Evidence of meeting #133 for International Trade in the 44th Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was emissions.
A video is available from Parliament.
Liberal
Maninder Sidhu Liberal Brampton East, ON
You mentioned the U.S.'s bipartisan carbon bill, the PROVE IT act, which was put forward by both Republicans and Democrats across the U.S.
Can you speak more about this bill so we can all understand it? For those watching, what does it mean? I get the general sense that it's a bill to look at some of the data and the actions U.S. industry has been taking to lower emissions. If they have to deal with CBAM in other countries, they have data to prove they are also going in the right direction.
Principal Economist, Canadian Climate Institute
In the past, bipartisan bills that have come forward on border carbon adjustments have included a carbon price, which has not really moved forward. The PROVE IT act is different because it does not include the explicit imposition of a charge on U.S. exporters.
Instead, it's basically a reporting requirement. It says, “Lafarge, you're bringing in cement. You have to, on your bill of lading, meet these reporting requirements.” That rolls out across about 200 products and a big swath of our industry. Right now, it's an administrative burden—more red tape—but it's ultimately about data collection. It's a step toward imposing a cost on those imports.
Liberal
Maninder Sidhu Liberal Brampton East, ON
My guess is that the U.S. would use that data to help their sales pitch with other CBAM countries. They'll say they're taking steps to lower carbon emissions for some of the products they're looking to export to a country and that maybe, therefore, they should be excluded from a potential carbon duty on things shipped to the EU. Is that right?
Principal Economist, Canadian Climate Institute
The regulations are really complex, and I'm not an engineer, so it gets a little scary.
Basically, this is what happens: “What's your emissions intensity per unit of cement? What's your emissions intensity in another country per unit of cement? Do you have a carbon price? Are there differences? We're going to charge you.” Disclosing your relative emissions intensity to the implementing country that has a tariff is step one. You have to be able to demonstrate what you're doing and avoid punitive charges or double counting—paying at home and abroad. That's really what it's about.
December 11th, 2024 / 4:50 p.m.
Liberal
Maninder Sidhu Liberal Brampton East, ON
If you compare what the U.S. is trying to look at with what Canada has done with carbon pricing, would you say we have a good, competitive advantage compared with other G7 countries?
Principal Economist, Canadian Climate Institute
Yes, I would say our carbon pricing—that was the basis of my talk—is a foundation. It applies to the EU, so there are now companies in the country that will basically have to disclose their carbon content and will have to be assessed against the EU rules today. Then they'll disclose what they're paying in provincial or federal carbon charges and have a fee levied. That increases prices in the EU market.
Liberal
Maninder Sidhu Liberal Brampton East, ON
The work this government has already done to this point gives us a leg-up because we started long before many of the other countries that may be looking into this.
I have 30 seconds left. What other countries are looking at a CBAM type of legislation? I've heard maybe the U.K. and maybe Australia. Are there other countries that come to your mind?
Principal Economist, Canadian Climate Institute
Yes, the U.K. is looking at implementing it, absolutely, and the Australians are thinking about it as well. It's an issue. Misaligned carbon costs and competitiveness are issues that need to be addressed, and CBAM is the tool of choice. They're not going away.
Liberal
Maninder Sidhu Liberal Brampton East, ON
Absolutely, and we need to level the playing field on environmental labour standards, as Ms. Kwan said. I know my time is up, but maybe that's for the next round.
Liberal
Bloc
Louis-Philippe Sauvé Bloc LaSalle—Émard—Verdun, QC
Thank you, Madam Chair.
My question is for Mr. Simard.
We know that Quebec aluminum is one of the greenest in the world.
Please tell us more about your path towards decarbonization, based on your historic emissions and your production.
I would also like you to tell us how we compare to the global industry average.
President and Chief Executive Officer, Aluminium Association of Canada
Thank you for your question.
I'll correct you at the outset, because we can't say that aluminum is green in Canada. As per Bill C‑59, which was passed this summer, such a statement is equivalent to greenwashing. That's why we use the wording “low-carbon footprint aluminum”. That's the wording I'm going to use for the purpose of our discussion.
Since carbon pricing systems were implemented in Quebec in 2012, our industry has adopted an approach to reduce its greenhouse gas emissions as quickly as possible.
Accordingly, we have signed two voluntary reduction agreements, one of which is with the Government of Quebec. We have surpassed the commitments set out in both agreements. We chalked up more reductions than we had anticipated. Right now, that makes us the Canadian industrial sector that has contributed the most to reducing greenhouse gas emissions in Canada.
We emit approximately two equivalent tonnes of CO2 per tonne of aluminum produced, while a comparable coal smelter in India or China emits between 17 and 21 tonnes of CO2 per tonne of aluminum. Today, based on that average, we emit one of the lowest levels of emissions compared to the rest of the world's production.
When we look at the reductions planned over the next few decades, everyone has the same objective, which is to achieve net zero by 2050, as in the industrial sector. The global average, which takes into account emissions related to hydroelectricity, natural gas and coal, is much higher at around nine tonnes.
Canada's average is two tonnes, which is where the rest of the world wants to be around 2045. So we're well ahead of the game. The challenge we face is that to further reduce our emissions, we will have to change the way we produce aluminum.
Bloc
Louis-Philippe Sauvé Bloc LaSalle—Émard—Verdun, QC
I want to ask you two more questions.
You talked about greenwashing, which piqued my curiosity.
I would like to know how the bill affects your members.
Second, can you tell us about the challenge your sector faces with respect to the goal of net-zero emissions by 2050 compared to your foreign counterparts?
President and Chief Executive Officer, Aluminium Association of Canada
When it comes to greenwashing, we need to set things straight regarding certain terms. As I pointed out earlier, we don't use the term “green aluminum”. In fact, we've never really used it. Governments have. It's easier for governments, in terms of public perception, to use the wording “green aluminum” or “our green aluminum” than for the industry to talk about green aluminum, because what that means to us is highly relative.
The Middle East can say that its aluminum is green because it uses natural gas, not coal, and so on. It's too relative a term. What bothers us is that foreign competitors can make claims against which authorities in Canada would have very little recourse, whereas, conversely, those same foreign competitors would be allowed to impose countervailing measures if we used the same language.
The ability to apply these new parameters is very relative, especially since we have to refer to internationally recognized methodologies. That's the main problem with this new regulatory environment.
We'll see how things pan out. Our sector's way of doing things will stay the same because our positions and claims have always been very well documented.
The second part of your question was about the challenge we face in meeting our 2050 targets. We have to develop and deploy disruptive technologies, such as the use of inert anodes or the ELYSIS project in Saguenay, or try to adopt other technologies that weren't developed for our sector. I'm thinking, for example, of carbon capture and sequestration.
Liberal
The Chair Liberal Judy Sgro
Thank you very much, Mr. Sauvé. I'm sorry, but your time is up.
We're moving on to Mr. Desjarlais for six minutes.
NDP
Blake Desjarlais NDP Edmonton Griesbach, AB
Thank you very much, Madam Chair, and thank you to the witnesses for being present with us today.
We're studying, of course, the massive economic and trade impacts of climate change. This is a severe topic we often talk about in this place, and in this committee in particular, we talk about the cost of the very concerning threats made by American President-elect Donald Trump of a 25% tariff, which is concerning and deeply problematic.
The impacts of climate change are extreme and extraordinary when compared to the tariffs presented by the American president-elect. I think this puts into context the very severe reality we're dealing with. In particular, young people, young Canadians and young workers—the next generation—are right now paying into pensions, doing the hard work and wondering whether their products, the things they're contributing to and the work they're contributing to will have value in the future.
We heard from forest producers in Quebec a couple weeks ago, and I asked them what the greatest threat to their industry is. They said the wildfires last year shut down the entire forestry industry for the entire summer, which generated a huge loss. It's a severe issue, and it's something we have to take more seriously in this place. I really hope we can take the time to speak about why we're having this conversation today.
The motion we're debating and studying is, of course, on demonstrating global leadership in emissions reductions, including with the use of pollution pricing mechanisms that will benefit Canada's trading relationship with the EU and others. It's a positive frame, I'd suggest, to a very serious issue. There are opportunities given the crisis. We're talking about the impacts of a crisis.
Ms. Kwan, you mentioned some of those opportunities, and you mentioned recommendations made by the Canadian Labour Congress, one of which I agree with. I've heard it from others as well, including the Alberta Federation of Labour. It's about the need for an industrial strategy.
How do you think an industrial strategy would assist Canadians and Canadian workers? Would it ensure they're able to not only continue to have good-paying union jobs but also contribute to a future their children can be proud of?
Senior Researcher, Canadian Labour Congress
Unions have been calling for an industrial strategy for quite a while now.
If you look across the actions we've been doing, there are parts, pieces and different strategies, but there's no visionary plan that one can actually follow. I say this because we really need one to provide us with some framework to go forward with. I mentioned the industrial policy, and it's in the document the Canadian Labour Congress put out in December 2023—“A Sustainable Jobs Blueprint Part II: Putting workers and communities at the centre of Canada's net-zero energy economy”. Among the economy-focused recommendations is the recommendation to develop a net-zero industrial policy that creates conditions for thriving industries.
I've always felt that we talk about the work we do in terms of the low-carbon economy. That is really good, but on the other hand, we need to push a little further and don't always need to push in the same direction as the United States. We can do our own things. There is no reason, as we produce some of the cleanest steel, that we can't use it in local public infrastructure. Why aren't we compelling the use of that, or local lumber?
This is all part of the rethinking that needs to go into the industrial policy, just as with diversifying the economy. We have a very rip-and-ship model, which is that we rip out the raw stuff, extract it and more or less ship it out. It adds no value for us, and we need to develop value-added downstream activities to create good jobs. I can't go through the whole thing, but certainly that's what is generally meant by that.
We need to create jobs but not just existing jobs. There are new jobs out there in the low-carbon economy that, quite frankly, we can't even imagine yet, just as with the development of AI. There are new jobs coming up, and we really need to provide supports for workers who are transitioning to other sectors, whether they're traditional ones or new, low-carbon ones. We also need to provide them with training for upskilling, re-skilling and skilling in general.
NDP
Blake Desjarlais NDP Edmonton Griesbach, AB
In many ways you're talking about more jobs—more good-paying union jobs for Canadians.
I'll give the example of precision drillers in Alberta. I used to work in Alberta's oil sector, and this is very common. Precision drillers are the folks who drill the well we need to get oil out of. Imagine if one of the largest companies in Alberta could utilize technology and the skills of these workers, who could be rewarded not just in pride but in good paycheques, to diversify their bids for products. Rather than an oil company, for example, saying, “Precision drillers, build an oil well for us”, what if another company said they should drill a geothermal plant? Imagine if that question were presented to them.
As a matter of fact, that happened in 2014 and 2015. A pilot project in Alberta converted an abandoned oil well with the existing skills and technology of the oil sector, and it produced the very first geothermal well in Alberta. Is that an example of the kind of technology that not only provides good-paying union jobs, but also increases and diversifies the immense labour skills and technology we already have?
Liberal
NDP
Blake Desjarlais NDP Edmonton Griesbach, AB
I apologize, Chair. Thank you very much. I'll come back to that.
Liberal
The Chair Liberal Judy Sgro
Ms. Kwan, I'm sure, will find a way to answer that, in addition to her answering the other questions.
Mr. Jeneroux, you have five minutes.
Conservative
Matt Jeneroux Conservative Edmonton Riverbend, AB
Thank you, Madam Chair.
Ms. Kwan, you're someone who has been at the committee a few times. I'm sure you'll find a way to do that. Welcome back to committee.
Mr. Simard, welcome back as well.
Mr. Sawyer, I'm not sure if I've seen you at committee before, but if so, welcome back, and if not, welcome.
I want to pose a question to all three of you first, right off the bat. In 2020, the CBA policy was first announced by the current government, and in 2021, it was included in the Liberal Party platform. Then in 2022, consultations were undertaken by the government to do it.
First off, were any of the three of you consulted as part of those consultations? I'll start with you, Ms. Kwan.
Senior Researcher, Canadian Labour Congress
In the job I do, we keep track of consultations. Did someone approach us? I can't remember, but I know the Canadian Labour Congress and I had conversations with other unions that are interested in the BCA consultation.
Conservative
Matt Jeneroux Conservative Edmonton Riverbend, AB
Just to clarify, either you or somebody you know participated in the consultations, basically.