Evidence of meeting #32 for Industry and Technology in the 45th Parliament, 1st session. (The original version is on Parliament’s site, as are the minutes.) The winning word was technology.
A recording is available from Parliament.
Director, Global Intelligence Knowledge Network
The implementation of any communications device that also attaches itself to an electrical grid or any other power supply in and of itself opens up opportunities for a foreign adversary state to take advantage of or disrupt that energy.
Conservative
Ted Falk Conservative Provencher, MB
What are some of the precautions that you think Canada should be taking?
Director, Global Intelligence Knowledge Network
It's difficult to say what precautions can be taken in relation to the importation of 49,000 Chinese EVs. From what I've identified today, the bigger risk is in not taking a stronger look at why these EVs are coming to Canada and what threat they pose.
In relation to providing information about what we can do to try to mitigate these threats, that would be better left to individuals who have a more technological understanding of the integration of this technology.
Conservative
Liberal
The Chair Liberal Ben Carr
Thank you very much, Mr. Falk.
Mr. Bardeesy, the floor is yours for five minutes.
Liberal
Karim Bardeesy Liberal Taiaiako'n—Parkdale—High Park, ON
Thank you very much.
I want to start with Mr. Kabbara. Given your commentary about the tailpipe emission standards being, perhaps, important as an investment direction signal, could you elaborate a bit more on that and on what kinds of signals it sends exactly?
Chief Executive Officer, The Transition Accelerator
Let's think about electricity system planning. If you look at utilities, they're supposed to plan what the grid is going to look like and where they're going to put their investments. When you're telling them that we're going to have a bunch of EVs coming online but they don't have any idea of whether it's going to be 100,000 or 300,000, that really impacts their ability to plan for that growth.
When we're looking at planning for growth, would this act as an investment anchor, in the sense that it anchors the demand in something that can be tangibly calculated so that they can look at the distribution investment they're going to do? Similarly, for the charging infrastructure people, having some idea of how the market is going to evolve is going to be really helpful for something that is changing very rapidly.
Liberal
Karim Bardeesy Liberal Taiaiako'n—Parkdale—High Park, ON
The internal combustion engine associated manufacturing sector can take gas stations, in a sense, for granted. They don't need to help prime in any way the existence of the gas station infrastructure on which they depend, but the situation with electric vehicles is different. Could you elaborate a bit on that?
Chief Executive Officer, The Transition Accelerator
There's a very simple reason for that: 90% of the time, people are not going to charge at these things. Charging networks are not actually analogous to gas stations, because their utilization, by definition, is that when you go home—you have a garage at your place or a driveway—you're going to plug in your car and you're going to wake up with a full charge. The data we've seen is that 90% to 95% of the time, that's what's going to happen, but if you're going on a road trip or you're taking a longer trip a few times a year, you're going to need public charging.
The idea is that the business case, inherently, is challenging for charging infrastructure. That's why I mentioned that there is going to be high highway usage, for which there's going to be a good business case. There are cases in which there will never be a business case. Maybe that risk can be shared, and a charging operator can have a portfolio in which some make money and some don't, and then it balances out. However, I think that public money is really needed to help grease the wheel so that we can actually have a self-sustaining model.
Liberal
Karim Bardeesy Liberal Taiaiako'n—Parkdale—High Park, ON
My last question for you, Mr. Kabbara, is on GHG standards driving investment. You mentioned the charging and supply chain sector. What about the manufacturers themselves?
Chief Executive Officer, The Transition Accelerator
We know that we want Canada to remain an automotive superpower. We've lost ground in the last several years, as I mentioned. Just look at the trends. We know the future of automotive is electric vehicles. Even the Ontario government, which is a Conservative government, has stated that very clearly. Saudi Arabia stated that very clearly. The idea is that if we can have demand-side policies that can also incentivize the manufacturing of these types of technologies, the GHG standards do that as well.
Liberal
Karim Bardeesy Liberal Taiaiako'n—Parkdale—High Park, ON
Thank you very much.
I have a couple of questions now for Ms. Weitzman.
Ms. Weitzman, thank you. You put on an event in Toronto last week where both I and Ms. O'Rourke spoke and visited with some of the many companies you referred to. My first question is about that network of companies. Could you speak to the state of maturity of the sector in Canada and the number of start-ups that you're starting to see in the sector?
Vice-President, Strategic Initiatives, Clean Transportation, Electric Autonomy Canada
As is typical of Canadian innovation, we have some of the leading companies in this sector. I'll point to a few of them and maybe briefly explain what some of them do.
One start-up that's based in Toronto, where I am, is SWTCH. They have a diverse portfolio they are working on, but they're a leader in condominium charging, where you have electric vehicle stations going into parking spots at apartment buildings or other multi-unit residential contexts. Their technology is best in class, and they work across North America.
Another company, called Polara, is an energy management software company. They were actually incubated at Hydro-Québec, and that technology has been sold to Polara. That platform marries charging infrastructure with energy management, which is obviously very beneficial to grids and also beneficial on a cost basis to operators.
What you're trying to do when you're charging vehicles is flatten electricity demand over a charging session overnight. If you have 50 vehicles, you don't want all of them starting to draw power at the same time. It stresses the grid and incurs higher utility costs generally. What you want to do is to have them roll over and charge in sequence to be operational for the next day. There's amazing technology being developed here.
There are also companies that work on aggregating individual EVs and using those as a managed charging resource. For instance, when the sun is shining and there's an overcapacity of renewables, the piece of software involved here would trigger those vehicles to start charging and essentially suck up all the renewable energy stored in the battery, and then use it as clean electricity to fuel the powertrains when those cars start moving.
Liberal
The Chair Liberal Ben Carr
Thank you very much, Mr. Bardeesy.
Mr. Ste‑Marie, you have the floor for two and a half minutes.
Bloc
Gabriel Ste-Marie Bloc Joliette—Manawan, QC
Thank you, Mr. Chair.
Mr. Kabbara, I'd like to ask you two questions. You'll have two minutes to answer them.
First, while the United States, under the current administration, is turning away from the electrification of transportation, is it possible to establish more partnerships with the European industry?
Second, according to the Parliamentary Budget Officer's assessment, subsidies to Ontario battery plants would be profitable only if those plants sourced minerals and components from here in Canada. Otherwise, the subsidies would never be profitable.
Do you agree with that analysis?
Chief Executive Officer, The Transition Accelerator
On the first question, we should take the opportunity from the U.S.'s slowing down, because it was very difficult before this for us to compete on batteries and EVs in the era of the Inflation Reduction Act under the Biden administration. This is an opportunity for us to try to catch up and potentially win in this area.
We're working with the Europeans and should really focus on harmonizing our vehicle standards with them. That would be a slam dunk, because we've been trying to do this for 25 years. It would be the first thing that could help us import more vehicles from Europe, specifically electric vehicles, and export more to them as well. I think that's a great idea.
As for the second piece on the investments, I totally agree, which is why we've been very clear that we need a whole supply chain approach and to capture more value upstream from vehicle assembly, or even the battery cell itself. If you go from lithium spodumene to lithium hydroxide, you've already increased value creation tenfold. If you go from lithium hydroxide to cathode material, you've already increased value creation. Capturing that value is going to be what helps us get the bang for our buck. The thesis that this is going to happen magically is going to be challenged, but where we're trying to help is by spurring investments upstream from where assembly plants have been located.
Bloc
Gabriel Ste-Marie Bloc Joliette—Manawan, QC
Thank you very much for your answer. It's very clear.
Once again, I'd like to thank the three witnesses for being here.
Thank you, Mr. Chair.
Liberal
The Chair Liberal Ben Carr
Thank you, Mr. Ste‑Marie.
Mr. Falk, I understand that the floor is to be returned to you. You'll have five minutes.
Conservative
Ted Falk Conservative Provencher, MB
Thank you very much.
Mr. Bisson, I'd like to continue the line of questioning we were discussing before about the security concerns with Chinese-made electric vehicles. You had indicated the threat is there, in that they would have access to our power grid. Could you expand a bit more on what you mean by that? How would that work?
Director, Global Intelligence Knowledge Network
As I stated, access to the power grid is.... With electric vehicles, anything that needs to be charged has to be charged through the electrical grid. We have previously seen that the Chinese Communist Party has had interest in Canada's capability to use the electrical grid in a sufficient way, whether it's for battery storage or interconnectivity across provinces.
From an intelligence and threat-related risk assessment perspective, any vehicle that has the technology to communicate and provide information back to the Chinese Communist Party.... The CCP could then take that information, supplement that information and potentially use that information for its own personal, commercial, economic, strategic and, potentially, military goals. On top of that, you also have the issue of the potential to disrupt. If these vehicles are connected and have the technology for them to disrupt the electrical grid system, that could potentially happen.
Conservative
Ted Falk Conservative Provencher, MB
CSIS has previously warned that hostile actors are seeking to pre-position themselves within our critical infrastructure. We know that car manufactures have the ability to shut vehicles down remotely. With the technology that's embedded in these Chinese EVs, what would the capability of the Chinese government be to disrupt our electrical grid?
Director, Global Intelligence Knowledge Network
Unfortunately, it's beyond my capacity to speak to that from a technological perspective. All I can speak to is the fact that the Chinese Communist Party and the People's Republic of China have demonstrated both the willingness and the ability to conduct operations in Canada for the theft of intellectual property, for foreign interference and for espionage. All of this leads me to believe that any integration of technology from the Chinese Communist Party or the People's Republic of China can potentially and will be used for these acts.
As I stated, in 2017 the Chinese government implemented the National Intelligence Law, which means that any company the Chinese government has access to must provide information to state intelligence organizations when it is asked for.
Conservative
Ted Falk Conservative Provencher, MB
By that, you would suggest that these vehicles not only will be able to gather intelligence and provide that information to the People's Republic of China but also will also be able to disrupt, perhaps, our Internet, our power grid and things like that.