International Trade Committee on Nov. 15th, 2022

[Daniel Breton]

Rather than require that batteries be made in the United States, it should instead call for all batteries to be made in North America under the Canada—United States—Mexico agreement, CUSMA. For the time being, limiting battery manufacturing to the United States is a real problem.

I would remind you that Mr. Adams represents automobile manufacturers. We also represent manufacturers of cars, but also trucks, off-road vehicles and even buses. In short, if all these people want access to the battery manufacturing subsidy for their light or heavy electric vehicles, Canada will not be competitive. It's a real problem.

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

What can you tell me about infrastructure?

[Daniel Breton]

As to infrastructure, I completely disagree with what was said earlier about charging infrastructure across Canada.

Quebec currently has 45% of the vehicles that need charging in Canada, by which I mean hybrid, rechargeable or 100% electric vehicles. There are 8,000 to 9,000 public charging stations, and all of them are public. It's worth noting that 80% to 90% of charging is done at home and doesn't require the use of public charging stations. Consequently, the requirement for four million public charging stations mentioned by Global Automakers of Canada and the Canadian Vehicle Manufacturers Association does not hold up.

In June 2022, there were approximately 150,000 electric vehicles in Quebec, and the government wanted this to increase to 1.6 million in 2030. If you multiply that by approximately 10, we're talking about 80,000 charging stations for Quebec. If you do the math for the entire Canadian market, then we're talking about 200,000 to 250,000 charging stations, all public of course, a figure that matches what Natural Resources Canada published barely a few weeks ago. According to the department, there will be a need for 50,000 public charging Stations in Canada in 2025 and approximately 200,000 in 2030. These figures are based on facts. Quebec and British Columbia are the two Canadian provinces where charging infrastructure is most robust and it's possible to travel anywhere in these provinces in electric vehicles.

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

Concretely, how might the proposal currently being examined by the U.S. Congress have an impact on all this?

[Daniel Breton]

Surprisingly, given what is being proposed for infrastructure deployment, Canada is ahead over the United States. What worries me much more is what's being proposed for the manufacturing of batteries for electric vehicles, because it would force the manufacturers to move to the United States to have access to the U.S. market, whether the manufacturers produce light vehicles or heavy vehicles, as does Lion Electric, for example.

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

On that note, thank you.

[Daniel Breton]

Thank you.

[The Chair, Liberal, Judy Sgro]

Now we have Mr. Bachrach for six minutes, please.

[Taylor Bachrach, NDP, Skeena—Bulkley Valley, BC]

Thank you very much, Madam Chair.

Thanks to all our witnesses for their presentations. This is a fascinating discussion. Perhaps I will start with Mr. Breton for my questions.

I think it was you who mentioned the $15 billion in battery-related investment in Canada in recent years, which is certainly positive news.

[Daniel Breton]

It's not for batteries; it's the whole supply chain.

[Taylor Bachrach, NDP, Skeena—Bulkley Valley, BC]

Yet currently, to my knowledge, Canada doesn't have a concerted strategy around the zero-emission vehicle and battery supply chain. Is there a need for a Government of Canada strategy to lead that important work?

[Daniel Breton]

I think we need a full electric mobility strategy together with all of the departments. Ten years ago, when I was in government for the Government of Quebec, we had an inclusive battery electric mobility strategy going from infrastructure and research and development to vehicle manufacturing, education and training, because this is very important. We want to have workers who know what to do with electric cars.

Yes, this is needed. This is something that we've talked about for a number of years. We have some catching up to do, and not just to the U.S. I will just give you a number here, when we're talking about battery manufacturing or electric vehicle manufacturing, from Bloomberg New Energy Finance: “China currently hosts 75% of all battery cell manufacturing capacity and 90% of anode and electrolyte production.” We have years of catching up to do with China. They are far ahead of us.

I see that the Inflation Reduction Act is making a difference, but Canada has to catch up with the U.S. and China especially.

[Taylor Bachrach, NDP, Skeena—Bulkley Valley, BC]

Just following up on that, we heard from Mr. Adams that, in his opinion, Canada should follow suit on the incentives but not the restrictions around domestic content. Do you share that view?

[Daniel Breton]

Absolutely not. When we're talking about restrictions, we're talking about the ZEV mandate, for instance. We've been advocating for a ZEV mandate. The Government of Canada has announced that it wants to adopt a ZEV mandate by the beginning of 2023, or something like that, because we need EV supply.

I can give you an example. Back in 2011, we gave money to Toyota to build electric vehicles in Ontario, the Toyota RAV4 EV: $70 million from the federal government and $70 million from the Ontario government. Because there was no regulation, no obligation for them to sell the EVs in Canada, and there was regulation in the U.S. to sell them, 100% of these EVs were sent to the U.S. because there was regulation over there.

[Taylor Bachrach, NDP, Skeena—Bulkley Valley, BC]

I want to hop in with some questions for Mr. Strickland.

The inclusion of requirements around good union wages and apprenticeships is something that I think really sets the Inflation Reduction Act apart from the work that Canada has done already.

How much would it take? What would it take for Canada to emulate those aspects of the Inflation Reduction Act?

[Sean Strickland]

I think it would be fairly easy. Through regulation or through the process of applying for a tax credit, that application includes a commitment from the proponent that they are going to create well-paying union jobs and make a commitment to apprenticeship. I think it's pretty straightforward. I don't think it would require a lot.

I will also say, in terms of creating good union jobs and adopting prevailing wage strategies, this is good for all workers. It's good for union workers, but it's good for all workers. I think it's important to consider that these tax credits, subsidies, in exchange for the creation of good union jobs benefit all workers. We are going to do as much of that work as we possibly can, and it's going to benefit the entire industry.

[Taylor Bachrach, NDP, Skeena—Bulkley Valley, BC]

Mr. Strickland, I read somewhere that the IRA really shows that the United States' approach to decarbonization is industrial strategy. I wonder, in your opinion, if we can say the same thing about Canada's approach to emissions reductions.

[Sean Strickland]

I think that, up until the Inflation Reduction Act, Canada was doing a very good job. Canada continues to do a very good job according to my daily business of talking to proponents of major infrastructure projects. You know that there are hydrogen projects in Newfoundland that are approaching a final investment decision and hydrogen projects in Alberta. We have LNG projects right across Canada. There's a lot of interest. There's EV production in Windsor, Ontario, and more EV battery plants are expected to come in Ontario.

I think we've been doing a really good job, but we need to take stock of our approach to all these incentives in light of the Inflation Reduction Act. I think it would be wise on behalf of government and parliamentarians to take a look at it and, as I said, be very strategic in responding and responding in ways that make sense, and amplify the competitive advantage that we already have in some of these sectors.

[Taylor Bachrach, NDP, Skeena—Bulkley Valley, BC]

Thank you.

[The Chair, Liberal, Judy Sgro]

Next is Mr. Baldinelli for five minutes.

[Tony Baldinelli, Conservative, Niagara Falls, ON]

Thank you, Madam Chair.

Thank you to our witnesses for being here today.

Like my colleague earlier who led off the round, I'm going to discuss, probably with Mr. Adams and Mr. Billedeau, the questions with regard to how Canada responds.

A previous witness from our last hearing, Ms. Cobden from the Canadian Steel Producers Association, basically said that the IRA takes an enabling approach. During her question and answer period, she juxtaposed that with Canada's having more of a carrot-and-stick approach. You're seeing $390 billion that's been offered over a 10-year investment. It's just driving investment into the United States.

We have auto manufacturing facilities close by. Selfishly, we would like to see those facilities continue to exist and expand to meet those demands. When you see some of those production credits, those content requirements, to Mr. Billedeau's point, do we even have the ability to meet some of those demands?

When I look at one of these credits in the United States, it has to have a specified production limit for critical minerals. They're talking about going from 40% in 2023 to 50% in 2024, 60% in 2025, 70% in 2026 and 80% in 2027.

How does Canada even meet that demand? We can't get a mine built in 10 years. How are we going to be able to compete to draw those critical minerals so that we can get those production facilities? It's tough enough that the Americans are now offering production credits and multiplier effects. How does Canada compete?

Mr. Adams, you mentioned that you are going to be providing recommendations to the finance committee. Do you have some suggestions that you could provide for us now or at least share with us when you table those with the finance committee?

[David Adams]

Yes, we have to share those recommendations with you when we do present them to the finance committee.

You raise a critical point that really what's happening in the U.S.—and I think others on the panel would agree with me—is that—you're absolutely right—there is an industrial strategy that's being applied to address climate change and address greenhouse gas emissions reduction. We need the same approach here, our comprehensive approach. One of the things we need to leverage is private investment in this effort as well. Government is not going to be able to do this all by itself, so we need to find creative ways to leverage private investment to assist in making this happen.

Maybe I'll turn it over to Mr. Billedeau for his comments as well.

[David Billedeau]

Yes, if I may.

The Canadian Chamber of Commerce recently released a report on Canada's commitment to net zero and how we get to our 2050 goal in an orderly fashion. I'd be happy to share that report with the committee after our discussion today.

Similarly, we have an upcoming report focused on critical minerals. It is focused on addressing every section of our supply chain, from upstream exploration and extraction to downstream manufacturing and recycling. We're going to be developing a number of recommendations in each of those areas. Those will be released in early December. Again, I'd be happy to share those findings with the committee.

However, whether it's looking at net zero or critical minerals, life sciences or digital economy, when the chamber examines these potential areas for growth, there are always two themes that crop up that impede Canada's ambitions to grow: access to capital and access to labour.

The Government of Canada is already making great strides in access to capital through investments made by the Canada Infrastructure Bank, through the SIF, and most recently through the clean fuels fund, but at the end of the day, when we're looking at net zero alone, we're looking at a $2-trillion price tag for Canada to decarbonize. We really need to start getting serious about the true costs behind not only extracting and processing critical minerals but also decarbonizing our economy.

It's similar with labour. We're already facing labour shortages, which makes it really hard to attract investments in Canada, so we need to start developing that green job strategy I mentioned in my opening remarks.

[Tony Baldinelli, Conservative, Niagara Falls, ON]

Just building on that—

[The Chair, Liberal, Judy Sgro]

You have 12 seconds left.