International Trade Committee on May 3rd, 2021

[The Chair, Liberal, Judy Sgro]

Thank you very much, Mr. Breton.

Mr. Sheehan, please go ahead, for six minutes.

[Terry Sheehan, Liberal, Sault Ste. Marie, ON]

Thank you very much, Madam Chair. Thank you to all our presenters for presenting on this very important subject, and our undertaking to increase our clean exports across the world.

I'm going to begin with Mr. Pochtaruk. I appreciated your testimony and some of the great things you are doing. In particular, what I found very neat was the solar panels that are being used in low-orbit satellites. Obviously, your technology is very superior to be put on these billion-dollar satellites. I also wanted to reference and base my question on an article you wrote, an op-ed in The Hill Times. You talked about the supply chain and where solar panels could also be deployed, and that there's some research and development going on around that.

Could you expand on those opportunities, not only in satellites but in electric vehicles and others?

[Martin Pochtaruk]

As I mentioned in my testimony, Heliene developed, together with SpaceX, the low-altitude satellite solar modules that are being launched into space with those satellites. We have another product that is a greenhouse-integrated PV. For example, there is a greenhouse near Niagara where we utilize 4% of the roof to generate 10% of the energy requirement of the greenhouse. That means we could size up systems to have net-zero greenhouses going forward.

As many of us know, agriculture is one of the main contributors to greenhouse emissions. Therefore, by advancing the integration of PV, of solar-powered generation in the greenhouses, we can diminish the footprint of greenhouses in terms of greenhouse gas emissions.

Another possible utilization we are working on is the integration of solar to actually generate renewable energy for electric vehicle charging. There are already a few companies entering this space. We know this is going to be a multi-billion dollar infrastructure business of which we want to be a part.

[Terry Sheehan, Liberal, Sault Ste. Marie, ON]

In the same article, you wrote that the price of solar panels went down by about 90% over the last decade. That's good news, but the the American tariff is now at 18%. You mentioned that it's cutting into your working capital. I saw on your website that you're investing 5% to 8% in R and D. I'm sure that could be affected.

That 18% is also a tax on Americans and Americans that purchase our particular solar panels. Would you agree? If you delve down into advice, what advice would you give to the trade officials as they go forward with your suggestion of a renewed optimism with the Biden administration? I know the minister, in January, issued some statements and began a consultation process.

I'll open it up there, and let you delve into that a bit.

[Martin Pochtaruk]

According to chapter 31 of the Canada-U.S.-Mexico Agreement, dispute resolution has to take place if there is no agreement between the Canadian government and American government on taking off the unlawful import duties. I understand that right now there are ongoing conversations between the remedies department of Foreign Affairs Canada and the U.S. Trade Representative. Canada is waiting to kick off that dispute resolution in an attempt to solve this issue amicably. However, there's only so much we can do. As industry, we rely on the government to bring this issue to the U.S. government as soon as possible.

We have been paying this tariff for three and a half years, and there was no possibility of amicable discussion with the Trump administration. That's why right now Foreign Affairs is on guard to start the dispute resolution as soon as possible, if there is no possible way to do it amicably.

[The Chair, Liberal, Judy Sgro]

Thank you very much to everyone.

We'll go to Monsieur Savard-Tremblay for six minutes, please.

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot, QC]

Thank you, Madam Chair.

I thank all our witnesses for their contribution.

Mr. Breton, you have been involved in the various electric vehicle shows. When you go around them, you realize that there are many SMEs and that, in terms of dynamism and electrification of transport, the SMEs are at the heart of Quebec.

However, much of the funding comes from the Strategic Innovation Fund. According to the available data, most of the money has gone to Ontario-based multinationals, not to innovative SMEs in Quebec.

Should we review the criteria? If so, how would we do this?

[Daniel Breton]

Yes, we are in favour of an innovation program specifically focused on electrifying transportation. According to the Speech from the Throne, the budget, Canada's climate plan, and the agreement with the Biden administration, the government wants to speed up the electrification of transportation. In our opinion, having a fund established solely in order to electrify transportation would be a very wise decision.

The criteria also need to be designed so that SMEs, whether in Quebec or elsewhere in Canada, can be eligible, because a number of innovating companies, for example in British Columbia, Nova Scotia or Quebec, want to speed up the electrification of transportation.

Take Taiga Motors, for example. The company was founded by three students from McGill University. They build electric snowmobiles but they had no access to funding of that kind. So they went to the United States to get development funding.

In terms of electrifying transportation, a lot of innovative companies are often startups or SMEs. That's also the case with solar energy and renewable energy. That is why we feel that SMEs should be eligible for programs of that kind.

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot, QC]

No question about that, in my mind.

Then we have the famous Buy American Act. A number of my colleagues sit on the Special Committee on the Economic Relationship between Canada and the United States. These days, it's a full-time study for us.

First, should we have a similar requirement, with a view to coming to an understanding with the United States at some stage so that we can obtain contracts?

Then, would support like that pass the test of the agreements and the rules around international trade?

[Daniel Breton]

Electric Mobility Canada suggests that we develop our own Canadian strategy for electrifying transportation, rather than having piecemeal programs. We want a comprehensive vision for electric transportation, as is the case in Europe. President Biden and Prime Minister Trudeau have stated that they want to work together to develop a Canada—USA strategy for electrifying transportation.

Members of Electric Mobility Canada are selling their products in the United States and have already had to establish facilities. For example, New Flyer and Nova Bus have opened plants in the United States.

We feel the need for a kind of North American Act, a way of saying that we want to work together and decrease greenhouse gas emissions more quickly in Canada and the United States, because climate action is urgent.

In 14 years, Canada's greenhouse gas emissions have decreased by 1%. We now want to decrease them by 39% in nine years. Negotiations therefore have to happen quickly. Canadians and Americans have everything to gain from working together, especially since the North American automotive market is so integrated.

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot, QC]

However, the United States could say that they really have no need to do that, because they have a number of companies, especially in Silicon Valley in California, and that their technology is more advanced.

In other words, why do they need us?

[Daniel Breton]

I feel we could work collaboratively. When I was responsible for the Quebec government's strategy to electrify transportation, I persuaded that government to come to a collaborative research and development agreement with California. The agreement was signed and it is still in effect today.

We have complementary expertise. In terms of natural resources, Canada has the strategic critical minerals that the United States wants. We must not forget one extremely important point: at the moment, 96% of the batteries for electric vehicles are made in China, Japan and Korea. For geopolitical reasons, as well as economic and environmental reasons, a collaboration between Canada and the United States could counter our dependence on strategic resources and batteries for electric vehicles. The collaboration would result in a North American strategy to electrify transportation.

The same thing happened in the 20th century with oil from the Middle East. We do not want to find ourselves in a vulnerable situation when it comes to electrifying transportation.

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot, QC]

You talked about batteries. Do you believe that we could be self-sufficient in that respect in the near future?

[Daniel Breton]

I don't think that we can be completely self-sufficient, but we could be much less dependent on batteries from China, Korea or Japan, because we could develop the expertise.

The Government of Canada and the Government of Quebec worked together to announce the launch of a battery plant for Lion Electric. Other projects are in development. The United States is moving in that direction too, because they are realizing that the key to electrifying transportation is in the batteries and the power trains.

Canada has the resources and we have to make use of them. We have to use our advantage and make sure that we have control of the resources, in the interests of national security.

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot, QC]

Thank you, Mr. Breton.

Is my time up, Madam Chair?

[The Chair, Liberal, Judy Sgro]

Yes, it is.

We will move on to Mr. Blaikie for six minutes, please.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

Thank you very much.

Thank you to the witnesses for joining us here today.

I know some of you touched on this in your opening remarks, but of course the reason we're here is to be able to make some concrete recommendations to government about what they might do to help foster success in Canada's clean energy economy and increase exports.

I'm just wondering if our witnesses would like to take this time to be quite specific about what kinds of things they think the committee ought to be recommending to government toward that end.

I see that Mr. Pochtaruk has his hand up. We can start with you, Mr. Pochtaruk, and then go down the line.

[Martin Pochtaruk]

Thank you.

We have been paying a U.S. import duty since February 2018, so there's very concrete action to be taken for Canadian solar modules being exported to the U.S., which is to work with USTR to exclude Canada from such import duties, whether it is done in an amicable way right away or, otherwise, by triggering the dispute resolution on the USMCA.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

Thank you very much.

Monsieur Breton, we'll go over to you next, please.

[Daniel Breton]

As we said, we think that working on a North American act would trigger a lot of growth for Canadian industries, especially since the Biden administration talks more and more about the EV industry, getting more electric vehicles, from light-duty to heavy-duty, on U.S. roads and creating American jobs.

As we know, we have an integrated market for light-duty vehicles especially, where in Ontario many companies build parts of pickup trucks and SUVs. We are about to build electric vehicles in Ontario. We are building right now electric vehicles in Manitoba and Quebec, so we think that the North American act could be something that could work really well.

We have to make sure that for national security reasons we can have access to our strategic minerals and metals, because if we end up just exporting them to other markets to come back as finished products, we'll end up just importing the technologies and the batteries. To us, that's very important.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

Can I just follow up on that?

Obviously Canada, the United States and Mexico just went through a pretty intensive round of bargaining leading up to CUSMA. There were concerns that would sometimes crop up where Canada and the U.S., or certainly Canadians, would have liked to have a more collaborative relationship with the U.S. on some files, but the U.S. response, or what was perceived to be the U.S. response to Mexico, sometimes complicated those things.

When we talk about a North American act, does that vision include Mexico? In what ways do you think that might complicate some of the supply chain relationships you're talking about between Canadian and U.S. producers, and what might be done about that?

[Daniel Breton]

That's a good question. I think it would be best to include Mexico in that, because we already have Mexico as a partner with Canada and the U.S. As well, when we're talking about the auto industry, it's a relationship that's built between Canada, the U.S. and Mexico.

However, the technology and the knowledge that we have in Canada is worth something. The natural resources that we have are worth something. As I said, with the Biden administration really pushing for a transition towards EVs, light or heavy-duty, we think the time is perfect. We just saw an agreement between President Biden and Prime Minister Trudeau regarding the development of EVs in collaboration with Canada, but I think Mexico could be included in that very well.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

Thank you very much.

I'll go over to Mr. Sinha, who has his hand up as well.

[Apoorv Sinha]

Yes. In terms of specific recommendations, one recommendation I would have is actually road mapping a certain collaboration, either with the U.S. or the EU bloc specifically, to look at a time horizon of two to four years around adopting industrial retrofits or new industrial technologies.

As I mentioned in my opening statement, carbon technology and the space we play in is pretty unique in that you're dealing with very long payback periods for some of the installations that are being affected. Our experience thus far has been that as we've looked at business development internationally, a lot of the licensing or commercialization endeavours are looked at over a decade-long horizon, if not longer.

To have the ability to look at how employment in those two associated countries could work for a business development rep or a technology rep, or whatnot, would be quite helpful. From our perspective, having a program that doesn't just look at three or six months but rather a three-year framework of engagement would be very helpful.

[The Chair, Liberal, Judy Sgro]

Thank you, Mr. Sinha.

We will move on to Mrs. Gray, for five minutes, please.