International Trade Committee on Nov. 18th, 2022

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

Given that we must urgently respond to the U.S. Inflation Reduction Act 2022, what steps that have not already been announced could be taken to help our industries?

[Trevor Kennedy]

To reference the fall economic statement, there were interesting measures and measures that are more targeted. I think the reality for Canada and for many of our peers around the world, whether they are in the European Union or elsewhere, is that we don't have the resources. We can't match the U.S. dollar for dollar, but there are targeted measures in the fall economic statement.

The question we go back to is on the details. Until the details are confirmed, we don't know whether we've had a chance to level the playing field and whether or not industry will have an adequate response to the IRA. Once again, we're looking towards budget 2023 early next year as an opportunity to clarify some of those measures.

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

The time is now. We're here to hear from you if you have any recommendations or suggestions, in the hopes that they will make it into the budget.

Would you like to add anything in particular?

[The Chair, Liberal, Judy Sgro]

Do you want anyone in particular to address that issue?

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

Yes, it was for Mr. Kennedy again.

[Trevor Kennedy]

I think we'll have some communication around that soon, but the general point is that we'd like to see a budget early in 2023 to clarify how some of these tax credits will function, how the Canada growth fund will function and so on.

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

Ms. Gingrich, if there's not enough time, we will continue in the next round of questions.

The government is providing $250 million for a variety of employment and training related measures, including the creation of a sustainable jobs training centre and a new sustainable jobs training program.

What are your thoughts on the announcement? With the United States investing heavily on its side, will the Canadian funding be enough to compete with the United States?

[Meg Gingrich]

It's hard to say whether it will be enough. I think a lot of it has to do with the design of how the training happens and who it's done with. If it's done in conjunction with unions to figure out where the skills are now, where some skills gaps might be, what type of training is needed, whether there are jobs at the end of it and whether there is a real commitment to good union jobs at the end of it....

I'm not sure if the amount will be sufficient, but I would say that almost more than anything, a lot of this has to do with design and the inclusion of unions in this type of training and in planning it so that we're making sure we're using the skills that our workers have for these jobs going into the future, especially as the existing jobs might be threatened.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

We'll go to Mr. Cannings for six minutes, please.

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

Thank you.

Thank you to all the witnesses.

I will continue with Ms. Gingrich with a follow-up to that question.

You talked about the need for value-added critical minerals. When I was in the natural resources committee in the last Parliament, we had a study on critical minerals and talked a lot about the need for a vertical ecosystem, from exploration to mining—graphite, lithium, cobalt, rare earth metals, etc.—to the production of battery parts, the production of batteries and the manufacture of cars and recycling batteries. It's the whole ecosystem.

I'm wondering if you could expand on that idea and talk about what we need to do to make that happen. We've all heard about the need for a quick response here, both in terms of maintaining our trade position with the United States and in terms of what needs to be done in the fight against climate change. What do we need to do? It includes training so we can have the good union jobs that a lot of workers had been getting in the oil patch as it declined over the decades, but what do we need to do right now? What does this government need to do to help your union members?

[Meg Gingrich]

I think there are investments along the supply chain. We're seeing that in the United States, where there is a shift towards an industrial policy and an entire supply chain approach. Canada is well positioned given our critical minerals. Of course, it will take a lot of time to develop some of them, but we're seeing increased production in nickel and some others, occasionally even with government help to try to get contracts to make sure the minerals extracted here are actually manufactured here using the facilities and skills we have now to be able to manufacture them.

Those often exist, but it does take some planning. It takes comprehensive policies but also working with unions. It takes labour market research and things like that to really analyze where the potential is and where the gaps might be to make sure that we provide training. It also takes working with workers to be sure that they're getting the jobs that might emerge.

There's the possibility of investments or different types of tax credits. I think you see a lot of that in the IRA. As others have said, we don't need an exact dollar-for-dollar approach, but we need some of the things the U.S. has done with various incentives and investments to make sure they are using not only the critical minerals component but the manufacturing component. Those are all included in this comprehensive policy. We need something similar to make sure we're not just exporting all of our critical minerals abroad and having the manufacturing done there.

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

Thank you.

You also mentioned green steel. I hear the government talking about green steel and how Canada is going to be a leader in this.

Can you update me and the rest of the committee on where we are with green steel and how long that timeline is? Are we ahead of the United States? Will this give us an advantage in these talks?

[Meg Gingrich]

I would say we're already a leader in green steel. Canadian steel is some of the cleanest in the world. Of course it's high emissions, but comparatively, it is much lower emissions than the steel produced almost anywhere in the world. It's on par with the United States, and it might be a bit cleaner.

There are things we can do immediately in that sense, such as having emissions targets in public procurement policies so that when you're doing public infrastructure, you're using greener steel, which often would be steel made in Canada. We also need to maintain our access to the U.S. markets as much as possible. As much as the U.S. is turning towards lower-emissions steel, Canada is very well placed on that, even with the current level of emissions from steel.

In terms of the shift longer term and the different technologies coming in to make steel cleaner, we need more investment in that, whether it's hydrogen or even shifting towards electric arc furnaces. That's part of it, but it's not the only solution. We've seen investments in Algoma, for example, to shift towards an electric arc furnace. That will hopefully maintain the mill in the community of Sault Ste. Marie for a long time.

When making those types of investments, you have to make sure you're including the union in the discussions, because some of our members will lose their jobs or will have to be retrained. To get real union support on these types of things, you need to include us. That's something that I will always emphasize.

Generally, I think Canada right now is very well positioned on green or clean steel, and we can only get better. Its use will be helpful in domestic infrastructure projects and in the U.S.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

Mr. Baldinelli, you have five minutes.

[Tony Baldinelli, Conservative, Niagara Falls, ON]

Thank you, Madam Chair.

Thank you to our witnesses for being here this afternoon.

I'm going to build on what several past witnesses talked about. I think Mr. Montgomery talked about it as well.

The IRA in the United States takes more of an enabling approach, and Mr. Montgomery talked about the carrot-and-stick approach that Canada pursues. That's been raised by previous witnesses as well. When you see $390 billion injected into the system, the Americans are looking to pull in investment, while Canada has regulatory uncertainty in where we're going to go. As Mr. Kennedy talked about, we need to act almost with a sense of urgency to respond to the provisions of the IRA.

When we look at some of the tax credits—Mr. Montgomery, this one would be for you—and the credits that specifically talk about the critical mineral provisions, the U.S. put them right in their legislation. They're talking about increasing the number from 40% in 2023 to 50% in 2024 to 60% in 2025 to 70% in 2026.

Is Canada even able right now to commit to fulfilling those requirements? Do we still have regulatory burdens that hinder us from being able to meet that kind of demand?

[Chris Montgomery]

I would respond in the first instance by saying that our members explore foreign-produced oil and natural gas. They're not so much invested in the critical mineral space at this particular time, although it may be of interest in the future given that some of those critical minerals are contained within the brines that are produced through oil and natural gas.

[Tony Baldinelli, Conservative, Niagara Falls, ON]

But what's your experience on the whole regulatory front? I mean, to draw in that type of investment, investors and corporations are looking for certainty. Is Canada the place that's providing that right now?

[Chris Montgomery]

I would agree that investor certainty is key and regulatory certainty is key.

With respect to CCUS, which I raised today, Canada does need to do more, and quickly. As I said, government has two or three different levers it could pull to create that certainty, and it could do it pretty quickly, I think.

[Tony Baldinelli, Conservative, Niagara Falls, ON]

Mr. Kennedy, could you comment on regulatory certainty, and also the aspects that this government needs to examine as part of its budget, probably in March, to provide some certainty for those looking to invest?

[Trevor Kennedy]

Absolutely. In the fall economic statement, you did see some focus on clean hydrogen and critical minerals, which are very important, at least in the effort to accelerate our move toward those resources. At the same time, we know there's incredible interest in LNG around the world. Our partners have come to Canada asking for LNG and are curious about LNG.

We know that our government has at least spoken about supporting our friends and allies around the world through our energy and energy security. We have asked for some details to clarify how we can assist in developing these projects to ease the regulatory burden and speed up the approval process where necessary so that our partners can rely on Canada to be part of their energy mix for the future and for energy security. We didn't see that in the fall economic statement, but we certainly hope it will be clarified in budget 2023.

[Tony Baldinelli, Conservative, Niagara Falls, ON]

Thank you.

Ms. Gingrich, perhaps I'll quickly go to you. I come from an auto manufacturing area, just like my colleague Mr. Carrie. Currently, an engine plant is located right next to my riding. It employs 1,200 workers. At one time we had three plants in that community—with 10,000 workers—all running three shifts.

The point you raised was about Canada not only being a destination for critical mineral extraction. You'd like to see manufacturing jobs created as well. Selfishly, I think we'd all like to see those investments made in our local communities. I'd like to see investments made in that engine plant going into the future.

In your conversations, you talked about a distinction. The Americans are looking through this act.... They've tied their industrial policy into their environmental policy, with $390 billion over 10 years. They're going to reduce emissions by 40% by 2030, and there's no carbon tax there.

You mentioned in your remarks that Canada should not raise the carbon tax. Can you explain how that makes it a disadvantage to invest here in manufacturers?

[Meg Gingrich]

Well, it can if it's unequal. If there's a carbon tax here and there isn't one in the United States, and there are all sorts of other incentives for them to produce in the U.S., it gives a clear advantage to the U.S. steel producers. It would simply cost more to do it here.

I think there are several solutions to that. It's not that we're necessarily opposed to a carbon tax at all, but maybe there are other methods. I've talked about green steel before and incentivizing the use of it in procurement policies. That's a way of ensuring that we're still producing things domestically despite what could be a disadvantage. It's more that we need multiple policy responses to ensure that we're not disadvantaged.

I also mentioned the carbon border adjustment, which is something our union has been in favour of. This is maybe more about looking internationally at the overproduction of steel that exists globally. It's coming into our market as a way of undercutting Canadian steel—

[The Chair, Liberal, Judy Sgro]

Thank you very much, Ms. Gingrich. I'm sorry to interrupt you.

Go ahead, Mr. Miao.

[Wilson Miao, Liberal, Richmond Centre, BC]

Thank you, Madam Chair, and thank you to all the witnesses who are appearing today.

First, I'd like to ask Mr. Krogmeier some questions.

You mentioned in your remarks the refinery in Burnaby, British Columbia. I know that recent gas prices in British Columbia are at record highs. I understand your company is planning an expansion of the current refinery facility.

Could you tell the committee a little more about the plan moving forward to transition to clean technology and how this would benefit British Columbians, who will pay less for their gas?

[Ryan Krogmeier]

We plan to invest well over $650 million—in the right environment, of course—in a renewable diesel complex, with the potential to invest in sustainable aviation fuel. That will be 6,500 barrels per day, which is a little over one million litres of low-carbon sustainable fuels.

This economic activity and the expansion of the refinery will bring hundreds and hundreds of jobs during construction, and of course it will lead to dozens of good, permanent union-paying jobs at the refinery for many years to come. It is a great benefit economically to British Columbia and to all of Canada, because we will be able to bring in Canadian raw materials—canola oil, tallow, forestry residues—and use Canadian railroads and Canadian labour to then put fuel back into Canadians' tanks.