Good afternoon, Madam Chair and members of the committee.
My name is Mark Zacharias. I'm the executive director at Clean Energy Canada, a climate and clean energy think tank at Simon Fraser University.
I'll be speaking today on how Canada can position itself to maintain high-quality jobs and seize the economic opportunities in the shadow of the U.S. Inflation Reduction Act.
The IRA is a game-changer and requires Canada to act now and rethink our approaches to attracting and retaining jobs and investments.
Prior to the IRA, Clean Energy Canada had done numerous studies to demonstrate the clear economic potential of a transition to a net-zero economy. Our modelling found that between 2020 and 2030 clean-economy jobs in Canada are projected to grow almost 50%. For example, by 2030, Canada's electric vehicle, or EV, battery supply chain could support nearly 250,000 direct and indirect jobs and add $48 billion annually to the Canadian economy.
While the IRA has the potential to impact Canada's economy in many ways, three key opportunities stand out: automobiles, batteries and construction materials. The IRA extends the U.S. $7,500 tax credit for new EVs and introduces a U.S. $4,000 tax credit for used EVs. These tax credits provide a massive opportunity for Canada to supply electric cars, and their parts, to the U.S. market. Prior to the bill, tax credits expired once an automaker reached EV sales of 200,000 vehicles, meaning companies like GM and Tesla haven't been able to benefit from them for years. The new, uncapped tax credit will drive EV sales and leverage Canada's recent efforts to land agreements with Ford, GM, Stellantis, and their unions, to assemble EVs in Canada.
Even more important to Canada are the new rules on batteries. Starting in 2024, to access the EV tax credit, the vehicle must not only be built in North America, but its battery must contain at least 50% mineral content sourced in North America or a U.S. trading partner— meaning not China—and 60% of the battery components by value must be made or assembled in North America. These percentages rise 10% annually until they reach 100% in 2029.
Being one of the few nations with all the critical metals and minerals required for battery production, along with the ability to produce refined battery materials using low-carbon electricity, Canada stands to benefit from the IRA's battery content requirements and will help us eat into China's 79% market share of the global lithium ion battery market.
Finally, in February, President Biden announced the Buy Clean Task Force to use the federal government's purchasing power—the world's largest—to create demand for low-carbon materials, while restricting access to high-carbon imported steel and aluminum. The IRA provides the funding needed to implement this executive order, including more than $5 billion U.S. to purchase low-carbon construction materials for federal buildings, highways, bridges and homes.
Another U.S. $5.8 billion has been allocated to install advanced industrial technology in steel, cement and other industrial facilities.
Canada must be strategic and understand its competitive advantages if we aspire—and we should—to do more than export raw commodities like critical minerals. Canada has the potential to be a clean energy and clean manufacturing superpower, but we cannot and should not simply try to meet the IRA's fiscal incentives one for one. However, by focusing on areas of potential strength, we can compete in a number of these sectors.
To do this we must do the following.
First, work with industry and stakeholders to finalize the design of the investment tax credits put forward in the FES.
Second, recognize the importance of our low-carbon electricity supply. Reliable, cheap and clean electricity is a prerequisite for industrial investment, and completing the forthcoming clean electricity regulations is key.
Third, support our highly skilled labour supply and deliver further training and education aligned with the economy.
Fourth, build out the infrastructure necessary to develop critical minerals and metals as well as to transmit power to the new facilities.
Fifth, continue the decarbonization of our own industries to sell low-carbon goods to the U.S. and other trading partners.
Lastly, complete the forthcoming zero-emissions vehicle mandates to drive domestic EV demand and therefore Canadian production.
Strategic alignment with the U.S., while playing to Canada's strengths, can create a thriving North American market for the next generation of clean technologies and materials and keep us on the pathway to meeting our net-zero 2050 goals.
Thank you. I look forward to your questions.