Industry Committee on April 29th, 2021

[The Chair, Liberal, Sherry Romanado]

I apologize, Mr. La Salle, we are out of time. Perhaps you can continue your response in an upcoming round of questions.

We'll now go to MP Masse.

You have two and a half minutes.

[Brian Masse, NDP, Windsor West, ON]

Thank you, Madam Chair.

I will ask Mr. La Salle a question.

With regard to the perspective of what's going on in the United States, Ford just announced another investment into battery manufacturing in the Detroit region last week. Missing again was Canada in terms of investment.

What's your take on the fact that the U.S. is moving towards battery plant expansion and development, including the traditionals, including General Motors and Ford? We haven't seen FCA, Fiat Chrysler, yet, but they might be next.

[Benoit La Salle]

You're absolutely right. They have stated that publicly, that they're now looking to Canada to supply the critical materials. They are opening up all these battery plants. There will be about 20 of them. There are currently 20 battery plants in construction in the United States and they don't even know where the actual input is going to come from. On the mine we're bidding for, there are two Americans that are completely backed by the U.S. Department of Defense or by the federal government to come and buy the lithium from this project.

When we see all these announcements and we think it's great, and Mr. Biden and all the billions of dollars, because they're all going electric, they're turning back to us.

We don't have a problem. We don't have a battery plant here in Canada, but at least let's sell them finished products.

We mine lithium. We turn that into spodumene. We sell it at $600 a tonne. We turn that into lithium hydroxide, which is $14,000 a tonne. Do you see the difference?

The foreigners who are trying to buy the mine are not going to do the hydroxide here. They'll do it in North Carolina, in Australia, in China, whereas we're saying, no, we're building the hydroxide line in the plant immediately and we'll sell that.

Right now, hydroxide is $14,000 a tonne and people think it will go to $30,000. Spodumene will go from $600 to $800.

[Brian Masse, NDP, Windsor West, ON]

Thank you, Madam Chair.

[The Chair, Liberal, Sherry Romanado]

Thank you very much.

We'll now go to MP Baldinelli.

You have five minutes.

[Tony Baldinelli, Conservative, Niagara Falls, ON]

Thank you, Madam Chair.

Thank you to all the witnesses for joining us today.

I just want to build on some of the comments and questioning of one of my colleagues earlier with regard to the support required for assistance for small and medium-sized enterprises. I'll refer back to our last session when we had two organizations saying that sometimes those small and medium-sized enterprises have a difficult time accessing not only the resources available for assistance but also the technological assistance and support they would need to bring forward the changes that are required.

I'll go first to Ms. Manuel with GreenCentre Canada.

You talked about the commitment from the federal government of that $1 billion over five years to attract private sector investment in clean-tech projects. If you could, build on those obstacles that stand in the way of those small and medium-sized enterprises that try to leverage, develop and grow from the assistance that could be provided.

[Lynne Manuel]

The companies that we work with are very nascent, very young. They are start-ups and entrepreneurs. Many of them come from an academic background. They are trying to commercialize technologies that were developed by universities. Very often they have a great idea and they have enough to put some initial patents together and do a little bit of work, but at that point they're a bit stymied.

In clean tech there is often the need to do quite a bit of technical work that requires laboratories, people with expertise and analytical equipment. All of this is very expensive. People working one-off alone by themselves also aren't nearly as productive as people working in groups, so at GreenCentre Canada we provide that expertise. It's very much faster for the companies that are accessing it than trying to pull all these things together. They don't have the money. They also don't have the experience. They're focused on trying to run their businesses. We tend to help them figure out what it is they need in order to get over the hump so their technology becomes investable. That's what we do.

We have over 100 years of person experience in our lab, so it really makes a big difference when you apply that kind of knowledge to these problems.

[Tony Baldinelli, Conservative, Niagara Falls, ON]

Is there a gap, in a sense, in those small and medium-sized enterprises knowing that your services and others like ERA exist out there to assist? When those small businesses need help, how can they find it?

[Lynne Manuel]

You're right. That can be a gap. At times we've run several programs. We're quite well networked across Canada because we run some NRC IRAP-sponsored programs, so we get in touch with a lot of different companies. With the IRAP program, it's SMEs that are more at the revenue-generating end of things. We've worked with a lot of start-ups through several programs that we've had in the past few years.

Our most recent program ended in March 2020, just 13 months ago. We canvassed all across Canada very quickly to find seven projects in that year. We completed those projects. Those companies have since gone on to raise $45 million and hire 60 people in Canada.

If we can put the word out that these programs are available, there's very good uptake. Certainly, creating more of a national ecosystem and network with regional offices set up to really look in the various regions to find the best opportunities would be even better.

[Tony Baldinelli, Conservative, Niagara Falls, ON]

Thank you so much.

I quickly want to follow up with ERA Environmental Management Solutions..

Gary, you spoke earlier about the impact on the automotive sector and I was hoping you could follow up a little bit more. I also come from a riding like Mr. Masse's. We have a General Motors plant just next to my riding. In fact, I spent four summers there. They put me through university working there.

As we transition to a greener economy—they're an engine plant facility—what are those impacts? What are those decisions? What are those things that GM is going to be looking at as it moves forward to newer technologies and means in engine production?

[Gary Vegh]

The drivetrain, as you can imagine, is changing with electrification, so the battery plant is a good part of the discussion. The efficiency of the plants themselves—how they manufacture and release to air, water and the land—are huge investments. Any plant is worth over $1 billion U.S. We're seeing it ourselves.

I think I mentioned FCA, which is now Stellantis, and a brand new plant in downtown Detroit. We do see investments there in Oakville, Ontario, with Ford, not just on the consumer side—regular vehicles—but also on the commercial side with trucks. We hear contracts with Amazon and their companies are happening. Even Hydro-Québec is advertising here in the province of Quebec about transportation of homegrown produce through the winter with electric vehicles, so that's also slowly taking shape.

[The Chair, Liberal, Sherry Romanado]

Thank you very much, Mr. Vegh.

Unfortunately, Mr. Baldinelli, that's your time.

We'll now to go Ms. Lambropoulos for five minutes.

[Emmanuella Lambropoulos, Liberal, Saint-Laurent, QC]

Thank you, Madam Chair.

When I first proposed this study on the green recovery several months ago, I was really looking forward to helping our government find a way forward, and to hear from as many witnesses and experts as possible in order to make sure we did things in a responsible way, but that we got the job done.

Obviously, we're looking at a moment in history where we have a unique opportunity to build back better, because of a pandemic. It's an opportunity we don't necessarily have presented to us all the time.

Today we heard many of our witnesses express some concerns, and express some of the consequences we can face if we go about this the wrong way. Obviously, we want to get to net zero emissions within the next decade or two. However, I'm hearing that our natural resources sector could definitely suffer if we were to go about this the wrong way. We don't want to be dependent on any other countries in the future, so we need to come up with a plan. We need to really measure and make sure we do this the right way.

What are the things we should be taking into account when creating a green recovery plan? How would we assess that this is the right way to go?

Mr. La Salle, you talked about the natural resources that we have here in Canada, and you said that foreign companies are buying up our resources and using them.

Given that the goal of the Government of Canada is to become greener in the future, what would you recommend to them in that regard?

Transportation is a huge reason for a lot of the air pollution we have. If we hope to get to a place where we only use electric vehicles, how do we leverage this? How do we take our natural resources into account to make sure we have a sustainable path forward?

[Benoit La Salle]

Thank you. That's a very good question.

We saw this in the 1990s. The government wanted to set up an industrial strategy for aeronautics. We were not yet a major player in that sector, but the government had decided to set up such a strategy so that we would become one.

There are people here who are much more qualified than I am to talk about industrial strategies in terms of integration, but we have the raw materials. If we didn't have them, we could just watch the train go by and hope that it doesn't cost too much at the end of the day, much like we do with COVID-19 vaccines. We're looking at the situation and hoping to get vaccines.

However, in this case, we have the raw materials. We own them. We must not sell them. We need governments to put an industrial strategy in place, which is not that expensive. The difficulty lies with having the natural resource, and we have it. It is important that an industrial strategy be put in place so that primary and secondary processing can take place in this country. We need to solicit local people—we have intelligent people—to turn to the manufacture of anodes or cathodes. We need to move toward integration.

We have a great company, Lion Electric, that makes school buses and is going to take over the world market. Do you know that the ore travels 35,000 kilometres from Quebec to China and then back to Lion Electric? This is not economical and it is certainly not environmentally friendly. We have to stop this right now. We have the natural resources. The ore must stop travelling and we must have an industrial strategy. We also need financial support, whether in terms of capital or debt, through development banks like Export Development Canada. With a strategy like this, we'll develop our natural resources properly.

[Emmanuella Lambropoulos, Liberal, Saint-Laurent, QC]

Thank you very much.

I don't have time for another question, but I would like to thank all the witnesses.

ERA, I'd like to specifically and particularly thank you for your presentation. You are actually in my riding of Saint-Laurent, so I appreciate your being here today. You offered a lot of really good information on plastics and waste.

[The Chair, Liberal, Sherry Romanado]

Thank you so much.

We'll now start our third round of questions, and the first round goes to MP Poilievre for five minutes.

[Pierre Poilievre, Conservative, Carleton, ON]

Thank you, Madam Chair.

Mr. La Salle, you mentioned minerals from China that are used to make electric cars. Yet China's environmental standards are lower than ours.

When you take into account all the environmental consequences of the activities associated with producing an electric car and those associated with producing a gasoline-powered car, how does the environmental cost associated with using an electric car and the cost associated with using a gasoline-powered car compare?

[Benoit La Salle]

That is a very good question.

Your question has two parts.

The first is the lack of respect for the environment in China. I will only talk about cars, I will not talk about the batteries that are used to store energy. European companies have set traceability criteria. That is why cobalt from the Democratic Republic of Congo and other countries is not acceptable. All German companies, including BMW, and French companies, have set traceability criteria. For us, this is an opportunity, because even if there are no battery manufacturers in Quebec or Canada, we can still export to Sweden. There is a very nice...

[Pierre Poilievre, Conservative, Carleton, ON]

I apologize for interrupting you, but I don't have much time.

If you consider all aspects and activities surrounding the production and use of the gasoline car and the electric car, how do the environmental costs of these two cars compare? Which one offers the greater environmental benefit?

[Benoit La Salle]

Several studies on this topic show, among other things, that it depends on mileage. Previously, what put the electric car at a disadvantage was battery recycling. When you had to recycle the battery after 10 or 20 years, the environmental cost of an electric car became roughly equivalent to that of a gasoline car.

However, all car batteries will now be reconnected together in huge containers, and they will be converted into batteries for energy storage. This will make the electric car more environmentally competitive than the gasoline car.

There are a lot of studies on this and you are right that it is not that obvious.

[Pierre Poilievre, Conservative, Carleton, ON]

Every time you see someone in an electric car, you think they are doing a lot for the environment. However, that's not necessarily the case when you consider all the materials and minerals used to make the car, which come from mines in China. I'm thinking in particular of coal, which is currently used for electricity generation.

When you take these factors into account, it's not clear that electric cars, right now, have a huge advantage over traditional cars. There's a big debate about that. Is this an accurate description?

[Benoit La Salle]

That description is very accurate.

[Pierre Poilievre, Conservative, Carleton, ON]

Thank you very much.

I just think we have to be very careful about what seems to our eyes to be green versus what is actually green. I think in Ontario the government signed the so-called green energy contracts that overpaid for electricity through wind and solar power. This had the effect of actually driving more electric activity out of the economy and into more polluting jurisdictions where energy was cheaper.

Also, it made sure that things like geothermal to heat your home are less economical, because the electricity that you have to buy in order to power the geothermal system is far more expensive here in Ontario due to these so-called green energy contracts. It's also more expensive to power up your electric car in Ontario because of these so-called green energy contracts. When we could have just bought affordable electricity from Manitoba and Quebec, which is clean, green and proven, we instead wasted enormous sums on these contracts.

Things that appear green to our eyes are not always so green.

[The Chair, Liberal, Sherry Romanado]

Thank you very much, Mr. Poilievre, and I'll just tell you that I do enjoy my plug-in hybrid. I'll just mention that.

[Pierre Poilievre, Conservative, Carleton, ON]

Congratulations.