Evidence of meeting #38 for Industry, Science and Technology in the 44th Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was alberta.
A video is available from Parliament.
12:40 p.m.
President and Chief Executive Officer, Chemistry Industry Association of Canada
Is this bill going to do it alone? No, but—
12:40 p.m.
NDP
Brian Masse NDP Windsor West, ON
No, no, I didn't ask that. I asked whether you're supporting the bill or not.
12:40 p.m.
President and Chief Executive Officer, Chemistry Industry Association of Canada
Yes, we support the nature.... In general we support what's here; the specifics—
12:40 p.m.
NDP
Brian Masse NDP Windsor West, ON
Okay, thank you. I appreciate that. I'm not trying to put you on the spot, either. I'm just trying to clarify. We've had other....
Go ahead, Mr. McGowan, please. The floor is yours.
12:45 p.m.
President, Alberta Federation of Labour
As I said at the outset, we support this bill because it would create a platform for alternative voices to be heard in a way that perhaps they have not been so far. If there were any changes that I would propose, they would be very minor.
One point that Mayor Heron mentioned in her opening remarks, which I would reiterate and support, is that we feel a little uncomfortable with the language about retraining energy workers. That's actually not the issue. Most of our members who work in oil and gas or in oil and gas-related construction have skills that are transferable; the issue is to create economic opportunities for them to put those skills to use. If you're an electrician working in the oil sands, or a pipefitter or a boilermaker, you're not stuck in the oil and gas sector. You can build whatever industrial projects are available. We've seen that with all the work in the industrial heartland.
One thing I noticed in the report and the discussion around it is that it didn't emphasize some of the big industrial opportunities that are ahead of us in the unfolding global energy transition. In particular, experts in our provinces say that we're going to have to at least triple the size of our electric grid. As we point out in our blueprint that we released last week, that's a huge investment and jobs opportunity, with billions of dollars in investment and thousands of jobs created. We'd like to see that reflected.
The final point—
12:45 p.m.
NDP
Brian Masse NDP Windsor West, ON
Be real quick, though, because I'm running out of time and I have one last important question.
12:45 p.m.
President, Alberta Federation of Labour
Yes.
The final point is that there should be a mention of metrics in the bill. We'd like to have a metric of good jobs as a metric that is discussed in all economic development-related issues in the report.
12:45 p.m.
NDP
Brian Masse NDP Windsor West, ON
Okay.
I'm going to go back around for quick answers.
One thing that gives me discomfort about this bill is that it has no first nations consultation or support, or at least nothing has come in to my office. This is giving me a lot of discomfort, because what we're doing here is that instead of going to them first, we're coming to them with a plan and then saying later on, “We'll consult you after the fact.” Does this give you some concern?
That consultation could come before this bill is passed in the House of Commons or voted on. It could come from those groups and organizations.
For the record, Mr. McGowan, Mr. Masterson and Ms. Heron, would you prefer to see some type of engagement with first nations prior to this vote? Be really quick, please.
12:45 p.m.
President, Alberta Federation of Labour
The short answer is “no”, but only because of the short timelines and also because this bill is about consultation. I think if this bill is passed, it will create a framework for consultation that consultation should include all the stakeholders, including the indigenous community. The conversation, if we're going to have it at all, needs to happen quickly. I would hate for us to miss this opportunity by spending months consulting on whether we should consult.
12:45 p.m.
President and Chief Executive Officer, Chemistry Industry Association of Canada
I would defer to Justice Canada and whatever the Crown's duty to consult is. This is a very important issue. If it's done wrong, you put us back to square one.
12:45 p.m.
President and Chief Executive Officer, Chemistry Industry Association of Canada
Tick the boxes first and move forward with purpose.
12:45 p.m.
President, Alberta Municipalities
I don't know the timelines on how this works in Ottawa. I would note that municipalities were not invited to consult in the framework, yet here I am, so I don't see any problem with getting some of the indigenous communities in front of you as quickly as possible. I have a feeling from the west and from my extensive involvement with them that they would be very supportive.
12:45 p.m.
Liberal
12:45 p.m.
Conservative
Ryan Williams Conservative Bay of Quinte, ON
Thank you very much, Mr. Chair.
I'm certainly enjoying the discussion on this bill. There have been quite a few great things said. I really want to get to the meat of this, which is embracing next opportunities. We're really on the same page on some of this. I think all parties want to support workers. All parties want to embrace next opportunities.
Mr. Masterson, I think you hit the nail on the head when you talked specifically about investment. What we're trying to get a handle on here is investment and support for workers in the industries and what's next. That's the biggest part of this whole bill. We haven't really talked too much about it. We're talking more about the framework instead of what's really important: What do we need to support industries and workers in the Prairies and across Canada?
Mr. Masterson, I'll start with a broad question. What has investment as a whole been in your industry in the last five years as compared with the U.S.?
12:50 p.m.
President and Chief Executive Officer, Chemistry Industry Association of Canada
Well, a decade is a better number. In the last decade, half of all manufacturing investment, something north of $400 billion, has gone into the U.S. chemistry industry. In Canada, we have two very important projects, one in the heartland area, but it's about $7-$10 billion in the last decade, and that's before the Inflation Reduction Act. I'd love the opportunity to talk a bit more about that.
12:50 p.m.
Conservative
Ryan Williams Conservative Bay of Quinte, ON
That's fair. We probably will. That's 40 times more investment in the U.S. than in Canada.
12:50 p.m.
President and Chief Executive Officer, Chemistry Industry Association of Canada
Correct.
12:50 p.m.
Conservative
Ryan Williams Conservative Bay of Quinte, ON
It's a little bit more than that.
Let's talk about investment policy. You talked about it in the beginning, so if you want to reference the Inflation Reduction Act, what recommendations are you going to make for an investment policy?
12:50 p.m.
President and Chief Executive Officer, Chemistry Industry Association of Canada
Let's talk about what's changed in Alberta. Why did we go from one project worth less than $5 billion—well, there were two. One's currently on hold and not moving ahead. One that's near completion is about $5 billion, but now we suddenly have $30 billion.
What most of the American states try to do to attract investment is they provide the signals—the carrots—through the tax code. It's not left to a political decision whether or not a company is eligible for those incentives to go ahead. What happened previously in Alberta, although the government did provide the opportunity, and what happens with the federal government is that it's done on a case-by-case basis.
What's happened now in Alberta with phase two of what was its petrochemicals diversification program and is now the petrochemicals incentive program is that if you qualify, you are eligible for a 12% grant for the value of your project, period. There's no political decision. There's no minister you have to lobby to sign off on it.
For instance, specifically with regard to the carbon capture, utilization, and storage tax credit—the ITC here in Canada—first of all, the level was not at par with what was already in the 45Q in the U.S. It was a much more narrow definition of eligible equipment. That has now expanded greatly in the U.S. It's worth at least double what ours is.
But here's the thing: If you're eligible in the U.S., you go to your shareholders and say, “I'm eligible for this tax credit.” You can build 100% of that tax credit into your business plan. What's proposed under the credit today, under consultation, is that it's left to a decision by the Minister of Environment and the Minister of Natural Resources. I'm going to my board, representing my shareholders, and saying, “Hey, there's a great opportunity here in Canada.” How much do I have to discount the eligibility for that tax credit in Canada? It's 100% in the U.S. I don't know what the number is in Canada. Is it 50%, 80%, or 20%? I don't know, but I can tell you one thing: If you're going for ministerial approval, it's not 100%.
That would be a clear example of how we have to do things differently. Alberta has shown that if you do it through a tax credit, through the tax code, it's transparent and it's not a political decision, and people will run to what we have to offer in Canada. If you leave these things up to a political decision, they will take the decision south of the border, and again, as we said repeatedly, the Inflation Reduction Act changes the game tremendously from where we were even six months ago.
12:50 p.m.
Conservative
Ryan Williams Conservative Bay of Quinte, ON
I have one last question with the time I have left.
To compete with the U.S. we have to be innovative and competitive. The U.S. Department of Energy has what's called the Energy Earthshots initiative, and it's putting targets on specifics that make the U.S. more competitive. For instance, it has a carbon negative shot, which is going to make carbon capture less than $100 per tonne. The industrial heat shot will make carbon capture technologies 85% cheaper than they are now.
Do we have anything like that happening in Canada right now?
12:50 p.m.
President and Chief Executive Officer, Chemistry Industry Association of Canada
Part of the idea behind the investment tax credit for carbon capture is that it will stimulate some of that activity, but what we have in Canada right now is less than a 42% return on the cost of capital—not even a return, but a reduction in the cost of capital—whereas what the Americans have done with the Inflation Reduction Act is that if you're proposing to do a major carbon capture project, you will not only recoup your cost but make a profit.
It's not just about capturing carbon from your activities and storing it in the ground; they're also providing a very significant tax credit for what they call air capture, taking CO2 out of the air. Again, the terms are so appropriate that it's not a question of minimizing your costs; you're actually turning it into a defensible business decision. You're going to do it because there's a return for your shareholders.
That's not the case in Canada. We're at well less than half. Even if we had a 100% guarantee that if you qualify, you would get the credit, we're at less than half of what's on the table in the U.S.
