International Trade Committee on May 7th, 2021

[The Chair (Hon. Judy A. Sgro (Humber River—Black Creek, Lib.)), Liberal, Judy Sgro]

Welcome to all of the committee members and witnesses.

Today is meeting number 29 of the House of Commons Standing Committee on International Trade. Today's meeting is webcast and is taking place in a hybrid format pursuant to the House order of January 25.

Before we start with our witnesses, Mr. Savard-Tremblay, you issued a notice of motion regarding Bill C-216. All of the members have it. Can I suggest that we reserve 15 minutes at the end of the meeting to discuss it, or do you want to discuss it now?

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

That is precisely what I wanted to ask you, Madam Chair.

The fact that you are suggesting it is perfectly fine with me, and I thank you.

[The Chair, Liberal, Judy Sgro]

Thank you very much, Mr. Savard-Tremblay.

Resuming our study on clean technology exports, pursuant to Standing Order 108 and the motion adopted by the committee on Friday, March 12, THE committee will resume its study of Canada's exports of environmental and clean technology goods and services.

Before us today, as witnesses for this study, we have, from the Canadian Association of Petroleum Producers, Tim McMillan, president and chief executive officer; from First Cobalt Corp., Trent Mell, president and chief executive officer; from the International Brotherhood of Electrical Workers, Matt Wayland, executive assistant to the international vice-president and Canadian director of government relations, and Ross Galbraith, international representative; and from Pyrowave, we have Jocelyn Doucet, president and chief executive officer.

Welcome to all of you, and thank you for taking the time to appear before the committee today.

Mr. McMillan, you have the floor, please.

[Tim McMillan, President and Chief Executive Officer, Canadian Association of Petroleum Producers]

Thank you for the opportunity to join you in this important discussion your committee has undertaken.

My name is Tim McMillan. I represent the oil and gas producers in Canada. I'll tell you a little bit about our association. We represent both large and small companies that explore, develop and produce natural gas and oil throughout Canada. Our member companies produce about 80% of both of those commodities. With them and our associate members, who are involved in the service side of our business, we generate about $116 billion worth of revenues a year, and we make up the largest component of Canada's exports.

I know that today we'll be speaking specifically about technology and clean exports. I will get into that in a moment, but we believe that responsible oil and gas development, driven by technology and innovation, is essential to a healthy Canadian economy.

Our industry recognizes the importance of delivering reliable, affordable, and responsibly produced energy that addresses important social and environmental issues, including climate change. We believe that Canada's oil and gas has a critical role to play in an integrated energy system, and is part of the global solution needed to tackle climate change. CAPP believes Canada is well-positioned to become a global supplier of choice. World energy demand is growing, and we have some of the highest quality reserves in the world.

Canada is obviously an environmental leader in general, and we take our ESG responsibilities very seriously. I think that when we look at oil and gas producers globally, Canada truly stands out, and when you look at the world's top 10 producers of both of those commodities, we are unique. The other nine include Saudi Arabia, Iran, Iraq, Nigeria, Venezuela—countries that just don't share our capacity to innovate, drive technologies, or implement them on the ground. That gives us a unique role to play, and I'll speak to that more in the moments ahead.

On innovation and technology, almost 40% of all clean-tech and green-tech investments made in Canada are made by the oil and gas industry. We have seen studies recently that say that as much as 70% of green and clean innovation spending comes out of the oil and gas sector, but we use a number of a little less than 40%, and it's having a great effect.

Over the last decade, the oil sands, for example, have seen an over 20% reduction in greenhouse gases per barrel. According to IHS CERA, a research group, it is predicted that over the next decade, innovation and technology will continue to drive a further 20% to 25% emissions reduction.

As I noted earlier, other countries that are producing large amounts of energy globally don't have this capacity. I think that Canada has a responsibility to develop these technologies and innovations and, ultimately, see them adopted globally. We most certainly are seeing that happen.

Other contexts that I think would be important are the following. If we look at energy demand globally, it is growing. It is growing across the board—every energy source, including oil and gas. We are expecting, according to the International Energy Agency's best-case scenario, to get back to record demand for oil and gas as early as 2023. We will continue to see both of those commodities growing aggressively to 2040, the end of that forecast. Gas will grow aggressively, but oil will continue to grow at a slower pace.

By 2040, the International Energy Agency expects that oil and gas will grow to a level of over half of all energy consumption globally, meaning that gas will overtake coal for the first time, which brings me to the largest single opportunity Canada has to lower global greenhouse gas emissions.

Today, there are almost 300 coal-fired power plants under development and under construction. Canada will have the lowest emission LNG, once our first major LNG facility is completed. We have done some work to look at this. If Canadian natural gas were to be used to offset the new build-out of coal in Asia and around the world, we would actually only need four facilities, the size of the one that's currently under construction, to entirely meet Canada's Paris commitment.

We've looked at the numbers another way, that if the almost 300 coal-fired power plants under development and construction were offset with Canadian natural gas, the savings of greenhouse gases globally would be more than Canada's entire greenhouse gas emissions today. We would be at net zero if we just took on the responsibility of offsetting the current build-out of coal.

There are a couple of challenges for Canada to meet that objective, which I would like to highlight for the committee.

One is the ability to recognize those reductions, which were set aside in article 6 of the Paris Agreement to recognize international offsets. That is the one article of that agreement that has not been finalized. Until it is finalized, the strong efforts by Canada to continue to drive down our emissions per barrel, per gigajoule of gas cannot be recognized and there is no incentive for Canada, or increased incentive, to offset those coal-fired power plants and no incentive for China or India or the other countries to get Canadian gas to do their part to offset it as well.

A couple of other areas of challenge that I'd highlight for the committee are things as simple as the infrastructure to get our products to market. The regulatory system in Canada is viewed by global investors to be challenging. Major pipelines have been cancelled, and as we build the LNG facility that's currently under construction, getting the pipeline from the gas developments to the coast is one of the big pieces of infrastructure that's needed and has been a challenge to this point. I'm very confident that it's well positioned and will get built.

I would like to highlight the other technologies that are currently coming through the process. In the recent budget, there is the carbon capture tax credit. We have 90 days of consultation to ensure that it will be a workable model that can continue to allow Canada to drive down its emissions.

I would highlight some serious concern that enhanced oil recovery was specifically excluded from that tax credit. I think that should be reversed if we want to ultimately reach the objective we're all looking for.

Some of the funding around IISD to enable infrastructure to be built is going to be very positive.

I would be happy to take questions at the conclusion, but ultimately, maybe the last message I would leave with the committee before I conclude is that Canada needs to be competitive. We need to be attracting investment in our energy resource development if we want to develop the technologies that are used here and ultimately exported around the world.

Over the last five or six years, we have seen a decrease in capital investment in the energy sector in Canada, from over $80 billion to about $27 billion this year. That's a substantial decrease. I think there is a lot of room for growth, a lot of opportunity, and I look forward to your questions about how we can contribute into the future.

Thank you, Madam Chair.

[The Chair, Liberal, Judy Sgro]

Thank you very much, Mr. McMillan.

We will move on to First Cobalt.

[Trent Mell, President and Chief Executive Officer, First Cobalt Corp.]

Thank you, Madam Chair.

I would like to thank the members of the Standing Committee on International Trade for undertaking a study on Canada's exports of environmental and clean technology goods and services.

Our presentation will focus on the export of batteries, specifically batteries for electric vehicles, and Canada's unique position to play a dominant role in the sector.

As a proud Canadian and the CEO of a publicly traded company in the clean technology space, I'm excited by the opportunity for the next generation of Canada's industrial footprint. After talking about our company First Cobalt, I'll then focus on opportunities for Canada in the context of what I think is happening in the U.S. under the new Biden administration with respect to electric vehicles and specifically the battery market.

Against the backdrop of the EV revolution, the Biden presidency, I believe, represents a generational opportunity for this country, and specifically for our automotive sector, our mining industry and the chemical industry. There's a window of opportunity that could generate literally billions of dollars of economic activity, from which Canadians would benefit for generations through a reinvention of our export-focused auto supply chain.

Clean tech has come of age, and policy-makers in this country have an opportunity to seize the moment, as Canada is uniquely positioned to play a leading role not just vis-à-vis the U.S., but in the world. However, an important caveat that I want to underline in this statement is that massive investments are already being made around the world today. I already see a gradual erosion of the competitive advantage that we have before us, and I think it's important that we look to making some bold decisions right now.

I'd like to talk a bit about First Cobalt. We're a Canadian-headquartered, Canadian-led cobalt company. We own the only permitted primary cobalt refinery on the continent, and we're currently in the process of recommissioning and expanding a refinery in northern Ontario. Initially we're going to produce 25,000 tonnes of cobalt sulfate per year—that's a product that goes into electric vehicle batteries—and thereafter we're looking to expand even further to process material from the growing battery recycling market. Our initial production equates to about 5% of the global market for cobalt and 100% of production on the continent. By contrast, 80% of supply today is coming from China, with about 14% out of Europe. There's no production in the U.S. We also have an exploration project in Idaho and have exploration land in northern Ontario, with 50 past producing mines, in what's called the “cobalt camp”.

Our team is led by Canadians. We have more than 250 years of combined expertise in our start-up, both in mining and in the refining industry.

In December of last year we were the grateful recipients of $10 million in public funding to support what is an $80-million investment to restart our refinery: $5 million was from the Government of Canada in the form of a loan, and $5 million was provided by the Government of Ontario in the form of a grant. This funding is a small part of the $80 million, but it was an important catalyst. It enabled us to raise additional capital and accelerate our strategic plans to play a role in the transformation of our supply chain.

Cobalt, notably, is one of 35 elements identified by the U.S. Department of the Interior as a critical mineral. Critical minerals are those that are deemed essential to the economic and national security of the U.S., the supply chains of which are vulnerable to disruption.

Upon his election, President Biden announced a 100-day review of the critical mineral supply chain to determine how the U.S. government could reduce its vulnerability to these disruptions. All of the cobalt in American electric vehicles today is imported, so First Cobalt is an important part of that solution, starting as early as next year.

Canadian government support for a transformation of our auto supply chain more generally is going to give our industry an edge, broadly defined, not only among electric vehicle automotive companies, but in the chemical sector and the mining sector. It will also give us an edge in the rapidly growing interconnected market. Countries around the world are competing today for about 300 billion U.S. dollars' worth of investments in the EV supply chain. I want to underline that the most expensive piece of an electric vehicle is the battery and that it's made up of raw materials, almost all of which we have right here in Canada.

I want to turn to the Biden presidency, if I may, and what I see as a golden opportunity for us and our own EV ambitions.

Against the backdrop of growing EV adoption rates around the world, the Biden presidency presents an opportunity for the private sector, not just in the U.S. but also here, to work with governments. The most significant initiatives over the next four years of this administration may well be policies addressing climate change. For the U.S. to meet its Paris ambitions, aggressive actions will be required to influence industrial and consumer behaviours in the way we live our lives.

We believe the President's commitment to install up to half a million charging stations is sending a very clear message that the administration is going to support the transition to EVs. They also plan to increase incentives and tax breaks for EV purchases. Shortly after inauguration, President Biden reiterated a campaign commitment that they're going to transition their government fleet to zero-emission vehicles.

All of these developments in Washington present a really interesting opportunity for Canada, as the neighbour to the north. We have the industrial footprint, raw materials and engineering talent. We can play an important role and be a major player in the global EV supply battery chain, particularly in the largest consumer market in the world just south of our border.

President Biden's $2-trillion clean energy plan includes sweeping proposals designed to create economic opportunities while also tackling climate change, notably addressing the biggest, or one of the biggest, source of emissions— internal combustion engines.

EVs represent a megatrend. I don't want to use a buzzword, but it's an important one for our industry. It's a megatrend that's going to forever change the way we get around. The electric vehicle revolution has been described as an arms race. I think it's well known that North Americans are lagging behind. We lag behind Asia, and now we lag behind Europe. Make no mistake, change is coming here as well, and the change is coming pretty quickly. President Biden's focus on climate change and the flurry of EV-related investment announcements is like pouring rocket fuel on a market that's already one of the most consequential trends that we're faced with today.

The number of EV models available on the U.S. market last year was only 16. This year it's going to be more than double to at 39. By 2025 there are going to be 120 different models available. That's the sign that change is coming. As battery technology has evolved, it's going to include pickups, SUVs and crossovers, that is, the bigger vehicles that North Americans and Canadians like and want to drive. As consumer demand shifts to EV, so too must our industrial investments.

Back to Canada, I think the transformation of our auto supply chain is going to give Canada an edge when it comes to competing for the billions of dollars of capital investments being made around the world, not just in EV plants, but also in the batteries that power them. That's where I think our focus needs to lie.

Federal and provincial governments are already investing $500 million in Ford's Oakville EV and battery assembly plant. GM meanwhile is putting $1 billion into their CAMI plant in Ingersoll to produce commercial EVs. These types of investments create enormous opportunities. It's up to us now to work our way up the supply chain and try to connect some of the gaps that are emerging in our supply chain, or the new opportunities, as I like to see them.

I think there's more that Canada can do to transform the auto sector. Battery production has to be at the heart of the next steps the government takes in this area. This is where the future jobs are going to be, and where the investments will be and currently are today.

Policy-makers in Canada, if I may say, must continue picking winners as we go forward and supporting them with financial and regulatory measures. They have to foster those investments to bring the capital to our country.

By way of illustration, the EU in December 2019 approved $3.2 billion in subsidies to help boost their lag in competitiveness vis-à-vis Asia in the battery sector. That payoff was almost immediate. Despite COVID and the drop of passenger sales generally, EV sales were up 137% last year over 2020. They're now a bigger market than China.

They started 2021 with a bang as well and announced another €2.9 billion in support for yet more battery sector investments in R and D, production and installations. That unlocked, in turn, about $12 billion of private sector investment. I guess the policy gamble paid off in Europe. We're seeing it with advanced materials, cells and modules, battery systems and recycling, all now rolling out across Europe. Europe's stated goal was to produce its own battery cells by mid-decade. It's an ambitious statement in a sector that's dominated by Asia, but it looks like they're going to get there.

Canada has something Europeans don't have. We have vast mineral deposits. That's where it all starts. With these deposits, our governments should be focused on connecting the value chain from our mines through to the assembly plants, with a keen focus on battery production here in Canada. This involves not just mining the materials, but also the chemical processing, battery cell manufacturing, battery pack assembly and, of course, at the end of the life cycle, recycling the batteries themselves.

As a nation, Canada and Canadians must embrace mining. It is the solution to global warming. Without minerals, there's no clean energy future. As a next step, we need an industrial policy that's going to be centred around benefiting Canadian resources at home rather than shipping them abroad, as we too often do.

This means turning Canada into what I think could be a global battery powerhouse. Industry can't do this alone. Like Europe, I think it's going to take co-operation between the public and private sectors in the form of both policy and financial incentives.

I want to conclude by offering this perspective. There's no reason, in my opinion, why LG Chem, SK Innovation, Panasonic and all of the battery makers around the world shouldn't be looking to Canada for their next battery manufacturing investments. We've seen billions of dollars of investments going towards the U.S., and I think it's our turn.

To get there, we need a team Canada approach to attract this investment in the same way the federal and provincial governments court automotive investments. Government funding programs have to match the private sector, not necessarily dollar for dollar, but we have to be at the table together. I think Canada can win the battle to create a North American battery supply chain, given our abundant natural resources, not to mention our proximity to a clean source of power. Hydroelectric power and nuclear have a huge competitive advantage in an ESG world.

We have the markets, the proximity to the markets, and we have a deep pool of engineering talent. I think we have all the ingredients.

Before I conclude I want to leave you, if I may, with three ideas. First, all levels of government have to partner with industry, and we have to seize this window of opportunity now. Time is ticking. I think next year is going to be too late.

Second, the best way for us to partner is to do as the Americans and the Europeans are doing, and that is to pick the winners and provide some broad, imaginative opportunities for cash-based incentives and subsidies to the industry.

Third, and I've said this already, really the time to act is now. Many western countries are ahead of us, notably Europe and the U.S., as I've mentioned, not to mention China, Japan and Korea that were already ahead of Canada.

The green revolution really is here to stay. There's no going back. It's up to all of us to work together to ensure Canada is a leader in this new world.

I want to thank you for your time and, again, I'm happy to answer any questions.

[The Chair, Liberal, Judy Sgro]

Thank you very much, Mr. Mell.

Now we move on to the International Brotherhood, with Mr. Wayland, please.

[Matt Wayland, Executive Assistant to the International Vice-President and Canadian Director of Government Relations, International Brotherhood of Electrical Workers]

Thank you, Chair, and you'll notice—we didn't plan this on purpose—that our presentation will dovetail nicely with Trent's, from Cobalt.

Good afternoon, committee members, fellow witnesses and guests. I would like to thank you for allowing us to present here today to the members of the Standing Committee on International Trade for your study on Canada's exports of environmental and clean technology goods and services.

My name is Matt Wayland. I am the executive assistant to the international vice-president and Canadian director of government relations for the International Brotherhood of Electrical Workers, or IBEW. Joining me here today is Ross Galbraith, international representative for the IBEW from Atlantic Canada.

The IBEW represents 70,000 members right here across the country in Canada and 775,000 members in North America who work in a variety of sectors in the electrical industry. The IBEW is the longest-standing and largest union of electrical workers in the world. Work in the electrical sector is extremely complex, and the majority of our members work in highly skilled trades, technical and professional jobs, with many coming from science, technology, engineering and mathematics, or STEM, occupations, such as the various types of technicians and technologists we have, members of the skilled trades, engineers, information technology and communication specialists.

As technology in the electricity industry has changed over the last 130 years, we've been there to change along with it. We welcome the work of the committee to undertake a study of the Canadian exportation of green, clean and low-carbon technologies.

We firmly believe that there are many opportunities, as the other guests have mentioned, for Canadian technology in a variety of world markets, from our neighbours, the United States, to other growing countries and regions that are hungry for clean tech like Europe, Asia-Pacific, China and India, to name a few.

In drafting our remarks, we wanted to focus on the motion before this committee, and also ask ourselves just what clean technology is.

A recent post by Export Development Canada defines clean technology or clean tech as “any process, product or service that reduces environmental impacts, fosters sustainability and provides goods that use less energy and fewer resources than the industry standard.”

The article goes on to quantify the growth of the clean-tech sector. Clean-tech exports have been increasing at a compound annual rate of 4% since 2008. By 2015 that value had reached $1.2 trillion yearly and is now projected to be over $2.5 trillion. Growth in this sector will only accelerate, as the other witnesses have already explained. Due to the simple fact that the world has recognized the existential threat posed by climate change, clean tech is becoming an essential component of all sectors of the world economy, not just here in Canada.

Although there are significant export opportunities in the clean-tech sector in industrial and extractive processes, transportation, recycling, energy efficiency, water management and agriculture, our presentation will focus on our area of expertise, which is electricity.

We all know the foundation of a modern society is built on access to safe, reliable and high-quality electricity. It heats and lights our homes, powers our communication and entertainment, and the many Zoom meetings we've been on over the last year and a bit. It enables information technology and increasingly will be relied upon for transportation.

Accordingly, there's a high demand around the globe for cleaner electricity generation, energy storage solutions and capacity, better utilization of our electrical grid to ensure efficient use, and reliable delivery to the end consumer.

In the interest of time, we're going to focus our comments on electricity generation and smart grid development, which includes energy storage.

We are a world leader in clean generation, with 80% of Canada's electricity coming from low-carbon sources such as hydro, nuclear, wind and solar. We have pioneered commercial-sized carbon capture and storage technology in Saskatchewan at Boundary Dam 3 for use in the thermal generation sector.

These existing investments and our expertise in this area lead to a massive opportunity to export Canadian-produced clean electricity to our friends in the United States, and Canadian-designed and -manufactured generating equipment can be exported right around the world.

An especially important opportunity exists within the well-established and well-respected Canadian nuclear industry. There's a global demand for large amounts of low-carbon baseload energy as a foundation to intermittent renewable forms of generation and for the cogeneration of hydrogen gas through high-temperature steam electrolysis.

Not only is Canada an established leader with the CANDU nuclear reactor design, but we are also at the forefront of the development of the next generation of small modular reactors, or SMRs, as recognized by the recently announced Canadian SMR road map. These reactors will be built in centralized manufacturing facilities and then transported as modules to their site location and built on site, rather than being built from the ground up.

This represents a huge global market to the country that can build and operate first-of-a-kind demonstration units. Not only can SMRs be mass produced in Canada and then exported around the world, but low-carbon energy produced by Canadian-based SMRs can be used within Canada as we continue to decarbonize our power grid and electrify our transportation sector. There is also the opportunity to export the final product of this technology for the sale of surplus power generated here in Canada to the United States.

Moving on to storage and grid management, you might be interested to know that the North American power grid is the largest interconnected machine on earth. As complex as our current power grid is, the grid of the future will be very different from what you and I know today, and even more complex to meet the changing customer demands and needs. How, when, and where electricity is produced, and when we use it is shifting to integrate variable renewable energy sources like wind and solar and to create efficiency in energy consumption. Smart grids will become more reliable and self-healing, providing sustainable, safe and quality electricity to all consumers.

This means that the grid itself is in the process of changing from a simple pipeline that transmits electrons from point A to point B into a super computer, with millions of controllers and sensors that utilities will be able to use to integrate distributed energy resources and stored energy, increase reliability, reduce waste, and improve energy efficiency across the grid.

Many technology companies are working on solutions to these needs and looking to partner with power utilities across Canada to develop and demonstrate these new grid management technologies. In many cases, the integrated nature of our regulated power grid could serve as a perfect test bed to demonstrate new technology that clean-tech firms can then scale up and scale out, across Canada and for export around the world.

As we have described, there is a global demand that exists for the low-carbon electricity and associated power grids that drive our modern society. Canada has a massive opportunity to export our knowledge and expertise in these areas, but to take advantage of these opportunities I have described, it would be necessary for us to foster the environment where these costly and highly regulated technologies can be demonstrated and brought to market before other global competitors get there first.

In all of the cases above, there is a role to play by our existing electrical utilities. In many cases, however, they are constrained against using rate-payer-generated revenue to invest in innovation or new technology ideas. In addition, many of the clean-tech firms in the nuclear and smart grid fields have gaps in product development funding and scale-up financing.

One of the best ways that government agencies at all levels can help Canadian clean-tech businesses scale up and export to new markets is to adopt measures that will support both clean-tech energy firms and, of course, our existing electrical power utilities, which are willing to test and deploy these new technologies. Many of these are manned by our members in the IBEW.

Whether this is direct financial support for first-of-a-kind, commercial-scale products or other mechanisms that can help overcome the financial risks for both parties in developing and demonstrating innovative technology and bringing it to the market, there is a window of opportunity that exists for Canada to not only claim a share of these global markets but to be looked at as a leader in clean-tech.

If we can foster an ecosystem that supports and nurtures these types of partnerships, clean-tech firms can both demonstrate their new products and services, and also tap into the infrastructure and operating experience as well as the highly skilled IBEW workforces that exist within globally respected Canadian electrical utilities and construction alike.

We feel this is one of the best ways to partner and develop clean-tech products that will benefit Canada, provide good-paying jobs, and compete in a global market.

Thank you to the committee chair and members. Ross and I both look forward to your comments and questions.

[The Chair, Liberal, Judy Sgro]

Thank you very much, Mr. Wayland.

We're on to Pyrowave.

Mr. Jocelyn Doucet, please go ahead

[Jocelyn Doucet, President and Chief Executive Officer, Pyrowave]

Thank you, Madam Chair, and dear members of the committee for the invitation to speak to this committee.

I'm Jocelyn Doucet, a chemical engineer and the CEO of Pyrowave. We're a pioneer and leader in the electrification of chemical processes.

What does that mean? I'm sure you've heard about the electrification of vehicles, but probably less about the electrification of industrial processes. It means that we've developed the most advanced microwave technology using electricity for the production of low-carbon chemicals.

Our first application turns polystyrene waste into its basic constituent, namely styrene monomer, a global commodity with a market of over 30 million tonnes a year used in a variety of different products all over the world. What we do by decomposing plastics into their smaller constituents brings a lot of advantages. It increases the value by turning waste with no value in the market into a useful commodity with a high value and large market.

For example, styrene monomer can be used to make polystyrene, a very popular plastic, but also ABS found in your computers and SBR found in your tires. We recently announced a global partnership with Michelin, which has invested in Pyrowave and is also adopting our technology in Europe.

They will use our technology to move to the 21st century and make renewable styrene monomer from waste using our technology, which is more efficient and cleaner. The output products are identical to virgin...and that will replace fossil-based styrene in the production of synthetic rubber found in tires—all of that with the objective of being 40% sustainable by 2030 and 100% sustainable by 2050.

We also have multiple projects starting in Asia, and this certainly presents a huge opportunity for us. It also demonstrates the world-wide demand for Canadian-themed technologies.

Canada is a leader in clean technology development. Ten years ago, I personally co-founded Pyrowave, a company specializing in what we now call the circular economy of plastics. However, we have much work to do to become a leader in scaling up and exporting technologies worldwide. Having walked the path myself, I'm aware that my experience is unique.

Today, I'd like to share my vision for the gaps that will require special attention if Canada chooses to accelerate the export of Canadian clean technologies as we rebuild the economy after COVID-19.

Here are my three points, and I'll expand further on them.

First, we need to help Canadian clean-tech companies access large capital markets; second, we need to adopt carbon pricing to truly differentiate low-carbon solutions from fossil-based solutions; and third, we need to adopt policies and trade rules that will further enforce the carbon differentiation of Canadian clean technologies and create demand for them abroad.

Regarding investment opportunities, I think Canada already has an impressive portfolio of clean technologies made possible by great programs like Sustainable Development Technology Canada, from which we received very early support.

Past the demonstration stage comes commercialization, which requires a massive amount of capital and access to various investment networks. In order for Canadian companies to export and win on global markets, it's essential to secure financial strength. For that, I invite the government to develop programs to invest in clean tech to stimulate and attract investments, as well as key players into the Canadian innovation ecosystem.

In Europe, for example, clean-tech companies have strong support from the EU through grants, and various mechanisms of financing that attract private investments. If Canada wants to lead this new sector and be able to challenge these competitors, we need to bring elements to attract capital and strategic partners for Canadian companies.

Regarding carbon pricing, I think another element is putting in place a level playing field, so that low-carbon clean tech can truly exhibit its differentiation element at the financial level. For example, in 2015, the IMF issued a report that quantified the total subsidies to the fossil fuel industry. Its methodology was to report post-tax subsidies. These subsidies include pre-tax subsidies, which occur when people and businesses pay less than it costs to supply the energy. To that are added other amounts reflecting damages to the environment and health caused by the use of that energy. In other words, it represents the value that is destroyed or not captured by using this form of energy.

In that study, if we divide the total amount of subsidies by the amount of global emissions, we obtain a price of about $150 per tonne. If I use Pyrowave as an example, the difference in carbon emissions between fossil and recycled styrene monomer is basically anywhere between two to four tonnes of CO2 per tonne of styrene. In other words, by switching to recycled styrene, we reduce emissions by 2 to 4 tonnes of CO2 per tonne. By applying such carbon pricing, switching from fossil to recycled would create a cost differentiation of anywhere between $300 and $600 per tonne.

When you're a global packaging company and you buy 100,000 tonnes a year of styrene, that means you have savings of anywhere between $30 million and $60 million a year just by switching from fossil to recycled. The low-carbon differentiation element is therefore captured in the financials and justifies a switch to low-carbon products and therefore helps accelerate adoption of clean technologies.

An important point here is that I don't think carbon price should be used to finance clean tech because it would mean that you need fossil fuels to power clean technologies and therefore we're doing all of this for nothing. I think that carbon pricing is a mechanism by which clean tech can reflect its true differentiation at the financial level and drive corporate decisions toward low-carbon solutions. In other words, carbon pricing shows how much value is destroyed by not changing to low-carbon solutions.

My third point is related to policies and tariffs. Policies and tariffs can help Canadian clean technologies deploy internationally. Governments can use tariffs to benefit specific industries. It's common to see tariffs being applied when importing countries feel that some industries are unfairly subsidized. If we recognize that fossil-based products are subsidized and because their price does not represent the true cost of the good, we can make an argument that importing such goods creates an unfair advantage against products made with low-carbon technologies.

This concept is called “carbon border tax” and is being discussed right now in Europe and the U.S. It basically imposes additional costs on high-carbon imports that come from countries with inadequate climate rules. At the same time, suppliers at home can get carbon-related rebates to help boost their exports. I believe such policies like tariffs and minimum recycled contents, for example, could help companies currently using or developing clean technologies by creating opportunities for them abroad and here.

In conclusion, my vision of the problem is coloured by the experience we had navigating the ecosystem of clean technology and its positive impacts on our economic growth and job creation. Clean technologies are progress. They represent the evolution of century-old technologies. They're what the high-speed train is to the good old steam train. Who wouldn't say yes to a high-speed train today?

While we have seen tremendous progress in electronics, transportation, computers and software, there is a lot to do with industrial manufacturing that accounts for 45% of global emissions. As I said, we need to help clean technologies access a large capital market. We need to adopt carbon pricing. We need to adopt policies and trade rules that will further enforce the carbon differentiation of Canadian clean technologies here and abroad. This will create the basis of a strong sustainable economy by creating high-quality jobs here and retaining long-term value.

We've seen how rapidly this government invested in solving large problems like COVID-19. Canada can certainly support the delivery of clean technologies around the world and lead this new clean economy.

Thanks for your time and we look forward to questions.

[The Chair, Liberal, Judy Sgro]

Thank you very much, Mr. Doucet.

We will move on to questions from the members.

Mr. Hoback, you have six minutes, please.

[Randy Hoback, Conservative, Prince Albert, SK]

Thank you, Chair, and thank you, witnesses, for being here on a nice Friday afternoon.

I'm going to start off with you, Mr. McMillan.

You started talking a little bit about how natural gas exported into the Asian market would be able to offset the coal-fired plants that are very, let's say, not friendly. Can you explain how that gives us credit here in Canada? How does that work toward our Paris climate initiatives?

[Tim McMillan]

Absolutely.

It's a challenge because today it can't. There's no incentive to offset the coal-fired power plant build-out around the world with Canadian natural gas. The intent of article 6 of the Paris Agreement was to put a structure in place where those credits could be shared by both parties. They could be split in half or it could be a 40-60 split. I think there are a lot of models that would make sense for the priorities of different countries, but as of today there is no benefit.

In fact, by providing more natural gas to offset coal in Asia, Canada just further puts itself behind the eight ball when it comes to meeting our commitments even though we're driving a global emissions reduction by doing it.

Until we get the incentives correct, we're going to continue to see the build-out of coal-fired power plants in countries that legitimately are trying to provide heat for the first time for some of their populations. There are over a billion people in the world who don't have access to electricity. We can look from our high tower of a wealthy nation and cast judgment, but the reality is...let's just find a better way to do it.

[Randy Hoback, Conservative, Prince Albert, SK]

Then we're looking at the global emissions situation and we can actually reduce that and still be strong and providing what we do best.

When we look at our technologies and how we extract oil and gas and compare it with other regions around the world, how do we take those regulations that we now face and compare them, for example, with those in the U.S.?

[Tim McMillan]

That's a great question.

The U.S. is a very good comparison, because when you look at the global top 10 producers, there are two countries that stand out from the rest: Canada and the U.S.

Every other nation that is a top-10 producer does not have our capacity, technology or innovative mindsets, even the U.S. We partnered with them for a 45% reduction on methane emissions. We've now done that and we will meet that goal by 2023, but the U.S. no sooner had signed the commitment than they backed away from it.

Potentially, under the new administration in the U.S., they will play catch-up. I hope they do, but we have seen that time and again, where Canada continues to lead and we sometimes fail to see our partners follow.

[Randy Hoback, Conservative, Prince Albert, SK]

We tend to be the Boy Scouts.

Mr. Wayland, you talked about the Boundary Dam. I'm from Saskatchewan, so I'm very familiar with the carbon sequestration.

Then you talked about the facility that we're building here in Saskatchewan for rare earth elements, and we're excited about that.

As I look at that, how do we take something like the Boundary Dam and actually commercialize it? That's a problem we've been facing right from day one. We have all this great innovation, all this technology, yet it seems like nobody is embracing it; it's just sitting there in Estevan and not being used.

How do you fight this argument about coal being bad when, in the situation in Boundary, coal actually has less emissions than natural gas? Can you maybe give me some information on that?

[Matt Wayland]

Sure, Mr. Hoback. Thank you for the question.

The Boundary Dam 3, as you mentioned, is the first of its kind of commercial size. Certainly there were some hiccups along the way. When you do the first of anything, you're going to expect that. Many of us experienced that on our first Zoom meeting and subsequent meetings.

CCS technology is looked at around the world. I know that you actually have the International CCS Knowledge Centre in Regina that has done work not only within Canada, but around the world, on reducing emissions from existing not only coal plants but other extractive industries that are heavy-resource, whether it's oil and gas, cement or even Nutrien in your home province of Saskatchewan. The technology can be used not just on electricity or coal generation, but it's a technology that can be adapted to other types of heavy carbon use.

As you know, they are able to sequester that carbon, put it into the ground. Our members built, operate and maintain that facility right through to today.

I think it's just a matter of further supports. I know the federal government and provincial government did a lot of support on that. The challenge is the cost, and maybe even the population.

I think we need to look at a Canadian solution. I don't want to raise any alarm bells here, but we need a Canadian solution to energy right across the board, and not province by province or pitting one against the other. We have a variety of energy sources right across this country. We have to embrace them and utilize them.

[Randy Hoback, Conservative, Prince Albert, SK]

Mr. Mell, before cobalt, what other rare earths are the bottlenecks in the electric battery field? I come from Saskatchewan, and in terms of SMRs, we have nuclear. We have existing oil reserves and gas reserves. We have coal. Now, with the rare earths, development and processing here in Saskatchewan, we're already moving into the next generation.

What other areas in Canada do we need to look at that would be potential bottlenecks from seeing us having a complete menu or a completely fulfilled battery being built here in Canada?

[Trent Mell]

The rare earth work going on in Saskatchewan right now is fascinating. The Department of Defense in the U.S. is funding a rare earth plant in California, a project in California.

That asset in particular, that initiative in Saskatchewan, should be viewed as a potential national treasure, because that's an important component to the electric vehicle.

When you get to cobalt, if I look at the batteries or the cathode, the rarest and most expensive material in the battery is cobalt. Today, 70% of that is coming out of the DRC, and the balance is coming out of nickel operations around the world, including Voisey's Bay and Sudbury.

When you look, it's the scale-up factor. You have the EV market growing at 26% per year over the next decade. It's not just that it may be rare today, such as rare earth, but even lithium, which we can get in Ontario and I believe also in Alberta, and graphite in Quebec, and so on. We just need more of it all across the board. Copper out of B.C.—

[The Chair, Liberal, Judy Sgro]

Thank you very much.

[Randy Hoback, Conservative, Prince Albert, SK]

Just one quick question.

[The Chair, Liberal, Judy Sgro]

Thank you very much, Mr. Hoback. I'm sorry, but there's no time. You're over time, because we were getting such a great answer, and I knew we all wanted to hear that answer.

We'll go to Mr. Sheehan, for six minutes, please.

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

We're going to stick with Trent, then.

You had an excellent presentation, Trent. I really appreciate what you're doing here in northern Ontario, and also across Canada and the world. You're leading the way.

You gave three different recommendations: partnering, picking winners and acting now. I had the pleasure of making that announcement for the $5 million loan from FedNor. We partnered with the province to partner with the private sector to leverage that $80 million.

For the record, could you use that as an example for the committee of what kinds of jobs that's supporting now, what kinds of jobs that will develop, and any other economic benefits with what you're doing with cobalt, as an example?

[Trent Mell]

Thank you for that question, Mr. Sheehan. It's good to see you again.

If I go back to the day of that announcement, as a start-up in the Canadian market, it's hard. Capital formation is difficult. That's why I said, “Pick winners”, because there are a lot of wannabes. When I started this company four years ago, there were probably 50 different cobalt companies vying for attention in the market. We just came out of a bear market, and there are only two or three of us left, perhaps.

That announcement allowed us to triple our stock market valuation overnight. That $5 million federal contribution and the $5 million from Ontario led to another $16 million of almost immediate investments in the company thereafter. That kind of collaboration does have an multiplier effect. What it means for us is that we were able to get going a lot faster, frankly, and keep on schedule. When I say go faster, it's to keep to the target we had originally set out, which is to start producing in October 2022.

We have a small local crew that's gearing up. Once we're operating, we're looking at roughly 45 full-time jobs. These are good-paying jobs. It's not like a mining operation—you're there five or 10 years and gone. The Port Colborne refinery that Vale owns has been around 100 years. However, these are long-term and really good-quality jobs. It may not be a lot, but strategically important to the supply chain.

Indirectly, what's the multiplier effect of that? You're going to get at least one to one and a half jobs for every job at the refinery. We have indigenous engagement and ongoing discussions. With construction, we have another 100 jobs or so. For an area like Temiskaming Shores, this is a pretty important driver of economic activity.

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

I appreciate that very much.

For those kinds of jobs requiring talent, is it challenging finding the workers to fill those kinds of jobs in the clean-tech industry?

I'm going to go to Trent, and then, of course, I'm going to go to Matt afterwards with some questions about the trades and being able to work in the clean-tech field.

I'm going to start with you, Trent, and then go to Matt with some questions about the talent that is needed.