International Trade Committee on May 3rd, 2021

[The Chair, Liberal, Judy Sgro]

Thank you very much, Mr. Breton.

We'll move on to Mr. Blaikie for two and a half minutes, please.

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

Thank you very much.

I'll go back to my initial question. I know Mr. Gorman was waiting to answer as well in terms of what some of the particular recommendations this committee might make to government are, from his point of view.

I'll pass it over to Mr. Gorman for that.

[John Gorman]

Thank you very much, Mr. Blaikie.

I would start by saying that, as the world moves to decarbonize and as we work to a net-zero 2050 future, we're seeing that economic opportunities globally are going to stem from that area.

Nations like ours have two challenges. First is how we decarbonize here at home. Second is how we help other nations around the world decarbonize so that we can hit that target. Aside from making it a safer, better world, there is of course economic opportunity to be had.

In these instances, first, to decarbonize here at home either we're going to be using our own technology, where we have expertise, like some of the presenters here before you today, or we're going to be importing technology from elsewhere. Of course, when it comes to helping other nations, we're going to need to look to the technologies where we have a depth of expertise and a real potential to help.

I'd submit to you that, with nuclear, we're a tier one nation, widely regarded as one of the best nuclear operators in the world. We also have one of the healthiest nuclear ecosystems of any country in the world right now because of the refurbishments that are going on here of all of our nuclear units in Ontario. There are 76,000 people, with $17.3 billion of money going to the GDP each year. We're using that very healthy ecosystem to do some incredible innovations in conventional nuclear but also these small modular reactors.

I'd say that small modular reactors are going to enable us to decarbonize some of the hardest areas to decarbonize—heavy industry, oil and gas extraction and mining—and will help first nations. If we can use those niche technologies where we have that expertise to help other nations, we'll be able to not only help them decarbonize but benefit economically.

Therefore, support the industries that you know we can bring abroad as well as help here at home.

[The Chair, Liberal, Judy Sgro]

Thank you very much, Mr. Gorman.

We'll move on to Mr. Aboultaif for five minutes, please.

[Ziad Aboultaif, Conservative, Edmonton Manning, AB]

Thank you, Madam Chair.

Good morning to all of our witnesses this morning.

ECT equals about 3.5% of the GDP. It's still shy; we do have an overall trade deficit. The United States is still by far the largest for us in that regard, equalling about 70%. We have other markets. As far as the Asian market, we have almost a complete trade deficit in this regard. Basically, we import more than we export. In this case, we have to start looking at where our strengths lie in Canada. There are three areas of industry represented here today: oil and gas, resources and nuclear.

To Ms. Savilow and Mr. Sinha in the oil and gas sector, where is this industry, the carbon-capture industry? We know that in Alberta we are a leader in that, as is Saskatchewan, I think. Where is the hope here? I believe that this industry is really going to help produce over and above the net zero on trade that we're looking for. If I could have a brief answer on that from both of you, that would be great.

[Apoorv Sinha]

I'll try to be succinct this time.

I totally agree with you. I think there's a strong opportunity for some of the experience that Albertans and people across the Prairies, frankly, including B.C., have built around LNG infrastructure and oil and gas, both heavy and light. A lot of that skill can be translated for use in carbon capture and storage. A lot of it can go toward decarbonizing industrial sources, such as coal-powered plants, which unfortunately are still going in many parts of Asia.

We've already seen that some of this is happening in terms of how that could be used as a way of creating a trade surplus. The key there is creating business models where the know-how can be taken over. Stantec, one of the largest engineering companies in the world, is based in Edmonton. By leveraging some of the partnerships and technologies that they have with start-ups like ours.... This is not necessarily just Stantec. It's also other Canadian engineering firms, such as Hatch. They can be great catalysts for bringing these technologies out to such regions as China, Indonesia and other areas and essentially help these specific organizations there create the new plants—essentially, the modern versions of an ethylene cracker or a distillation column—and start creating royalty-based structures where the know-how can actually be moved from Canada over to these areas.

We think that will be the future. We cannot be taking Chinese carbon emissions and capturing them in Canada, but we can take the technology over there and create those long-term business relationships.

[Ziad Aboultaif, Conservative, Edmonton Manning, AB]

Exactly. It's like two birds with one stone here. We have the technology. We are world leaders in that. We can, first of all, help ourselves to achieve better environmental standards, the 2050 goal, and on the other side, we can sell this technology overseas while still maintaining some control over it.

What should the government do on this? There is a plant here not far from Edmonton, and with $55 million a year for the next 10 years they will be able to capture carbon equal to almost 320,000 vehicles being pulled off the road. I'm sure you're aware of these good stories. What should the government do? Should the government step up and help these industries?

[Apoorv Sinha]

I would have two recommendations. One would be that there has to be some sort of framework with specific countries in Asia. I think Indonesia, China and India will turn out to be probably the most important levers. There has to be some kind of arrangement where the adoption of carbon technology from Canada in those areas can be promoted somehow. If that's done through some sort of an incentive or by using the employment agreement that, by the adoption of Canadian technology more jobs in these countries can be produced, I think that could be a very interesting angle to promote localized decarbonization methods.

The second piece is something similar to the low-carbon fuel standards in California. I think something like that adopted in Canada could be interesting for direct air capture. One of the interesting things about how that is gathering momentum is that we can capture carbon emissions in Canada that were produced elsewhere in the world. If we can promote some kind of framework where direct air-capture mechanisms are being supported by LCFS or a similar mechanism in Canada, then it basically means that we can create Canadian jobs cleaning up Chinese pollution, as an example.

[The Chair, Liberal, Judy Sgro]

Thank you, Mr. Sinha.

We'll go on to Mr. Sarai for five minutes, please.

[Randeep Sarai, Liberal, Surrey Centre, BC]

Thank you, Madam Chair, and thank you to all the witnesses. I apologize. I didn't realize that I was listening to you with my camera off after the brief intermission. Please excuse that.

My first question is for Mr. Breton. In budget 2021, we proposed a 50% reduction on corporate taxes on clean-tech manufacturing. Do you think this will help? Maybe you can elaborate on how this will help.

Will it induce more investment or create jobs in the sector, and if so, how?

[Daniel Breton]

It will absolutely help. We are already seeing the results from EMC member companies.

Electric mobility is all about innovation, so to have people who are working in clean tech getting a 50% reduction in taxes will make a difference. We are seeing more and more companies being able to get funding from financial institutions.

The thing is, though, when we see more and more money coming from financial institutions or potential funders, a lot of that money comes from the U.S. There's still an issue here with regard to finding Canadian seed money to invest in these technologies. Many of these funders want the companies or the plants to go to the U.S. because the money comes from the U.S. To me, that's a great step in the right direction, but we have to find ways to leverage Canadian money into investing in clean technologies and clean transportation.

[Randeep Sarai, Liberal, Surrey Centre, BC]

Thank you.

We can't stop money from being invested in this sector but we can give inducements like this tax break. What are other ways to keep that investment, whether it's foreign or Canadian, and have that manufacturing right here in Canada?

[Daniel Breton]

We think the Canada Infrastructure Bank could play a role in funding some of those projects. We've seen that in Quebec with Investissement Québec. That's something we could be working on. We think Canadian banks could offer some incentives for investing in Canadian clean tech. We know that Canadian banks have invested a lot of money in oil and gas because it's a core Canadian business. We understand that. However, we think that the Canadian banks could get some privileged solutions from the Canadian government to invest in clean tech.

[Randeep Sarai, Liberal, Surrey Centre, BC]

Thank you.

My next question is for Mr. Pochtaruk from Heliene. I just want to know why solar panels, when you export them to the U.S., are tariffed. Are they tariffed because a significant number of their components are made in China or other places that are tariffed in the U.S., or is there something else factored into that? I've met some other Canadian solar manufacturers before and that was my understanding. I just want some clarity on that.

[Martin Pochtaruk]

Of course.

No, we do not use Chinese solar cells. Chinese solar cells will have an anti-dumping and countervailing duty—if we include that. Canadian exports to the U.S. were never over 2% of total imports. The U.S. International Trade Commission, in its assessment during the section 201 tariff investigation back in 2017, actually concluded that Canadian exports were not producing injury. The International Trade Commission actually agreed with us that Canadian exports should not have been included.

However, then U.S. trade representative Robert Lighthizer and then president Trump actually did include Canada and everybody. It was a catch-all type of—

[Randeep Sarai, Liberal, Surrey Centre, BC]

Is that still pending?

[Martin Pochtaruk]

It is still going. Right now we are paying 18%. That is still happening. That has not been resolved. We have an opportunity to resolve it now with the Biden administration.

[Randeep Sarai, Liberal, Surrey Centre, BC]

Thank you.

My next question is for Mr. Sinha.

You have what seems like an amazing technology to reduce the carbon footprint. How can the government help you export this more broadly? Cement is used globally. It would be very good for the world and for Canada if we could reduce from double digits the greenhouse gas emissions from a major global contributor.

[The Chair, Liberal, Judy Sgro]

Could we get a brief answer, please?

[Apoorv Sinha]

I think the main framework is a four- to five-year game plan on engaging with industrial partners in other countries.

I'd be happy to talk about that more off-line, but currently there's no precedent for this.

[Randeep Sarai, Liberal, Surrey Centre, BC]

If you could submit something, that would be great.

Thank you.

[The Chair, Liberal, Judy Sgro]

Terrific. If you could submit it to the clerk, Mr. Sinha, we'd appreciate it.

We will move on to Mr. Lewis for five minutes, please.

[Chris Lewis, Conservative, Essex, ON]

Thank you very much, Madam Chair.

Thank you to all the witnesses. There was some really good testimony this morning.

My first question is to Mr. Breton, through you, Madam Chair.

I'm fortunate enough to sit on our auto caucus, as well as to be part of the CAAM committee, which is a special committee on economic relations recovery between Canada and the U.S. I was listening very intensely when you were talking about all the job creation and those types of things. I also recently had a conversation with the Canadian global auto manufacturers. I understand there to be about 121 new EV models coming to the market by 2030.

My riding of Essex is down by Windsor, so it's next to the busiest international border crossing in North America. I know that our manufacturers, our tier twos, are actually hemorrhaging jobs to the United States because they can't get people—people being commerce across the border. They can't get clients in and get them back over. If they do, they have to quarantine for 14 days or pay very hefty fines.

These manufacturers, I'm assuming, are going to be building all of the parts for your clean technology to go into new vehicles, but still under the major players in the world when it comes to auto. Have you run into that issue yet? Are you concerned about that? Are there any thoughts?

[Daniel Breton]

Just to make sure I understand, are you talking about the fact that because of COVID there are some problems going from the U.S. to Canada and vice versa?

[Chris Lewis, Conservative, Essex, ON]

Exactly.