Thank you, Chair, and congratulations.
I would like to begin by acknowledging that I am privileged to be in the traditional and unceded territory of the Algonquin Anishinabe people. This region is still the home of many indigenous people, and we are grateful to have the opportunity to be here today.
Chemistry and plastics are Canada’s third-largest manufacturing sector, generating over $90 billion in annual shipments. Eighty percent of the sector’s annual production is export-oriented, with most exports destined to the United States. More importantly, the sector is poised for significant growth. Today, over 24 chemistry projects have been proposed; taken together, they represent at least $30 billion in investments, and each of them is envisioned as low-emission or net-zero emission. This includes Dow’s proposal to build the world's first fully net carbon-zero petrochemical facility in Fort Saskatchewan.
There is a five-part pathway to transition the global chemistry industry to low carbon. This includes carbon capture storage and utilization; hydrogen; electrification; feedstock switching to lower carbon resources, including biomass; and building circularity for our downstream products, essentially avoiding production through post-consumer product recovery and reformulation.
The wonderful news is that Canada is only one of two regions worldwide capable of providing all five of these pathways to support the sector's transformation. Importantly, these pathways will also help downstream manufacturing sectors reduce their own emissions as chemistry products work their way through supply chains.
However, I must make clear two very real challenges.
First, these new projects are proposed. There are no shovels in the ground, no modules on order, and we have not seen any final investment decisions. There is significant work to turn these proposals into built infrastructure. Second, we need to attract every dollar of investment we can to lower emissions in the existing chemistry industry. A rough estimate suggests that we have $200 billion to $300 billion of existing chemistry infrastructure in Canada. To transform fully to low or net-zero production by 2050, we will need to recapitalize all of that infrastructure. The global chemistry industry will make the transition to a lower emissions economy. The only question is where these investments will take place.
I believe this committee shares an interest with us in seeing that Canada not only participates in the next wave of chemistry investments but also fully participates in the first wave of net-zero chemistry investments.
The Government of Canada must undertake two important actions to help realize the projects mentioned earlier and attract new investments.
The first is to place attention on the broader investment climate. Study after study shows that Canada is slipping in attracting foreign investment, and our future prosperity is potentially at stake. While attracting $200 billion to $300 billion in new investments over the next two decades sounds doable, the reality is that over the past two decades, the sector has only attracted about $10 billion in new investments. In short, the status quo approach will not suffice. The true value of incentives, like the Alberta petrochemicals incentive program and those in the U.S. Inflation Reduction Act, is the transparency and certainty provided to investors: If you meet a predetermined set of criteria, you receive the credits. There is no adjudication behind closed doors and there is no picking favourites. The intent of these credits is winning investment, plain and simple. In Canada, we continue to insert barriers into our investment policy, and we must be mindful of the risks associated with them.
Second, we need to ensure that the tax credits we have been discussing for three years become law as soon as possible. The Government of Canada has proposed and is consulting on the carbon capture utilization and storage tax credit, a clean hydrogen tax credit and a clean electricity tax credit, among others. We have been talking for years about investment supports and ITCs—input tax credits—and not one shovel is yet in the ground. We need to see these credits passed into law so that we can put private capital and Canadians to work.
In closing, as an example of what is at stake if we get this wrong, we are at the risk of falling behind the United States in assisting our Asian colleagues in meeting their climate change commitments. As of today, over a dozen clean ammonia energy export projects are under way in the United States. While Canada has several such projects proposed, not one is yet under construction.
My colleague David Cherniak and I look forward to discussing some of the specifics of these ITCs with you.
Thank you for this opportunity, and we look forward to your questions.