Industry Committee on June 5th, 2024

[The Chair, Liberal, Joël Lightbound]

Good Wednesday evening, everyone.

Welcome to meeting number 128 of the House of Commons Standing Committee on Industry and Technology.

Today's meeting is being held in a hybrid format, in accordance with the Standing Orders. Pursuant to the motion adopted on Monday, April 8, 2024 and the committee order of Monday, May 27, 2024, we are resuming today our study of recent investigations and reports on Sustainable Development Technology Canada.

Before we begin, I just want to remind everyone to adhere to best practices regarding the use of earpieces, and especially, to be careful and keep earpieces away from microphones when we speak to avoid feedback that can cause injury, especially to our interpreters. I would therefore ask you to comply with the instructions written on the small card in front of you. I would also like to confirm with the clerk that the sound tests were carried out before the start of the meeting. That's confirmed.

I thank you all for your co-operation.

I'd like to welcome our witnesses today. By video conference, we have Mr. Navdeep Bains, Ms. Veena Bhullar, Mr. Gianluca Cairo, former chief of staff at the Department of Industry, and Mr. Andrew Noseworthy, former assistant deputy minister for clean technology.

In Ottawa, from the Canadian Cleantech Alliance, we welcome Ms. Isabelle Dubé‑Côté, president and CEO at Écotech Québec, as well as Mr. Peter McArthur, chair of the board of the Ontario Clean Technology Industry Association. We also welcome, from Smarter Alloys Inc, Mr. Ibraheem Khan, general manager.

Thank you very much.

Thank you very much for being with us.

Without further ado, I'll turn it over to Mr. Bains for his opening remarks.

You have five minutes, Mr. Bains. The floor is yours.

[Navdeep Bains, As an Individual]

Thank you very much, Mr. Chair and members of the committee.

Thank you for having me here today.

My name is Navdeep Bains. From 2015 to January 12, 2021, I served as Canada's Minister of Innovation, Science and Industry.

I know there has been much conversation around the activity at Sustainable Development Technology Canada, or SDTC. However, I think it's important for us to first ground ourselves in the process and the roles.

SDTC is an arm's-length organization established by an act of Parliament in 2001. As minister, my role, as outlined by the act, was to make appointments to the SDTC board. These appointments were recommended through the fair, open and transparent process brought forward in 2016 to allow more opportunities for all Canadians to serve their country.

Under the new process, all positions are publicly listed on the GIC appointments website. Anyone can apply for the position on the website by submitting their CV and a cover letter.

After receiving applications for an appointment, a selection panel that included the Privy Council Office, with supports from across the government, was struck. These panels conducted interviews and presented ministers with a short list of candidates. As part of the process, ministers would speak with prospective applicants before formally recommending them for an appointment. Finally, the minister would make a recommendation and the GIC would pass it.

This open, transparent and merit-based process was used for over 100 of my recommendations for GIC appointments.

As has been testified numerous times, SDTC is an arm's-length organization that was created by an act of Parliament in 2001. Under the act, the minister is to recommend seven of the 15 board members, including the chair.

There is a funding agreement between ISED and SDTC; however, ISED is not responsible for the management and operations of the staff or board.

Finally, I believe in the clean-tech sector and the benefits it has brought to Canada. I am proud of the incredible people and companies that have made this sector in Canada a true global leader.

Once again, I'm happy to be here and to answer your questions.

Thank you very much.

[The Chair, Liberal, Joël Lightbound]

Thank you very much, Mr. Bains.

I now give the floor to Ms. Vina Bhullar.

Ms. Bhullar, you have the floor.

[Veena Bhullar, As an Individual]

Good evening, Mr. Chair and members of the committee.

Thank you for the opportunity to appear before you today.

My name is Veena Bhullar, and I'm here today to help provide my assistance with respect to the ongoing study on Sustainable Development Technology Canada.

I joined Sustainable Development Technology Canada, or SDTC, as manager for communications and partnerships in November 2018. I remained in that same position until my departure in April 2021.

As manager for communications and partnerships at Sustainable Development Technology Canada, my primary responsibilities were communications focused. As I began my role in early 2019, my main responsibilities revolved around the construction and rollout of a team intranet, establishing new social media procedures for institutional SDTC accounts and liaising with Innovation, Science and Economic Development Canada, or ISED, on upcoming funding announcements. This focused on communications and logistics.

As with any new role, fully integrating into the team at SDTC took roughly one month. There was a comprehensive onboarding process that included organizational briefings, one-on-one meetings with various departments, sitting in on funding interviews as well as various administrative and HR processes. I started in mid-November and was not fully integrated into the job until approximately January 2019.

The process to appoint the new chair of SDTC to replace Mr. Jim Balsillie was under way when I joined the organization. Annette Verschuren was appointed chair in June 2019. I was not consulted and was not a decision-maker in Ms. Verschuren's appointment process, nor was I responsible for providing advice on policy matters, board appointments or decisions around SDTC program delivery.

During my tenure, SDTC leveraged a system of procedures and structures to manage appointments. Those responsibilities were primarily held by the CEO, Leah Lawrence, and the vice-president of partnerships, Zoë Kolbuc.

Throughout my time at SDTC, I kept my direct supervisors, the vice-president of partnerships and the director of communications as well as the CEO informed of any conversations I had with the minister's office or with any other official within government. In my role, I never attended SDTC board meetings and had no operational responsibility in managing or providing advice on the appointment of an SDTC board director or allocating funds. Such matters would typically be under the purview of the CEO. The nature of my job, once again, was largely focused on communications.

Any conversations I had with the minister's office were at the direction of my superiors. I always reported any communications with political staff back to superior SDTC officials. The nature of these conversations centred around information sharing, providing updates on upcoming funding announcements and planning events. At no point did I provide advice on policy matters, board appointments or decisions around program delivery.

As you all know, as members of this committee, following testimony at the House of Commons ethics committee, the CEO resigned her position at SDTC.

While my direct involvement in the matter at hand was limited, I look forward to answering any questions you may have.

Thank you.

[The Chair, Liberal, Joël Lightbound]

Thank you very much, Ms. Bhullar.

Mr. Cairo, you have the floor for five minutes.

[Gianluca Cairo, Former Chief of Staff, Department of Industry, As an Individual]

Good evening, Mr. Chair and members of the committee.

My name is Gianluca Cairo, and I want to thank you for the opportunity to appear before you in relation to your study on Sustainable Development Technology Canada.

My role, as it relates to your study into SDTC, was as chief of staff to the Minister of Innovation, Science and Economic Development from the summer of 2017 to the summer of 2019. Former minister Bains was the minister of ISED at that time, and SDTC was part of that portfolio.

During my time in that position, there was an appointment process for the board chair of SDTC. It was run as part of a merits-based approach to appointments that was a joint effort between the Privy Council Office, the Prime Minister's Office and officials at ISED. As I understand it, this was a normal public process that was followed across all Governor in Council appointments at the time.

Ultimately, at the conclusion of that process, Annette Verschuren was appointed board chair of SDTC. Ms. Verschuren had previously been appointed to critical roles at the intersection of business and public policy by Prime Ministers Mulroney, Harper and Trudeau. As an officer of the Order of Canada and given her significant business experience generally, as well as in the clean-tech sector specifically, she was well suited for the position.

The appointment was made in June 2019, and I left my role as chief of staff a few weeks later, in August.

I respect the work of the committee and of parliamentarians. I know the work that is involved, and I appreciate what you do.

Before I turn to your questions, I want to address the fact that there was a motion passed to summons me to attend today. I was disappointed and surprised to learn that I had been summoned. I had corresponded with the clerk repeatedly, and the clerk was aware that I was in Australia on business when I was initially invited to attend. Upon my return, I reached out again, specifically to confirm my attendance, which is when the clerk informed me that I had already been the subject of a summons.

I am here voluntarily and co-operatively to help you complete your study. Although my role was limited in terms of the time and the scope of my involvement, I hope I can be of assistance to you and I look forward to your questions.

Merci.

[The Chair, Liberal, Joël Lightbound]

Thank you very much.

Mr. Noseworthy, you have the floor.

[Andrew Noseworthy, Former Assistant Deputy Minister on Clean Technologies, As an Individual]

Thank you, Chair.

Good evening, honourable members.

I'm appearing before you today as a private individual, having retired from ISED in January after 40 years of public service.

Within ISED, I worked on matters related to energy and clean technology. As part of my duties, I was the department's liaison with SDTC. I regularly attended board meetings and received board materials between 2017 and 2023.

SDTC board meeting notes refer to me as being there by invitation. My objective in attending those sessions was to assist the board in understanding federal policy and program developments that may have had relevance to its work. In doing so, I took my direction from the provisions of ISED's contribution agreement with SDTC, which states that federal officials must not be seen as exercising control or influencing the decisions of that organization.

In working with the board, I was also especially careful not to offer views or advice of any kind that could be seen to bias its operations, policies or decisions.

With respect to the appointment of Ms. Verschuren as chair, I had no direct role in this process. As former Minister Bains has indicated, it was handled through the normal process for order in council appointments between central agencies and the minister's office.

However, I had several conversations with Ms. Leah Lawrence, who was the CEO of SDTC at the time, including conversations seeking her assistance in encouraging applications and nominations for the position from within the clean-tech community. As she reported to you, I called her to advise her that an order in council had been issued, appointing Ms. Verschuren to the position of board chair.

We discussed Ms. Lawrence's concerns with respect to the appointment and the fact that the issue of Ms. Verschuren's potential conflict had been considered as part of the selection process. Indeed, we were both of the understanding that Ms. Verschuren had met with the conflicts commissioner to discuss the matter. On this basis, I indicated that I believed it would take another compelling reason for the decision to be reconsidered, but Ms. Lawrence was not forthcoming in raising other issues or concerns.

Thank you.

I look forward to discussing these matters with the committee and will be pleased to take your questions.

[The Chair, Liberal, Joël Lightbound]

Thank you very much.

Ms. Dubé‑Côté, you have five minutes.

[Isabelle Dubé-Côté, President and Chief Executive Officer, Écotech Québec, Canada Cleantech Alliance]

Thank you, Mr. Chair.

Thank you, committee members, for hearing us today.

My colleague Peter McArthur and I are here today....

We're here today as representatives of the Canada Cleantech Alliance to talk about the cleantech ecosystem. The Alliance is a Canadian coalition of 22 cleantech industry associations representing over 2,000 cleantech players across the country.

Clean technology companies are, in many cases, SMEs that design products, services or processes that improve not only the environmental footprint of organizations, but also the productivity of Canadian businesses. There is a growing demand for these solutions.

We would like to urgently address an issue of crucial importance, not only for Canada's cleantech sector, but also for the health of Canada's innovation economy and its global competitiveness, which are vital to our country's future.

The abrupt and lengthy halt to funding decisions for Sustainable Development Technology Canada, or SDTC, since October 2023, in the absence of an alternative, has considerably affected innovation in Canada and caused significant damage. The pause was originally scheduled to end no later than December 31, 2023. However, eight months have passed without a resolution, and the situation remained unresolved until recently. Yet questions remain.

Canada has consistently stood out in the cleantech sector relative to its size, contributing 13% of the world's cleantech companies, despite a GDP growth rate of just 1.2%. Three quarters of these 13 companies were funded by SDTC. Their success is therefore partly due to the crucial support provided by SDTC, which goes beyond initial funding to include technology risk mitigation, thanks to SDTC's technical expertise.

Today, however, our cleantech sector faces significant challenges. Over the past eight months, many of Canada's most promising cleantech companies, as well as their employees and investors, have been left in limbo. Their projects, poised to create high-value jobs, strengthen our innovation economy and improve our environment, are at a standstill.

The disruption has resulted in considerable setbacks, as we know from a survey conducted two months ago in which some companies in your respective constituencies took part. We've already shared this data with you, and we'd be happy to share more if required. These figures alone, gathered from around 200 respondents in just 48 hours, highlight the fact that investments of over $400 million have been suspended or abandoned.

I'll now hand over to my colleague, Peter MacArthur, who will suggest some possible solutions to quickly remedy the situation. We remain available to work with you and answer any questions you may have.

Thank you.

[Peter McArthur, Chairman of the Board, Ontario Clean Technology Industry Association, Canada Cleantech Alliance]

We are very pleased to learn that SDTC is going to resume its funding of eligible projects. However, to mitigate the adverse effects Isabelle noted, we urgently request that your committee support the following five measures.

Number one, promptly resume previously approved and committed funding decisions. Restart funding now for existing projects. Funding is currently greatly delayed. Every day of delay can reduce the likelihood of success. The transition to National Research Council cannot be yet another delay in access to funding.

Number two, promptly resume the intake application process for new projects. Don't have SDTC start from a dead stop on new intake while the transition to NRC takes place.

Number three, expedite implementation of the recommendations. Please urgently implement the recommendations from the Auditor General's report, ensuring swift resumption of funding decisions.

Four, streamline processes. While adjustments in processes may be necessary, it's crucial to avoid adding to the administrative burden for entrepreneurs under SDTC's existing rigorous structure. We must streamline procedures wherever possible. It's a key point.

Five, clearly communicate timelines. We can't leave people hanging. Provide affected companies now with clear timelines and estimated waiting periods to help them plan and move forward.

SDTC has been one of Canada's secret weapons in developing our clean-tech innovation economy. It has invested in over 500 companies, generating $3.1 billion in annual revenue, creating 24,500 jobs and bringing 194 new technologies to market. Not only has it provided funding to bridge the gap from bench to commercialization of new technology, it structurally required consortium partnerships and provided invaluable technology vetting that has allowed corporations and investors to deploy their capital into the clean-tech innovation economy in Canada. We're at risk of losing our clean-tech advantage. Mike Andrade from Morgan Solar in Toronto says, “the SDTC freeze...is terrible timing, particularly given the USA is increasing its support for companies like ours. We have had multiple calls from the DOE [Department of Energy] and state organizations about finding opportunities if we relocate portions of our business there.”

In Canada, we've been struggling to realize the full potential of our innovation. However, in clean tech, Canada has been winning in the innovation competition, thanks in part to SDTC.

We thank you for your attention to this urgent matter and remain available for any helpful consultation and collaboration.

Thank you very much.

[The Chair, Liberal, Joël Lightbound]

Thank you very much.

I'll now turn it over to Mr. Khan.

[Dr. Ibraheem Khan, Chief Executive Officer, Smarter Alloys Inc.]

Good evening, Chair, and members of this committee. Thank you for the opportunity to speak today.

My name is Ibraheem Khan. I'm the CEO of Smarter Alloys, which is a company founded on a patented technology that came out of my doctoral work at the University of Waterloo.

We are an SDTC-funded company located in Cambridge, Ontario. One of our key innovations is applying our materials to capture waste heat and convert it into electricity. It's called a heat engine. We have been targeting a huge inefficiency that we have in the world, which is waste heat, with our materials and our technology.

In a few short years, we've progressed our technology from a laboratory-sized system the size of a blender to a proof of concept the size of a locomotive or even the size of this room, almost.

We're scheduled to deploy this latest heat engine in the oil sands later this year to help reduce the carbon footprint out in Alberta. This progress would not be possible without programs like NRC IRAP, ERA or SDTC.

Clean tech transcends any one program, government or country. Canada's support and funding drives progress that benefits not just Canadians, but all of humanity. However, clean tech entrepreneurs face unprecedented challenges today. Geopolitical tensions, labour shortages and the pandemic have all compounded a difficult task of advancing hardware technology.

Support for clean tech commercialization is not just helpful, but critical for survival. Funding Canadian clean tech unlocks innovation, enables global leadership and supports both our economic and environmental aspirations. Without adequate support, Canadian companies will face difficult decisions and our global progress will be impeded.

The high standard for technical due diligence conducted by Canadian funding agencies is universally recognized. Companies that receive funding undergo significant technical vetting, which reassures global investors and partners of their merit. I've experienced this first hand.

The work that this committee is doing is key in helping maintain this standard. However, time is of the essence. As the resilience of Canadian innovators is now being tested, any further delay will derail progress that companies like mine have made. For example, any delay in us receiving our funding that's due from SDTC will significantly damage our ability to progress our technology in Alberta. It will cause irreparable damage.

I'm encouraged by yesterday's announcement that funding will resume. This positive step is vital for the health of Canadian innovation and the economy, our global competitiveness and the sustainability of the clean tech ecosystem. I urge you to prioritize existing projects, resume due diligence on new projects and applications, expedite and implement the audit recommendations, streamline the process, and communicate the timelines.

Finally, I further recommend increasing funding to accelerate the progress and mitigate the damage that's been done related to these delays.

Thank you for your attention and consideration. I'm available for any consultation and collaboration to ensure swift resolutions.

[The Chair, Liberal, Joël Lightbound]

Thank you very much, Mr. Khan.

Before we start the discussion, I want to clarify one small thing.

Much has been said about the challenges of organizing and scheduling this meeting with some of the witnesses. Summonses were adopted by the committee, but I want to make it clear that, from my understanding, Ms. Veena Bhullar only received the invite last week, which makes the summons a little premature. I just want to set the record straight because in May the invitations were not sent to the proper email address.

That's just to clarify before we get started.

Mr. Perkins, I will yield the floor to you for six minutes.

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

Thank you, Mr. Chair.

Thank you, witnesses.

To briefly address some of the comments that the people from the industry made, the delay was caused by corrupt directors. That's just to make sure...why the freeze was put on.

My questions are for Mr. Bains.

As a cabinet minister—the industry minister, as you said—for six years in the Trudeau government, you were a public office holder and subject to the Conflict of Interest Act.

Is that correct?

[Navdeep Bains]

Thank you.

All designated public office holders are subject to the Conflict of Interest Act.

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

You're familiar, then, with section 4 and section 6, which say that public office holders cannot profit from the public office they've been appointed to.

Is that correct?

[Navdeep Bains]

Yes. The act is there and it's public knowledge.

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

The SDTC act, for which you, as minister, were responsible, also says that directors of SDTC—they or their family—cannot profit from decisions they make in that role.

Is that correct?

[Navdeep Bains]

My understanding is that the act was introduced, if I recall from my opening remarks, in 2001, and the act provides a very clear mandate for board members and management and how the programs are administered.

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

And not to profit....

Leah Lawrence, the former president of the Liberal green slush fund, testified here before committee that around May 2019, when you were a minister, you called her to tell her that you were going to replace the chair at that time, Jim Balsillie, with a new chair. You gave her two names that you wanted her to review. Is that correct?

[Navdeep Bains]

I don't recall a specific conversation, but I would say that it was not uncommon for me to reach out to CEOs to engage them in the board selection process.

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

You suggested to her two names, Annette Verschuren and another individual who declined to participate because they had a pending conflict. Are you aware that the two people whose names you provided both had a conflict?

[Navdeep Bains]

Again, just to highlight that during my tenure, there were over 100—

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

I didn't ask you about the 100, minister; I asked you about this one. In preparing for this committee, I assume you looked at your notes.