Evidence of meeting #14 for Finance in the 43rd Parliament, 1st session. (The original version is on Parliament’s site, as are the minutes.) The winning word was companies.
A recording is available from Parliament.
Conservative
James Cumming Conservative Edmonton Centre, AB
I have a really quick one for Steve Oldham.
Thank you. With the big time change, I appreciate your coming today.
Just to get a sense of the scaling on where your project's at, this is a curiosity question. It's been 10 years. Where's the business plan? When do you think you would be cash positive or in a position where you start seeing some return on that $120 million?
Chief Executive Officer, Carbon Engineering Ltd.
We are building our first large-scale plant. It's going to be in Texas, for a variety of good reasons. It will be the largest direct air capture facility in the world. It will do the work of about 40 million trees. That will go operational in 2023, and that will become a cash-positive plant. Then as we roll out more of those plants, as we make synthetic fuel out of CO2 from the atmosphere to help decarbonize the transportation sector, we expect to build more and more plants. Each plant generates a royalty stream back to Carbon Engineering. It's our very strong intent to remain a Canadian company, and we will then invest back into R and D and build that business.
We will start to have plants that are profitable starting in 2023-24, and that's relevant because we started the business almost 15 years ago. The timeline for investment is 15 years and it's very, very challenging in the private sector to raise money that way.
Conservative
James Cumming Conservative Edmonton Centre, AB
Why Texas, then, rather than another plant in Canada?
Chief Executive Officer, Carbon Engineering Ltd.
The short answer to the question is it's because right now in the United States, the carbon policies that enable direct atmospheric carbon capture are more advanced than the ones we have in Canada. We're in the process of catching up in Canada, I think, but in Texas and the United States, at the federal and provincial level, they're already in place, so the economics for a first plant for us mean the United States.
I very much want to build my second plant in Canada. I am very keen to have the policy support at the federal government level to do so.
Liberal
The Chair Liberal Wayne Easter
That's something we should look into a little further, as well.
Mr. Fragiskatos is next.
Liberal
Peter Fragiskatos Liberal London North Centre, ON
I want to look into it right now, Mr. Chair.
There's a city called London, Ontario, Mr. Oldham, which I have the honour of representing in the House of Commons, so if you wish to talk about a second plant, I'd be glad to connect with you. I know London would love to have you.
Thank you very much to all witnesses for appearing today.
Mr. Oldham, I want to begin with you. I think it's a fascinating story. Let me ask you this. You got $14 million from the federal government of Canada to help start up the business and propel it forward, but why not alternative lending sources such as like banks or angel investors? Maybe you can tell us if you had that experience and how it turned out.
Chief Executive Officer, Carbon Engineering Ltd.
With regard to angel investors, yes, some of that $113 million that we've pulled in from private sources came from angel investors. Our largest owner is actually Bill Gates, from his own private investments. He can probably afford to take a bet or two on new technology. We also got support from Michael Hutchison, who is a private individual in British Columbia, and a couple of others as well. However, it's hard to get that money. It's really hard to get the attention of billionaires or those types of early-stage investors.
On the equity side—
Liberal
Peter Fragiskatos Liberal London North Centre, ON
Sorry to interrupt you, but I want to zero in on that. Is it difficult to get their attention because one might not have the networks that allow you to get their attention?
Can you go into that? I think it's a really crucial point.
Chief Executive Officer, Carbon Engineering Ltd.
Let's use the example of Amazon.
Jeff Bezos has just announced a significant fund for climate innovation. How do I get a hold of Jeff Bezos? I have no idea. We got to Mr. Gates because our founder knew somebody who knew Mr. Gates. Those connections are important.
On the banking side and the equity side, when I first joined the company, we were almost out of money, and it was extremely hard to find any private equity source or any venture capitalists. I went all the way around Vancouver, all the way around Toronto and Silicon Valley, looking for funding. Today, the phone rings every day with people who want to put money into our company, which is great, but that was not the case two and a half years ago, before we'd proved the technology could work.
It's a risk profile. As an investor, you look at the combination of technical risk, market risk, regulatory risk—some of the points raised here—and small early-stage companies really struggle with that.
Liberal
Peter Fragiskatos Liberal London North Centre, ON
Thank you very much for your persistence. It's great that the investment seems to have certainly paid off.
Can you talk about your experience with the clean growth fund? I know that prior to 2015, the focus of the strategic innovation fund did not take into account projects that had an environmental focus. The auto sector was prominent, and other sectors were prominent, but not the environment.
How has your experience been with the clean growth fund?
Chief Executive Officer, Carbon Engineering Ltd.
There are two things about the clean growth fund that affected us.
The first is what you said, which is that they put an emphasis on trying to find technology sectors that would be key growth sectors in the 21st century. They applied a bunch of experts to look at candidate investments in that area. That was great. It gave us a target to aim for inside government.
However, the other thing is that one of the challenges you have in a small company is that there are many different government departments that you can talk to, so you end up putting proposals or efforts and ideas into multiple different government departments, and you're not quite sure which one is the right one. What the clean growth hub has done is it has listened to those proposals, consulted among government areas and said, for example, that this isn't really the right thing for the strategic innovation fund, but you should go talk to SDTC.
That really optimizes the process, because then you know who you're talking to. You don't have to put in five or six proposals and hope one of them gets looked at. It's been an efficient method for us to target who we need to go talk to.
Liberal
Peter Fragiskatos Liberal London North Centre, ON
Thank you very much.
I'd like to go to Ms. Paish.
Ms. Paish, $153 million, if I'm not mistaken, from ISED is what the supercluster has received. How has that money been spent?
Chief Executive Officer, Canada's Digital Technology Supercluster
The $153 million was declared to be invested in our supercluster.
At this stage, we have paid claims of $3.6 million. The way this works is that once you go through that big process I described earlier and you come out the other end with a project that's contracted, and you reach your milestones, you can make a claim. We have paid $3.6 million. That has been paid across 60 discrete organizations, one-half of which are small and medium-sized enterprises.
We have a staff of 18, plus six contractors. We've grown from one. I was employee number one. We've grown up to that staff, and so some funds have gone there.
The rest will be deployed as projects hit their milestones. We have selected 21 projects so far. They have a total budget right now of $60.5 million. Our investment in that is...$24.2 million. I just had the wrong numbers in my mind.
Liberal
Chief Executive Officer, Canada's Digital Technology Supercluster
Our investment in those projects will be $24.2 million, of which $3.6 million has been deployed. The rest will be deployed as they hit milestones. The rest of the money will be deployed as we approve projects going forward.
Liberal
The Chair Liberal Wayne Easter
We're going to end that round there.
We have time for four more questions at about three minutes each. We'll start with you, Mr. Lemire. I don't know whether Peter wants one or not. I doubt it.
Sébastien Lemire Bloc Abitibi—Témiscamingue, QC
Thank you.
Ms. Paish, I will continue along the lines of the question raised by my colleague.
How will you ensure that the results of your supercluster also reach the smallest players? Are there any credits for that, or would you need additional funding to ensure that your knowledge can benefit as many smaller businesses as possible?
Chief Executive Officer, Canada's Digital Technology Supercluster
Our supercluster is composed of large companies, small companies, and research and post-secondary institutions.
Right now, in terms of the number of companies involved, 50% of our companies involved are SMEs. In terms of the investment in our 21 projects to date, approximately 50% of that investment is in SMEs. We are heavily focused on the small and medium-sized enterprises coming into our supercluster, because they benefit to grow.
Bloc
Sébastien Lemire Bloc Abitibi—Témiscamingue, QC
Thank you. In that sense, I assume you have to take action across the territory, not only in British Columbia, but also in the more rural regions of that province, of Quebec and of other parts of Canada.
Are you surprised to discover certain technological challenges, especially in terms of connectivity? We have with us a witness who talked about broadband Internet, and we are also talking about cellular networks. Are you sometimes surprised by technical challenges? Should the federal government invest additional funding to ensure that all Canadians and businesses are finally connected?
Chief Executive Officer, Canada's Digital Technology Supercluster
There are two questions there. I'll try to answer both very quickly.
We're located in British Columbia. We are Canada's Digital Technology Supercluster. We have now received submissions from across the country, from Atlantic Canada, Montreal, Ontario, the Prairies and B.C. We have a strong reach.
When we talk about broadband access, it is an issue that affects British Columbia as well as other provinces, and it does impact the ability of small and medium-sized enterprises to grow in rural communities.
It also impacts something else that we're focused on. In the superclusters, in ours, we are very much focused on developing an effective, diverse, digitally trained talent pool. We talk a lot about digital training, and training for people in remote, rural and indigenous communities. If you can't get on the Internet, then you can't access that training. Advancing and exploring ways to accelerate access to broadband is really important, and we are actually looking at that right now for British Columbia.