Industry Committee on May 13th, 2021

[Brian Masse, NDP, Windsor West, ON]

You seem particularly excited about that. If it's potatoes, I know my friend Wayne Easter, who's not on this committee here today, would be particularly fond of that.

How long has this technology been in development? I'm just curious because it's very clever. How long has this been in the works?

[Geneviève Aubry]

I am not overly familiar with the product, but I believe that MudWizard has been on the market for two years or so. It is already being used everywhere in the world. What's more, TechnoSub is special because it sells solutions, not just products and processes. Buyers of MudWizard also get support from the TechnoSub company, whose mission is to enable its business partners. It helps them to go further. I would invite you to watch their videos on the Internet about the MudWizard technology. You will understand how it works.

[Brian Masse, NDP, Windsor West, ON]

Thank you, Madam Chair. Those are all of my questions.

Thank you to the witnesses.

[The Chair, Liberal, Sherry Romanado]

Okay. We will now go to MP Dreeshen for five minutes.

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

Thank you, Madam Chair.

It's certainly great to have this discussion this morning. Finally, we are having some discussions about the realities of the future of renewable energy, with the reality of the energy that is going to have to come from the non-renewable resources. I think that's really important.

We've talked about the 10 years it takes to develop mines here in Canada. That would be if we didn't have any environmental groups fighting against our having them. I think that's something we need to consider.

I'd like to speak to Mr. Mills. We've talked about a net-zero journey, so when you calculate the full life cycle of global CO2 emissions, is there an opportunity for us to think that it is a realistic timeline to hit by the year 2050?

[Mark P. Mills]

Well, I think the question of realism is that you put it in a calculation and an estimate, as opposed to what we know could happen.

Again, I would refer to the just-released 280-page report by the International Energy Agency, which is the pre-eminent source of information for governments on this particular issue. What you'll find is that they cast doubt on the calculation showing it's possible, given what's going on. In fact, they clearly doubt it; given the world as it is—that is, how we actually access minerals, how we process them, and where they're processed—you can't get there. They're not saying it's physically impossible in the pantheon of science and engineering; it's just not possible given what we now know and what we're now doing.

They give many specific examples. In fact, I would recommend the staff or the committee look at one particular graph they have summarizing data about electric vehicles. Under ideal circumstances, electric vehicles on average cut CO2 emissions, counting the mining and processing. That's on average. But it ranges from something like a 50% to 70% reduction, not zero. This is a big reduction, 70%, but it can go up to a slight increase. The range can involve an increase in CO2 emissions from using electric vehicles.

The fastest way to reduce CO2 emissions, which no one is proposing anywhere in the world, to my knowledge, is subsidizing more efficient internal combustion engines. That's just economic and engineering reality.

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

In terms of the situation, when we talk about electric vehicles, if we did have this great influx of them, the only idea that I'm familiar with is that you'd have to have some massive battery storage projects in order to make that happen. The electrical grid, as we have it, would not be able to manage it. Then we'd be downloading all of this into municipalities in an attempt to be able to supply what they need.

I'm a former math and physics teacher. Perhaps with your physics background you could explain somewhat to folks just how easy that would be.

[Mark P. Mills]

You know, as a former physicist, when I used to practice as one, I would tell people that this was really arithmetic, not physics. We can look at the energy storage capacity of the batteries that are being planned and proposed for the world or Canada or the United States and compare it with the amount of electricity consumed in any given year or any given hour. What you'll find is that even these incredible increases that are being proposed will store minutes' worth, not hours' or days' worth, of electric supply. There's actually no possibility, given current plans, to operate electric grids on episodic power using batteries.

The only feasible means will be to do what Germany did and effectively build two grids, which costs more than twice as much. One grid is wind and solar with some batteries. The shadow grid is about 80% of the original hydrocarbon grid, which is there to provide electricity when the sun and wind obviously don't. It's an extraordinarily expensive solution. It can be done, but it doesn't eliminate carbon dioxide emissions. It just increases mining around the world.

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

I think that's the point.

I know that you did a YouTube presentation that talks about this. If you wish to give the clerk that information, I certainly think a lot of us could learn from that. I will leave that with you.

Thank you very much, Madam Chair.

[The Chair, Liberal, Sherry Romanado]

Thank you so much.

With that, we will now go to MP Jowhari for five minutes.

[Majid Jowhari, Liberal, Richmond Hill, ON]

Thank you, Madam Chair.

Thank you to all the witnesses. This has been quite informative.

I'll start with you, Mr. Mills. You spent a lot of time in your testimony talking about electrical cars, wind and solar, energy material extraction, processing, fabrication and the integrated supply chain. I'd like to talk about another dimension of what I believe is our government strategy around net zero, and that has to do with the hydrogen strategy.

I'd like to get your feedback or your thoughts on the plan we're introducing, starting at the end of 2021, as it relates to the hydrogen strategy. What are your thoughts on this strategy and the role it can play in the green economic recovery?

[Mark P. Mills]

That's a very good point.

The use of hydrogen in many respects is far more significant than the use of lithium batteries as an energy storage mechanism. I think it's important—and I'm sure you know this—that hydrogen is largely unavailable on planet earth. It left a long time ago. We have to produce hydrogen the way we produce electricity. You have to use energy to store it in an intermediate form. Electricity is inherently a clean way to use energy, but we have to use energy to make it. Hydrogen is similar.

I would say, again, when you look at the physical resource and the economic requirements, the same conclusion one reaches is that, given the chemistry we have and the energetics we know on how to make hydrogen, at scales that a country needs, it will take a very long time to have a significant effect with hydrogen. But it will be more significant, faster, than batteries. A fuel cell with hydrogen is also very expensive, like lithium batteries, but far more effective. However, there are no means known to produce at the scale and the prices that society is currently willing to pay for energy. It's a very expensive path, with many technical problems. Hydrogen is hard to store. It embrittles steel. When you store it, it requires much more rigorous safety procedures than natural gas does. Roughly 99% of the world's hydrogen today, as you know, is produced from a process called “reforming” natural gas. It's basically a way to use natural gas more cleanly, but it's roughly twice as expensive as using natural gas to make electricity.

[Majid Jowhari, Liberal, Richmond Hill, ON]

Thank you.

I'm going to go to Mr. Galt.

Mr. Galt, in your released sustainability plan you mentioned that sustainability is a top priority for Husky. You also mentioned that your plastic “packaging and other end products meet specific regional design requirements, particularly with regard to recycling and recycled content in the packaging itself.” I understand that you talked about the waste collection strategy. You also talked about the recycling standards and some of the other jurisdictions that are doing this and about providing incentives for recycling. What I want to get your input on specifically is the recyclability of some of these plastics.

What are your thoughts on that one, sir?

[John Galt]

First of all, almost all plastics are recyclable indefinitely. They're hydrocarbons. They're molecules. If you look at PET, the one that's familiar, in this container for example, it's made out of four primary molecules. They are the same four molecules that make up 96%, by weight, of the human body. That's fundamentally what we're working with.

In terms of the material itself, there are four types of technologies currently available for the purposes of recycling.

The first most and widely used is mechanical recycling, where you chop it up, you wash it and you put it through an elevated temperature and a vacuum to remove volatiles, and reprocess and sanitize it. That's in use in Canada today. About an hour away from Husky's facility here in southern Ontario, there's a company that's been producing these containers for 10 years from 100% recycled material. That's mechanical recycling.

The second is what we call chemical recycling. Chemical recycling actually breaks the plastic back down into its basic materials, and then reconstitutes it. This container right here is made from 25% chemically recycled materials. It's the first time in the world. What's attractive about this technology is not only that it can be used bottle to bottle, but that I can also mix clam shells in with it, I can melt [Inaudible—Editor] in it, I can mix all kinds of materials in it.

What I want to say is that I have these because they are samples that we're providing. Even to simplify it further, if you want me to do that, what you might have noticed is that there's no label, because we're now laser imprinting them, marking the top of the containers to make them easier to recycle. Most caps are made from a different type of plastic. This is the new invention we came up with to make the cap out of the same material as the bottle.

What I'm saying is that they're infinitely recyclable and there's a family of technologies we and others are bringing together to make it even easier and more economical to do so.

[Majid Jowhari, Liberal, Richmond Hill, ON]

Thank you.

Thank you, Madam Chair.

[The Chair, Liberal, Sherry Romanado]

Thank you so much.

I didn't want to cut you off because it's very interesting. Thank you so much, Mr. Galt.

[John Galt]

Sorry.

[The Chair, Liberal, Sherry Romanado]

No, don't apologize.

With that, we'll start our third round of questions.

The first round goes to MP Poilievre.

Mr. Poilievre?

If he's not available, we'll go to the next person and then I'll go back to MP Poilievre.

MP Lambropoulos, you have the floor for five minutes.

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

Thank you, Madam Chair. I'd like to thank all of our witnesses for being here with us today.

My first question is for Mr. Leclerc.

Mr. Leclerc, you talked about the take-up of new clean technologies and you mentioned that technological innovation is at the heart of our efforts to launch a green recovery.

I wholeheartedly agree with you on this in terms of using clean energy. I will come back to the second point a little later.

How can the federal government encourage businesses and the various sectors of the economy to adopt these new clean technologies?

[Denis Leclerc]

Thank you for the question.

The net zero accelerator, which is bringing billions of dollars in investments, is one of the concrete measures provided for in the budget. To speed up the development and use of clean technology made in Canada, Canadian industry players that receive these millions or billions of dollars should have to adopt Canadian innovative technology. We have to build a bridge between our industrial players and the SMEs doing the innovation.

I will make a hockey analogy. You are not going to make the playoffs if you don't give grants to industry players. To make the playoffs, you need a team. This team will be made up of players going from the first to the fourth line. The team will include industrial businesses who are looking for innovation. In Canada, hundreds and hundreds of businesses have developed new technologies and they would like to see them used here in the country.

That's one of the examples from the recent budget whereby Canada can further encourage ties between industrial players and innovative SMEs.

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

Thank you very much. This is fascinating.

My second question is for Mr. Mills.

Mr. Mills, you spoke about clean energy sources. In other panels we've heard from witnesses who say that solar and wind energy are a lot more expensive than the alternatives we currently use—and I know that many of my Conservative colleagues agree with this. Supply and demand, obviously, have a big role to play here, and over the next decade things would become more affordable. How can we make it more affordable now, sooner, rather than just waiting for technologies to improve and for the current ones to get old? How can we get there at a quicker pace? Is there any way forward that would make it easier for provinces and companies to adopt cleaner energy sources?

[Mark P. Mills]

It's a very important question to sort out the policy framework to accelerate whatever technology it is. When one wants less expensive technology, it's always the case that technologies have a learning curve. They get cheaper in time. The unfortunate thing is that what most governments are doing around the developed world is that they're accelerating the deployment of what I would unkindly call “yesterday's technologies”. By accelerating subsidies and spending on what you can build today, it means you're not investing in the future. You're not providing incentives for innovation. You're providing more money to those who already know what exists.

To accelerate the learning curve, there's not a pleasant, easy answer to do that. It doesn't work well through the direct subsidies for building yesterday's machines. You have to think about what innovation is and how it works, and this gets to the points that we have heard already in some testimony. What I'll call a “heavy-handed” regulatory approach to instructing jurisdictions on what to build, or accelerating what is being built today, doesn't necessarily take into account how industry really works.

I'm not giving you an easy answer because there is, unfortunately, not an easy answer. We need a framework that stimulates and rewards innovation, to make new and better things. Frequently, the thing that we'll want to use—let's say, profoundly better solar arrays, profoundly better electric vehicles—do not exist today. How do we get those? Well, we want to provide incentives for that kind of risk-taking by both private equity and private capital, because a lot of it's private. We want to avoid the disincentives that stop that from happening, which is the transfer of great technology out of universities in both Canada and the United States into making new companies.

I wish there were an easy answer. In policy circles, which I work in as well, we all like easy answers, sort of like a slogan. But that's it.

[The Chair, Liberal, Sherry Romanado]

Thank you so much.

We'll go back to MP Poilievre for five minutes.

[Pierre Poilievre, Conservative, Carleton, ON]

My apologies, Madam Chair.

Mr. Mills, I'd like to ask you about the supply chain behind today's so-called green technologies. You pointed out that the mining inputs necessary to create solar panels and batteries are largely sourced from countries like China. I'm going to quote from the International Energy Agency report you mentioned:

The Democratic Republic of the Congo...and People's Republic of China...were responsible for...70% and 60% of global production of cobalt and rare earth elements respectively in 2019. The level of concentration is even higher for processing operations, where China has a strong presence across the board. China's share of refining is around 35% for nickel, 50-70% for lithium [needed for batteries] and cobalt, and nearly 90% for rare earth elements.

By subsidizing the battery-powered vehicle, are we effectively driving more production to China?

[Mark P. Mills]

The short answer is yes, unavoidably, because we don't have the capacity outside of China for either the mining, or, as the IEA pointed out, the refining.

Thirty years ago, North America—the United States and Canada together—produced 80% of the world's rare earth elements. Those are neodymium, presidium, dysprosium...these magical-sounding minerals that are critical to all kinds of high-technology machines, including those using green energy..

I would say that we sort of chased those businesses off the North American continent, and China eagerly embraced the expansion of mining.