Thank you, Madam Chair.
I'd like to thank the members of the Standing Committee on International Trade for taking the time to listen to what we have to say about the United States Inflation Reduction Act of 2022.
My name is Daniel Breton and I am the president and chief executive officer of Electric Mobility Canada, an association that has over 150 members.
These members include manufacturers of light, medium, heavy and off-road vehicles, suppliers of electricity and charging infrastructures, mining companies, technological corporations, research centres, cities, universities, vehicle fleet managers, unions and environmental NGOs. In short, we are the national voice of transportation electrification.
According to a report published by the International Energy Agency in August 2022, approximately 50% of the energy jobs in the world, in 2019, were in clean energy, which includes clean transportation. Even in North America, where there is an important fossil fuel industry, clean jobs represented almost 50% three years ago, before the big push for the EV industry in Canada led by federal and provincial governments.
In the past six months, the Government of Canada has secured more than $15 billion of investment and tens of thousands of jobs in Canada's electric vehicle ecosystem. Canada is now developing an innovative electric mobility industry—from mining to assembly, infrastructure, education, electricity production and distribution—and more needs to be done, as this is the fastest-growing industry in the world.
Now let's talk about the Inflation Reduction Act. When we delve into section 45X, the advanced manufacturing production credit, we find that if a manufacturer wants to manufacture batteries for electric vehicles, they can get $45 per kilowatt hour for every battery over seven kilowatt hours.
To quote David Booth, “If that doesn’t sound like very much money, then it’s probably worth reminding you that US$45/kWh represents about one-third of the total cost of manufacturing an automotive battery, the most expensive component...in an EV. More to the point, the average EV sold in North America has about 80 [kilowatt hours].” If you look at that, it means that you can get an additional rebate for manufacturing the vehicle of between $3,500 and $6,000: “And remember, that's money directly in the automaker's pocket.... On a grander scale, that 30-gigawatt-hour plant could net BMW some US$1.35 billion. And that’s not a one-time payment. That’s annually, as in every year ’til the end of 2032.”
I want to remind everyone that in 2021, President Biden and Prime Minister Trudeau “agreed to work together to build the necessary supply chains to make Canada and the United States global leaders in all aspects of battery development and production. To that end, the leaders agreed to strengthen the Canada-U.S. Critical Minerals Action Plan to target a net-zero industrial transformation, batteries for zero-emissions vehicles, and renewable energy storage.”
To go back to battery manufacturing, we're not talking about batteries being manufactured in the U.S., Canada or Mexico—just in the U.S. To get that incentive of $45 per kilowatt hour, it has to be built in the U.S.
A few weeks ago, the federal government published its policy regarding foreign investments from state-owned enterprises in critical minerals under the Investment Canada Act. The policy said, “The Critical Minerals List was announced on March 11, 2021, and includes 31 minerals considered critical for the sustainable economic success of Canada and our allies—minerals that can be produced in Canada [and] are essential to domestic industry and security”.
On November 2, the federal government ordered three companies to divest from Canadian mining interests since these investments could “threaten our national security and our critical minerals supply chains, both at home and abroad”.
On November 12, a few days ago, Bloomberg New Energy Finance published its battery supply chain ranking, which saw:
Canada rise to the second spot this year [after China], which reflects its large raw material resources and mining activity, as well as its good positioning in environmental, social and governance factors...and infrastructure, innovation, and industry. A lack of significant cell and component manufacturing capacity means that most of the value of these resources is realized outside of the country, although recent announcements from the likes of BASF, General Motors and Posco show an increase in battery investments.
Considering this, the fact that many of the critical minerals needed for EV batteries, propulsion systems, renewable energy and the military are in Canada, what can we do to ensure that Canadians take advantage of our strategic position and do not end up being, once again, just a simple supplier of natural resources to another country, in this case the U.S.? Does the AMPC constitute a violation of the CUSMA accord?
Canada has the critical and strategic minerals, the entrepreneurs, the skilled workers, the research and development capacity, the universities, the clean energy, and, now, the political will. We need to ensure that these workers and future workers can make the transition by guaranteeing them a future in the electric vehicle, and electric vehicle components, manufacturing industry. It is therefore important for the United States Inflation Reduction Act of 2022 to remain compatible with what we want to do.
To conclude, we don't want the United States to be our competitor. We want to partner with the United States, but the 2022 act is problematic for the manufacturing of electric vehicles and electric vehicle components, and batteries in particular.