International Trade Committee on Nov. 29th, 2022

[Richard Martel, Conservative, Chicoutimi—Le Fjord, QC]

I have another question for you, Mr. Scholz.

At this committee, we have talked at length about incentives for the electric power sector and about developing a batteries pipeline, from resource extraction to the production of electric batteries.

Canadian businesses drilling for certain critical minerals wonder whether increasing the critical mineral exploration tax credit to 30% is the best way for the federal government to increase its support.

[The Chair, Liberal, Judy Sgro]

Can we get a brief answer?

[Mark A. Scholz]

Was that directed to me?

[Richard Martel, Conservative, Chicoutimi—Le Fjord, QC]

Yes, my question is to you, Mr. Scholz.

I am talking about the 30% tax credit for critical mineral exploration. Is this the best way to get more support from the federal government?

[Mark A. Scholz]

I think it's getting us closer to what we need. It's very unclear at this point whether or not our membership's drilling and service rigs would be able to qualify for the clean technology investment tax credit. We're having discussions with the federal government to see if that is in place for our industry.

The other piece that I think is going to be really critical is to allow this industry to have a bit of a carve-out for fuel switching from diesel to natural gas. That is still a huge emissions reduction game-changer for our industry, but, again, that's going to put us at about a 20% to 30% reduction. We have to make sure the technologies that are going to allow us to get there are included in some of these investment tax credit programs. We've asked for a 50% refundable income tax credit. If we're eligible for the 30%, it will certainly get us closer, but we have a 2030 target we have to make. Particularly in the oil and gas sector, we have a 42% reduction target we have to meet by 2030. We're seven years out.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

Thank you, Mr. Scholz.

[Mark A. Scholz]

If we want to be serious about reducing our emissions, we have to have this in collaboration with the federal government.

[The Chair, Liberal, Judy Sgro]

Mr. Virani, go ahead, please.

[Arif Virani, Liberal, Parkdale—High Park, ON]

Thank you very much, Madam Chair.

Thank you to all of the witnesses.

I'm going to start with Mr. Wilson.

Mr. Wilson, in your opening and again in response to Ms. Dhillon you mentioned important policies that we need to remain focused on, including the carbon price. You said on two occasions that it would be good for market and investment decisions, given that the carbon price serves as a lever to indicate to industry where they should and should not be putting their money, to actually prolong it and to have a projection about the carbon price and its future going all the way to 2040.

Can you just elaborate upon how the carbon price serves to incentivize industry to make decisions about clean investments?

Can you provide that answer in about 45 seconds? I have multiple questions.

[Evan Wilson]

Yes. I'm happy to do that.

Basically, the way to look at it is that we have a 2035 net-zero goal right now. We expect that wind and solar will be drivers to getting us to net zero.

We see a lot of demand from corporate buyers to go into long-term contracts, especially in Alberta, with wind and solar providers. Those contracts are based on the carbon price. They're a hedge against the carbon price for a lot of these companies that are going into these agreements. Right now, if we were to sign a 15-year contract or even a 10-year contract, we wouldn't know what the carbon price was going to be in 2032, 2033, 2034 or 2035. It becomes more difficult to sign these long-term contracts when there isn't an understanding of what carbon price will be part of the determination of the value of those contracts.

Likewise, we want net zero by 2035. We're driving to 2035. We don't have clarity on the carbon price for the five-year gap between 2030 and 2035. That makes it hard to determine what the revenues will be for these projects.

[Arif Virani, Liberal, Parkdale—High Park, ON]

Thank you.

I think that's an important segue. We heard a lot from some of the Conservative members on the committee, even today, about the importance of driving in unison towards those clean-grid objectives. I know that 85% of the grid is already clean, and that's 92% in Ontario, as Mr. Bradley pointed out. I think the carbon price provides that economic lever to spur further investments to get to the goal we're all striving for.

I want to ask you about some significance on the trade front. I'm staying with you, Mr. Wilson.

You mentioned solar and wind a number of times in your presentation. We know that in June Minister Ng was successful. There was an agreement announced with respect to U.S. solar safeguard tariffs being removed. I'm wondering if you could comment. Do you have any understanding of how the removal of those solar safeguard tariffs by the Americans on our products going to the United States impacts the solar industry?

I'll turn it over to you for 30 or 40 seconds.

[Evan Wilson]

I'll have to get back to the committee with some follow-up in writing on that. Unfortunately, I can't speak to that off the top of my head today.

[Arif Virani, Liberal, Parkdale—High Park, ON]

That's fine.

Mr. Scholz, you mentioned the white paper that your group did with respect to the transition of the industry as well as the transition of workers.

I noted that you mentioned the secretariat. There are three aspects of it that are covered in the fall economic statement. There's a sustainable jobs training centre, sustainable jobs stream under the UTIP—union training and innovation program—and the sustainable jobs secretariat. These are really trying to target as many as 35,000 workers with investments of over $250 million, in terms of where the sectors are heading—including the energy sector, which you represent.

Can you give your views on these measures in the FES and how effective you believe they will be?

Thanks.

[Mark A. Scholz]

This is obviously new information for us, and we're starting to sift through some of the details.

I would just say look, there are so many new technologies that are going to be coming out within our sector. We're talking about hydrogen fuel cells to run our drilling rigs, high-line electrification, and battery technology that we're going to be running rigs on.

I would just say that we have to be able to have an understanding of the key skill sets and competencies that are going to be needed within our energy services sector to allow us to be successful over time.

[Arif Virani, Liberal, Parkdale—High Park, ON]

Very quickly, to Mr. Bradley, you mentioned nuclear a couple of times. You know the FES talks about the investment tax credit and the clean-tech credit that applies to small modular reactors. There's some language there about large nuclear being studied.

Given what you mentioned about CANDU and the ecosystem that was built up, where do you feel large nuclear and CANDU have a role to play in terms of cleaning the grid going forward?

[Francis Bradley]

Thank you for the question.

I think every technology that will be able to produce electricity without carbon emissions will be required. If you simply do the math on triple the electricity required by 2050, we can't turn our back on any good technology. Whether it's small modular or large nuclear, whether it's small hydro or large hydro, or whether it's wind or solar, every technology that is non-emitting will be required. Otherwise, we just will not have enough kilowatt hours to be able to decarbonize the economy by 2050.

[Arif Virani, Liberal, Parkdale—High Park, ON]

Thank you.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

Mr. Savard-Tremblay, you have two and a half minutes.

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

Thank you, Madam Chair.

Earlier, I think Mr. Scholz had to cut short his answer to a question from our colleague, Mr. Martel. I would like to give him the opportunity to finish his answer, if possible, because he was heading in a rather interesting direction.

[The Chair, Liberal, Judy Sgro]

Mr. Scholz, you have a little bit of additional time to go back to Mr. Martel's question.

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

It was about critical minerals.

[Mark A. Scholz]

Sure.

I would say that if you want to have a successful supply chain build-out, particularly when it comes to lithium, you need to have energy service contractors who will be at the front lines of extracting that. We're starting to see some incredible numbers of exploratory wells being drilled, particularly in Saskatchewan, through brine extraction. To get lithium, you have two options. One, you can drill for it and extract it through brine or solvents, or you can mine for it. One thing that I think will be really clear is that when you look at the environmental impact of extraction through brine versus mining, I think most Canadians would choose drilling.

Our members will be at the forefront of that. It will be a pivot, a shift, but it will be over time. We will be allowing our workforce to use similar technologies and competencies that we have today in the traditional hydrocarbon extraction sector to be able to be deployed in these new budding sources of battery technology materials.

It's really exciting, but the reality, I would just point out, is that this sector is still getting through a very difficult period of time. We don't have the capital necessary to put into the types of decarbonization the efforts that we'd like. We will over time, but to meet a 2030 target, it means collaboration with governments. That's why I think access to things like the clean technology investment tax credit for the purposes of our industry is so critical for us to be able to decarbonize while at the same time position our sector to be able to grow these really critical mineral supply chains.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

Mr. Cannings, you have two and a half minutes.

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

Thank you.

I was going to ask Mr. Scholz about the training aspect and labour, but I think he answered that in the previous round.

I will ask the same question of you, Mr. Wilson, in the renewable energy sphere. What are the training needs? Is the federal government doing enough to help move those along in all aspects of your sector?

[Evan Wilson]

Thank you for that question.

We were very pleased to see the announcement of the workforce commitments in the fall economic statement. The workforce is one of the strategic priorities for our organization in supporting the training, recruitment and retention of the workforce for all the work that will be required to deploy wind and solar across the country.

We are eager to see more details on the announcements as they come out, but we were pleased that the fall economic statement did recognize the need to have a trained and available workforce to deploy 10 times the amount of wind and solar that we have currently. Certainly, we're looking forward to seeing more details about those programs and getting engaged on those programs. We want to see how they all roll out.