of our trading partners in the EU, the U.K. and now maybe even others are introducing border carbon adjustments of their own.

For Canadian companies looking to export to those markets, what is the commercial significance of Canada's maintaining a credible, internationally recognized industrial carbon price?

[Jason Clark]

That's a great question.

Recent analysis by BloombergNEF found that Canada is among a small group of exporting countries quite well positioned under the European Union's CBAM. That really underscores that a strong domestic carbon price helps Canadian goods move easily into these markets, often with fewer additional costs at the border. That does create a real competitive advantage.

[Wade Grant, Liberal, Vancouver Quadra, BC]

If Canada were to weaken or eliminate its industrial carbon price, what would that signal to the major industrial investors and clean economy companies that New Economy Canada works with?

[Jason Clark]

We would view it as a negative signal.

[The Chair, Liberal, Shannon Miedema]

Thank you much.

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

[Patrick Bonin, Bloc, Repentigny, QC]

Thank you, Madam Chair.

Mr. Clark, in your opinion, is Canada competitive when it comes to the energy transition and job creation in future-oriented sectors? If carbon pricing were to be weakened, would that harm this competitiveness?

[Jason Clark]

Do you mean the competitiveness of the energy sector or broadly across the economy? My apologies.

[Patrick Bonin, Bloc, Repentigny, QC]

I am talking about competitiveness in the deployment of infrastructure, future technologies and job creation in the so-called clean energy sectors.

[Jason Clark]

I've talked a little bit about how I think there are significant opportunities in those decarbonization investments. Like I said, you've seen this in the steel and cement industries, where those investments that enable those facilities to avoid an industrial price—where the policy is indeed doing what it should do—are really driving and enhancing productivity in those industries and sectors. They lower emissions and improve the efficiency of these plants and facilities, and enable them to carry forward their businesses.

[Patrick Bonin, Bloc, Repentigny, QC]

If there were no industrial carbon pricing, or if it were not high enough, could we lose investments in the clean economy here in the country?

[Jason Clark]

One of the things I pointed to is that Alberta has had an industrial price since 2007 and we've had the federal OBPS since 2019. Businesses have been making investment decisions based on this policy reality. I think what we're looking at now and what businesses are trying to see is a clear level of certainty that this policy had durability and will go forward. I think this is a key part of the negotiations of the Alberta-Canada MOU, which should establish an effective carbon credit price of $130 a tonne. The question, of course, will be over what period of time that will be and whether the price will be raised beyond that, but these are questions that businesses are looking for.

As I mentioned, there continues to be an opportunity to enhance these systems, to make some of the improvements that I highlighted, and to ensure.... I'll talk to one opportunity, which is that when the OBPS was launched in 2019, the federal government undertook a review process, a sector-by-sector competitiveness analysis. Considering the state of the world and where we are right now, I think it would be an opportunity for the federal government to undertake that analysis again as it looks sector by sector and to see the shifting landscape.

Again, our focus would be on creating that certainty over the long term while also ensuring that our Canadian sectors that are critical to the economy, such as fertilizer, remain competitive now.

[Patrick Bonin, Bloc, Repentigny, QC]

Let’s suppose the government conducts a sector-by-sector analysis. Do you think there should be a periodic review every few years, or something like that?

[Jason Clark]

That's a great question.

I would say there's always an opportunity to enhance and improve those systems moving forward. The world doesn't look like it did in 2019. I think those sector-by-sector competitiveness analyses were important to setting the benchmark, so having a review at this point would be prudent. They just undertook that federal benchmark analysis and there are ongoing discussions around the MOU, so that is a potential opportunity to continue to enhance the system and improve those systems.

[Patrick Bonin, Bloc, Repentigny, QC]

Would a review every five years be desirable?

[Jason Clark]

I wouldn't necessarily peg a specific year to it, but that would seem realistic.