Natural Resources Committee on May 9th, 2017

[Chelsey Reschke]

This prompted me to really consider a future doing a master's in economics, because I think those are the kind of people that you're going to need. You're going to need some measurement specialists. I'm not that person.

First of all, this is an example from the biofuels.

I talked to a gentleman named Jeff Golinowski from Tier 1 Energy and he went on an hour-long rant about the biofuels thing because the land is permanently damaged. Had they done the feasibility study in advance and notified everybody about how much would be consumed in the development of this biofuel and what the long-term impacts to the land would be, then they probably wouldn't have gone forward.

To your point, the economists that you probably have access to would look at things like the extractive cost that goes into developing batteries, for example, and how much carbon is liberated in the heavy mining industry to get x number of tonnes out of the ground, let's say. We would put a value on that, and then carry it through a kind of ecosystem. It's almost like the concept of the tiny plastic beads in cosmetics and how they bioaccumulate in the ocean.

This is a very tangible concept that I'm trying to give to something very complex, but you have a very large budget. If you're going to develop something, I would encourage this definition to be the prime focus of the study.

I would encourage you to engage really valuable industry experts and economists who can measure how much.... Maybe you make it on a scale of carbon liberation, because the real problem is how much carbon we are liberating in each process. Tag a value to it, track it really clearly, and have some sort of additive calculation before we proceed to develop things like biofuels or some of the more new-age technology.

I'm sorry I can't be more specific on that.

[Mark Strahl, Conservative, Chilliwack—Hope, BC]

You've said before that you believe the government should prioritize investment in the commercialization of new technologies over pure R and D. Could you maybe just expand on that thought? We don't have much time.

[Chelsey Reschke]

I guess what I've heard about R and D is that we should look at it like a pyramid. At the top of the pyramid, the R and D phase probably eats up the least amount of money because it's more in the science, not so much in the application.

The application process, or applying science by taking that patent off the shelf and making it commercially feasible, is at the bottom of the pyramid. It takes longer and it costs more money.

I'm not a finance expert either, but to get something to that phase, there's more emphasis on R and D all the time, with a lot of programs at the provincial level. There are grants. They are usually around $50,000. That's not enough to commercialize something. Maybe the government could spend a smaller portion, like 15% of the study money, on R and D, and more like 40% on the late-stage commercialization pieces.

I think that the problem is—no offence intended to anybody—how you are going to measure which ones to invest in. You need to talk to people at GE and 3M, people who have developed technology and are experts at this gated approach. They kill it if it's not going to go forward, and they have the best scorecards in the world.

[The Chair, Liberal, James Maloney]

I'm going to have to stop you there.

Mr. Cannings.

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

Thank you.

I'm going to start with Mr. Switzer. You mentioned that the future of the industry—I assume the oil and gas industry—will look very different. You said we have to go where the puck is going to be, not where it is.

Then you mentioned a few things kind of quickly, at least for me, about perhaps some of those possibilities. I wonder if you could expand on how that future will look in your mind's eye, where we have to be headed, and what we can do today to get there.

[Jason Switzer]

I think this discussion about what else you could do with the competencies and the resource is going to be incredibly important going forward, so I set out a storyline around what else you could liberate besides transportation fuels if you're looking at the oil sands or the vast resource in the western Canadian sedimentary basin. Certainly there are opportunities around mobilizing the electrons themselves, so creating electricity through technologies such as in citric acidification. There's liberating the hydrogen. There are bio-pathways, or actually bacteria, that consume the hydrocarbon and produce hydrogen as a by-product. Also, there are actually experiments under way right now looking at how to recover the heavy metals from the oil sands, rather than produce transportation fuels.

The first piece is thinking through what market the world needs. Are we going to need more lithium if the world is electrifying its transportation fleets? Absolutely. Could Canada be a leading producer of that lithium? Definitely. We have a huge industry built around extracting resources from our oil and gas sector, so we need to think about that.

We should also think about what to do with asphaltenes, which are a unique element of oil sands. The pipelines that connect Alberta, the resource source, to one of the world's leading manufacturing hubs in Ontario are already there. The question is, what could you do if you had the world's cheapest source of carbon fibres, and how many industries could you disrupt if Ontario were the cheapest place to produce that? That's a significant storyline that I think deserves to be investigated.

I think the point was made, though, around whether the industries that are in place right now are capable of making that kind of innovation. I think the answer is that they're under an existential threat right now, and as Canadian companies they have nowhere else to go. They've in many ways doubled down, buying out the oil sands' assets from their international peers, so the incentive to experiment and try new things is there.

I think the experience of AOSTRA, the Alberta Oil Sands Technology and Research Authority, is illustrative, with $1 billion invested by the public sector over 10 years, at times with the opposition of the international oil and gas sector. Companies didn't want to do that. Their time horizon for return on R and D investment is much shorter than what the public sector was forcing around trying to crack the opportunity that was the oil sands.

You need that decadal view, a long-term horizon, that no company can do on its own, but the impact of that is pretty significant. A single $1-billion investment by the public sector translated into over a $100-billion investment by private investors in a single year into the oil sands. We need to think at that scale and that does require picking winners. That's what government needs to do. It needs to focus. It needs to pick winners.

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

Thank you.

I'd just like to move to Mr. Poste and Mr. Wright and talk about tidal energy. Especially Mr. Poste, I see from your company's website that you have experience in the U.K., France, and other jurisdictions. I just wonder if you could quickly give us an idea of how those jurisdictions differ from Canada in your operations and how your experience there might inform the Canadian industry.

[Jeremy Poste]

As you said, my company is operating in Canada, France, Japan, and the U.K., and nobody is taking the same approach. In terms of policy and regulatory framework, a different instrument has been used in those jurisdictions, and sometimes more emphasis is put on commercialization as well. I spoke about the French model where significant investment has been made in port infrastructures that not only enable the tidal industry to get tidal projects going, but the offshore wind industry to invest in those locations as well. That's one of the models we can see in France.

In the U.K. some funding mechanisms supports have been quite comparable to what is done in Nova Scotia for tidal. Nova Scotia has a feed-in tariff for the development of tidal at this early stage. Maybe the slight difference we have between Canada and the U.K. is that they've bet on the issuance of long-term leases for development of pre-commercial or commercial rates. One developer can get up to 100 to 200 megawatts of consent to get his development going throughout the year. That's a type of visibility that is given to the developers or the technology providers or the site leasers.

When it comes to Japan it's a bit different. It's solely a government initiative to do a demonstration project, which is quite isolated at this stage and funded by the government. That's a different model and at a very early stage right now.

I hope that responds to your question.

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

Thanks.

[The Chair, Liberal, James Maloney]

You have 15 seconds, so I don't think you have any time. Thanks.

We have about a minute and a half left.

Ms. Ng, I think you have a question.

[Mary Ng, Liberal, Markham—Thornhill, ON]

Mr. Poste and Mr. Wright, I'm very encouraged to hear that the work both of the organizations are doing has stimulated the creation of 250 companies, start-ups right around the Bay of Fundy. Can you talk to me about how the level of investment that has been made through NRCan and elsewhere has helped and how, from our perspective, that helps encourage other investment from the private sector and create not only the outcomes but local jobs?

[Tony Wright]

It's not just investment that has helped spur academic activity related to the tidal sector. First of all, it takes the resources, something Canada has plenty of, both on the tidal side and the river current side. Canada is blessed with an opportunity to invest in renewable energy, that's for sure.

Before getting into the answer to your direct question, in Nova Scotia specifically the regulatory environment has given both the public and developers a sense of where marine renewables are going. That's unique. That doesn't exist in any other jurisdiction in Canada. That's certainly been an incentive to attract the investment because developers like Jeremy know there is a path through the demonstration phase and into larger-scale commercial development if all works out okay. They need that kind of certainty to make the significant investments that are required in this nascent industry today.

[The Chair, Liberal, James Maloney]

Thank you.

Unless you have something very short to finish, I'm going to have to cut you off.

[Tony Wright]

The investment by the clean energy fund at NRCan back in 2009 was paramount to creating the infrastructure to connect the turbines to the transmission grid. Without that, companies like Jeremy's would have had to spend that $20 million just to get into the water on top of that. The clean energy fund has provided that enabling infrastructure.

[The Chair, Liberal, James Maloney]

Thank you very much.

My apologies, my job is to cut people off.

I want to thank all the witnesses for joining us today, particularly those who made the effort to come back a second time. Your evidence has been of great value, but we do have to move on to our second hour.

We will suspend for one minute. I would prefer people don't even get out of their seats, except for our witnesses.

[The Chair, Liberal, James Maloney]

We'll get going again.

Two witnesses will be joining us by video conference. They aren't quite ready, so we will start with the two groups who are in the room. We have Ontario Cleantech Materials Group, and then we have Mr. Wissing and Mr. Won.

Mr. Bowes or Mr. St. Louis, why don't we start with you. We give each group up to nine minutes for their presentations. You don't have to use all nine minutes. Then we'll open the floor to questions.

Please go ahead.

[Brian St. Louis, Coordinator, Ontario Cleantech Materials Group]

Thank you.

Good afternoon, Chair, honourable members, committee staff, and fellow witnesses. We would like to thank the committee for the opportunity to appear before you today and to contribute to your study on clean technology in Canada's natural resources sector.

My name is Brian St. Louis, manager of government affairs for Avalon Advanced Materials. I'm here with my colleague Gregory Bowes, CEO of Northern Graphite. Together we are representing the Ontario Cleantech Materials Group, or OCMG.

My remarks today will focus on the immediate opportunity for Canada to leverage its natural resource wealth to participate in rapidly growing clean tech supply chains. This can be achieved by producing the critical materials and by manufacturing the value-added advanced manufacturing products required via sustainable methods. The government can establish policy instruments that support pilot and demonstration projects as well as process development work to capitalize on these opportunities that are central to the shift to a low-carbon economy and ultimately create jobs and economic opportunities, including in northern and indigenous communities.

As a brief introduction, the establishment of the OCMG was sparked by the Ontario Ministry of Northern Development and Mines, who hosted a battery supply chain round table in October of last year. This was followed two weeks later, at the mining innovation summit in Sudbury, with the panel, “Hot Commodities: New Materials and New Opportunities for a Low Carbon Economy”.

The OCMG's overriding goal is to stimulate the production of value-added clean tech materials and to leverage this Canadian strategic advantage into anchoring the domestic manufacturing of downstream clean tech components and end products. This is being pursued by increasing awareness, engagement, partnerships, and collaboration to establish hubs for advanced material production and innovation. This is all with the realization that numerous materials, such as refined forms of graphite, lithium, rare earth elements, cobalt, vanadium, and others, are absolutely fundamental to the mass uptake of clean energy technologies, including electric vehicles, wind and solar power, fuel cells, and other clean energy sources.

The OCMG is a collaborative network of industry and academia. It does not have any membership dues. It has no paid or permanent staff. We are not looking for support for the group itself. We do, however, recognize that all clean tech material companies have needs and challenges that, while shared at the macro level, are complex and unique. Working within smaller and less formal collaborative networks, as enabled and demonstrated by the OCMG, allows for flexibility and specificity. While companies should not have to go it alone, the group fully understands and appreciates that it is SMEs themselves, not groups or associations, who need the investment to commercialize and produce real results.

Today the OCMG has 17 members, as listed in the presentation shared with the committee. They span the supply chain, from production and manufacturing to research and development, and include commercial laboratories, battery manufacturing, and battery recycling companies. This full supply chain is supported by members from leading universities, associations, and service providers. The OCMG is an open and collaborative network and effort, focused on advocating for the industry and not individual companies or projects. It is open to all those participating in these supply chains. Within this group you have the players needed to create clean tech material supply chains right here in Canada.

What does this collaboration entail? Examples include material companies working with commercial labs or universities to do the following: first, optimize their individual innovative processes to improve product economics and product quality; second, maximize resource efficiency and reduce the environmental footprint by reducing the need for, or recycling of, energy, water, heat, and reagents in extraction and processing technologies; third, extract materials that can be manufactured into specialty products that may not have been previously produced without process innovation; and last, extract and recycle clean tech materials from discarded products.

Academic institutions also play a central role by supporting two other areas. The first area is the identification, training, and development of the highly qualified personnel who are and will be needed by the industry. The second area is by assisting clean tech material companies prepare themselves not just for the current needs of clean and high tech products but also for the next generation of technologies and their accompanying special material needs.

Overall, clean tech materials are and will continue to be critical inputs to the products that reduce and prevent adverse environmental outcomes and that ultimately enable a low-carbon economy. Furthermore, for both environmental and economic reasons, creating or recycling these products in the most efficient and environmentally friendly way possible is a necessity, and frankly, it's something that's demanded by consumers and customers.

One question posed by the committee was about what types of risk the federal government could address to help de-risk the adoption of clean technology in the natural resources sectors.

As mentioned, it is the innovative processes developed by Canadian companies and their partners that allow the production of these specially engineered clean tech materials. As with any innovative process, much work and ultimately funding must go into research and development, and then it's scaling up these technologies and processes. The development is high risk and high cost and does not have the immediate upside that would be sought by traditional investors.

As assistant deputy minister Frank Des Rosiers noted in his testimony before the committee, this leads to many Canadian SMEs falling into the “valley of death”, or perhaps less ominously labelled, the “commercialization gap”. The committee has heard wide-ranging testimony on this topic, thus I would simply strongly echo that this is an immense challenge for the clean tech materials sector, and it must be overcome if Canada is to have a success in this area and compete globally.

The processing challenges of the base and precious metal industries are well known and the marketing straightforward. The same is not true of lithium, cobalt, graphite, the rare earths, and many other specialty metals and minerals. Therefore, what are the best practice policy instruments for de-risking clean technology in the clean tech materials sector?

First, the government must support innovative Canadian clean tech SMEs in piloting and/or demonstrating their innovative processes, as financing a scale-up of technology is the most dominant barrier to these companies. This is not to say that the government must go this alone. To the contrary, there should and must be a willingness of private companies, partners, and investors to be directly involved.

Second, the committee heard in a previous study how effective the flow-through share program has been in enabling junior companies to raise exploration in some forms of project development financing. However, the new realities in material production for the clean tech sector are not the same as in the traditional mineral development sector. Commercialization involves extensive research, process development, and pilot plant testing to demonstrate that these processes can be scaled up and commercial products produced while at the same time mitigating environmental impacts.

Some of this process development work is not currently incorporated within the flow-through framework. There's a recommendation of the OCMG that the flow-through program be amended to cover these critical parts of commercializing the production of clean tech materials and the value-added products derived therefrom. It should be kept in mind that this is driven by private investors, private equity firms, and other sources of investment funds essentially in partnership with the government, which can inject some of the much-needed capital into the industry.

The OCMG is mindful that there are many good and valid competing interests and is willing and able to work with government to determine what aspects of development and demonstration processes qualify and to help establish guidelines by project and by company that are impactful, yet are not—nor do they become—an onerous burden on the government. The outcome of this would be to allow clean tech material companies and downstream process innovators to raise the risk capital necessary for small-scale early-stage innovation and process development that leads to the scaling up of technologies and commercializing these results.

One organization that supports pilot and demonstration projects is Sustainable Development Technology Canada, which has been successful in assisting growing and innovative Canadian SMEs via investment. However, SDTC does operate under a somewhat rigid framework that can constrain its abilities to incorporate some of the strategic and policy objectives that are central to government priorities.

Another example is the Quebec provincial government, which is already successfully investing in the clean tech materials sector while offering complementary support to private funders and partners via Ressources Québec, a subsidiary of Investissement Québec, as well as directly via other government departments.

In conclusion, what recommendations to the Government of Canada should the committee consider for its final report? The OCMG recommends that the government, first, support commercialization projects in the clean tech materials sector via development policy instruments that are focused on clean tech supply chain development, innovation, and resource efficiency; and second, amend the existing flow-through share program to better support clean tech material process innovation, development, and ultimately commercialization.

Thank you to the committee for inviting the Ontario Cleantech Materials Group to appear before you today. We look forward to your questions.

[The Chair, Liberal, James Maloney]

Thank you very much.

Welcome to our two witnesses who are joining us by video, Mr. Rand and Mr. MacGregor.

Maybe I will get Mr. Wissing and Mr. Won to present next for up to nine minutes, and then I can turn the floor over to each of you gentlemen.

[Ray Won, President, ISTAVA Inc., As an Individual]

Thank you, Mr. Chair.

My name is Ray Won, and I'm here with Wayne Wissing. We're privileged to have this opportunity to meet with your committee to discuss a most important topic, that being opportunities in CO2 reductions while creating a sought-after product for the European Union and Far East markets. Before starting our presentation, I'd like to provide a quick preamble on why the two of us are here as witnesses.

Over the past six years, Wayne and I have had numerous conversations on renewable energy solutions for Canada. Many of these conversations were a result of Wayne's observations and experiences gained through annual visits to Europe. Through these visits, he saw first-hand how Europe was adopting, and in many cases leading, the alternative energy movement. Wayne's professional engineering background lent itself well to analyzing many technical aspects of the observed solutions, and gave him the ability to envisage how they could be adopted by Canada.

Canada has adopted a number of renewable energy solutions across our nation. The first was the burning of felled trees, using the wood for heating and cooking. Today we also use some methane gas and wood waste products. The burning of biomass materials may be for direct heat, such as in wood-burning stoves and furnaces, or for boiling water, which generates the steam required to drive the turbines that produce electricity. As of 2014, Canada produced 2,043 megawatts of electricity through biomass technologies.

For decades, Canada has been blessed with hundreds of lakes and streams that supply hydro power. British Columbia, Manitoba, Ontario, Quebec, and Newfoundland are the primary producers of hydroelectricity. Canada is therefore the world's second-largest producer of renewable power using hydro's kinetic energy. This equates to 378.8 terawatts.

Though the uptake of wind energy and solar was slower in Canada than in other developed nations, we have seen significant growth in these sectors. As of 2014, Canada produced 9,694 megawatts of wind energy, followed by 1,843 megawatts of solar energy. Rounding out the list, we have geothermal generation and will soon have ocean wave and tide generation.

It is now accepted that renewable energy is not the real question. It's how we transport and store the generated electricity when the winds don't blow and the sun doesn't shine. This moves us into the discussion of the battery and the many forms it can take.

Today's presentation will focus on a number of important points. We trust that our discussions will answer the questions that the committee sent beforehand.

At this time I'd like to turn the floor over to Wayne. Sometimes my job is to take some of these many thoughts he has and distill them into something that is more understandable. If you see me nudge him, you'll know that I'm on that track of trying to get him to get to the point.

Thanks very much.

[Wayne Wissing, Electrical Engineer, As an Individual]

Thank you.

[The Chair, Liberal, James Maloney]

That was quite an introduction.

[Wayne Wissing]

Yes. I've basically been a scientist most of my life and so my thoughts are very wide.

Anyway, an observation on Canada is that we are focusing on electric cars and going eventually to ground-source heat pumps if you want to go to zero emissions. That means that in all these cases, we're going to use electricity.

I realized very quickly that there is no way that we can have this world all be electric. It's impossible. We already have a hard time with the air conditioning in the summertime. It's overloading the circuits everywhere. If you now look at that in relation to heat pumps, when you actually start to heat houses, you need approximately two to three times more heat pump capacity than when you use it for cooling.

That means that you use two to three times more electricity for heating the house. In the case of air conditioning, not everybody has air conditioning. However, if we are going to go to heating houses with heat pumps, everybody will have a heat pump. We're going to run out of power, and we haven't even talked about the electric car that's going to be plugged in the laneway.

I looked at the Tesla website and the smallest charger is a 40-amp charger. If you drive long distances every day, like a salesman or something, you need to double-charge it. That means 80 amps of power that you draw at the same time that everybody has the thermostat automatically starting the heat pumps at five o'clock and start cooking. We're going to end up with not enough electricity.

If we have to change that, we have to start changing not only the middle of the house, like the panel, we have to charge the wiring in the streets. We have to put in more transformers, and whatever feeds these transformers has to be heavier and so on, all the way to the power stations. That would be a replacement of millions of kilometres of wiring throughout the whole country, and we don't have that type of money.

I started to look at this and I said, wait a minute, when we look at powering a household, we're actually using different energies. We use electricity for the computer at home, the lights, to run the TV, and maybe electric cooking, but we have a second power source coming in, which is natural gas, and the third power we're using is fuel for the car, which could be gasoline or diesel fuel. We actually use three energies today, and with cleaning up this world, we are saying we want to put everything in electricity. You can't do it. You just don't have it.

What I'm trying to suggest is a different way of looking at how we can do it. This is an established technology that I'm taking about, and it's called P2G, power to gas. It was developed about 10 years ago in Germany, and it works on a very simple principle. I understand you have handouts.

I have this picture here for you, and when you look at it, the first one is basically the components of making water. You see an oxygen molecule and two hydrogen molecules there, and the next one is carbon dioxide. What they do on the first model, the water, through the means of electricity, they toss out the oxygen and they keep the hydrogen. Then the second molecule, which is carbon dioxide, they again toss out the oxygen and keep the carbon. Then they merge it together in this model, which is methane gas or natural gas.

The advantage of this natural gas is that it is 100% pure natural gas. There are no trace elements in it of oil or gas. There's no mercury in it. This is natural gas that is pure. That means when you burn this, of course there's no oxygen here, but to get combustion, you use oxygen, and you basically then take that oxygen again and merge it with hydrogen and it becomes water. That's your waste product. The carbon is merged with oxygen in the combustion process, and you get carbon dioxide again.

What you have done is basically taken the cycle all the way around, from starting with CO2, and then combining it, and then releasing it back into the atmosphere. They call it carbon-neutral natural gas. In the handout I showed the process that can be used in carbon neutral natural gas when you use this.

The next document I have is this one that is related to what happened in Germany, where they actually have an overproduction of electricity due to renewable energy. At the bottom you see that, even when they reduced the standard energy production—they reduce it every day, more and more—they're still overproducing because what we see under the zero line is the overproduction. The discussion of carbon-neutral natural gas is getting very strong there because they see it as wasted energy, what they are doing right now. When we produce more of this carbon-neutral natural gas, then we can actually divert our energy to a carbon-neutral source instead of having everything electricity.

To do that, to collect all the surplus power in Canada.... What happens with nuclear power plants, wind turbines, etc., is that they need to be collected. Therefore, you want an east-west power grid. An east-west power grid is already defended by Engineers Canada and by the Chamber of Commerce. The Liberal Party has talked about it. The NDP has talked about it. The Green Party has talked about it, and the Chamber of Commerce. I speak now for the Progressive Conservatives. I think they also have made the same discussion because they often look at the policies of the Chamber of Commerce.

[The Chair, Liberal, James Maloney]

Thank you. That might be a good place to stop.

I appreciate that.

Mr. Rand, I'm going to turn it over to you, and first, I just want to say thank you for coming back a second time because I know you were scheduled to be here last Tuesday, and it was cancelled.

[Tom Rand, Senior Adviser, Cleantech, MaRS Discovery District]

Thank you for the opportunity to speak.

I'm Tom Rand. I'm a senior adviser here at MaRS in their clean tech group, and I'm also the managing partner of ArcTern Ventures, which is a privately backed venture fund that invests directly in clean energy technology companies.

I'm going to focus a lot on the adoption side. I notice in the focus here it's not so much on the development of technologies but rather the adoption. I'm also going to bracket a lot of comments.

As I'm sure the committee knows, there was an enormous amount of work done over the past 12 to 18 months through the provincial Canadian working group on clean tech. That work was very robust. The outcomes, I think, are sound. Therefore, I'm going to focus my comments mainly on recommendations on following through on how to define the mandate that came out of some of the federal budget recently. There is about $1.8 billion that's heading towards EDC and BDC. I think it has it exactly right in addressing some of the central risks around adoption in the natural resources sector, as well as others, of clean tech.

Clean tech is capital intensive. We have a great farm team here in Canada. One of the questions you ask is, “What are we doing right?” You can tweak SDTC, but broadly speaking, it's done right. Double down on SDTC, that was done.

The question is how you get large first commercial plants adopted. I think that's where the market is stopped. There's a logjam there. There are probably a dozen companies in Canada capable of building large commercial facilities of next generation clean tech with a greater than incremental drop in energy use and greater than incremental gain in energy efficiency. Next-generation cellulosic ethanol, for example, is the poster child I've been using to talk about this market gap. It was addressed in the last budget, so I don't want to advocate for it being addressed. It has been addressed.

I will talk a bit about the risk that all of that political will may go to naught if EDC and BDC are not given a narrow enough mandate to allow them to move the market and change the risk for the private sector so that they can play and come into this space.

The risk is that EDC and BDC will act as market followers not market makers. They are banks. Their primary job is to return dividends to their shareholders. The funds that are being allocated to EDC and BDC can be very effective if they are firewalled, and those groups are given the capacity and the licence to use that capital in a different way and have success metrics associated with using that capital in a different way.

I have a one-pager. I can distribute a soft copy to you to follow up, but I'll go through it very quickly.

The point I'm making is that a very narrow mandate to follow up on that budget is required to get BDC and EDC to move the market. I'm going to focus my comments mainly on EDC, which has $450 million to fund first-of-a-kind commercial projects. I think NRCan has existing programs that can dovetail nicely with what EDC is doing, particularly if NRCan focuses on some of the enabling funds that get a company through the gate to EDC. FEL-3 drawings are site-specific drawings for getting these first commercial plants built. If NRCan endorses some of these points on a mandate to EDC, that's the best thing we can do. A lot of work was put into that policy and I don't think we can do any better.

First of all, the size of those projects should be very large. If the capex of those projects is not at least $50 million to $100 million, then you're incrementally different from SDTC and you're not moving the market. They should be big.

Secondly, the technical risk should be for first-of-a-kind large commercial. If it's the second and third, the private sector should be there, to a large extent, as opposed to the first of a kind.

Regarding commercial readiness, those projects should have offtake contracts with global partners, tier-one engineering firms, who have committed to build that plant and can provide a robust cost analysis and lots of upside potential. This is so that when we build that first-of-a-kind plant in Manitoba and they are producing cellulosic ethanol, there is a robust pipeline of opportunity behind that plant, which speaks to further GHG reductions but, of course, also an economic upside for the country. It should cover a large amount of that first project. If they come in and take a 10% or 15% piece as they normally would, it's not going to do anything. They need to take up to half of those first projects.

It should be milestone-based, so supporting a company right through the engineering engagement and FEL-3 drawings, which are sort of advanced engineering drawings to define the plan. Then milestone it right up through shovel-ready, permitting, and commissioning. I think we have projects in the pipeline today. I don't think it takes more than 12 to 18 months to get that out that door.

Projects built in Canada that have partners with a broad pipeline of activity overseas are also very helpful. The point I'm making there is that we have an enormous ability to move the needle here in Canada on greenhouse gas emissions, but the most we'll move that needle is if we look to these Canadian clean technology companies as exporting solutions to the rest of the world.

The poster child is Woodland Biofuels. It can build a cellulosic ethanol plant in Canada with a Chinese partner. There are Chinese partners who will pay for half that plant. It has 30 to 40 plants it can build in China, the same partners. That's the equivalent of taking every single Canadian car off the road. That's where the link comes to very substantial GHG reductions when we look to global markets. There's more detail, but I don't want to get into too much detail now.

The main point I'm making is that there is a lot of substantial work that's been done. I endorse the outcome of that working group. Now the challenge is that if we do not provide that narrow mandate—and NRCan is one of the groups that can do that—then this money might disappear down the rabbit hole under business as usual. That's the risk. There are receptive audiences in EDC and BDC. There are good people there who understand this. The banking divisions, though, just don't speak this language, so refining that mandate would help.

Lastly, NRCan does great work. There are buckets of money that have been very helpful as companies look to operate demonstration plants at scale. If that could be formed as a continuum feeding into EDC, there's work being done to form a clean tech hub in Ottawa where's there a single door. That would be very helpful, and NRCan has programs that will dovetail nicely as it coordinates those activities.

I'll finish with that. I will certainly offer the one-pager. It's not long, but I'm happy to distribute it to the committee if the committee sees fit.

[The Chair, Liberal, James Maloney]

Thank you very much, Mr. Rand.

Mr. MacGregor.