International Trade Committee on Nov. 25th, 2022

[Elizabeth Kwan]

Thank you very much for your question.

I think that the magnitude of the IRA and the amount of money in the IRA is pretty mind-blowing. Quite frankly, it's not just about Canada. It is something that everyone else is paying attention to around the globe. I think we need to know what we're dealing with, which is what I said previously. We need to study and look at the impact on Canada and on workers in Canada.

It would be very logical to say that we cannot match, dollar for dollar, what the Americans are doing, so we need to be strategic. We need to really invest in people and in workers and make sure that those jobs are good jobs that we have in Canada.

One thing that advantages us in Canada is that—I know that this might not sound like a direct sort of impact—we have everything to actually make good communities as we move forward. We have strengths like public health care and legislation around equity and inclusion. These are strengths that we kind of leave on the table or ignore. We're like, “Oh yeah, sure, we have them”, but I think these are things we can put into the strategic framework. We can actually develop the people of Canada, and develop good jobs, good works and good union jobs as we move forward.

Thank you.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

Mr. Blaikie, you have two and a half minutes, please.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

Thank you very much.

What I'm hearing loud and clear is that our competitors are engaging in pretty assertive industrial planning and Canada is not. We have a pretty rich history of not doing that, going back at least 30 years. Canada's trying to develop a way to do that in order to respond to competitors that are frankly more serious about taking a coordinated approach to industrial development in sectors that appear to be, and ought to be, the future of our economy.

Mr. Risley had said earlier that he was hoping that there would be consultation with a sense of urgency around some of the items that the government's already announced in the fall economic statement. When we talk about that effort and the need to have labour and industry at the table with government, do those tables already exist? If so, where are they? What are they called? Who sits on them? How often does that regular consultation happen, so that we have a process of ongoing industrial planning, or is it the opinion of our witnesses here today for their respective industries that the infrastructure doesn't really exist?

I thought I would start with Mr. Risley, and then the other witnesses can chime in with whatever time remains.

[John Risley]

Thank you for the question, Mr. Blaikie.

The infrastructure doesn't exist in a classic sense. However, elements of the infrastructure exists. Obviously, industry talks to union and each talk to government. Industry does have a responsibility to get its act together to act in unison in terms of its position with government, but there is no formal infrastructure for consultation around programs such as the fall economic statement's response.

I don't want to sound like I'm defending the government, but on the other hand, the IRA really came out of nowhere. Nobody expected it, and then bang—all of a sudden we get this awesome piece of legislation. It caught everybody by surprise, and we need to act quickly.

Industry is prepared to react quickly. I would say that the jobs that are going to be created by the clean energy revolution and the transition of clean energy in Canada are going to be excellent jobs. There's no question about that. We just need to move on with it, because if we don't, we are going to miss the boat. We will not be in second place; we will be in seventh or eighth place.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

Thank you very much for that.

[The Chair, Liberal, Judy Sgro]

Thank you very much, Mr. Blaikie.

Mr. Carrie, you have five minutes, please.

[Colin Carrie, Conservative, Oshawa, ON]

Thank you very much, Madam Chair.

I want to thank the witnesses for being here today. I am very concerned with the testimony, though.

We'd been hearing it from other witnesses, before the fall economic update, that the IRA was supposed to be the fix for Build Back Better. It seems that the Canadian government has not been engaged. It was actually passed August 16, and a lot of our witnesses, before the fall economic update, were looking for urgent action. Waiting until March or April is not acceptable.

I think Mr. Masterson, just at our last meeting, said that the time for study and debate is over. The Business Council of Canada has argued that Freeland can't afford to wait, urging her to move the budget date to February instead of March or April.

Mr. Risley, we had Madam Vera-Perez from the Canadian Hydrogen and Fuel Cell Association say that with our lack of action, “Canada is falling behind” and we have to “reclaim our leadership”.

It's extremely urgent. Even the fall economic statement concluded, “Without new measures to keep pace with the IRA, Canada risks being left behind.”

I'm very, very concerned, because the things we're being asked for seem.... You know, it's talked about in the update, but nothing is solid in there. Nothing's certain. With the American uncertainty, we're seeing businesses concerned that maybe they're going to go down there right away, before the change can happen in the United States.

Mr. Gorman, in Oshawa I'm surrounded by nuclear power and the auto sector. You mentioned some things that could help with competitiveness. You mentioned the green bonds, I think, to allow government-owned businesses to have access to tax credits and refurbishing. Could you please tell the committee if there is anything the government could do before March or April, or whenever they're going to come out with the next budget, that could give some certainty to the market? We'd like to see that business attracted here, to Canada, instead of losing out to the United States.

[John Gorman]

I do believe that if the government were able to send a strong signal before the budget about what its intention is in terms of levelling up with what the United States has achieved with the IRA, it would give all of the sectors needed to make this clean energy transition happen the ability to consider their plans and consider where their investments will go before they make critical decisions for making those investments and business plans for participating in the U.S. market.

I think there are important business strategy decisions that are being made as we wait for budget 2023 to come out. Right now, the smart money and the strategic business decisions are all geared towards the U.S., where the IRA is clearly creating enormous opportunity.

Signalling exactly what we're trying to achieve here and which sectors we are supporting would be helpful.

[Colin Carrie, Conservative, Oshawa, ON]

I agree. I just worry that it's not enough. Four days ago, former Bank of Canada governor Stephen Poloz said that he believes red tape and over-regulation are sending Canada's economic productivity down the drain. He said that Canada's the second-last for productivity and performance among the OECD countries. This is so concerning, because this investment with the IRA is generational.

I'm wondering, Mr. Risley, if you could comment. Again, from your colleague from the Canadian Hydrogen and Fuel Cell Association, we heard that we have all the tools to be competitive, and there was nothing of certainty in the fall economic update.

As I said, the IRA was passed August 16. Can we wait until March or April? How much are we going to lose by just sitting on our hands?

[John Risley]

I'll give you an example. This is just an example, but I think it's an indication of the sense of the supply chain problems. We were told by one of the very major OEMs in this industry, without whose participation it would be very hard to build a project of our scale, that if we don't order equipment in January, we will not get it in time for 2025. If we wait six months, then we are subject to a further two-year delay.

That's the problem we face. People are not waiting around for Canada to make up its mind. People are spending tens of billions of dollars in the United States in response to the IRA right now, and we need to move on.

We can do it here. We have all the ingredients. We have the raw materials. We have great resources. We have the people. We can do it.

[Colin Carrie, Conservative, Oshawa, ON]

We can. I have the confidence. We just need government out of the way.

[The Chair, Liberal, Judy Sgro]

Thank you, Mr. Carrie.

We'll go on to Mr. Miao for five minutes.

[Wilson Miao, Liberal, Richmond Centre, BC]

Thank you, Madam Chair, and thank you to all the witnesses for being here today.

First, I'd like to ask a question about nuclear medicine, through you, Madam Chair, to Mr. Gorman.

In 2018 the Prime Minister announced a new institute for advanced medical isotopes at the University of British Columbia's TRIUMF facility. Can you give us an overview of the work being done here, and could this work result in an increase in Canadian exports of medical isotopes?

[John Gorman]

You're right. The medical science part of the nuclear sector is often overlooked because of discussions around nuclear power, but the fact is that Canada is absolutely a world leader in the production of life-saving medical isotopes. It's not just the 70% of cobalt that we provide to the rest of the world for sterilizing one-time-use medical equipment, but it applies to a huge and growing range of increasingly targeted isotopes that Canada is producing and providing to the world.

The work that has been done at TRIUMF and at the Canadian nuclear laboratories at McMaster is innovative, important work that is providing these life-saving isotopes, and the great news and innovation in Canada lately has been adding to that, with the ability to harvest new, sophisticated types of isotopes from our existing reactors.

Bruce Power and OPG, with their existing reactors, are working with partners like BWXT and Kinectrics and others to harvest isotopes from existing operating reactors, thereby greatly expanding the capacity as well as the assortment of isotopes we're providing to the world market. You're absolutely right. It's a large and important market.

[Wilson Miao, Liberal, Richmond Centre, BC]

Thank you.

Where do you see the most potential for small modular reactors here in Canada? Do you see the potential for these reactors to be used in place of diesel engines in certain circumstances?

[John Gorman]

The great potential for small modular reactors has to do with how scalable the reactors are. They can be so small as to fit on the back of a truck and be delivered to a northern community, a first nations community, or they can be large, and they're providing electricity.

Their uses in Canada, if I could put it succinctly, really focus on their scalability being applied to smaller markets. Even Saskatchewan, for example, which needs to phase out coal, couldn't take a whole conventional reactor on their electricity grid. Very small modular reactors could be provided to northern indigenous communities to get them off diesel power.

Lastly, these small modular reactors produce very high-temperature heat, and this heat can be used to replace industrial heat in the production of steel and cement. It can be used in mining operations in the way that we extract and process oil and gas, in a way that electricity just can't do by itself.

The ability of small modular reactors to decarbonize heavy industry in Canada with high- temperature heat in a very scalable way is what is addressing Canada's central challenge. We have a clean electricity grid. We have a problem trying to decarbonize heavy industry. Small modular reactors can help.

[Wilson Miao, Liberal, Richmond Centre, BC]

What are the biggest barriers right now to nuclear energy in Canada?

[John Gorman]

There are several things we have to watch very closely. I call them bottleneck issues. One of them is common to any build-out of major infrastructure, and that is the speed to get approvals for siting and building out infrastructure. That applies to nuclear power. It just is taking too long to get approvals to have things built.

Another one is financing and having the public funds there to ensure that we can unlock the private financing.

Ms. Kwan has spoken about some of the HR challenges that we're going to have vis-à-vis the United States in ensuring that we have a really competitive, skilled workforce that can build out our nuclear infrastructure.

Those are some of the issues we're looking at right now.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

We've completed two rounds. We have time for a few more questioners. We will go to Mr. Seeback.

[Kyle Seeback, Conservative, Dufferin—Caledon, ON]

That's great. How much time do I have?

[The Chair, Liberal, Judy Sgro]

Let's try five minutes.

[Kyle Seeback, Conservative, Dufferin—Caledon, ON]

That's fantastic.

The first question I want to ask is of Mr. Risley. When you look at trying to unlock private financing and private capital, what's the best way for us to drive the innovation that we're trying to see in the development of these things? Is it government programs or tax incentives and other investment incentives for business?

[John Risley]

That's a great question. I'm not sure that I have the time to adequately respond to it.

I think there are a number of ways you can create a level playing field. For instance, in the IRA, specific to hydrogen, the American legislation has provided a very elegant solution, which simply provides a production tax payment of up to $3 a kilo based on labour and carbon intensity. That gives the industry real certainty. It doesn't matter how they get there; they just know that if they get there, they get $3 a kilo by way of a direct payment for 10 years.

[Kyle Seeback, Conservative, Dufferin—Caledon, ON]

They're doing the same for batteries, are they not?

[John Risley]

Exactly. We've decided—and this is fine, and I'm not being critical here—that we want to go with the one-time tax credit on the eligibility of certain assets or the capital cost of a project. That's fine too. You have to weigh one against the other. It doesn't have to be exactly the same. It just has to be reasonably competitive.

Obviously, there are other factors that one has to take into account. What's the quality of the natural resource that we're working with here? Are our wind speeds better or worse? Do we have the availability of fresh water? Do we have access to deepwater ports?

All of these things add to the cost competitiveness of a project, and it's not the government policy in and of itself. Government policy is obviously a big component of it. It just needs to be competitive.