International Trade Committee on May 14th, 2021

[Marco Presutti]

Certainly. I can elaborate a bit on Atlantic and other jurisdictions.

We have identified some priority areas where we have been working very closely with provinces and their utilities across the country to try to get the infrastructure built. We see the real value.

You mentioned the Atlantic provinces. One of the projects we have been putting a tremendous amount of effort into with our colleagues from ISED and other government departments is referred to as “the Atlantic loop”. It's essentially transmission infrastructure that would connect provinces like Newfoundland and Labrador and Quebec, which have surplus clean power, to jurisdictions like Nova Scotia and New Brunswick, which are still working to get fossil fuels out of their generation mix.

We have been working through a number of intergovernmental committee processes to do due diligence on the projects and to try to figure out the best route and the best technologies. The biggest challenge in the electricity space is that, ultimately, the way our systems work in Canada is through ratepayers. Households and businesses end up covering the lion's share of the costs in building new infrastructure.

[The Chair, Liberal, Judy Sgro]

Thank you, Mr. Presutti. I'm sorry to cut you off. I just have to move on.

Monsieur Savard-Tremblay, you have six minutes, please.

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

Thank you, Madam Chair.

I would like to welcome our new witnesses and thank them for their contribution to our study today.

I must admit that I wasn't sure whether this question is for the Department of Foreign Affairs, Trade and Development or the Department of the Environment. If you want to speak up, please do so.

The budget states that:

The government intends to launch a consultation process on border carbon adjustments in the coming weeks. This consultation process will begin in the summer with targeted discussions, including with provinces and territories, importers, and exporters...

In addition, on March 10, 2021, the European Parliament voted in favour of a carbon adjustment mechanism. European parliamentarians chose to support carbon pricing on certain goods imported from third countries, if those countries are not ambitious enough in terms of climate change, of course.

To your knowledge, is this mechanism consistent with the requirements of the World Trade Organization?

[Rosaline Kwan]

Thank you for the question.

I would like to invite Ms. Huddleston from ECCC to respond.

[Jeanne-Marie Huddleston, Director General, Bilateral Affairs and Trade, International Affairs Branch, Department of the Environment]

I can speak generally to border carbon adjustments, but not in the context of the WTO. Perhaps a GAC colleague can add to that point.

In the context of border carbon adjustments, as noted, this is something that Canada is exploring as a possible measure to ensure, as we transition to a low-carbon economy, that it is achieved in a way that is fair and predictable for our businesses and that it supports international competitiveness for Canadian companies. As noted, the budget indicated that the government will be launching a domestic consultation process, which we expect to happen in the coming weeks.

We are working with other like-minded countries, such as those in the EU, to consider how this approach more broadly fits into global strategies for countries to meet their climate targets while ensuring a fair and predictable environment for businesses.

With respect to the European proposal, Canada did submit formal comments to the EU as part of their consultation process, which, among other things, underlined Canada's robust price on carbon. We also know that the United States has made some comments, but they're also looking at this.

I would say this is still an evolving space in terms of policy.

I might cede the floor now to Doug or Rosaline from GAC. I'm not sure if you have anything with respect to WTO.

[Doug Forsyth, Director General, Market Access, Department of Foreign Affairs, Trade and Development]

Sure, thanks, Jeanne. I'm happy to add to your comments.

Good afternoon. Thank you for the question, Madam Chair.

Yes, as Jeanne said, this is an evolving policy space. It's very topical, no question about it. There is a lot of interest from around the world. I think a lot of that is being driven by the European Union. They announced that they have been conducting a number of studies and analyses, and I understand they will be in a position to release, as part of their broader environmental package, a CBAM, a carbon border adjustment mechanism. There will be details on that in mid-July. We are following this very closely, obviously, as Canadian exports to the European marketplace could be impacted.

As to whether it is WTO-consistent, well, we don't know. I think this is the challenge with respect to carbon border adjustment mechanisms. There have been a great number of studies over the years and no one has yet implemented one that is WTO-consistent, so we're watching carefully. As Jeanne noted, Canada is currently analyzing whether that policy is appropriate for Canada. We'll continue that analysis, and the consultations will follow later this year.

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

Thank you.

According to the budget, consultations are expected to begin by the summer.

Has a timetable for consultations already been established? Do you have any idea of the sectors that will be covered? For example, will the energy sector be included?

[Jeanne-Marie Huddleston]

Thank you for the question.

My understanding is that the intent is to consult broadly and to launch these consultations domestically in the near term. I'm afraid I don't have precise details on hand, but I'm very happy to follow up and provide additional information.

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

Thank you.

For Canada to achieve clean and sustainable economic competitiveness, a great deal of coordination is needed within the federal and provincial governments, and among them.

What interdepartmental coordination and programs are planned for clean technology goods and services?

[The Chair, Liberal, Judy Sgro]

Can anyone give a brief answer to the comment? Otherwise, I will move on.

Go ahead.

[Jeanne-Marie Huddleston]

I can respond quickly to that.

Within the federal government, as it relates to climate change, we are very much taking a whole-of-government approach. That includes dedicated regular meetings at the assistant deputy minister and deputy minister levels to ensure that departments are working together and mutually supporting the various programs and policies that have been proposed or announced, and then for individual programs—

[The Chair, Liberal, Judy Sgro]

Thank you very much for that answer.

[Jeanne-Marie Huddleston]

Okay.

[The Chair, Liberal, Judy Sgro]

Thank you, Ms. Huddleston.

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

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

Thank you very much.

Mr. Presutti, I wanted to come back to the discussion we were having earlier. I suppose I took you to mean—and you can correct me if I'm wrong—to both increase the capability for transmission between provinces and also actually try to build a more common grid and have grid interconnectivity.

I know you were talking about a project that you're looking at in eastern Canada, but of course in western Canada the provinces of Saskatchewan and Alberta still use a significant amount of coal to generate their electricity and are bookended by the provinces of B.C. and Manitoba, both of which have a considerable supply of hydroelectricity. I'm wondering if the department is working with provincial partners in a way similar to what you described on the east coast with western provinces and exploring not just the possibility of enhanced transmission between western provinces, but also the possibility of building a more interconnected grid in the western region.

[Marco Presutti]

Thanks for the question.

We are in fact working across the country. We've done technical analyses and studies over the course of the last several years to identify the most promising projects that we think can help with emissions reductions and also keeping rates affordable for Canadians.

As I mentioned with the Atlantic, we have work under way with Saskatchewan and Manitoba right now to advance a project known as the Prairie Link, so essentially some grid integration between the two provinces that would allow surplus clean power from Manitoba to flow into Saskatchewan to help with retiring some of the coal. We're doing the same thing in British Columbia. We have a dialogue under way with BC Hydro, the province and the Canada Infrastructure Bank to look at how we can build some grid connections that would help connect natural gas facilities in the northeastern part of the province, which would help it use electric drives instead of gas drives to lower its emissions.

We are in fact looking across the country and trying to work with any of those provincial jurisdictions and utilities that want to work with the federal government. Certainly, electricity is a provincial domain, so we have to be working in lockstep with those jurisdictions.

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

When you're undertaking that work, are you looking at opportunities, if there's new infrastructure being built, whether it crosses provincial boundaries or whether it's within a province but going to newer areas, to try to piggyback other important infrastructure like broadband onto those projects, or is your mandate narrowly focused on issues of electricity?

[Marco Presutti]

The work we've been doing is primarily around electricity. When we try to develop new transmission infrastructure, we're often working in existing corridors. In fact, in at least two of the three cases that I've mentioned, it's existing corridors where we're trying to add more, or beef up existing transmission.

I know there are other parts of the government, other departments and perhaps folks here who might be able to speak to broadband and other initiatives, but not so much me.

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

Thank you.

My next question is a little more general, although it might be most properly directed to the Department of Industry. One of the recurring themes at this committee over the course of this Parliament has been hearing from a number of folks in industry, both on the employer side or business side and from a number of labour unions as well, that Canada stands out among our international trading partners for a distinct lack of industrial policy and planning.

Of course, we're here to talk about how to increase export opportunities. We often talk about trade deals, but in the Canadian context, it seems we do that without a concerted plan for what we want strategic industries to look like in the next 10, 20 or 30 years: I think, for instance, of Canada's lack of a plan for the aerospace industry or the automotive industry.

If we have those plans, please table them with the committee. However, we've heard repeatedly—including just earlier from our last panel of witnesses—that Canada is not doing a good job of this and that it would bring benefit in terms of helping industry coordinate some long-term planning, which they don't always have the capacity to do as they try to meet the short-term demands of their industry. Also—and I think we've seen a little bit of this today with some of the questions that get punted around—sometimes different government departments don't really know what their partners are working on, so you don't get a cohesive plan emerging.

I'm curious about the philosophy behind this, whether it's a matter of resources and when the government plans to get serious about convening its interdepartmental partners and industry to develop explicit medium- and long-term plans for certain strategic industries.

[The Chair, Liberal, Judy Sgro]

There are about 30 seconds left for an answer, if that's possible.

[Andrew Noseworthy]

The short answer would be, sir, that we are collaborating very closely. We have regular communication among all the people who are here on this call.

I think we're at a point of dramatic industrial transition, so helping companies understand things like net zero and understand what's necessary now is actually quite a bit different from what it would have been, say, 18 months ago, because markets are progressing so fast.

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

With the last little bit of time that I have, could you—

[The Chair, Liberal, Judy Sgro]

I'm sorry, Mr. Blaikie, but you don't have any more time on my clock.

Mr. Hoback, go ahead, please.

[Randy Hoback, Conservative, Prince Albert, SK]

Thank you, Chair. I can't believe we're having a meeting with officials and Steve Verheul is not here. I think it's a first.

It's nice to see you again, Mr. Forsyth.

My first question is for Ms. Kwan.

Ms. Kwan, I'm curious about how you define the idea of clean tech in your department when you're saying companies can qualify for your programming. What are the criteria to be considered a clean-tech company here in Canada?

[Rosaline Kwan]

Thank you for that question.

Of course, clean tech, as evidenced by the diverse set of witnesses who have appeared before this committee, applies to many different sub-areas, if I can call them sub-areas. Some are quite deep on their own, in terms of technologies and application. It is, as we see it, a cross-disciplinary, cross-platform sector, if you can still limit it by that terminology.

Clean tech could cover what some people call “pure play”: the technology side of decarbonization of certain products or services. It also, as we've heard, applies to the oil and gas sector, the energy sector, the mining sector, the agriculture sector and so on, because the implications of reducing greenhouse gas are so wide and so important. For us also, those are considered areas to which clean technology could be applied.

I'm not an expert, by any means—I don't want to portray that—but there is a taxonomy for clean tech that is used when we do data and data strategy.