Evidence of meeting #39 for Finance in the 43rd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was projects.
A recording is available from Parliament.
3:25 p.m.
Liberal
The Chair Liberal Wayne Easter
Thanks, all of you.
Ms. Dzerowicz, you'll wrap it up. You have four minutes.
3:25 p.m.
Liberal
Julie Dzerowicz Liberal Davenport, ON
Thanks so much, Mr. Chair.
Thank you, Ms. Ropar, Mr. Casola and Mr. Morley, for joining us today and for being so great with all these questions.
In my riding of Davenport, it's very clear that my constituents want to make sure that as a national government we don't reduce our focus on climate change and moving to a more sustainable low-carbon economy. I have two questions related to this.
One, how are you ensuring that you're picking projects that will help Canada become more sustainable? Two, as you're picking infrastructure projects to invest in, how do you assess the risks that represent climate change and how does the bank plan to mitigate those climate risks?
3:25 p.m.
Chief Investment Officer, Canada Infrastructure Bank
I'll start. Annie, if you want to chip in, that would be great.
It's very much a focus of everything we do. We are actively involved, to build on Ms. May's question, in interties in transmission to the north. Anything that results in getting remote communities off diesel is a good thing, and we're actively exploring models for that.
We are looking at renewable projects where it makes sense to do so. In other words, if there's a funding model in the market where they can get private sector capital, they don't need us, but there are instances where some of the risks involved do need us because of the peculiarities of the market and so on. We have a funding project in the Pirate Harbour Wind Farm in Nova Scotia, where the main benefit of that project really is that it helps to balance the Nova Scotia grid and provide more reliable power to that entire province.
The lens goes beyond renewable projects. We're looking at storage projects, at battery and pumped storage, and at all types of projects across the country. In addition, even when we're looking at transit projects, we're always looking at the option of electrification. There's always a cost trade-off, obviously, and those are policy decisions that public sponsors will need to make, but we always put those options on the table for consideration and try to get some measure through external validation of GHG reductions value.
Everything has a value and everything has a cost, so we view it very much as our job to do the work and to put good and valid options on the table for all the levels of government with which we collaborate.
3:25 p.m.
Liberal
Julie Dzerowicz Liberal Davenport, ON
Thank you.
Do you have anything else to add, Ms. Ropar, or can I go to my last question?
3:25 p.m.
Chief Financial Officer and Chief Administrative Officer, Canada Infrastructure Bank
No, I have nothing to add there. Thank you.
3:25 p.m.
Liberal
Julie Dzerowicz Liberal Davenport, ON
This is actually a question that our chair raised. I think there was some confusion around subsidy versus loan. Is this maybe the right moment for someone to clarify? I think we started off with grants, moved to loans and then moved to subsidies. Can you provide a very clear definition of what it is that we're actually providing in terms of loans or subsidies?
3:25 p.m.
Chief Financial Officer and Chief Administrative Officer, Canada Infrastructure Bank
I can start.
I agree that a lot of terms and terminology are being mixed together. A loan is a type of product that we would contribute to a project. It could have varying interest rates attached to it, but it is just one product, if I can call it that, or one type of instrument that we can use. As we've mentioned before, we can use equity or some other form of financial instrument to fill the gap in the capital structure of a project. That's how we frame what our opportunity is set on and the things we can offer to a specific project.
3:25 p.m.
Chief Investment Officer, Canada Infrastructure Bank
I'd like to make one short comment, to add to that.
I think it's important to separate the actual capital that we provide, the big number of dollars, from the interest rate or the return that we charge, the interest rate and prime. The actual capital, taking the REM as an example, is roughly $1.3 billion. That is not a subsidy or grant; it is a repayable loan. Where the subsidy portion of it may come in is if we charge an interest rate of 1% and they would have been paying 3% or 4% if they went to the market. The difference between the 1% and the 4% could potentially be characterized as a subsidy. However, that doesn't negate the fact that using that structure, we still get the $1.3 billion back and wouldn't in a full grant scenario. I'll just leave it at that.
3:30 p.m.
Liberal
The Chair Liberal Wayne Easter
I think that is helpful.
Witnesses, thank you very much for your appearance today. I think we had a great discussion on a number of fronts and cleared up quite a number of issues. Certainly we want you investing intelligently. It is taxpayer money.
Committee members, we get a bit of a break because of what's happening with maintenance in Ottawa, so the next meeting will be on July 7. There will be two panels. One is the Financial Consumer Agency of Canada. The second panel will be the Office of the Superintendent of Bankruptcy Canada.
I want to thank committee members for their endurance over the last four or five weeks. We've heard from about 350 witnesses, so members are to be commended for all their efforts.
Thank you again to the witnesses. I wish you well in all the work you do on behalf of Canadians.
With that, the meeting is adjourned. Have a good week.