International Trade Committee on March 21st, 2022

[The Chair (Hon. Judy A. Sgro (Humber River—Black Creek, Lib.)), Liberal, Judy Sgro]

I call the meeting to order.

Welcome to meeting number nine of the House of Commons Standing Committee on International Trade.

Today's meeting is taking place in a hybrid format pursuant to the House order of November 24. Please note that the first hour will be public and the second hour will be in camera.

As a reminder, for all of us to remain healthy and safe, please note that masks must be worn in committee rooms except when members are at their place during parliamentary proceedings. All those inside the committee room should follow best practices of maintaining proper hand hygiene by using the hand sanitizer provided. As the chair, I will enforce these measures, and I thank you for your co-operation.

To ensure an orderly meeting, please note that you may speak in the official language of your choice. At the bottom of your screen, you have the choice of either the floor, English or French. If interpretation is lost, please inform me immediately and we will ensure interpretation is properly restored. The “raise hand” feature is on the main toolbar should you wish to speak. When speaking, please speak slowly and clearly. When you're not speaking, your microphone should be on mute. Finally, as a reminder, all comments should be addressed through the chair.

You would think that we could start to dispense with those opening comments, but anyway, welcome to the committee. I'm glad to see so many of us actually sitting at the table. It does feel a little bit like life is getting back to normal as we go forward.

Pursuant to Standing Order 108(2) and the motion adopted by the committee on Monday, January 31, 2022, the committee is proceeding with the study of Canada's exports of environmental and clean technology goods and services. The committee is resuming this study from the second session of the 43rd Parliament.

With us today by video conference are, from the Department of Natural Resources, Daniel Dufour, director general, innovation branch; Amanda Wilson, director general, office of energy research and development; Allison Christie, director, clean growth hub; and Anna van der Kamp, director.

We welcome all of you.

We will start with five minutes of opening remarks.

Mr. Dufour, the floor is yours, please.

[Daniel Dufour, Director General, Innovation Branch, Department of Natural Resources]

Thank you, Madam Chair. It's a great pleasure for my colleagues and me to be here today to talk about the clean-tech sector in Canada. Some of us have had the pleasure of joining previous committee sessions, so it's good to be back.

Again, my name is Daniel Dufour. I'm the director general for innovation at Natural Resources Canada. If you'll allow me, I'll start with an overview of the clean-tech sector in Canada.

Clean tech, broadly speaking, is an important sector in its own right, but furthermore contributes to all economic sectors, improving both environmental performance and competitiveness. Clean tech provides sustainable solutions, notably in reducing emissions, waste, and water use; in developing advanced materials and bioproducts; and in extracting, transforming or producing natural resources goods more efficiently, which could be in energy, mining and forest products.

A strong clean-tech sector will be critical for Canada and the world to achieve net-zero goals. As we know, reaching these goals by 2050 will require widespread use of technologies. Based on the International Energy Agency, 50% of these technologies are not yet available.

The potential is huge, with the global market for low-carbon solutions expected to grow to over $34 trillion through 2030. In order to better understand the clean-tech sector and its opportunities, NRCan and ISED, Innovation, Science and Economic Development Canada, in partnership with Statistics Canada, launched the clean-tech data strategy back in 2017. As a result of this work, we now have some data on clean-tech contributions to Canada's economy and export, which I'll go over rapidly.

Clean-tech sector contribution to GDP was $26.8 billion in 2020, and it grew faster than the overall economy between 2012-20. As you would know, the sector comprises mostly SMEs, about 80%. In terms of employment, it increased by more than 25% over the 2012-20 period, which was seven times faster than the rest of the economy. It employed over 200,000 Canadians in 2020.

In 2022, Canada ranked second in the world, after the U.S., in the global-tech top 100 list, with 13 Canadian firms being nominated or being successful on that list, and all of which received federal funding. Eight of these companies received funding specifically from Natural Resources Canada.

Canadian clean-tech companies are also important creators and holders of intellectual property, with over 65% of clean-tech firms holding IP, versus roughly 27% for all SMEs.

A large portion of Canadian clean-tech products and services are exported, primarily to the U.S. Clean-tech exports reached $5.9 billion in 2020. Exports have grown 33% since 2012, outpacing overall exports, which grew 23%. In 2019, 73% of these exports went to the U.S., followed by Europe with 14%. The top clean-tech products and services that are exported by Canada are complex manufactured goods, scientific and R and D services, and support services.

With respect to the NRCan and other federal departments' support, they're offering a suite of programs that support clean-tech firms, from R and D to demonstration to deployment. In addition, support is offered for trade and investment promotion through Global Affairs Canada's trade commissioner services, and also EDC and Invest in Canada.

We also have the clean growth hub, which is co-led by NRCan and ISED. It supports innovators and adopters to navigate the federal system for funding and services. It also enhances federal clean-tech program coordination and aims to strengthen the federal capacity to track and report on clean-tech outcomes.

Let me close with a snapshot of key innovators that are active across Canada. Just to name a few, in B.C., we have Ekona, producing clean hydrogen. In Alberta, we have Recover, which makes valuable products from oil drilling waste. We have the Saskatchewan-based PapaBravo Innovations, which develops electric vehicles for underground mining. We have, in Ontario, Polar Sapphire, which provides cleaner alumina for batteries. In Quebec, we have Elkem metal, which replaces coal with biocarbon briquettes made from forest residues. We also have the Quebec-based GHGSat, which develops remote sensing to detect GHG emissions from industrial facilities. Lastly, we have, in Nova Scotia, CarbonCure, which is implementing carbon capture solutions by storing carbon dioxide in recycling wastes from concrete products. These are a few of the clean-tech innovators we have in Canada that are a source of pride and confidence in our future.

I want to thank you, Madam Chair, for your good attention. My colleagues and I are available to answer questions that the committee members may have.

Thank you.

[The Chair, Liberal, Judy Sgro]

Thank you very much, Mr. Dufour.

We will now open it up to our committee members.

Mr. Lewis, you have six minutes, please.

[Chris Lewis, Conservative, Essex, ON]

Thank you, Madam Chair. Thank you, Mr. Dufour, for your intervention, and all the information you provided. It's a very important conversation, of course.

Ironically, I came from the sewer industry. In the sewer industry, we invented technology that we shipped across North America and the world. Instead of digging up the street, ripping up the pavement, cutting up the curbs and cutting the streets, we went in with robots, materials, and resins. We did it all in a day, instead of over the course of some six months, as an example. When you spoke about this technology, I listened with a very keen ear.

My first line of questioning is regarding clean technology. I believe I heard you correctly when you said that the biggest importer of Canadian clean technology is the United States. Did I hear you correctly, sir?

[Daniel Dufour]

That's correct.

[Chris Lewis, Conservative, Essex, ON]

Thank you.

Who does Canada import the most from? Is it equally from the United States?

[Daniel Dufour]

I'll ask my colleague, Anna van der Kamp, as she can answer that question.

[Anna van der Kamp, Director, Department of Natural Resources]

Yes, absolutely, it's from the United States.

[Chris Lewis, Conservative, Essex, ON]

Thank you.

Earlier on, you mentioned clean water. I'm going to speak specifically to my region of Essex, near Windsor. I'm quite sure that my honourable colleague, Mr. Masse, will also be talking about electric vehicles and the battery plants potentially coming down to that area.

In Essex County and Windsor, we're basically surrounded by water—three quarters of us—so we're almost an island in and of ourselves.

If we are the biggest importers of American clean technology, and the U.S. is the largest importer of our clean technologies, are the countries working in a united way to make sure we're working on the same fronts?

We've only got one type of water, of course, so do we work in a united way, or do we use two different types of technologies?

[Daniel Dufour]

This touches to a certain extent on the partnerships we have with our American colleagues. The government-to-government relationship has a variety of partnerships, but it's more a partnership in terms of the technology per se and to what extent the industry is actually joining forces on some of these developments.

Amanda, might there be examples you'd like to list of the collaboration we have with the United States?

[Amanda Wilson, Director General, Office of Energy Research and Development, Department of Natural Resources]

Thanks, Dan, and committee members.

I'm the director general of the office of energy research and development.

As Dan said, it really depends on the types of technologies you're talking about. Obviously, with some types of technologies, it's more important to have consistent standards and regulatory measures that span borders than others. One would be EV charging, for example. That's obviously an area where there is a benefit to have common standards across North America.

In other areas, we do work closely in partnerships with our relevant American colleagues. There are obviously a number of industry partnerships that happen at the company or industry association level. We also engage in collaboration with our partners in other governments around the world. A good example would be the U.S. Department of Energy, for example. NRCan has had ongoing relationships with the Department of Energy, and MOUs in that space in a number of areas, over the past number of years.

[Chris Lewis, Conservative, Essex, ON]

Thank you very much for the answers to those questions.

Earlier on in the speech, there were remarks about parks. Ironically, one of the members of this committee raised in the House of Commons this morning the fact that a national park will be potentially created in both his and my ridings.

Can you speak to the clean technology that's currently being used in Canadian parks and what's on the table going forward on that front?

[Daniel Dufour]

I'm sorry, as this would be a question best addressed to my colleagues at Parks Canada, I'm not in a position to answer the question.

[Chris Lewis, Conservative, Essex, ON]

Okay.

We don't have Parks Canada here.

[A voice]

No.

[Chris Lewis, Conservative, Essex, ON]

Very well.

That's good, Madam Chair. Thank you.

[The Chair, Liberal, Judy Sgro]

Thank you.

Mr. Sheehan, go ahead, please.

[Terry Sheehan, Liberal, Sault Ste. Marie, ON]

Thank you very much to the presenters and for undertaking this important study.

I first started thinking about and introducing this to the committee back in 2019. It just seems that we've come a long way, particularly recently even from 2021 until now, especially with some of the investments that have been made down in southern Ontario in the auto sector and across Canada. In my riding, with Algoma Steel you're seeing investments in green, clean technologies. In the case of Algoma Steel, they're going from a coal-based operation to an electric arc. That of course affects the supply chain, the downstream and the upstream. Even the market itself is demanding more clean green products.

Perhaps you can comment on some of the investments that have been made. In particular, since we're dealing with Natural Resources, I'm thinking of PDAC, the Prospectors & Developers Association of Canada, whose conference is coming up shortly. It's going to be sort of a hybrid. It will be in person in June, and it will also have a Zoom portion to it. I remember at the last one that we were assembled at in person, in 2020, there was an announcement of the various tax measures that were there for companies that employ clean technologies in the mining sector.

Perhaps you can comment on what we have seen recently over the last little while in terms of the various funds and activities that are available for Canadian companies to invest into themselves, into the clean green technologies.

[Daniel Dufour]

I'll look at the question in two ways. You mentioned the investment in Algoma. I think you touched on that. Then you asked questions around specifically the tax incentives we may have in terms of clean-tech adoption and clean-tech development. I'll take the first question, and then I'll ask my colleague Anna van der Kamp to talk about taxation more specifically.

With regard to investment by Algoma, one tool that has been used quite extensively of late to really help industry, including automotive, to decarbonize and adopt cleaner technologies has been ISED's strategic innovation fund. You may be familiar with it. Under the fund, a net-zero accelerator was launched. This is really an $8-billion program with our colleagues at ISED, but NRCan has been working hand in hand with ISED around the governance, going through the selection of projects that will help to decarbonize, achieve the most impact in term of GHG reduction, enable the transformation of the industry towards cleaner technologies, and build a solid environmental ecosystem.

If possible, I would now turn to Anna van der Kamp to tell us a bit about taxation.

[Anna van der Kamp]

I'll speak quickly to some of the various tax measures we have in the federal government that have been developing very quickly, as you say.

Of course, we have an accelerated capital cost allowance for clean energy and energy-efficient equipment, which allows with it Canadian renewable and conservation expenses. We also have a new ITC, investment tax credit, for CCUS, which I'm sure Amanda Wilson can speak to better than I. In addition to that, we have recently, of course, mentioned the manufacturers tax credit. That's a 50% general corporate and small business income tax credit. Those would go into effect January 1, 2022.

Then there are other additional investment tax credits for renewables, and potentially for hydrogen and clean tech, that have also been announced and are being worked on now. Plus, of course, there's the mineral exploration tax credit, which is maybe the one that you were referring to, which has been doubled for critical minerals.

[Terry Sheehan, Liberal, Sault Ste. Marie, ON]

While we're sticking to mining, I have to be a good northern Ontarian and ask about the Ring of Fire. We have a provincial election coming up. I've seen that the premier has made some comments about it recently. We know that we need a road to get to the minerals. The minerals represent billions and billions of potential dollars, in particular for EV and clean tech.

Could you basically give us a summary of discussions that you might be having with the province and other stakeholders at this particular time?

[Daniel Dufour]

I'm sorry. I'll turn to my colleagues.

It's one that we're not in a position to answer, Madam Chair.

[Terry Sheehan, Liberal, Sault Ste. Marie, ON]

I couldn't hear that.

[Daniel Dufour]

It's a provincial jurisdiction.

[The Chair, Liberal, Judy Sgro]

They're not in a position to be able to answer that question.

That's most unfortunate. It would be interesting to get an answer.