Industry Committee on May 4th, 2021

[Mark Zacharias]

Thank you to the member. I see a yellow card, so I'll be very quick.

Yes, the technology is robust. Yes, it does sequester carbon. It could use some tax incentives similar to those in the U.S. It has a 45Q tax credit that gives a $50-per-tonne incentive to store carbon underground. Canada has a significant amount of basaltic geological formations as well as used oil and gas reservoirs in which you could store CO2.

[The Chair, Liberal, Sherry Romanado]

Thank you very much.

Mr. Lemire, you have the floor for two and a half minutes.

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

Thank you, Madam Chair.

I will continue with Mr. Chornet of Enerkem, so that I understand what is going on as well.

Mr. Chornet, you have a green end product, ethanol or methanol, that reduces greenhouse gases. You produce this fuel from a renewable energy source, hydroelectricity.

On the other hand, I understand that the Clean Fuel Standard has implications for your operations, including the price at which you are able to sell to a market like California. That is because the emissions factor is based on a Canadian average, and we know that, in the rest of Canada, they can use oil derivatives or oil itself for production.

Does the Clean Fuel Standard carbon rating hinder you?

Also, what are the economic benefits of what you do at Enerkem?

[Michel Chornet]

Thank you for the question.

Yes, the Canadian average is hurting us. In its low-carbon fuel standard, California has determined that electricity generated from renewable sources like hydro has a zero carbon footprint. The same is true in Europe. In Canada, on the other hand, they determined that its carbon footprint is bigger, and that hurts us.

The construction of an Enerkem plant generates about 500 jobs. During its operation, which will last at least 25 years, we're talking about another 100 jobs. That represents an economic impact of $85 million in Quebec and Canada.

Our technology offers a way to energy transformation in Canada. You were discussing the oil industry earlier. We have a partnership with the oil industry, a strong partnership with Suncor. It's a perfect example of how industry sectors can be complementary: Suncor has the operating expertise, we have the innovation and research and development expertise. Together, we're able to deliver Canadian solutions that reduce greenhouse gases and create high-quality jobs.

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

So you are proposing that we divert from landfill. It is well known that diverting residual waste can produce ultimate waste. You are therefore in a pure circular economic model, since you are powered by forest biomass, among other things. Is that right?

Can you tell us about this circular economic model?

[Michel Chornet]

What Enerkem does is advanced recycling, in symbiosis with the mechanical recycling we hear about more often: sorting centres, composting or biofuel recovery. Over the past 30 years, only 12% of all waste has been recycled, so the majority of products still need to be recycled. At Enerkem, we go after the materials that are not recyclable, to do advanced recycling.

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

Thank you.

[The Chair, Liberal, Sherry Romanado]

Thank you very much, Mr. Chornet.

I know that you didn't get the opportunity to finish your explanation. If you want to send a document to the committee to explain the circular economy or your point of view, feel free to send it directly to the clerk.

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'm going to move to Mr. Cochrane.

With regard to the U.S. and U.K., you mentioned that they were raising corporate tax cuts, but they're also moving into finding other revenue streams.

How out of step is Canada right now not addressing, I guess, some of the profiteering that's taking place during COVID-19? Other countries are doing some adjustments. There have been even preferential government treatments to companies that have really enjoyed some excess profits at this point in time. The telecom sector, for example, is one. Bell took in hundreds of millions of dollars and, at the same time, has had significant profits.

[Dr. D.T. Cochrane]

It's hard to say at this moment that Canada is out of step, but the fact that there has been very little discussion spurred on by what has come out of the U.S. and the U.K. governments is worrying. The current Canadian government prides itself on being progressive and is currently being eclipsed in terms of progressive tax measures by the Biden administration and even by the Conservative U.K. administration.

We have seen that the pandemic has been K-shaped. A study by Canadians for Tax Fairness identified over two dozen corporations that enjoyed record profits during the pandemic. While lots of people were struggling to make ends meet, some companies were managing to bring in higher profits than ever before, and they were sending those profits to their shareholders, many of whom had become rich because of decades of the carbon subsidy.

It's been a little bit disconcerting to hear people complain that the fossil fuel industry is not getting the credit it deserves when the fossil fuel industry has been incredibly overdeveloped because we had the carbon subsidy in place.

[Brian Masse, NDP, Windsor West, ON]

I'm sorry to cut you off, but I'm going to run out of time.

How important is it to redirect or redistribute to small businesses, say for example, who right now are really struggling, and to keep them in some type of structure to be able to compete afterwards?

I'm worried about small business getting side-swiped during all of this and a lot of bankruptcy.

[Dr. D.T. Cochrane]

Put the money there. Support them. Support those small businesses. Support the local economy. Support the things that will keep our communities thriving. If the concern is that the debt is growing, then you can find the money where it is, which is with the wealthy.

[Brian Masse, NDP, Windsor West, ON]

Thank you.

Thank you, Madam Chair.

[The Chair, Liberal, Sherry Romanado]

Thank you very much.

We will now go to MP Dreeshen.

You have five minutes.

[Earl Dreeshen, Conservative, Red Deer—Mountain View, AB]

Thanks again.

One of our previous studies was on the activities of state-owned enterprises, and we've just completed that. One of the issues there has to do with mining operations. Of course, we have operations here in Canada, and as we heard in one of our last panels, there's concern that Chinese investors want to come here and be part of this new electric vehicle push as far as mining is concerned. That's something that we have to be aware of.

From multiple independent studies, we know that the use and regulation of subsidies to force installation of costly renewable energy generation in Canada has reduced income and employment here while it has benefited the suppliers of solar and wind generation equipment in other countries. Largely, these are from China. For example, six of the top 10 solar panel manufacturers are Chinese, the result of a deliberate strategy by the Chinese government to dominate that market. Foreign dominance of manufacturing characterizes the production of wind turbines as well, only in that case the centre is in Europe.

One of the things we try to talk about is what Canada will do as we try to get into this new push as far as mining is concerned.

Let's take a look at what China has done. There's an area in China, I don't know how deep it is, but it's 19 square miles of land that has been used to produce solar panels. If you work that out, for every man, woman and child, you take a coffee cup and that's how much area has been taken just for solar panels, however deep that happens to be. We seem to forget and think when it happens someplace else in the world it doesn't matter. If it was on our front lawn, maybe we would take a little different look at this.

My concern is that we aren't paying attention to these other countries that are poised to take over from us, and if they can't manufacture here, they'll go to some other country. Therefore, the competition and the opportunities for these companies that are Canadian based will be very difficult in terms of ensuring their success.

Mr. Zacharias, you've been involved in this and you understand what is happening in the rest of the world. How confident can we be that we aren't going to be overtaken by some of these other countries that actually don't have our best interests in mind?

[Mark Zacharias]

Member, that's a good question.

My response to that in terms of how to prevent all our purchasing going overseas to purchase things that could be made here in Canada, again really comes back to a buy clean type of approach. What the Biden administration is looking at in terms of the buy America approach, the Canadian version would ideally be where we would look at carbon content standards of metals, materials and products and goods that would come into Canada, and if those don't meet a threshold, they can't come in.

That would incent a number of things. One is that the manufacturer of those things would be here in Canada and scale up our manufacturing. Two, once that happens, we would be able to reach a sufficient size in terms of some of our industries, by which we'd get export into other markets because we would have low-carbon, sustainably produced products. Three, if those things are manufactured in Canada that will support a clean economy including mining, they will also ideally use Canadian metals and minerals in their production.

Those discussions are ongoing. Minister Wilkinson and Special Envoy Kerry made an announcement two weeks ago around looking at greening government. That is the first step down this path to address some of the issues you bring up.

[Earl Dreeshen, Conservative, Red Deer—Mountain View, AB]

Okay. I'm in the last minute now.

We talk about the U.S. and we talk about Canada. We should understand or respect the fact that metallurgical coal is coming out of the northwestern U.S., going through our Vancouver port and heading over to China to help them produce steel, which they then ship back to Canada and undercut our steel markets here. Those are issues that have to be worked into the calculations when we look at just where we're getting this from, who's winning and who's losing.

Thank you very much.

Do you have any quick comment on that?

[Mark Zacharias]

Member, I fully agree with you.

We have an enormous amount of Canadian met coal that comes out of British Columbia. It's moved over to Asia. It's used to produce steel, and that steel comes back into Canada. Meanwhile, we have a very robust steel manufacturing industry here in Canada that could potentially use Canadian inputs. Therefore, I agree with you.

[Earl Dreeshen, Conservative, Red Deer—Mountain View, AB]

That's great, as long as people will let us use it.

Thank you.

[Pierre Poilievre, Conservative, Carleton, ON]

Is it my turn, Madam Chair?

[The Chair, Liberal, Sherry Romanado]

Actually, Mr. Poilievre, you're out of time. That was the five-minute round. My apologies.

We'll now go to MP Erskine-Smith.

You have five minutes.

[Nathaniel Erskine-Smith, Liberal, Beaches—East York, ON]

Thanks very much, Chair.

For a moment I think maybe Pierre thought he was a Liberal. We all have those moments.

My question is for Clean Energy Canada, as a starting point. It's specifically in relation to training.

We heard from a previous witness that when we look at the total expenditures in the government's green recovery plans to date, that training is not really keeping pace. We heard from Céline Bak that 15% of the total spend typically is, and ought to be, focused on training.

Can you speak to that aspect of the Canadian plan? Is that, in your view, an area that is underdeveloped and needs greater investment?

[Mark Zacharias]

It's a good question.

I am not aware if Canada is in front of, behind or equivalent to other nations in terms of training a workforce that's going to be aligned with the green economy.

I know provinces and territories have stepped up their game over the last several years to make sure there are programs that will support where a new economy is going. I'd be happy to take that offline and provide you some information on it.

[Nathaniel Erskine-Smith, Liberal, Beaches—East York, ON]

Yes, anything you can send to the committee as a follow-up in writing would be appreciated.

My second question is about buildings.

In past testimony, we have focused on buildings. Specifically, the government moved forward in the recent budget with a $4.4-billion plan for home retrofits. How that will layer onto existing municipal plans, at least here in Toronto, remains to be determined.

When we look at the focus on commercial buildings—we see that from the Canada Infrastructure Bank—we don't really see the scale of investment required, from what I can tell. I am curious about your thoughts on this for public buildings and community buildings. There is a very modest fund to this extent. As it relates to retrofits, do you think there is much more work that needs to be done?

[Mark Zacharias]

Yes and no.

Buildings produce 12% of Canada's total emissions. Compared to oil and gas at 26%, or transportation at 25%, that's much smaller, but it's still material.

I agree with you, the $4.4 billion in terms of the home retrofit loans will go a long way to help buildings.

I think provinces and territories do have provincial or territorial incentives. They vary across Canada in all landscapes.

I would agree there is more work to be done. It's not immediately clear to me exactly what that work would be or where the highest return on investment would be, both from a geography perspective and with regard to the type of building.