Thank you, Madam Chair.
Thank you, committee members, for this timely and important study, and also for the opportunity to be before you in person today.
Chemistry and plastics is your third-largest manufacturing sector in Canada, with about $90 billion in annual shipments. Eighty percent of that is exported, and the vast majority of that is to the United States. In short, the United States is our largest customer, but it's also our largest competitor, both for market share and for investment share.
Globally, our industry is embarking on two simultaneous and major transformations: the transformation for a zero-carbon chemistry sector and the transformation for a circular economy for plastics. In short, it's no longer a question of environment policy; it's entirely a question of investment policy. The sector will invest. It will transform. It will do so rapidly. The only question is where those investments are going to take place.
I would like to start with some good news. After several decades without major new chemistry investments in this nation, we have two global-scale facilities that will enter commercial operation in 2023. That's some start-up good news, but also, in the last 18 months, we have had over 15 major project announcements in our sector worth more than $30 billion of proposed new investments. Here's the interesting part. Every one of those investments is envisioned as net carbon zero from initial operation.
Those projects are largely in response to very aggressive investment attraction efforts from the Province of Quebec and the Province of Alberta.
I have to stress, though, that these are proposals only. Much work remains to turn them into final investment decisions and built infrastructure. My main message to you today is that indeed the U.S. IRA is a game-changer, and I can't imagine that there's not one of those projects that won't be re-evaluated from a due diligence perspective to see how the Canadian business case matches up with the new business case under the IRA in the U.S.
My second point is that it's not just those new investments that are at stake. In transforming our sector, we have about $200 to $300 billion of built chemistry infrastructure in Canada today, and to reach net zero, we have to recapitalize every penny of that in the next three decades. Our ability to do so will depend entirely on improving investment conditions in Canada.
Definitely, the IRA contains long-lived incentives. It covers all five of the pathways available to decarbonize the chemistry sector. All five of the pathways have various incentives available to them, and incentives can be stacked. They are already on top of major advantages that are in place at the state and federal level, and that includes accelerated capital cost allowances, which, unlike in Canada, are not going to start to fade away in 2023.
My final point is this: The true value of the IRA's incentives and the biggest challenge for Canada is the transparency and certainty provided to investors. I know you have heard a lot about carrots and sticks, but if you will allow me a seasonal analogy, I would say that all industries in Canada are on the naughty list. We pay a very steep and ever-steepening carbon price.
Some very fortunate few that do find their way onto the “nice” list get hand-picked access to federal grants, tax incentives, loans and other incentives to assist with decarbonization, but here's the thing: The criteria to get on the list are not transparent; they are not clear; and they are not available to everybody. That means that you can't build them into a business case, which puts Canada at a disadvantage.
In contrast, in the United States, no industry or company is on any naughty list; everybody's on the nice list. Everybody can look at the IRA and factor in these very real, very material, very accessible incentives into their business cases for proposed industrial decarbonization projects.
As time allows in questions, I would like to share further details that compare and contrast investment attractiveness for decarbonization of the chemistry sector in the U.S. versus Canada today.
Thank you again for this opportunity.