Evidence of meeting #37 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 ira.
A recording is available from Parliament.
2 p.m.
Liberal
Wilson Miao Liberal Richmond Centre, BC
Thank you for that.
You mentioned in your remarks that domestic demand is decreasing. What's your plan moving forward to promote more domestic supply being used domestically? How is the IRA impacting that right now?
2 p.m.
Senior Vice-President, Supply, Trading and Refining, Parkland Corporation
We want to continue to increase our current low-carbon fuels manufacturing capacity and take that to the consumers in Canada and in British Columbia.
Again, the IRA implies, because of the uncompetitive nature that we will be in, that we will not be able to compete against U.S. production once our facility is up and running. This is because the variable cost for U.S. producers to make those low-carbon fuels will be much lower than our cost to manufacture. Therefore, we won't be able to compete.
While we continue to advance our low-carbon fuel standards here in Canada, that supply has to come from somewhere, like the U.S. It can come from overseas, of course, but the U.S. today supplies most of the ethanol, biodiesel and renewable diesel that we consume here in Canada. That trend will only continue.
The hope is that by levelling the playing field, we can compete on a level playing field.
2 p.m.
Liberal
Wilson Miao Liberal Richmond Centre, BC
I understand that right now jet fuel is being transported to YVR, which is part of my riding of Richmond Centre. I also understand that Abbotsford airport is becoming an international airport in a more suburban area.
Will those demands also impact the production level moving forward in the future?
2 p.m.
Senior Vice-President, Supply, Trading and Refining, Parkland Corporation
Yes, absolutely. YVR is a large consumer of jet fuel today, as we all know, and it will be a large consumer of sustainable aviation fuel in the future. As to what exactly those regulations to consume sustainable aviation fuel will look like, we'll have to see the pace, but they are coming.
We want to be a part of the solution, but again, we need a level playing field in order to do that.
2 p.m.
Liberal
The Chair Liberal Judy Sgro
Thank you very much.
We'll go to Mr. Savard-Tremblay for two and a half minutes, please.
2 p.m.
Bloc
Simon-Pierre Savard-Tremblay Bloc Saint-Hyacinthe—Bagot, QC
Ms. Gingrich, if you don't mind, will pick up where we left off earlier. You were telling that you weren't sure the Canadian funding would be enough to catch up.
In your opinion, what measures should be put in place urgently in response to the U.S. legislation?
2 p.m.
Assistant to the National Director, United Steelworkers
Is this specific to the sustainable jobs you were asking about earlier? Is it that fund?
2:05 p.m.
Bloc
Simon-Pierre Savard-Tremblay Bloc Saint-Hyacinthe—Bagot, QC
Yes, but feel free to respond generally as well.
2:05 p.m.
Assistant to the National Director, United Steelworkers
It's hard for me to give specifics, both in terms of that particular fund and overall in terms of the money that needs to go toward all of this. I don't have a good estimate at this time of what that looks like.
I think the main thing is to develop a comprehensive policy to look at it similarly to how the U.S. is looking at it. That is, essentially, as a green industrial policy in which action on climate is tied in with job creation, with a particular emphasis on creating good union jobs.
There are a host of measures. We need to expand on some of the things we've seen. We started to see some tax credits and other types of incentives for clean energy and that type of stuff. As some of the others have said today, it's not always exactly clear. Some of the rules in that are not as clear as what we've seen in the IRA.
I think what we need to see is more clarity on various tax incentives. We need green procurement policies. We've started to see them, but we need stronger ones that ensure we're using clean steel, aluminum, wood and cement in infrastructure projects, and we must ensure they will create good jobs here in Canada.
Again, we need policy concurrence across the spectrum. That includes on trade, where we're making sure we have things like carbon border adjustments or other things so that we're not undercutting our own domestic manufacturing by bringing things in from abroad that are cheaper and that are poor for the environment and poor in terms of labour.
It's hard for me to quantify exactly what that looks like, but I think what we need is clear, comprehensive planning that connects climate policy with job creation.
2:05 p.m.
Liberal
The Chair Liberal Judy Sgro
Thank you very much.
Mr. Cannings, go ahead for two and a half minutes, please.
2:05 p.m.
NDP
Richard Cannings NDP South Okanagan—West Kootenay, BC
Thanks.
I want to continue with Ms. Gingrich.
I was hoping to ask you about border adjustments earlier, but I ran out of time. You've mentioned this a couple of times since. I've been hearing about border adjustments for the last seven years, and for the last couple of years, the government has started talking about them.
Where are we with the possibility of using border adjustments and how likely is it to happen? Is there a timeline where that might happen? What I'm trying to get at is whether this is something we can rely on.
2:05 p.m.
Assistant to the National Director, United Steelworkers
I think it's part of something larger. The European Union has been working on theirs and designing theirs for years, so it's not a fast process. It's takes a long time. I know there was a consultation on this maybe about a year ago, and the United Steelworkers put in a submission. As far as I know, that's stalled. I could be wrong about that, but it was something we heard a lot about as the EU was developing its carbon border adjustment mechanism. I think we need to look into it in more detail and come up with a plan.
It will be several years before it gets implemented, if that's the way we go with it. It's certainly not the only policy option, but it's important, and one that we find our members, particularly in energy-intensive industries like steelmaking, typically support. In other places they have fears about various decarbonization efforts, but this is something we really find our members get behind.
2:05 p.m.
NDP
Richard Cannings NDP South Okanagan—West Kootenay, BC
In the one minute I have left, I'll go to Mr. Golinowski.
I'm curious as to where the carbon capture market and system is outside the oil and gas industry in Canada. I think you briefly mentioned the heavy industry, where in Europe we see people going to carbon capture. Is that happening in Canada?
2:05 p.m.
President and Managing Partner, Carbon Infrastructure Partners Corporation
Plans in engineering are under way, but until we have clarity on policy and price, I think we're unlikely to see large volumes of capital being deployed.
In the United States, with the Inflation Reduction Act, the section 45Q tax credit was substantially upgraded, so for the production of hydrogen, electricity, ammonia and ethanol—a variety of the building blocks of reality and of society—the United States has chosen to pay for the carbon capture and sequestration process. For producers of those products—hydrogen, ammonia and so on—in Canada, we are using a carbon tax plus the investment tax credit. They are different approaches, but I would very much echo the comment that has been made today that the United States is prepared to buy the carbon and pay for it, and industry participants see that as far more competitive and more interesting to attract capital.
2:10 p.m.
Liberal
2:10 p.m.
Conservative
Richard Martel Conservative Chicoutimi—Le Fjord, QC
Mr. Kennedy, I'm concerned that fewer and fewer foreign investors are coming to Canada right now.
You gave me pause earlier when you talked about the U.S. Inflation Reduction Act 2022. With this legislation, investors will certainly go to the United States because it's currently to their advantage to do so.
That should be remedied somewhat so as not to leave a clear advantage to the Americans. I'd like to hear your opinion: What do you think should be done?
2:10 p.m.
Vice-President, Trade and International Policy, Business Council of Canada
It's a very difficult question, because we have the same impression that there is a great deal of interest in Canada from a wide range of countries around the world that haven't necessarily always invested a lot in Canada but are looking to Canada as part of their climate change plans and for economic or energy security.
The Inflation Reduction Act has changed the landscape for Canada. Every investor who is looking at Canada is at least going to question whether the IRA presents a more favourable environment and whether to invest in the United States over Canada. It is a really serious challenge, given that companies are making plans for this and countries are making plans for their economies for the next several decades. Whether we're talking a span of several months, half a year or a year, we don't have answers to these questions. In that time, it's going to be very difficult for Canada to attract certain kinds of investments, whereas the United States has very clear sets of rules and plans in place, whether for tax credits or other incentives.
This is absolutely critical, and looking once again to the fall economic statement, some plans were outlined to address this competitiveness gap. However, many of the details need to be confirmed or ironed out, whether that's done in the budget or in the time in between. The top-line message is to act with a sense of urgency and make sure we clarify these things as soon as possible for any international investor.
November 18th, 2022 / 2:10 p.m.
Conservative
Richard Martel Conservative Chicoutimi—Le Fjord, QC
Once again, I'm hearing the same words over and over: we need to move quickly, we can't lag behind, we have to be even clearer, we're never clear enough.
On November 1, 2022, the representative of Canadian Manufacturers & Exporters testified before the committee that certain provisions of the U.S. Inflation Reduction Act 2022 have drastically increased the amount of funding the U.S. federal government provides to domestic manufacturing companies. He added that the U.S. funding measures could trigger an outflow of investment from Canada to the U.S. and result in a loss of manufacturing jobs in Canada.
If, as Canadian Manufacturers & Explorers is saying, the U.S. legislation has triggered an outflow of investment, which sectors would be hit hardest in Canada?
2:10 p.m.
Vice-President, Trade and International Policy, Business Council of Canada
Canada has certain advantages. We know Canada is home to many critical minerals, which would give us some hope, at least, that we have some natural advantages in certain sectors. As we move through the supply chain and look at the auto manufacturing and auto parts sectors or the battery supply chain, we know there's a real competitiveness challenge now given the IRA. Many other sectors have the same situation.
We have seen a great deal of interest and some great announcements in the past several years or even in recent months, and we are going to have to find a way to keep up this momentum and interest. Whether it's in the auto sector or other areas of advanced manufacturing and clean technology, Canada has to address this competitiveness gap and do so very quickly. Otherwise, companies will look elsewhere.
2:10 p.m.
Conservative
Richard Martel Conservative Chicoutimi—Le Fjord, QC
Since brought up critical minerals, do you find it normal that our phosphate, which is of good quality, is not yet recognized as a critical mineral?
2:15 p.m.
Vice-President, Trade and International Policy, Business Council of Canada
I'm sorry. Was that a question for me?
2:15 p.m.
Conservative
2:15 p.m.
Conservative
Richard Martel Conservative Chicoutimi—Le Fjord, QC
Since you brought up critical minerals, do you find it normal that we have high-quality phosphate in Canada, but we're unable to have it recognized as a critical mineral?
One of the things we discussed earlier was the advent of electric vehicles. I feel we have an advantage in that respect.