International Trade Committee on Dec. 13th, 2022

[The Chair, Liberal, Judy Sgro]

Mr. Robertson, you're on mute.

[Colin Robertson]

Yes, sorry.

We've always sought to attract foreign investment in Canada because we don't have a big enough market for the investment we need to develop our economy, and it has worked extremely well for our economy, beginning with railways, pipelines and grids. We are also now big investors through our pension funds.

I think investment will go where it wishes, but we want to make ourselves as attractive as possible. We are an attractive destination point, and this has been shared by all governments, so I would continue to attract foreign investment to Canada. The point that some of the big companies export so much of what they produce to the United States is actually a good thing. It shows that we're scaling up to market size, and that's what we seek to achieve.

[Chandra Arya, Liberal, Nepean, ON]

My point is that we have just been maintaining things for the last 15 to 20 years. We are not growing.

With my limited time, I want to note the terms you used: permanent campaign and a team Canada approach. I have been in politics for about seven years, and I understand them. I understand the importance of them in international trade, with service to the U.S. and, obviously, North America in general.

I don't want to suggest another task force, another team or another department. How do we keep a focus on this permanent campaign you mentioned?

[The Chair, Liberal, Judy Sgro]

Can we get a brief answer?

[Colin Robertson]

Yes.

In my experience, it starts in the Prime Minister's Office. Under Mr. Harper and Mr. Trudeau, having a dedicated team in the Prime Minister's Office, which works with the Privy Council Office and bureaucracy, has worked extremely well.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

Go ahead, Monsieur Savard-Tremblay for six minutes, please.

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

Thank you, Madam Chair.

Good morning. Thank you to all the witnesses for their opening remarks, and hello to my fellow members.

Many of the witnesses we've heard from during our meetings on this study told us that they feared a flight of capital investment to the U.S., so out of Canada.

Do you share that fear?

What can we do to prevent the flight of capital investment to our neighbour to the south?

Madam Chair, you can decide which witness answers first.

[The Chair, Liberal, Judy Sgro]

Mr. Marshall, would you like to start?

[A. J. (Sandy) Marshall]

My apologies, but I missed that.

If flight of capital is a fear and a concern, I would think our biggest problem is the attraction of capital and the fact that we need international capital coming into Canada. If we don't have the right environment for that, we won't be able to attract capital, let alone hold on to what we have here already.

I think we've talked about the incentives or approaches we can take to attract this capital. This really comes down to creating the economic environment where these companies can be successful. Subsidies, tax credits and these sorts of tools become part of that. As other witnesses have stated already, these are all factored into the business cases for all of these projects. The projects will be built where the economics provides the best opportunity for success.

[The Chair, Liberal, Judy Sgro]

Mr. Robertson, did you want to speak to that comment from Mr. Savard-Tremblay?

You have to unmute yourself, Mr. Robertson.

[Colin Robertson]

Pardon me, Chair.

I'll just say that an industrial strategy is where I think we should be headed.

[The Chair, Liberal, Judy Sgro]

Ms. Green or Mr. Auer, would you like to comment?

[Jennifer Green]

Given the current conditions we're in with the IRA presenting a very different playing field for Canadian companies, the threat is very real, as member companies are able to take their manufacturing, skill sets and jobs south of the border.

One of the differentiators between the IRA and what Canada has presented in the fall economic statement, as I mentioned, is that there has been a specific call-out for the inclusion of biogas and RNG in production and incentive tax credits. With the complete lack of mention of biogas and RNG in the fall economic statement in this country, Canada is missing a tool in its tool box.

[The Chair, Liberal, Judy Sgro]

Thank you.

Mr. Auer, go ahead.

[Adam Auer]

I support the macro view that we need an industrial decarbonization policy. The problem the IRA is trying to solve is that the market is not ready to pay for the value of the carbon reductions that come from the types of technologies being supported through the IRA. We could make net-zero cement, for example, today with carbon capture and storage, but the market would not pay for the increased costs of that cement at a magnitude that would be capable of justifying the investment.

There are a number of things we could do to close that gap. I think the production subsidies the IRA introduces are certainly one powerful mechanism. Another one would be procurement. Governments can play a leading role in helping to procure the lower-carbon goods made with these technologies and therefore start to incubate a sustainable market response.

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

Thank you for all of those answers.

Mr. Robertson, you said an industrial policy was the way to respond to the measures in the IRA.

The Canadian government announced that it was working on a response, so the 2023 budget will undoubtedly include an industrial policy. In fact, the Minister of Innovation, Science and Industry announced last week that a battery strategy was in the works.

Tell us, if you would, what that policy should look like, substance-wise.

[Colin Robertson]

I think we decide what we want. Our advantage, of course, is in our strategic minerals, but for now, our strategic minerals are being sent for processing to China. I think we have to start refining and using clean-tech methods within Canada, but that's going to take some time. It's also going to take substantial investment. If we did this on a continental basis or with free trade partners in Europe—the Europeans are very interested in what have—we would be able to track the investment. That's one of the areas I'm talking about in which we have competence and capacity. Of course we have the resources, but it is going to take an effort by more than just Canada. We are going to need investment and technology from our partners in the United States and Europe.

That is one area that I hope the government will be looking at in their industrial policy, because we have a natural advantage. What I would not like to see is those vital minerals transferred to the United States or some other place for refining, because the technology and the jobs that could be created from going to the higher end are what we want to try to preserve in Canada today.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

Mr. Cannings, go ahead for six minutes, please.

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

Thank you.

Thanks to all of the witnesses before us today. I'm going to start with Ms. Green and will talk about renewable natural gas.

A renewable natural gas project is under way in my riding in Fruitvale. REN Energy is building a plant there. They just got their final development permit today or yesterday.

I'm wondering if you could comment on what drives those kinds of investments. This project was probably planned long before the IRA was even conceived of. Perhaps you could comment on what drives those decisions. I don't pretend to understand energy markets, but it seems that right now the price of natural gas is very different in different markets, and one of those lines is along the border with the U.S. I just want to find out how much the decisions the federal government makes and any subsidies would change things. Would these things go ahead anyway?

[Jennifer Green]

The current drivers in Canada are very much a patchwork. We have many provinces taking the lead right now in establishing specific mandates with respect to the percentage of renewable gas that is part of their delivery of natural gas to customers. We have seen leading jurisdictions in Quebec and British Columbia establish that type of policy.

Currently in Canada, we don't have anything of that nature federally, but as we know, to move towards reducing emissions by as many megatonnes as we can, there is a real desire to see a targeted policy for reducing emissions that looks to include low-carbon gaseous fuels.

Biogas and RNG projects have been established across the country. Some programs have specifically identified their opportunity and eligibility, and where there are no programs, we see there is less development. Many of these projects take two to five years from initial feasibility to the approvals and construction process, like the project you were speaking about. This is a significant amount of time. The point is that they don't happen overnight, so when we see changes in policy like those we have seen in the IRA, it is definitely game-changing for projects that are already in that cycle and have investigated the opportunities for investment in Canada. This disrupts the opportunities not only for future growth but also for projects that have already made commitments, so there is a substantive impact.

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

I'll turn to Mr. Auer. It's good to see you, as always.

I want to get a better sense of the cement production in Canada. Every community has a ready-mix kind of operation that creates the concrete we need, but in how many places is cement made? I'm thinking of the CCUS demands you were thinking of. How many of those kinds of plants would we need to produce in Canada to cover the production of cement?

[Adam Auer]

We like to say that concrete is hyperlocal while cement is more region-based. We have 14 production facilities across the country: two in British Columbia, two in Alberta, five in Ontario, four members in Quebec and one in Nova Scotia.

Geography does play a role in the viability of the technology as it stands today. Both projects that have attracted investment to date in Canada are in Alberta. I think there are a couple of obvious reasons for that. One is that there's some infrastructure to transport captured CO2, and that's already been invested in. Of course, they have 1,000 years' worth of geologic storage in that province.

Part of the challenge for the cement sector and other heavy industries will be how to overcome some of the existing geographical and geological challenges on the storage side to make technology applicable in every region in Canada and around the world. There is a lot of promising stuff happening in that vein, but this points to Mr. Robertson's comments about collaboration with other jurisdictions. The United States is making deep investments in not just the actual capture infrastructure but also all the infrastructure—the ecosystem, if you will—that's required to make CCUS work. There are opportunities for partnerships that would open the door for broader and earlier applications of CCUS across the country for our sector.

[The Chair, Liberal, Judy Sgro]

You have 30 seconds remaining.

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

Mr. Auer, what's the export situation for Canadian cement going into the United States and vice versa? What's the competition?

[Adam Auer]

About 40% of our cement is exported to the United States. Canada has enough capacity to meet its own demands, and the U.S. does not. It imports quite a bit of its cement, and 30% of U.S. imports come from Canada.