International Trade Committee on Nov. 1st, 2022

[Brian Kingston]

Our members do manufacture medium- and heavy-duty vehicles as well, yes.

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

I know there is concern about that.

There are many electric bus manufacturers in the Greater Montreal area.

Did they share concerns over this U.S. law with you?

[Brian Kingston]

I think the most important part for the larger vehicles is similar to what we're recommending on the light-duty side, as the U.S. and IRA put forward incentives for commercial vehicles. We should just ensure that on the playing field we're on the same level of what the U.S. is doing. Transport Canada has done some work on this and has an incentive in place, but we have to make sure that what we offer in that space is comparable.

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

Thank you.

[The Chair, Liberal, Judy Sgro]

Mr. Masse, go ahead for two and a half minutes.

[Brian Masse, NDP, Windsor West, ON]

My question is for Mr. DiCaro and Mr. Kingston.

I am concerned about the consumer incentives. The U.S. has $7,500 U.S. federally, which is about $10,000 Canadian, and $4,500 is going to go to used batteries. We have zero. There is now another $500 U.S. one, which I didn't realize.

I want your thoughts on that. I'm being told it's going to distort our market and also keep used vehicles in Canada. That doesn't even take into account, as has been noted, that we don't even have Ontario participating at all.

Let's go quickly to Mr. DiCaro and then over to Mr. Kingston.

[Angelo DiCaro]

This is a great place for discussion. We would say that, no, the current incentives are not adequate for trying to incubate and grow this market, which are going to be vital to both jobs and our economic prospects. We've called for a $10,000 purchase incentive from the federal government. That's doubling the current iZEV incentive. That also opens the door for provinces to do more. We have to do everything we can to close that gap on price.

[Brian Masse, NDP, Windsor West, ON]

Go ahead, Mr. Kingston.

[Brian Kingston]

I completely align and agree with what Mr. DiCaro said. We've been calling for a $10,000 federal incentive. That would put us on par with the U.S.'s $7,500 tax credit. The introduction of an incentive for used vehicles would be extremely helpful, as would incentives for home charging, which we do see in the IRA. It's a serious cost facing Canadians and Canadian households that want to buy an EV. We need something like a tax credit to encourage the installation of home charging. We have much work to do on this front.

[Brian Masse, NDP, Windsor West, ON]

Do you think not having these incentives will actually distort our market? I know, for example, that a lot of people will sell used vehicles in the United States. How do we reach our targets if all of our used vehicles eventually end up in the United States?

[Brian Kingston]

We operate in a totally integrated North American market. That is the foundation of this industry. That's why it's so important that we align with the U.S. in every space possible, including on things like purchase incentives, to ensure that we don't create distortions and that we move in lockstep with the Americans in this transition to electrification.

[Brian Masse, NDP, Windsor West, ON]

The Prime Minister did promise to do this in Washington, and I'm told by my colleagues in Congress and in the Senate that they're a bit irritated about it.

Thank you very much, Madam Chair.

[The Chair, Liberal, Judy Sgro]

Thank you, Mr. Masse.

Go ahead, Mr. Baldinelli.

[Tony Baldinelli, Conservative, Niagara Falls, ON]

Thank you, Madam Chair.

I'd like to thank all the witnesses for being here today. These conversations are quite interesting and timely, with the economic statement coming out on Thursday.

I'd like to get into the questions.

Like some of my colleagues here, I come from an area that has an auto manufacturing facility. It's in St. Catharines, just next door. I spent four summers working at the General Motors powertrain facility. My new vehicle has an engine that was manufactured in St. Catharines. I also have, just across the river, a powertrain facility in North Tonawanda.

As we see these movements towards investments being made in battery cells and modules and new powertrains, from a selfish standpoint, I'd like to see investments being made in St. Catharines and continuing there. At one time, when I was going to university, we had three plants going with three shifts and 10,000 workers. Now we're down to one plant and 1,200 workers. We'd like to get back to that notion. I'm not sure whether it was Mr. Volpe or one of the other panellists who talked about how Canada needs to lead and not simply respond.

You made an interesting comment, Ms. Cobden. You mentioned that the IRA takes an enabling approach, particularly on the manufacturing side with driving investment and pulling in investment, whereas on the Canadian side, we're almost seeing more roadblocks. With some of these vehicle tax credits for having critical minerals, we're looking at 40% content in 2023, 50% content in 2024 and 60% content in 2025. Are we almost too late? I don't think we even have the ability to supply the kinds of critical minerals to meet these kinds of deadlines.

How can we get to that process, to Ms. Cobden's point, and that enabling approach? You said this may be an opportunity for us to re-establish or reimagine our relationship with our largest trading partner. Can you tell us a bit more and maybe provide some comments on that?

[Catherine Cobden]

I'd be happy to. Thank you very much for the question.

As it pertains to the United States and our relationship—and again, I think this is why the committee plays such an important role in keeping an eye on that—this is an opportunity. I want to make sure we all see what we see in the steel industry, which is that climate policy is now becoming trade policy for the U.S. We must keep pace and be there in lockstep with our largest trading partner. Certainly that's what I meant about that opportunity to rethink how we can re-engage as team Canada, all on the same page, in furthering our approach.

Now, as it pertains to the balance question and whether we have the balance right, we are taking a carrot-and-stick approach in Canada, and the U.S. has just a carrot. We're not against sticks. Sticks have a place, no question, but they need to be at a pace that's reasonable and commensurate with the rate of change we're going through as an industry. Otherwise, we'll have no competitiveness left.

If I may, I have one more point. I think we could think through whether we can measure our competitiveness as we do this transformation, and have targets not just for the environment but potentially for our competitiveness as we move along.

[Tony Baldinelli, Conservative, Niagara Falls, ON]

That's excellent.

Go ahead, Mr. Kingston.

[Brian Kingston]

I don't think we're too late. I say that because, particularly when it comes to critical minerals, the United States has put in place very strict sourcing requirements as they try to decouple the battery supply chain from Asia largely and from China in particular. Canada is the only location from which they will be able to source some of these minerals to meet these higher stringencies.

I think the opportunity is there, but you've heard the challenges. It takes 10 years to approve a new mine, and there's a huge infrastructure spend. A lot of things have to happen. The opportunity is enormous, but they have to happen now.

[Tony Baldinelli, Conservative, Niagara Falls, ON]

That's great.

Now, when we look at some of the initiatives—and there was the comment on pulling investments as opposed to the carrot-and-stick approach—we have an article from October 6 in which a gentleman, Michael Belenkie of Entropy Inc., says, “the American production credit is superior to Canada's incentives for carbon capture”. He goes on to say, “We will not invest material amounts of our financing in Canada unless they fix this problem. We will take our capital and we will invest in projects with a strong bias towards the United States.”

That's the great fear I think we all have. How can we get to a point where Canada isn't left behind? Have you supplied any kind of recommendations in advance of the economic statement?

[Catherine Cobden]

I would say we're back to the carrot and stick analogy again. I'm going to overuse this, I'm afraid.

On the carrot side, we need to be strategic. Let's focus on the system-level solutions that can actually help many industries, such as heavy industry, decarbonize. Rather than individualized incentives, what about working to ensure we get affordable hydrogen? What about working to ensure that our CCS incentives match those of the States? For sure, CCS and hydrogen have the opportunity to play a significant role in decarbonizing our economy.

What I'm advocating for is a laser focus on where the best incentives are that can help us along the journey.

[Tony Baldinelli, Conservative, Niagara Falls, ON]

Go ahead, Mr. Kingston.

[The Chair, Liberal, Judy Sgro]

Be very brief.

[Brian Kingston]

We have provided the input. I'd be happy to share it with the committee. It focuses on the SIF program as well as matching the U.S. on EV adoption.

[Tony Baldinelli, Conservative, Niagara Falls, ON]

If you could do that, it would be great.

Thank you, Madam Chair.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

Mr. Miao, you have five minutes.

[Wilson Miao, Liberal, Richmond Centre, BC]

Thank you, Madam Chair.

Thank you to all the witnesses for their appearance today at the standing committee.

Mr. Poirier, one thing Canadian manufacturers and exporters strive to accomplish—the 2,500 manufacturers you work with—is maximizing opportunity.

Given that the IRA has implications for a variety of different sectors, can you give the members of the committee an idea of how some of the manufacturing will benefit from this new act signed into law? How can the Government of Canada help manufacturers realize their maximum potential following the signing of the IRA?