Natural Resources Committee on June 16th, 2026

[The Chair, Liberal, Terry Duguid]

Good morning, colleagues. I call this meeting to order.

I'll start by acknowledging that we're meeting on the unceded territory of the Algonquin Anishinabe nation.

Welcome to meeting 44 of the House of Commons Standing Committee on Natural Resources. Today's meeting is taking place in a hybrid format.

I would like to remind everyone in the room and online of the following points. Before speaking, please wait until I recognize you. For those participating by video conference, click on the microphone icon to activate your mic, and please mute yourself when you are not speaking. For those on Zoom, at the bottom of your screen, you can select the appropriate channel for interpretation: floor, English or French. For those in the room, you can use the earpiece and select the desired channel.

I would like to remind witnesses that committee members may ask questions in either English or French. If you will need interpretation, please take a moment now to prepare your earpiece and select the listening channel you need in advance in order to take advantage of the time allotted for questions and answers.

For members participating in person or via Zoom, please raise your hand if you wish to speak. The committee clerk and I will do our best to maintain a consolidated speaking order. This is a reminder that all comments should be made through the chair.

Pursuant to Standing Order 108(2) and the motion adopted on Thursday, April 23, 2026, the committee shall resume its study of Canada's electrification, energy self-sufficiency and domestic energy security.

Colleagues, let me, on your behalf, welcome our witnesses. We have with us, from the Canadian Fuels Association, Bob Larocque, president and chief executive officer, and Lisa Stilborn, vice-president, public affairs; from Electro-Federation Canada, Cherith Sinasac, director, government affairs; and from Resource Works Society, Margareta Dovgal.

All of our witnesses have conducted a mandatory witness onboarding test, particularly those on screen.

Welcome, all. You will each have five minutes for your opening remarks, after which we will open the floor to questions.

Mr. Larocque, I'm going to turn to you first. You have five minutes.

[Bob Larocque, President and Chief Executive Officer, Canadian Fuels Association]

Thank you so much.

Good morning, Chair Duguid, honourable members and fellow panellists. We greatly appreciate the opportunity to appear today.

The Canadian Fuels Association has been the voice of Canada's transportation fuel sector for over 30 years. Our members account for virtually all petroleum products refined in Canada. We also make nearly 80% of all the biofuels produced in Canada, including ethanol and bio-based diesel, and we're just starting to make sustainable aviation fuel. Our fuels are essential to every sector of our economy and support Canadians' way of life.

I would like to thank the committee for undertaking this important study.

Let me start by saying that a year ago, energy security was a background issue. Now, it is the issue. The situation in the Middle East has reinforced the hard reality that energy security can no longer be treated as a secondary consideration.

First, I would like to focus on the good news for Canada: As a net exporter of conventional refined petroleum fuel products, this country is in a relatively strong position from a supply perspective compared to many other countries. In a fragmented and volatile world, secure and reliable supply is a definite strategic advantage.

In recent weeks, multiple countries have approached our sector to discuss potential new secure and reliable supply agreements. This speaks volumes about how Canada is seen as a trusted energy producer and partner.

However, the latest events have also demonstrated potential vulnerabilities. Just to name a few, a recent infrastructure decision has made us reliant on imports for jet fuel in British Columbia, and of course, we always have the potential closure of Enbridge's Line 5 looming in the background, which is a key pipeline for Ontario and Quebec's refined products.

This also reinforces the importance of maintaining a strong, resilient and national refining sector as Canada's energy systems evolve. Canada's experience illustrates an important lesson: Where we have domestic production capacity, we have reliance; where we rely on imports, we are exposed to decisions made elsewhere.

Here's the other side of the coin. As domestic demand for low-carbon fuels rapidly grows to meet compliance with low-carbon fuel standards provincially and also the clean fuel regulations, so is our reliance on imports growing to meet that demand. At this juncture, we need to decide whether we will produce these fuels ourselves or increasingly rely on others to do it for us.

Today, about 60% of Canada's renewable diesel and ethanol supply comes from imports, mostly from the United States, and the United States recently boosted its renewable fuel mandates, which is already increasing competition for available product. These decisions are completely outside of our control, and they can directly impact our ability to access the biofuels we need.

In a more protectionist global economy, importing compliance is not the same as building energy security. Canada's conventional fuel sector demonstrates what energy security looks like: We produce the fuels we need, we maintain the infrastructure to deliver them, and we have the resilience to respond during periods of disruption. We should strive to do the same for low-carbon fuels.

The challenge is in creating a policy environment that stimulates growth in domestic production alongside the growing demand. Energy security is not just about having access to energy; it's about having access to energy produced by a system that we control.

We have recommended practical, targeted and achievable measures to that end: Maintain strong demand signals for low-carbon fuels; ensure regulations encourage domestic production as well as demand; and simplify compliance and remove barriers that discourage investment. If we align our policies with these objectives, Canada can build a more resilient low-carbon fuel sector, reduce reliance on imports and strengthen Canada's energy security.

Canada has already demonstrated what energy security looks like when it comes to conventional fuels. We should aim for the same outcome with low‑carbon fuels.

Thank you for your attention. I look forward to answering your questions.

Thank you. I look forward to answering your questions.

[The Chair, Liberal, Terry Duguid]

Thank you, Mr. Larocque.

Now it's over to Ms. Sinasac. You have the floor for five minutes.

[Cherith Sinasac, Director, Government Affairs, Electro-Federation Canada]

Good morning, Chair and members of the committee. Thank you for inviting me here today.

My name is Cherith Sinasac, and I'm the director of government affairs at Electro-Federation Canada. We're commonly known as EFC.

EFC represents over 230 member companies across Canada's electrical and automation industry. Our members design, manufacture and deploy technologies that power Canada's industries, buildings and transportation systems. Our sector plays a critical role in advancing electrification and energy security. We are delighted to be here today to discuss Canada's electrification, energy self-sufficiency and domestic energy security.

Canada's electricity system is entering a period of significant structural transformation. Electricity demand is increasing rapidly due to electrification across sectors, economic growth and new large energy loads such as AI data centres. At the same time, the system is becoming more complex with increased integration of distributed energy resources and variable generation such as wind and solar. This means that Canada must simultaneously expand, upgrade and modernize our electricity system.

Electrification is central to achieving Canada's climate and economic objectives. To support this transition, EFC has worked with Dunsky Energy and commissioned a national assessment of key grid technologies expected to shape Canada's electricity transition. A central finding is that the technologies required to support electrification already exist and are commercially available. The primary challenge is not innovation, but rather the deployment barriers such as supply chain and cost pressures, utility regulatory rate-setting frameworks, codes and standards and interoperability challenges.

Supply chain and cost pressures are the dominant system-wide challenge and the top barrier to grid expansion and modernization, particularly for grid hardware. Cost inflation since 2020 has been driven by material shortages, lack of capacity and high demand. Canada's electricity infrastructure depends on increasingly complex global supply chains, with significant reliance on imported critical grid equipment and component parts. This exposes Canada to potential geopolitical risks, supply chain shocks and cost volatility. These deployment barriers also have the potential to impact Canada's energy security and domestic self-sufficiency. To address these challenges, the report identified several near-term priorities.

First, we need to strengthen domestic supply chains for critical grid technologies by expanding existing investment tax credits to include key grid equipment and to target investment where Canada can build capacity. This measure aligns with pillar four of the national electricity strategy.

Second, the report has found that there is a need to modernize utility regulatory frameworks. Current frameworks often favour traditional capital-intensive infrastructure and do not fully enable digital solutions or demand-side measures, or what we call non-wire alternatives. These are solutions that enable utilities to extract more value from the existing grid assets.

In addition to supply-side investments, demand-side measures are also critical.

Energy efficiency, load shifting and customer-side flexibility are among the most cost-effective ways to manage peak demand, improve system reliability and defer costs of costly infrastructure investment. These measures complement grid expansion.

In closing, Canada has a clear opportunity. The technologies needed to support electrification and strengthen energy security are available today. The priority now is to remove the barriers to deployment. By bolstering supply chains, modernizing regulations and standards and providing policy certainty, Canada can accelerate grid development, improve system reliance and support long-term economic growth and energy security. EFC and our members are standing ready to support the government in this work.

Thank you. I look forward to your questions.

[The Chair, Liberal, Terry Duguid]

Thank you, Ms. Sinasac.

Now we will move on to Ms. Dovgal.

You have the floor for five minutes.

[Margareta Dovgal, Managing Director, Resource Works Society]

Thank you so much, Mr. Chair and members of the committee, for the opportunity to be here with you today.

My name is Margareta Dovgal. I'm the managing director of Resource Works Society, based in Vancouver. We're focused on responsible natural resource development as a foundation for economic prosperity, indigenous partnerships and practical pathways needed to meet Canada's climate and energy goals in tandem.

I also work closely with the Energy Futures Institute, where former B.C. environment minister and attorney general Barry Penner leads our work on pragmatic, evidence-based energy policy, particularly around electrification. Our consistent message is that Canada and British Columbia succeed when policy is grounded in reliability, affordability and the full range of our energy strengths, including our deep hydroelectric base and our abundant natural gas.

The motion before you rightly calls for an in-depth look at electrification, energy self-sufficiency and domestic energy security while respecting provincial jurisdiction. We welcome the study and the May 2026 national electricity strategy, powering Canada strong, with its ambition to double Canada's electricity supply by 2050 by providing greater flexibility in the clean electricity regulations.

British Columbia offers a clear illustration of why that flexibility matters in practice. Under the province's look west: jobs and prosperity strategy, and federal signals around ambitious LNG expansion, natural gas production in British Columbia is forecast to grow significantly. The province is on track to export 19.4 million tonnes of LNG per year by the end of this decade, with proposed projects bringing that number to a further 28.5 million tonnes. This growth supports LNG exports and condensate demand tied to Alberta's oil sands.

Producing and processing gas takes power. Electricity demand from the upstream natural gas sector, which relates to the power needed to run the gas fields themselves, is set to rise faster than BC Hydro's 2025 integrated resource plan anticipates. Industry analysis, including work shared by the Canadian Association of Petroleum Producers, shows that trajectory pretty clearly.

British Columbia is building the north coast transmission line to bring more than 2,200 megawatts to the northwest, but transmission at that scale takes years to get to that point. In the meantime, these facilities need power that is abundant, reliable and affordable. In many cases, the most practical answer is greater industry self-generation paired with natural gas as firm dispatchable power.

Natural gas is already playing this role at scale. In 2025, gas and other combustible generation reached its highest level and its highest share of the Canadian grid in the current data series, rising for years as gas displaces coal and backstops a system stretched by drought-reduced hydro. Gas provides the reliability and peaking capability that intermittent sources and long transmission lines alone cannot guarantee, especially as we electrify buildings, transport and industry while adding data centres and resource projects.

The national electricity strategy correctly recognizes that natural gas can play a strategic role in a diverse portfolio. The proposed adjustments to the clean electricity regulations—chiefly, greater use of credible offsets, flexibility to avoid stranded assets and support for near-term reliability—are positive steps. For them to deliver, they must be durable and certain enough that developers and operators will actually invest behind them.

Provincial jurisdiction is central here. B.C. has its own integrated resource plan, the CleanBC framework and the building electrification road map. A national strategy should coordinate on interprovincial transmission and regulatory efficiency while respecting the ability of provinces to plan their own mixes. Top-down prescription risks higher costs and slower progress. Enabling provincial leadership, including the practical use of natural gas where it strengthens reliability, produces better outcomes.

Resource development is itself part of the solution. LNG and upstream natural gas drive jobs, growth and government revenues, which in turn help fund the very infrastructure this study contemplates. In British Columbia, they increasingly do so with first nations as owners, not just hosts. Cedar LNG, which is a Haisla Nation majority-owned project, and the Nisga'a-partnered Ksi Lisims development, which signed a European supply agreement last month, show what indigenous-led energy looks like in practice.

Where we can add value at home, we should. Generating power here keeps the jobs, the reliability and the emissions advantage in Canada. Canadian LNG, with one of the lowest emissions intensities in the world, gives our allies a lower-carbon option than the fuels it competes against abroad.

If I can leave the committee with one thing, it is this. Plan realistically for resource-driven electricity demand in British Columbia. Let industry self-generate and use gas as firm power alongside hydro. Make the clean electricity regulation flexible, real and durable. Respect provincial jurisdiction while coordinating on transmission and approvals, and recognize that responsible development of our natural resources pays for a cleaner grid.

Canada has the resources, the technology and the people to meet rising demand while holding the line on reliability and affordability. British Columbia's combination of deep hydro and abundant natural gas, increasingly developed with first nations, is exactly the pairing a national strategy should enable rather than constrain.

Thank you. I'm happy to take your questions.

[The Chair, Liberal, Terry Duguid]

Thank you, Ms. Dovgal.

Thank you, witnesses, for your presentations. They were all on point and on time.

We're going to move to our MP colleagues around the table, and we're going to start with Mrs. Stubbs for six minutes.

[Shannon Stubbs, Conservative, Lakeland, AB]

Thank you, Chair.

Thanks to all the witnesses for being here today.

I'll start with you, Ms. Dovgal and Mr. Larocque, in turn.

Ms. Dovgal, you highlighted that the Liberal fuel standard forces Canada to import biofuels from the U.S., as did Mr. Larocque of the Canadian Fuels Association.

Ms. Dovgal, is it fair to say that the Liberal fuel standard is a hidden tax that currently adds seven cents per litre and will add 13¢ per litre for gas and 16¢ per litre for diesel by 2030?

[Margareta Dovgal]

It's adequate and fair to say that a variety of policies, including the clean fuel standard, are hidden costs on not just the production of resources but also Canadian consumers and affordability. We see it in a variety of ways, but we have to look at it as a package.

This government has said they want Canada to be an energy superpower, but we're still falling quite short of that. We've seen some improvements, notably out of the Alberta MOU, but that relates to Alberta producers. Those were changes on competitiveness, including things like the output-based pricing system, that we need to see elsewhere across the country for us to be able to get to that threshold of being an energy superpower and attracting the capital required to get there.

[Shannon Stubbs, Conservative, Lakeland, AB]

I'm going to go to the Fuels Association in a second, but since you mentioned the carve-out in the Alberta MOU, it seems to me—and I wonder what you think about this—this government has been told for years by proponents and utility companies concerned about providing affordable, reliable power to their ratepayers that the clean electricity regulations are divisive, punitive and unrealistic and would drive up costs for consumers, and it has been told that its target is unrealistic on the timeline that they've set.

Given that it has placed that workaround in the negotiations between the Government of Alberta and the Government of Canada, it recognizes the anti-competitive impact of that policy. Wouldn't it make more sense, then, to scrap it for all the provinces?

[Margareta Dovgal]

I think you're exactly correct about that. We see it across the board. Many policies that we've seen in the last year and a half are essentially a recognition that the way things are set up right now is broken. They're not actually designed to export energy and produce it competitively. They're designed to keep the product in the ground.

The Alberta MOU provisions on electricity are a great example. We also see that in major projects approvals. While the fast-tracking legislation is highly optimistic and promising for many proponents and is certainly a good opportunity to create jobs and opportunities for tax revenues, it is also a recognition that the approvals process is broken. It is not achieving the results that it needs to, whether related to that or other areas of energy and climate policy. We need to be thinking about an overhaul that is actually intended to deliver the types of results that this government says it cares about.

[Shannon Stubbs, Conservative, Lakeland, AB]

Yes. That is especially true in regard to being able to compete and beat the United States and OPEC competitors right around the world.

This question is for the Canadian Fuels Association.

In an article in The Hill Times on June 3, you highlighted that Canada “remains heavily reliant on imports—primarily from the United States—to meet a significant portion of its biofuels needs.”

After years of uncertainty and revisions, and proponents telling the Liberals what they need to do to make this policy flexible, workable, feasible and practical if they want to keep these regs in, which Conservatives have committed to scrapping, do you have comments on why Canada has to rely on the United States—which is insane given that they're also our number one customer and competitor—to meet those requirements? What kinds of adjustments could be made, particularly in terms of reducing legislative, regulatory and policy barriers, to incent that production and development and those exports at home?

[Bob Larocque]

I'd like to clarify that a lot of provinces have their own demands. The clean fuel regulations are very important, but we also have to meet demands from all the provinces. That's going to stay.

What happened is the United States changed their policies about two and a half years ago under President Biden, and then President Trump doubled down on it. It's section 45Z in the One Big Beautiful Bill Act. That incentivized U.S. production of biofuels. They get that incentive in the United States, and then they can sell to Canada and they get the same credits that our Canadian producers do.

That's the bigger difference right now. The biggest change that the current government can make is to amend the clean fuel regulations and allow Canadian production to receive the same support as U.S. biofuels.

[Shannon Stubbs, Conservative, Lakeland, AB]

Thanks for raising what Biden did in terms of that policy in the United States. I would note that President Biden also brought in concrete two-year timelines for regulatory approvals. That was years ago.

This same Liberal government, which has been here for 11 years, of course, still hasn't fixed the permitting timelines to make them competitive in Canada. It still hasn't fixed the certainty and clarity in conditions or the legislative or regulatory frameworks it knows block building because it has listed all of these laws and regulations in the back of Bill C-5, which it promised would make things happen faster.

I know that you, Ms. Dovgal, and members of the Canadian Fuels Association have commented on, for example, the necessity of increasing project approvals and improving investor confidence through more predictable and timely regulatory systems.

Of course, industry has told the federal Liberals two things over and over again. One is that the federal industrial carbon tax that this government imposes federally on its businesses adds costs to Canadian businesses and entrepreneurs that businesses in the United States or OPEC competitors do not have to face. On top of that, both of you have highlighted various legislative or regulatory changes, including tax costs and environmental compliance costs, which have been noted especially by members of the Fuels Association.

I wonder if each of you could give at least three top changes required to ensure expanded Canadian energy of all kinds—production, development and exports. Maybe you could follow up with written submissions.

[The Chair, Liberal, Terry Duguid]

Thank you, Mrs. Stubbs.

You'll have to answer that question in a future round, likely from Mrs. Stubbs' party.

We'll now go to Mr. St-Pierre for six minutes.

[Eric St-Pierre, Liberal, Honoré-Mercier, QC]

Thank you.

Ms. Sinasac, there's been a lot of technical modelling to show that as our economy electrifies, we need to, at a minimum, double the electricity on our grids by 2050. Some other modelling has shown that we need to potentially triple that capacity or at least increase it by two and a half times.

Can you inform this committee what types of energy sources you think should be included in the grid? I think you mentioned during your testimony that those technologies already exist. I'm curious if you can give us a few examples of those existing technologies.

[Cherith Sinasac]

We are fuel agnostic here at EFC. We will connect any kind of generation source.

As the grid starts to expand their generation sources to wind, solar, rooftop and distributed energy resources, we're seeing that there's a real need to modernize the grid. The more we utilize smart grid technologies, the less grid we will actually need to build. That number, whether we have to double the electricity grid, will be dependent on how we're utilizing existing technologies and innovation.

I hope that answers your question.

[Eric St-Pierre, Liberal, Honoré-Mercier, QC]

It does. Thanks.

You also mentioned during your testimony, and again just now, the need to modernize utility regulatory frameworks. Given that this often falls within provincial jurisdiction, what's the role of the federal government vis-à-vis modernizing utility regulatory frameworks?

[Cherith Sinasac]

We have a policy road map with this study, so I encourage the committee to look at it. The second of the main pillars is modernizing regulatory frameworks that will enable smart grid and distributed energy resources. The federal government plays a key role in establishing national-scale utility regulatory reform initiatives, and the provinces also play a role in that industry and the utilities regulators.

[Eric St-Pierre, Liberal, Honoré-Mercier, QC]

Thank you.

You mentioned a road map. Would you be able to provide a copy of that to this committee so that we can take notice of it?

[Cherith Sinasac]

Yes, we'd be happy to supply the road map.

We assessed nine key grid technologies that are available, and we found that the main deployment barrier is the supply chain, along with the utility regulatory rate-setting frameworks.

[Eric St-Pierre, Liberal, Honoré-Mercier, QC]

Thanks.

It's often been said that energy efficiency is a—quote, unquote—“first fuel”, and the best energy source is the one that we don't use. I'm curious if you can comment on the role of energy efficiency as we double our electricity grids by 2050.

[Cherith Sinasac]

As you said, demand-side measures are obviously the most cost-effective tool. The kilowatt that we do not need to produce is the cheapest kilowatt. Effective demand-side reduction is complementary to grid modernization and is equally critical. We see these as two sides. We need to build out and modernize the grid, but we also need to reduce demand through energy-efficient products as well as energy efficiency technology such as demand-side flexibility technologies.

That's where modernizing the grid to utilize those technologies will mean that we don't need to build as much grid, but right now it's all about trying to access those technologies and deploy them at scale.

[Eric St-Pierre, Liberal, Honoré-Mercier, QC]

Still on the theme of energy efficiency, can you or some of your members comment or give some opinions on how our government could further advance energy efficiency? Maybe you can comment on any programs that might be interesting to some of your members.

[Cherith Sinasac]

I'm not going to pinpoint a few today. I'll follow up with a written submission on that.

Obviously, in Ontario and throughout the provinces, there are a number of energy efficiency programs. NRCan continues to regulate energy-efficient products, and we're always very supportive of increasing energy efficiency.

[Eric St-Pierre, Liberal, Honoré-Mercier, QC]

Great.

What would you see as the biggest opportunities as we plan to double electricity grids by 2050? What would be the biggest opportunities for the Canadian economy, for federalism and for Canada as a whole?

Can you comment on how this should be positively perceived? What are some of the positive opportunities for Canada?

[Cherith Sinasac]

We know being able to generate enough electricity for economic growth is the number one priority for Canada. The main barrier preventing that at this point is scaling and securing domestic manufacturing of critical grid technologies. The supply chain is under significant stress. It's under stress, as well, from the geopolitical situation south of our border and the trade situation. Therefore, we're asking the government to please follow through with pillar four of the national strategy and launch a critical grid supply chain initiative, but also to invest in expanding the technology tax credits to include grid equipment so that we can not only secure domestic supply, but start to grow domestic manufacturing of critical grid equipment here in Canada. That is a massive opportunity.

[Eric St-Pierre, Liberal, Honoré-Mercier, QC]

Great. I'll sneak in one last question.

We have a lot of interties with the U.S. I think there are over 30 that are north-south. In 15 seconds, what can we do to better support east-west or northern interties?

[Cherith Sinasac]

I'm not super knowledgeable on that topic, so I'm not going to comment on it. I'm so sorry.

[Eric St-Pierre, Liberal, Honoré-Mercier, QC]

Thank you for your time.

[The Chair, Liberal, Terry Duguid]

Thank you, both.

Mr. Simard, you have the floor for six minutes.

[Mario Simard, Bloc, Jonquière, QC]

Thank you, Mr. Chair.

Ms. Sinasac, during your discussion earlier with my colleague, Mr. St‑Pierre, you spoke about workforce challenges. I find that surprising. Yesterday, I visited a company in our area that made a $6 million investment. The company is Moteurs électriques Laval, which will be producing large coils for electric motors.

One of its major challenges concerns the temporary foreign worker program. I know that not everyone across Canada faces the same reality in the job market. However, Quebec—particularly the regions—is currently facing a severe labour shortage. This type of industry often relies on temporary foreign workers. I don’t know whether your organization has data on this, or whether this issue factors into your discussions on workforce challenges.

After my discussions with people yesterday, it struck me as a significant issue for the growth of these companies. The companies may be equipment manufacturers or service providers set to play a key role in the deployment of electrification. I'm wondering whether you have any data on this. On a broader note, I would like to know whether you have data on jobs related to this sector and on the labour shortage, specifically regarding temporary foreign workers.

[Cherith Sinasac]

I don't have anything to say on temporary foreign workers, except that we were pleased to see that the national strategy included the consideration of the workforce. It is a continual concern and it keeps up. One of the very top issues that always keep our executives up at night is finding the right talent.

We know that as we start to deploy these new technologies, we are going to need a highly trained workforce to help support the electricity system of the future. This continues to be a top priority, but I do not have any data. I apologize.

[Mario Simard, Bloc, Jonquière, QC]

I would like to discuss the financial support that the government can provide. I don't know whether you noticed that the budget and its implementation plan include a provision specifically for the gas sector, which involves an accelerated depreciation measure. This accelerated depreciation makes it easier to deploy infrastructure.

Would you be in favour of extending this to the electrical energy sector for infrastructure purposes? Have you ever considered a mirror measure?

[Cherith Sinasac]

I'm sorry. Are you asking me about how it has been extended to gas or energy?

[Mario Simard, Bloc, Jonquière, QC]

Under the current budget, the accelerated depreciation measure applies specifically to the gas sector, meaning to gas infrastructure. Could implementing the same type of accelerated depreciation measure for electrification infrastructure make it easier to deploy the grid?

[Cherith Sinasac]

Anything that can help support.... The cost barrier is the number one barrier, so it's the cost barrier and the supply chain. Anything that helps to secure our domestic supply chains helps confront the cost of upgrading the grid. We know this is going to be a once-in-a-lifetime, generational investment, so anything that helps make it financially viable to help get the grid built out to where we need it to be is beneficial.

Mainly, our request is to have investment tax credits expanded to manufacturers.

[Mario Simard, Bloc, Jonquière, QC]

We've already had discussions here, as part of this study, with some stakeholders. We know that Hydro‑Québec has a detailed plan all the way to 2035 that focuses on energy storage and greater energy efficiency. However, the plan for electricity deployment isn't the same across Canada. So, even though we have a clear picture of what Hydro‑Québec plans to do by 2035, the situation is a bit less clear for the rest of Canada.

Does your association have any guidelines adopted by the other provinces? How does this fit into the strategy that the federal government will be implementing?

[Cherith Sinasac]

We are actually very supportive of the federal government's current strategy, which was just released. We feel they hit the nail on the head in almost every single category that is important to our industry and that we've been consulting on with utilities, as well as with manufacturers. We're happy to see that they're going to be doing a critical grid supply chain initiative.

How each province decides to unroll this is something that we just have to.... It's the environment that we work in. We want to see utility regulatory rate-setting frameworks not only favouring building hard assets, but also being able to have a cost recovery mechanism for digital solutions. We need value and compensation frameworks for distributed energy resources and demand flexibility. These are things outside of the regular hard assets that the utilities are used to building. That needs to be federally led. Without a federal lead on that, we are going to have each province building more electricity grid than they need to, and that's going to inflate the cost.

[The Chair, Liberal, Terry Duguid]

Thank you, both.

Colleagues, we're going to move on to our second round.

Mrs. Stubbs, we're going to start with you and then Mr. Rowe. I believe you'll be splitting your time.

[Shannon Stubbs, Conservative, Lakeland, AB]

Yes. Thanks, Chair.

I want to give the witnesses a chance to answer my question, which is twofold.

First, on the issue of the federal industrial carbon tax being imposed on Canadian businesses, which the U.S. and OPEC countries do not burden their businesses with, it has been said, for example, that it is a flawed hybrid. Its performance-based measures are tied to the decline of the sector they are targeting. It's a system designed not to foster innovation, but to manage the most productive industries into non-existence.

I'll direct this to the Canadian Fuels Association.

Imperial, Suncor and Cenovus have all talked about the burden of the federal industrial carbon tax, which will limit production and therefore limit exports. Could you comment on, let's say, your top three, and then provide more submissions, on the legislative or regulatory changes that must be made urgently to former Bill C-69, the Impact Assessment Act, which your members have also called flawed since it passed?

[Bob Larocque]

Thanks for that question, Shannon.

[Shannon Stubbs, Conservative, Lakeland, AB]

You're welcome.

[Bob Larocque]

I will focus on the immediate for the refining sector. I think the upstream, which is the Cenovus and whatever.... Bill C-69 does not really apply to refining, but one thing I will say is the clean fuel regulation does. To take a year and a half—

[Shannon Stubbs, Conservative, Lakeland, AB]

I'm sorry. I asked about the federal industrial carbon tax—

[Bob Larocque]

Yes, I will will touch on that.

[Shannon Stubbs, Conservative, Lakeland, AB]

—and about your legislative and regulatory reforms. That's the question I'd like answered.

[Bob Larocque]

Okay. I'll be—

[Shannon Stubbs, Conservative, Lakeland, AB]

As well, I've quoted members of your association who have called for those changes, so I'm assuming you're going to reflect that.

[Bob Larocque]

Okay. Well—

[Shannon Stubbs, Conservative, Lakeland, AB]

I'm definitely not telling you what to say. I'm just quoting what the members said.

[Bob Larocque]

I'll answer your question on the output-based sector, as far as the refining sector goes. It is impacting our sector. You're right. The United States does not have any carbon pricing, and we do. I think we need to look at the carbon border adjustment, for example, to make sure both what is Canadian and what is coming into the country are protected.

I think we need to maintain the provincial leads on this, because they have a lot of regional programs that support regional differences. So far we are doing that, but we're not sure yet where the benchmark is going to land, to be honest with you. We're a huge proponent of leaving the provincial systems in.

[Shannon Stubbs, Conservative, Lakeland, AB]

Protecting provincial jurisdictions is—

[Bob Larocque]

Yes, it is, 100%.

[Shannon Stubbs, Conservative, Lakeland, AB]

That's very interesting.

Are there any top legislative—

[Bob Larocque]

Not as far as.... I'm sorry.

On permitting or anything...we don't need any major changes from the refining side or downstream.

[Shannon Stubbs, Conservative, Lakeland, AB]

Okay.

[Bob Larocque]

We need it in regulation but not legislatively.

[Shannon Stubbs, Conservative, Lakeland, AB]

Yes. Definitely, though, the upstream production members deliver a totally different message.

[Bob Larocque]

That's a very different thing.

[Shannon Stubbs, Conservative, Lakeland, AB]

They are the producers, so it's extremely important to Canadian energy security, self-reliance and exports.

Ms. Dovgal, perhaps you would like to answer.

[Margareta Dovgal]

Canada needs to diversify trade. We need to get our product to markets. We need to ensure that the capital flows in a way that is accomplished through competitiveness.

To your earlier question, I have three broader recommendations.

The first one is to conduct a comprehensive review to ascertain whether our broader legislative and regulatory system around energy and climate is aligned with the objective of fully leveraging our natural resources assets for the benefit of Canadians. To the points you raised, there is tremendous room for improvement, at the very least, certainly in impact assessment, carbon pricing and all sorts of regulations, including the ones currently being studied here.

Second, I recommend something rather philosophical: Honestly assess where subsidies are necessary or being used to bridge policy failures rather than market failures. We often hear the idea that it is market failure that is responsible for why things are so expensive, or why it is hard to build large infrastructure, whether it's domestic electricity generation and transmission or something else. There is plenty of evidence from many fields across the broader energy ecosystem that we are getting in our own way pretty habitually.

Finally, I'd say that a more practical solution in relation to the study is self-generation. Industry has the ability to do that. Our electricity grid, particularly in British Columbia, is strained. We're increasingly relying on imports from jurisdictions like the United States. As we grow the production of products that are very valuable and necessary for our economy, like liquefied natural gas, we need to allow industry to generate its own electricity, because they are producing the product they are shipping abroad. It makes no sense to force them to rely on the electrical system for that.

[The Chair, Liberal, Terry Duguid]

You have 30 seconds, Mr. Rowe.

[Jonathan Rowe, Conservative, Terra Nova—The Peninsulas, NL]

I have a question for Ms. Dovgal.

Bay du Nord in Newfoundland and Labrador was approved on the condition that it will achieve net-zero operations by 2050.

Is that even possible? How does an offshore oil rig achieve net zero by 2050? Are they going to have solar panels out there on the rig? How does that happen?

[The Chair, Liberal, Terry Duguid]

Can we have a quick answer, please?

[Margareta Dovgal]

I'm not familiar with that specific project. I know of it but not in detail.

I will say this. Generally speaking, requirements for net zero are achievable at great expense, and that's a direct hit to the competitiveness of our industry. If your goal is to get projects built and produce products that pay into our tax coffers and put Canadians to work, you need to seriously think hard about the imposition of net-zero requirements.

[The Chair, Liberal, Terry Duguid]

Thank you, both.

Mr. Danko, you have five minutes.

[John-Paul Danko, Liberal, Hamilton West—Ancaster—Dundas, ON]

Thank you, Chair.

My questions will be for Ms. Sinasac.

This committee has heard a lot about opportunities for electrification in buildings, industry and transportation, but I want to focus on industry specifically.

I am a representative for Hamilton, Canada's industrial centre. Hamilton's industry was built in that area specifically because there was access to abundant and affordable electricity supply from DeCew in St. Catharines and hydroelectricity in Niagara. We're seeing the reindustrialization of those same sectors. Electric arc furnaces at ArcelorMittal Dofasco, AI data centres that use a large amount of energy, and advanced manufacturing and new technologies all have very specific energy needs in those industrial centres.

You talked about the national energy strategy, and we talked about doubling the capacity, but a lot of those industrial uses have very different needs. For example, data centres are a steady 24-7 draw, whereas an electric arc furnace has a very time-intensive use, and then it's not in use for a particular time.

How do we make sure the electricity grid is able to supply that developing new industry, that reindustrialization? Also, what are the risks to Canada's economy if we don't move at speed?

[Cherith Sinasac]

We know that, as you said, there are a number of examples of organizations who have said they've located in Ontario or in Canada or in particular areas of Quebec because of the abundant electricity there. It's affordable and it's clean. That's a major attraction for businesses.

Then we look at how to manage the demand. That's where modernizing the grid to have controls, substations, digital substations, sensoring, all of these technologies will allow us to demand flexibility. Even integrating vehicle to grid and utilizing the millions of batteries in EVs themselves can allow us to help control those peaks and flows.

If we don't modernize, we will have to build more infrastructure in order to manage that. It will be more costly to do so. The whole idea here is to prevent having to fire up those peaker plants. Through the technology that we currently have available, we can help to balance the peak grid demands and help to foster and ensure that we have enough electricity. Right now there are regulatory barriers at the utilities. The way they calculate their return on their investment and the way they evaluate which technologies to use currently really favour building hard assets instead of utilizing these smart grid technologies and demand flexibility technologies we have in order to make the most of optimizing the efficiency of the current assets.

I hope that answers your question.

[John-Paul Danko, Liberal, Hamilton West—Ancaster—Dundas, ON]

It absolutely does. Thank you.

I want to ask you specifically about some of the deployment barriers in the supply chain.

You talked about critical grid supply chain equipment. I think this is a really strong opportunity for Canada, again, talking about reindustrialization, to make some of the equipment and components that we used to produce and now import from offshore. In terms of advanced manufacturing, are there specific components that you would like to see available in the Canadian supply chain that would have an impact on our energy security in that we would now have the ability to produce those components domestically?

[Cherith Sinasac]

Yes. Thank you for this question. Our report does show where we have significant opportunity here in Canada. That's where the supply chain study from the federal government will help us to identify where those gaps are.

We currently have areas where domestic manufacturing is strong. That's in wire, cable, transformers and switchgear. There are probably other areas in which we could scale domestic manufacturing and actually create new industry here in Canada. We want to make sure that is located here in Canada. There is significant competition right now from the U.S. We saw that the U.S. included funding from their defence spending to help build out the electricity grid. That will pull investment down into the U.S. We need to be just as competitive here in Canada.

We are currently surveying our members to identify how we can be more competitive, who is anticipating to put down more manufacturing here in Canada and how we can help.

[The Chair, Liberal, Terry Duguid]

Thank you both.

Mr. Simard, you have the floor for two and a half minutes.

[Mario Simard, Bloc, Jonquière, QC]

Thank you, Mr. Chair.

Mr. Larocque, I would like to pick up on a previous conversation. Don't worry. I won't reveal any secrets. It's about the deployment of clean fuels and biofuels. There are projects in my constituency. For example, the Groupe Rémabec is currently producing them. This helps the company keep its forestry operations afloat.

I've always understood that, without carbon pricing, these projects become difficult or even unfeasible. We need some form of carbon pricing in order to develop these types of projects. We aren't doing anything out of the ordinary here. It's the same thing in Europe. Everyone operates the same way.

Could you give us some guidance or clarify this for us?

[Bob Larocque]

I agree with you, Mr. Simard. We need an additional cost that reflects the situation. This could be a carbon price or a clearance market, as proposed by the federal Clean Fuel Regulations. These incentives play a critical role in ensuring that all biofuels can be produced in Canada.

Our issue is that other countries, such as the United States, have added domestic production. We don't have this in Canada. That's our biggest problem. That's why you don't see more factories going up in Quebec. It's supported in the United States, but not in Canada.

[Mario Simard, Bloc, Jonquière, QC]

What do you mean?

[Bob Larocque]

The United States' 45Z program states that, if you produce in the United States, you receive credits for ethanol or renewable diesel. Then, when you sell the fuel in Canada, the legislation gives you access to carbon credits from British Columbia or the federal government. However, Canadian producers don't have this incentive to produce in Canada. So we're already at a disadvantage. The difference ranges from 5 cents to 30 cents per litre.

[Mario Simard, Bloc, Jonquière, QC]

What form might an incentive program take?

[Bob Larocque]

Our recommendation is to add a multiplier to the Renewable Fuels Regulations that applies only to Canadian production. This should provide an incentive, since there would be an additional credit for production in Canada. This would bring us into line with the United States.

[Mario Simard, Bloc, Jonquière, QC]

However, the demand for this is real. I'm thinking of the Groupe Rémabec's work in our region. They serve industrial sectors that need to show that their processes consume energy while leaving a smaller carbon footprint. So this demand for low‑carbon fuels won't disappear overnight. We must ensure that we produce them collectively.

[Bob Larocque]

Exactly.

[Mario Simard, Bloc, Jonquière, QC]

Thank you.

[The Chair, Liberal, Terry Duguid]

Thank you.

Thank you both.

[Mario Simard, Bloc, Jonquière, QC]

Oh. I had only two and a half minutes.

[The Chair, Liberal, Terry Duguid]

Mrs. Stubbs, it's back to you for five minutes.

Do you want to share your time?

[Shannon Stubbs, Conservative, Lakeland, AB]

I'll decide as I get into it. Maybe you'll give me a heads-up on time.

Thanks, Chair.

This is for both the Canadian Fuels Association and Ms. Dovgal.

As you know, Conservatives did call on this government to immediately scrap all taxes on fuel for the rest of the year to provide some relief. The Liberals only removed one of those taxes.

Is it fair to say that this tax is essentially offset by the switch from the winter blend of gas to the summer blend? Would you say this means that the removal of only one of these taxes may end up being negligible for relief at the pumps for Canadians who need it?

[Bob Larocque]

I can answer some of this one.

I just want to clarify to everyone that whenever there was a change on taxation regarding fuel, it was immediately seen at the pump. When we had the carbon tax removed about a year ago, we saw it immediately. With the excise tax it was the same thing. It came into effect on Monday morning, and we saw it.

The problem we're facing is with crude. The price of crude globally has the biggest impact we see on gas prices. It went from about $90 a barrel to $95. Then there was an escalation in the Middle East, and it was $110 within three days. That pretty much eliminated the 10¢ per litre from the excise tax. Hopefully this de-escalates. Now the barrel is down to about $80 or $85.

The biggest impact on the price of gas is the price of crude as a commodity.

[Shannon Stubbs, Conservative, Lakeland, AB]

Do you have any comments, Ms. Dovgal, on removing taxes?

[Margareta Dovgal]

I can briefly comment that, overall, any taxation we do, whether it's direct to consumers or hidden taxes that have to do with the cost of producing the products we use, we see the impact on affordability. The more removed you get from it in terms of the broader supply chain, the harder it is for people to understand where it's coming from.

When we're talking about affordability, we should also talk about the ways that people can afford their lives, which are from incomes and productivity. In order to get to that, we need to have higher competitiveness for global capital, so we can build more big things and employ Canadians. That's another very valuable way of offsetting and not just looking at specific taxes that consumers are exposed to.

[Shannon Stubbs, Conservative, Lakeland, AB]

That's a good point about all the economic contributions that can also be gained from cutting expensive taxes that don't actually achieve the aims their proponents argue they will.

This is for both the Canadian Fuels Association and Ms. Dovgal.

The Liberals promised more than a year ago that they would bring in legislative and regulatory reform. They advocated for this: they would cut permitting timelines to two years and under. We're actually moving into their second year and they haven't yet brought forward that repeal and reform agenda, even though they've listed all these laws and regulations in the back of Bill C-5 that they know block building, which is why they put them in there.

Conservatives, of course, have consistently called for these regulatory and legislative changes to be made at every single step. I can say that as a person who's been here for 11 years. Conservatives have always argued for making Canada's regulatory system competitive, attractive, predictable, fair and objective, and evidence- and science-based. We have also—since I've been elected—supported the construction of two pipelines that would have provided Canadian energy self-reliance, security and exports to both Asia and Europe.

What does it say when everyone from industry to legal experts, from the Supreme Court of Canada and opposition members to every premier and territorial leader have called for overhauls? This government is going into its second year of power, and it has just announced that it's going to delay consultations on the very changes that proponents right across the natural resources sector are saying need to happen.

[Margareta Dovgal]

The Liberals were elected in 2015. For the majority of the 11 years they've been here, we've had policies on the books whose implicit purpose, even if it wasn't the stated purpose, was to keep the product in the ground. I was a Liberal for many years. I organized for the Young Liberals. That was something members of Parliament told me was a priority. It was about ensuring that we shut down the dirty tar sands. That was a line I heard from elected officials on the other side.

[Shannon Stubbs, Conservative, Lakeland, AB]

That's so anti-scientific, because there's no tar there.

[Margareta Dovgal]

Precisely. There are big quotation marks around it.

That was a policy framework that had the intent of making it profoundly difficult for this industry to grow. Now the light has seemingly been seen. We've come under unprecedented economic pressures. It is hard to roll all of that back. The pressure is on to get to results that aren't just band-aids, because we are seeing band-aids. There are a lot of promising indicators and signs, but we need to ensure that it's not just large corporations that have the ability to navigate lots of regulation—to hire large teams that can successfully navigate this.

We need to ensure that the energy sector is one that all Canadians can benefit from. That comes down to the core principles of these policies. If we want to see a change that makes Canada an energy superpower, we need to think more in terms of structural reform, in order to get away from the policies of the past.

[The Chair, Liberal, Terry Duguid]

Thank you, both.

Ms. McKelvie.

[Shannon Stubbs, Conservative, Lakeland, AB]

Chair, maybe the Fuels Association could submit more context in a written submission, if they like.

Of course, I'll note, for the Electro-Federation, that this committee made a recommendation to do west-to-east interties in this country in 2017. I too wish they'd get on that.

[The Chair, Liberal, Terry Duguid]

Thank you.

Ms. McKelvie, you will be wrapping up this panel. You have five minutes.

[Jennifer McKelvie, Liberal, Ajax, ON]

Thank you, Mr. Chair.

My questions are for Mr. Larocque and Ms. Stilborn, to start.

Can you speak to how the government can further strengthen the biofuels sector here in Canada and increase domestic production? What role might the biofuels production incentive have in that?

[Bob Larocque]

I'll take that one. Thank you so much.

Very clearly, they need to amend the clean fuel regulations. They needed to do that yesterday. We're waiting for an amendment. In that one, there needs to be an incentive that relates to the Canadian production of biofuels. The number one thing they can do right now is amend the CFR.

The second thing they can do is approve those projects. The CFR is a life-cycle assessment-type regulation. Sometimes it takes 18 months to two years to approve something. We need to fast-track those approvals within the CFR. It's different from legislation, but they need to do it within the clean fuel regulations.

Those are the two things they can do right now.

[Jennifer McKelvie, Liberal, Ajax, ON]

Can you speak to the innovation that exists within Canadian oil and gas companies? How much are they spending on R and D? What are the sorts of investments being made around decarbonization, renewables and biofuels?

[Bob Larocque]

We have about $10 billion in investments waiting on the table. The number one biggest innovation is called co-processing. Basically, you're putting Canadian canola oil or, if you wish, any kind of oil right into the refinery. When it comes out, you're making renewable diesel, renewable gasoline or renewable jet fuel. It's a new process. It's innovation. It requires some investments, like in the supply chain. I really like what Electro-Federation said. Sometimes the supports are only at the mill site. They're not supporting the whole supply chain. Those are additional changes that could be made. The approval of that is taking a long time because it's so new. It's not traditional biodiesel plants.

Second is, through life-cycle analysis, carbon capture at a refinery like an ethanol plant all the way through the supply chain to the gas station. That's where all the investments.... They're just waiting right now, because there are no incentives to produce that in Canada. It's still technically cheaper to buy your renewable diesel from the United States, where they are incentivized to do it. We're not.

[Jennifer McKelvie, Liberal, Ajax, ON]

Do you have examples of countries that are doing it well, in terms of biofuels? One that pops into my mind is Italy with Eni, the international oil and gas company. Who is doing it well, and are there models we can look to?

[Bob Larocque]

I'll be honest with you. Look at what the United States did. I can't believe I'm saying this, but it's an industrial policy. The United States' One Big Beautiful Bill Act, on the biofuels side, section 45Z, is a good way to look at it.

[Jennifer McKelvie, Liberal, Ajax, ON]

My next questions are for Ms. Sinasac.

You were speaking about supply chains. I'm wondering what the low-hanging fruit are, so to speak. What are the immediate investments that can be made that will have the biggest measurable impact on supply chain improvements?

[Cherith Sinasac]

The whole world is going through electrification at the same time. Electrical infrastructure and component parts are under significant demand worldwide. Sixty per cent of Canada's critical electrical equipment supply is imported, and 70% of that is coming from the United States, China and Mexico. We are heavily reliant on imported products and components, so it's important that we look at where we can start to manufacture those products here in Canada to help secure our domestic supply.

Again, if you want to bring more manufacturing of these critical grid components to Canada, we are asking you to expand the manufacturing investment tax credit to include grid equipment. That way we can start to incentivize those companies and compete with the U.S. so that we continue to be an exporter of this equipment, but also continue to secure our domestic supply.

[Jennifer McKelvie, Liberal, Ajax, ON]

Do you see a role for bulk purchasing particularly by the electrical utilities in terms of smart grids or more local infrastructure that could be rolled out? What role is there in bulk purchasing to be able to bring down the cost for consumers?

[The Chair, Liberal, Terry Duguid]

Give a quick response, please.

[Cherith Sinasac]

That is a strategy we have proposed and encouraged.

Right now, one of the things we're seeing is that utilities have different specs that they all like to customize. You might have a transformer with a green box or a red box. There are some good reasons for that. We do have different climates throughout the country. However, when we do specialized orders for each utility, it prevents economies of scale. Instead of stockpiling this critical equipment, we are waiting for that PO to come in and then we custom-make that product. That's where aligning codes and standards, aligning the specifications across a utility, and bulk ordering could help us to stock and capitalize on economies of scale.

[The Chair, Liberal, Terry Duguid]

Thank you.

Thank you, colleagues.

Thank you to our witnesses for appearing today. There have been good exchanges.

As Mrs. Stubbs mentioned, we welcome briefs and additional information, so please feel free to send that along to the clerk so that we can access that.

With that, colleagues, we're going to suspend for five minutes while we make way for our next panel.

[The Chair, Liberal, Terry Duguid]

Colleagues, we're now in session.

Pursuant to Standing Order 108(2) and the motions adopted on Thursday, September 18, 2025, and April 21, 2026, the committee will resume its study of the forestry industry.

I would like to welcome our witnesses. From the Canadian forest sector transformation task force, we have Ken Kalesnikoff, co-chair, and principal at Kalesnikoff; and Frédéric Verreault, co-chair, and vice-president, Chantiers Chibougamau. I hope I pronounced that correctly.

Colleagues, I'll thank, on your behalf, the co-chairs of the task force, who I know have worked hard on this report and are anxious to share their results with us. They have completed the mandatory witness onboarding test.

Let me make a few comments for the benefit of our witnesses.

Please wait until I recognize you by name before speaking. All comments should be addressed through the chair. Each of you will have five minutes for your opening remarks, after which we will open the floor to questions.

Mr. Kalesnikoff, you have the floor for five minutes.

[Ken Kalesnikoff, Principal and Director at Kalesnikoff, Canadian Forest Sector Transformation Task Force]

Thank you very much.

Chair, I'm happy to hear that you had an issue trying to pronounce my co-chair's company, because I refer to him as Nordic Structures. It's a lot easier.

Frédéric and I both appreciate the opportunity to present to you today. I'm Ken Kalesnikoff. We're based in southeastern British Columbia. Frédéric's company is based in Quebec.

Thank you for giving us this opportunity to speak to you today on the report from the Canadian forest sector transformation task force. Our membership included me and Frédéric; Jim Irving from J.D. Irving Ltd. and Kent Homes; Brad Carr, CEO of Mattamy Homes; Lana Payne, national president of Unifor; Luc Thériault, the CEO of Domtar Canada; Lenny Joe, representing first nations with the BC First Nations Forestry Council; and Don Roberts, CEO of Nawitka Capital Advisors Ltd.

I'll start off by providing a bit of background on how this all came together. Then I will turn it over to my co-chair. I'll try to get through this quickly and leave Frédéric as much time as I can on the detail.

We were invited by Minister Hodgson to take on this role last December. We were given a 90-day mandate to identify priority actions to accelerate the transformation of Canada's forest sector. This group came together on a volunteer basis. We each brought our own perspectives and diverse but complementary expertise on what goes into attracting capital investment, on transforming operations in large and small enterprises, on first nations economic development, on the importance of Canada's skilled workers and on what is needed to fast-track affordable housing in Canada. We spent 88 days engaging with dozens of stakeholders and experts, including senior officials from federal, provincial and territorial governments. We reviewed 176 submissions by interested parties.

The report was released a few weeks ago. The title, “Competitive. Relevant. Resilient.”, stuck with us right from the beginning. It was suggested by Frédéric and is a very relevant name for the report.

This is what we are seeking, not for ourselves and our personal interests but on behalf of Canadians and communities whose livelihoods depend on the health of our forest sector. We're all facing many external pressures—the ongoing trade dispute with the U.S., global market shifts, the collapse in markets for communications paper, and record-breaking wildfire seasons. As a task force, we deliberately chose not to focus on these things, as they are, frankly, outside our control.

For too long, we in the forest industry and in government have sought to deflect attention away from the problems we have created for ourselves by blaming distant others. The fact remains that global demand for forest products continues to rise. Canada's forest products are world class, sustainably harvested and manufactured with some of the highest technologies and rates of renewable energy used globally. But by and large, major investments are not being made in Canada. They are instead being made in Scandinavia, the United States and Brazil. This is largely because of poorly adapted systems and regulations that are in our control but that we have failed to change.

However, while transformation and modernization will require a huge lift, we were heartened to look at the facts and confirm the extent to which this really is in our hands, as Canadians, to do better. It has been an incredible experience. People we spoke with were generous with their time, their insight and their data, which ultimately allowed us to get specific about what needs to change and how we might go about doing so.

I'll pass it over to Frédéric.

[The Chair, Liberal, Terry Duguid]

Please proceed, Mr. Verreault.

[Frédéric Verreault, Vice President, Corporate Affairs, Chantiers Chibougamau]

Thank you, Mr. Chair.

Thank you, Mr. Kalesnikoff.

The mandate took shape with the ambitious directive from Mr. Hodgson, Minister of Energy and Natural Resources to consult, listen, work and deliver a report in less than 90 days. We accomplished this in 88 days.

From the outset, we established that our task force members would proceed on a consensus basis, and that if ultimately only three recommendations garnered consensus, we would submit only those three to Mr. Hodgson.

We're quite satisfied with the solid report that we submitted. This report needed to establish a diagnosis. We wanted this diagnosis to be factual, solid and sustainable.

The conversation on forestry in this country is all too often split among groups pulling in different directions, even though the facts are crystal clear. That's why we wanted this type of solid diagnosis. We wanted to lay the groundwork and to properly identify the needs and issues, but also the potential of this very modern sector, based on the action plan that we'll submit at a later date.

Over the course of this work, it quickly became clear—and we hope that your review of the report will lead you to the same conclusion—that the forestry sector is primarily a manufacturing sector. The most modern and ambitious economies—such as President Macron's France or the United States with the economic policies of the current American administration—are taking steps to reindustrialize and to build on a strong industrial manufacturing base. We may have taken it for granted and we have undoubtedly forgotten it, but the Canadian forestry sector is primarily a manufacturing sector. It serves as a remarkable backbone of this country's economic strength.

However, like any manufacturing sector, the forestry sector needs a strong, predictable and competitive supply chain in order to produce goods that will, in turn, be competitive. This quickly became the elephant in the room during the consultations. Given the different regimes in place across the country's provinces, Canada has lost some of this competitiveness as a result of supply chain issues. In public policies and regulatory frameworks, we've collectively lost sight of the fact that, just as an aluminum company needs green energy as a raw material and as critical input to operate, perform effectively and remain competitive, a forestry company needs cubic metres of wood. This wood is its raw material. Like any manufacturing sector, it must rely on a solid supply chain.

It also quickly became clear that New Brunswick has an extremely inspiring forest management model. A hectare of forest isn't treated as an expense in a government's books. Instead, it's an asset that can generate returns, perform well, remain productive and optimize value, while also benefiting from modern and relevant conservation policies to ensure the preservation of biodiversity. Otherwise, many situations across the country reflect this duality where a forest is treated as either an asset or an expense. The phrase “asset versus expense” quickly emerged.

Our priority has been to look at this issue and at how to secure more raw materials; better protect biodiversity in an intelligent, sensitive and measured way; build greater resilience to the risk of forest fires—which obviously lie at the heart of climate‑related disruptions—through forest management; and increase the contribution to Canada's gross domestic product, or GDP, by province. Moreover, as we showed in appendix D of the report, we believe that the GDP remains the most factual and pragmatic high‑level metric for measuring the sector's potential contribution to the country.

There are significant issues, challenges and threats. Quebec and Ontario are grappling with threats, including the demise of the newspaper, which served as the foundation for the entire interconnected industrial system. We're moving on to something else. It's happening right before our eyes. Now we don't necessarily have the tools to handle this.

The bioeconomy is taking shape on a global scale.

As Mr. Kalesnikoff pointed out, investors around the world are losing confidence in the domestic conditions necessary for the success of ambitious projects in the forestry sector. As a result, we're recommending a substantial investment fund of $10 billion over 10 years.

Time has flown by. Of course, we'll have a question‑and‑answer period, so I don't want to take up too much time.

Nevertheless, I would like to point out that we consider this matter extremely important from a regulatory standpoint. We've seen regulatory duplication. In many cases, the provinces had credible and legitimate regulatory frameworks in place to govern industrial forestry activities. The federal government was adding its own layer of regulations in far too many situations. Simply respecting the credibility and integrity of the provinces would have improved the business environment.

These are a few ideas in order to lay the groundwork.

We're ready to continue the conversation with you.

[The Chair, Liberal, Terry Duguid]

Thank you both.

We will now move on to questions and comments.

We're going to start with Monsieur Malette for six minutes.

[Gaétan Malette, Conservative, Kapuskasing—Timmins—Mushkegowuk, ON]

Thank you, Mr. Chair.

Mr. Kalesnikoff and Monsieur Verreault, you are the co-chairs of the transformation task force on forestry. It was certainly a very challenging task that you had to do. I've read the report, or, I should say, I've studied it. It gave me hope as a Canadian to read through the report.

Looking at the vision in the next 25 years, how do we bring Canada back as a world leader? It starts now, but actually, for you it started six months ago. I would like to give you the opportunity to go through the report and take us through the four or five key steps that will start us in the right direction. This will help the committee make the proper decisions.

I will leave it to both of you. I'm sure you both know how to work together now. Maybe you could share your time. Walk us through it, and help this committee make the right decisions and move this forward to our colleagues.

[Ken Kalesnikoff]

This is really easy for me. I'll pass it on to Frédéric to start.

[Voices]

Oh, oh!

[Frédéric Verreault]

Thank you, Mr. Kalesnikoff.

The list of priorities begins with analyzing or diagnosing the issue. This means that we must acknowledge that this industrial sector is by no means relegated to our heritage or folklore. It's a thoroughly modern industry. The primary driver for cutting down and processing a tree is the production of construction materials. Given the unprecedented housing crisis, we need to understand that the cornerstone of housing affordability is the two‑by‑four, meaning lumber. That's the first point.

Second, we must recognize that we've experienced a rather unusual disruption in the North American lumber market in recent months. Mr. Kalesnikoff and I described this phenomenon in our report using graphs of North American lumber consumption.

The lumber market has always been self‑contained. Canada and the United States produce lumber. Canada and the United States consume lumber. Since the invasion of Ukraine, a phenomenal amount of European lumber has become available. This lumber has been shipped to meet North American needs.

We also have the whole trade environment and the current global trade chaos. We've lost sight of this rather fundamental aspect needed to fully grasp the current challenge. The direct outcome of this is that North America has always had excess lumber production capacity. Lumber is a key material in housing construction and residential construction.

Today, we're relying on lumber from outside North America to meet the construction needs of Canada and the United States. This is completely unprecedented. This means that we're just a few percentage points away from the consumption level of 2021‑22, when prosperity reigned for everyone. For consumers and builders, it was also a period of shortages and high inflation.

Let's get back to the basics. When it comes to public policy, government guidance and the allocation of public funds, lumber becomes absolutely strategic. Given that critical and strategic minerals are part of this country's future, forest resources are just as critical and strategic for this country's future. We have a rock‑solid foundation to propel us forward.

However, there are challenges. We talked about capital. We need this $10 billion fund to begin the modernization [Technical difficulty—Editor] who lost confidence in the country's forest conditions. We need to review the regulatory framework and to clean up a few things. This isn't about creating a lenient environment for the forestry sector and forestry activities. Companies have a vested interest in ensuring that clients and markets trust our forestry practices in this country. We have every reason to trust in the integrity and credibility of this country's forest resources.

Let's talk about market access. The Canadian railway system isn't working. It's a barrier to interprovincial trade. Across this country, it's a barrier to competitiveness that prevents us from expanding into foreign markets. This is certainly true for the United States, but it's also true for other markets. To remain relevant and competitive in foreign markets, we must move goods from factories to seaports. We must urgently address the railway system—which isn't working—right here and now. That said, I don’t mean to criticize the two companies that hold this monopoly. However, the system clearly isn't working.

I'll come back to the priorities. For the past 10, 15 or 20 years, the National Building Code has been calling for more wood‑based construction. Yet the real momentum hasn't kicked in. In the United States, states such as California and Colorado have adopted regulations that cap greenhouse gas emissions per new square metre of construction. Canada wants to achieve this by 2030. We have an opportunity to speed things up and boost the market. Ultimately, a series of measures to increase domestic wood consumption are being proposed to replace up to a quarter of the American market.

[The Chair, Liberal, Terry Duguid]

Thank you both.

We will move on to Mr. Guay for six minutes.

[Claude Guay, Liberal, LaSalle—Émard—Verdun, QC]

Thank you, Mr. Chair.

Mr. Kalesnikoff and Mr. Verreault, I will take this opportunity to address you in French. I'd like to thank you and all the members of your committee for the work you have done for Canada and the Canadian forestry industry. We're very grateful to you. The report you produced contains a lot of good material. That said, it raises a few questions that I'd like some clarification about, on behalf of Canadians.

If I may, I'm going to start with a theme that comes up often in the report, which is that access to fibre is the main challenge. Is that an issue in all provinces, or are some provinces disproportionately affected by the issue? What is blocking fibre access in Canada?

[Frédéric Verreault]

Quebec and British Columbia definitely have greater challenges in terms of ensuring access to competitively priced fibre and a stable quantity of fibre over time. This is also a component of our recommendation to create a $10‑billion investment fund. We aren't recommending throwing Canadian tax dollars out the window. Just as a banker would require of any manufacturing company, forestry sector investment projects—to get a new mill or to transform and improve a mill—have to be based on a robust supply chain.

For us, it was important to have that financial and business integrity in our recommendation to the Government of Canada. Accordingly, we're advocating for access to these funds to be conditional on access to predictable, competitive and stable raw materials for the next 10 years. That will make it possible to transform or modernize an existing mill. When it comes to new mills, we're talking about 25 years. That's what's normal around the world and in manufacturing.

For that reason, regarding the provinces where improvements are needed, we have adopted a position that's meant to be not at all accusatory but instead constructive. What we're saying to the provinces is that it's not our mandate to examine their plans. The federal minister has obviously mobilized a task force. We're very mindful of provincial jurisdictions, but we can't, on the one hand, solicit a capital injection of $10 billion and, on the other hand, not correct this dysfunction in the supply chain. Over the past few days, we have submitted to the provincial ministers, with all the tact in the world, that this is an opportunity not to be missed. We're currently at a crossroads, and now is the time to correct things to stabilize the sector as a whole.

[Claude Guay, Liberal, LaSalle—Émard—Verdun, QC]

I think it was the right choice to appoint a representative from Quebec and a representative from British Columbia as co-chairs.

You have published the report, and the government has already drafted an action plan to transform the forestry sector. There have been recent announcements of additional funding. Do these announcements directly respond to the report's recommendations? What can be done? If you had been given more time, what would you have liked to accomplish? I'm not talking about the $10 billion, of course, since that hasn't been announced and discussed yet.

[Frédéric Verreault]

The action plan addresses many of the things we recommended, but not all of them. For example, in terms of wood consumption in Canada, there's an opportunity to improve the quality of infrastructure and construction, but the preliminary action plan from the past few days doesn't currently include any inherent components. Yes, changes to the Business Development Bank of Canada program were announced at the same time and are moving in the right direction, but we recommend program changes to support innovation.

Today, some calls for projects are very administratively rigid, including when it comes to project submission windows. However, the innovation trajectory doesn't align with a public servant's work schedule. I say that with the utmost respect for public servants. Businesses that pour their heart and soul into innovation projects do so over several weeks, several months and, in some cases, several years. When the time is right, it's the program that has to adapt to the business, not the business that has to adapt to the administrative procedures. That kind of aspect is missing.

No rail transportation initiative has been announced yet. Obviously, we're working on a very tight schedule. It's barely June. Our group was sitting before a blank page on January 19, 2026, so the pace is good.

Moving forward, once we have tabled our recommendations, it's up to the minister and the government to make the decisions. We remain available if we can help.

[The Chair, Liberal, Terry Duguid]

Thank you.

Mr. Simard, you have the floor for six minutes.

[Mario Simard, Bloc, Jonquière, QC]

Mr. Verreault, it's rare for an opposition member to point out something positive in what the federal government has done. Although, this industry report actually comes from you, not from the federal government.

It's fair to say that many people in the forestry sector and the politicians involved in this issue have been waiting for this type of proposal. I think it's good for everyone to see that the government's response seems to be favourable. Like you, I hope that this $10‑billion investment fund will be set up.

I don't want this to be a discussion among Quebeckers. However, we have to see how we can move this forward in a context where Quebec City sometimes has reservations around measures that may appear to infringe on jurisdictions. I understand what you're saying, and it makes perfect sense to say that an investment fund should be tied to a 10‑year supply guarantee.

However, I would like to know how we can be facilitators and how we can present this in a way that's acceptable to the Government of Quebec. What actions could we take very quickly? Perhaps we could benefit from an election campaign. I don't know.

[Frédéric Verreault]

We don't get involved in politics, so we'll let you be the judge of the right tools to make things happen.

Still, we were aware of the need for an approach that was firm and consistent from a business perspective, as well as constructive. That's why we're recommending a number of financial measures related, for example, to the ways that forest land is governed, where there is clearly room for improvement. We propose making envelopes available to the jurisdictions, the provinces, that would be willing to try new things. It's very much a carrot approach rather than a stick approach.

As for the workforce-related elements in our recommendations, we made sure to be mindful of partnerships and of co-operation to respect the agreements between the federal government and the provinces, as well as provincial leadership, including that of Quebec.

There are some thirty measures that we recommend implementing in the report. There is one that's naturally more sensitive regarding the eligibility of a jurisdiction, such as Quebec, for robust supply. I think we can do more than one thing at the same time. There are a lot of things that need to be implemented right now to improve the competitiveness, resilience and relevance of the forestry sector. Indeed, the home run here is that Quebec can get things moving quickly to ensure its eligibility for this significant capital that's on the table.

To conclude on the subject, I would say that when we talk about converting a newsprint mill, for example, it doesn't cost $20 million; it costs hundreds of millions of dollars. Newsprint mills play a stabilizing and critical role for the entire forestry industrial ecosystem. Yes, Investissement Québec is doing a good job in Quebec, but the Canadian government has to be able to follow suit.

Those are our recommendations.

[Mario Simard, Bloc, Jonquière, QC]

Thank you.

I'd like to continue on the topic you just ended with.

There will be a necessary transition. I'm thinking of my riding, where the Domtar Kénogami mill can't maintain its current model. The minister has said numerous times that he wants to retool the forestry sector. That necessary transition takes time to implement. The time horizon is such that, even if there were a $10‑billion fund tomorrow morning, it would take a long time before production was redirected to a more attractive manufacturing sector than the current pulp and paper sector.

Have you also spent time thinking about support methods to preserve what people have now, to maintain what has been gained?

[Frédéric Verreault]

We have indeed recommended a number of measures to stabilize things, but it's important not to get into wishful thinking. Newsprint gains are at an extraordinarily high risk over the next 6, 12, 24 or 36 months. Naturally, I won't speak for colleagues who have such mills, but, collectively, in public policy, we can't remain in denial: the newsprint sector is coming to an end.

Still, I'll give you some very concrete examples. In Ontario, there are projects to replace newsprint in the consumption of forest biomass and forest residues that have reached a certain maturity. Access to these funds could give these projects a quick boost to replace newsprint mills. The situation varies across the country.

The key is to make the tool box actually available. That's where I think the Canadian government has a role to play. That's why we recommend taking action by the end of 2026 for such an investment fund.

[Mario Simard, Bloc, Jonquière, QC]

Thank you.

[The Chair, Liberal, Terry Duguid]

Thank you.

Mr. Hogan, you have five minutes. I understand you want to share your time.

[A voice]

[Inaudible—Editor]

[The Chair, Liberal, Terry Duguid]

My apologies.

Mr. Martel, please go ahead.

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

Thank you, Mr. Chair.

Witnesses, this is very interesting. What's more, I think it's clear.

Mr. Verreault, I would like to know one thing. I think the report is interesting, but it seems to me that it discusses land use planning and the management of our forests. I know this is a provincial jurisdiction, but if nothing is defined in that regard, productivity is going to take a hit.

How can we move forward? If I'm off base, let me know. However, that seems to be where it starts. There's currently an issue there.

[Frédéric Verreault]

It's interesting to refer to both land use planning and forest management in the question. That's what we quickly realized in the course of the work, which was conducted mainly in English. In English, it's called “forest management”. There's no ambiguity. It's a matter of managing hectares of forest. However, in Quebec, we talk about “aménagement forestier”, which is one aspect of managing a hectare of forest. We don't have a 360-degree perspective on forest management.

As we're reflecting on this, the risks of forest fires are no longer theoretical. Our task force watched the documentary B.C. is Burning. We had a disturbing meeting with the authorities of the State of California, where people have died because of the forest fires. The idea of complete classical conservation, in the form of a bell jar, doesn't allow for forest management. Timber harvesting also makes it possible to remove fuel that would increase the risk of forest fires and their potential range. That's a consensus among the first nations representatives, provincial representatives and territorial representatives we met with during the course of our work. Without telling, for example, SOPFEU in Quebec what to do and how to do it, there's potential to facilitate a conversation on actual best management practices in the country, which we recommend in the report. In English, it's a “working forest”, a forest that is already alive and forest land management that is just as alive, whose pillars are timber productivity, respect for communities and populations, biodiversity and the reduction of forest fire risks.

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

Regulation gets talked about all the time. I think it's important to address it, because the report states that the federal government's regulatory burden is one of the main barriers to competitiveness. How can it improve that without changing everything? It keeps getting discussed, but nothing seems to change in terms of regulation. I would also like to know to what extent these delays and the overlap, if I can put it that way, increase your operating costs.

[Frédéric Verreault]

I don't have a specific estimate of how they affect our costs. Still, in appendix A of the report, we really took an inventory of the very specific aspects of the regulatory framework that we felt would be easiest to address. According to the powers of the Government of Canada, under the mandate that Minister Hodgson gave us, there is already scope for action, which is based on a decision and in no way compromises the integrity of the framework for our industrial practices.

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

The Europeans are getting somewhat involved. You talked earlier about the United States, Canada and North America. We were almost alone in this before the Europeans arrived.

The report compares Canada unfavourably with Finland. What do you think are the main differences in public policy between Canada and Quebec, on the one hand, and Scandinavian countries, on the other?

[Frédéric Verreault]

There are basically three. The first is the stability of access to the raw materials that are seen and understood as such, as well as the capital that naturally comes with it, to be able to exploit the potential of the bioeconomy, biofuel and bioenergy.

The second is forest land production. There's an important caveat here in the nuances of our recommendations. In Finland, planting takes place on 80% of forest land. At a threshold of 80%, that's no longer a forest ecosystem, a guarantee of biodiversity; it's agriculture. Our recommendation here is to increase the land currently under forest management from 5% to 10%. That would mean maintaining a perfectly reasonable threshold so as not to compromise biodiversity, but to double wood production in Canada.

Third, the Finnish population understands the logging and processing of a tree, how it's done and why it's done. Canada can certainly have a similar forestry culture.

[The Chair, Liberal, Terry Duguid]

Thank you.

Finally, it's over to you, Mr. Hogan.

[Corey Hogan, Liberal, Calgary Confederation, AB]

Thank you, Chair.

Thank you to both of you. It's great to see you both.

I'm only going to hold this floor for a few seconds, but I did want to take the time to express my sincere gratitude for your work and the work of the task force and to say, for the benefit of my colleagues, that, at the meeting of Canadian Council of Forest Ministers two weeks ago, there was, across provinces and across political stripes, very positive reception and great appreciation for your work.

The forest sector and communities and workers who rely on it are core to our Canadian identity. They all need us. In that spirit, I would like to share my time with a passionate advocate for forest communities. I give my time to my colleague from Courtenay—Alberni, Gord Johns.

[The Chair, Liberal, Terry Duguid]

Mr. Johns, welcome to the committee.

You have four minutes and 30 seconds.

[Gord Johns, NDP, Courtenay—Alberni, BC]

Thank you, Mr. Chair.

I want to thank the parliamentary secretary, Mr. Hogan, for giving me this time and this opportunity.

I was at the all-party forestry caucus this morning, and it was great to see all of us working collectively. This shouldn't be a partisan issue, but there are some things that need to happen and some issues that can be rectified.

We heard from the Forest Products Association of Canada. They talked about, obviously, the uncertainty that the U.S. tariffs and trade disputes are causing on the forest sector, but they did highlight that Canada should be putting more emphasis on creating domestic demand for Canadian wood products rather than relying so heavily on export markets.

I shared a story about IGV Housing in my riding. They're a company that we're so proud of. They had PacifiCan funding. They're ready to go, but they're running into the problem that CMHC can't finance off-site modular housing, but Build Canada Homes says you have to have modular housing. This is the same minister. The minister could direct CMHC to fix their financing allowability, but they haven't, and this is holding up projects that could use Canadian wood.

I'm going to go, obviously, to my fellow British Columbian, Mr. Kalesnikoff, so he can speak about how some of these gaps and barriers need to be addressed immediately and can help create jobs in our communities.

[Ken Kalesnikoff]

Thank you for that. This point was very much in a conversation I had recently.

It is a very tough thing to work through because, as much as we want to see modular building—we've now transitioned to modular building—the financing of that is very difficult. The system does not allow.... Generally, money is released upon certain levels of completion of a project, whereas modular is completed inside the factory. We definitely need to get past that type of use.

We also have a hang-up about using modular. We've been working with the provincial government on many different projects trying to convince them that we should be building schools not just from modular but also from mass timber. They need to be repetitive. If we build them in a factory and build them repetitively, we can save a lot of money. The premier recently cancelled five assisted-living homes because the cost per bed was so high. I truly believe that if we were given the opportunity, as a mass timber supplier, we'd be able to save a lot of money on those types of things.

There's definitely a gap here.

[Gord Johns, NDP, Courtenay—Alberni, BC]

I think you're touching on how important it is that we use Canadian wood for all infrastructure.

The forest sector action plan requires federal partnerships in key areas, as you know, to implement the strategy. We've heard from stakeholders that we need to scale up regional forest manufacturing hubs and integrated value chains; to accelerate investment in modernization, innovation and value-added production; to reduce, obviously, regulatory friction and align policy frameworks with provinces; and to support workforce transition and community resilience. I'm thinking about the workers in Crofton and the need for a bridge to retirement.

I'll go back to you, Mr. Kalesnikoff, given that you're from my home province.

Do you want to touch on some of those issues?

You have about a minute left. I want to give you my time.

[Ken Kalesnikoff]

At the end of the day, there's a real opportunity here for the forest industry. We're sitting on the cusp of being able to be very transformative.

This $10-billion fund the task force asked for is to do that. Our expectation is that whenever it gets approved—hopefully, it will be in the fall—the money will be used to promote the use and creation of new, innovative-type industries, and that we will end up being able to employ more people and secure those who are in rural communities across Canada. They are at such risk because the forest industry reaches so many of them. It is absolutely paramount for us to recognize this. That's really hard to do in a province like British Columbia, where the electoral population is basically in one corner of the province and doesn't really understand how important this is.

To be honest, right now, I'm sitting in 100 Mile House. I came here to help them talk about what they can do, because they just lost a sawmill here. They have no sawmills left in 100 Mile House. What are these people going to do? They're sitting here with fantastic fibre, but we have so many overlapping rules and regulations stopping them from doing what they know they can do.

Last week, I was in Burns Lake, dealing with wildfire issues.

There is an answer here, but we have to work together. This is not a partisan issue. This is a bipartisan issue. We're really hoping that this report will transition through different election cycles, because this is very important. As I said in Langford, we are truly in the hands of the different provincial and federal governments here.

[The Chair, Liberal, Terry Duguid]

Thank you.

Mr. Simard, you have the floor for two and a half minutes.

[Mario Simard, Bloc, Jonquière, QC]

Thank you, Mr. Chair.

Mr. Verreault, in your opening statement, you emphasized the fact that we need to think about the forestry sector as if it were a manufacturing sector. I couldn't agree more.

I have a quick question that is not meant to be annoying, but here goes. I've often heard people in the forestry sector say that they had a somewhat conservative culture, where people settled for just producing commodities. With an investment fund of $10 billion over 10 years, we may have to change attitudes.

Do you think there's work to be done on that? Could government financial support programs include incentives for more value-added manufacturing? Is the need to shift to value added a message that is understood by people in the industry?

[Frédéric Verreault]

We don't actually claim to know what the entire industry thinks today, of course. However, according to a number of colleagues and associations, there is a high degree of receptiveness to the report and the recommendations we have tabled. Generally speaking, I think there's good collective alignment.

Since you're talking about the industry's path forward, it would be important to mention to parliamentarians that we also didn't want to be complacent about the industry and its direction. There is a segment of the report where we are also very critical of leaders who have not been able to be agile and bold enough to develop more resilient business models.

At the end of the day, the goal is not to have added value or integrated groups. Integration must be done as it is in a number of companies, through clusters, hubs or whatever technical terminology we use. Nevertheless, it must be done, because it is an ingredient of the resilience we want to see reflected in all the aspects mentioned in our report and recommendations.

Resilience in the industry will ensure that it remains cyclical in terms of commodities. There will still be lows within the cycles. Today, as we see, business models that foster integration and are part of integrated, interconnected and optimized clusters are what show the resilience we collectively need in this country. The communities need it, as do the workers. We feel that is the angle that must be taken into account as we move forward.

[The Chair, Liberal, Terry Duguid]

Thank you.

Mr. Malette, I didn't forget about you this time. You have five minutes.

[Gaétan Malette, Conservative, Kapuskasing—Timmins—Mushkegowuk, ON]

Thank you.

Mr. Kalesnikoff, you were talking about 100 Mile House. We often forget why we're involved in this report and this task force. In the end, it's to protect jobs and it's to save communities. There are 300 communities across this country that live from the forest industry. It's probably more than that, because then there are the neighbouring communities who have contractors and logging contractors. It's the one industry that goes from one end of the country to the other.

Speaking of British Columbia, you've talked about it, but could you expand a little bit more on the biggest challenges in British Columbia to maintain a healthy sawmill industry? In the end, it's to continue with the other products and the other industries and to save jobs.

[Ken Kalesnikoff]

To follow up on what Frédéric mentioned earlier, we did have a presentation from New Brunswick. New Brunswick seems to really have accepted the fact that our forests are an asset, not a liability.

I discussed this with our premier and I hoped to make an impact. We need to look at our forests as an asset. It starts there. We need a cost-competitive fibre supply. If we create the hosting conditions that are very much needed, then we will see the industry expand. We will see jobs secured. Right now we have lost a lot of companies that have fled the province or have shut down because of the hosting conditions. We also need to promote understanding. We mentioned Finland in our report. The culture, the understanding of the forest industry and the social licence are amazing. You need all these things to be firing on all cylinders.

The previous gentleman mentioned value added. Value added is not a silver bullet. Value added is a spoke in the wheel. To make the wheel run smoothly, we need all the spokes in the wheel. We need to really create an environment where we appreciate what the forest industry brings to this country, right across the country, as you said. It will create the jobs that we need and it will secure the jobs that we need. At this point in time, if somebody doesn't know that they have a cost-competitive fibre supply, whether you want to spend $1 million or $100 million, you can't do it, because you don't know if you're going to have that supply. That supply would secure the jobs in the communities in this country.

[Gaétan Malette, Conservative, Kapuskasing—Timmins—Mushkegowuk, ON]

Thank you.

Monsieur Verreault, in the report there's an interesting section on doubling our consumption of the lumber, mass timber, OSB and MDF that we utilize in this country. Could you expand on that a little bit? To us, it doesn't seem like a large amount of lumber. What percentage would it take away from the U.S. markets? How critical could that be?

[Frédéric Verreault]

It remains very significant. Every percentage point of the sales we have in the U.S. that we can switch to Canadian markets makes a difference. In a market that relies on the balance between the offer and demand of lumber across North America, which has been the case for decades now, every percentage point makes a difference.

If you look at the report, we have figure 3 on page 25 and the spread of the lumber consumption per category in North America. You can see that compared to 2021 and 2022, the step back of the market is only 3% to 4% now, compared to that shortage period. This means that every time we move a percentage point, it has a huge impact on market viability and the price of lumber. If we double, for instance, the mass timber construction, it has a material impact on the destination of lumber and the global viability of markets.

Yes, Canada, and even the Canadian government through public infrastructure, can have a material effect on market viability.

[The Chair, Liberal, Terry Duguid]

Thank you.

[Ken Kalesnikoff]

Chair, could I add something?

[The Chair, Liberal, Terry Duguid]

Please go ahead.

[Ken Kalesnikoff]

We have the Build Canada Homes policy now. They're talking about building thousands of homes. If we built the homes we need with the lumber we have, what Frédéric is talking about would have a huge impact on the reliance on the U.S. market, and we could change that. Never mind all of the buildings, whether they're mass timber or not, we could be building that are being built out of concrete currently. That's a huge piece that would help us.

[The Chair, Liberal, Terry Duguid]

Thank you for that addition.

Wrapping up this panel is Mr. Saini.

You have five minutes.

[Gurbux Saini, Liberal, Fleetwood—Port Kells, BC]

Thank you to the witnesses.

I also want to commend Minister Hodgson for allowing this process to take place at a very critical time.

Ken, I live in British Columbia. I come from Williams Lake, in the neighbourhood of 100 Mile House. At one time, those communities were 80% dependent on forestry. Now half of that business has gone.

The biggest problem was with the U.S. market. We think we have a problem right now, over the last two years, but the forest community has been fighting those problems for the last 30 years. We challenge them and we win in court, but a few years later, the U.S. goes back into it. What can we do?

I don't think we can really get away from U.S. markets 100%. The U.S. will continue to be a major part of our economy. Yes, we can build in Canada, but we don't have enough capacity to use the forests that we have in Canada.

I'd like to hear from Ken and the other gentleman their views on those issues.

[Ken Kalesnikoff]

I think the task force specifically did not want to spend a lot of time on the softwood lumber issue because.... You said 30 years. The very first time this thing raised its head was in the early or late 1800s. I have a document. It's ridiculous. We continue to make policy based on what the Americans want. We need to make policy based on what Canada needs.

I do not disagree that we should divest ourselves completely of the U.S. market. The U.S. market is a huge market. It's right here. We need to look at it. We are already, as companies, always looking at external markets. Expanding the export market is possible, but we're already doing that.

What we are not doing is focusing on Canada. There are so many things we could do in Canada. As much as you're saying we can't use it all—I do not disagree—we could use a significant amount more. We could do so much more by focusing the needs of the forest industry...what we need it to have to make it stronger in Canada.

Frédéric, I'll pass it to you.

[Frédéric Verreault]

To give you a clear example of this, if wood doesn't increase its market share of the different construction materials, but the targets that we have with BCH, Build Canada Homes, for instance, are achieved, this only fixes a quarter of our exports of lumber in the U.S., a quarter. That's highly important.

In addition to this, we exported about 12 billion board feet of lumber last year to the U.S. The U.S. has a deficit of lumber that is higher than our total exports. We often address the subject of the softwood lumber dispute as being based on our own emotions and our own impacts that we experience. If we turn to our client, the fact is that even at full capacity, American construction does need Canadian lumber. That is a fact. Even if they have fantastic development, which we wish them, fair enough, those are the numbers. We have to keep that in mind to avoid going in a direction without being focused on those facts.

[Gurbux Saini, Liberal, Fleetwood—Port Kells, BC]

My second question is this. I think, maybe for political reasons, we have ignored the forest industry, because it employs 200,000 people today, plus those who are in other industries that depend on it. We have 9% of the world's forests in Canada, but we don't have a ministry at the federal level that says we need to be managing this forest in such a way. New Brunswick is a prime example. Why can't we have a ministry at the federal level that says, “We need to follow these regulations. This is what's going to make it competitive, and that's what needs to be done”?

I'd like to hear from you on that.

[Frédéric Verreault]

We do address this subject.

Ken, please go ahead.

[Ken Kalesnikoff]

All I was going to say is that my feeling is this current government is doing that. The sense that we're getting from Minister Hodgson through our work with Frédéric and the task force is that this is a priority for the federal government. I think that's very important.

[The Chair, Liberal, Terry Duguid]

A last quick word will go to you, Mr. Verreault.

[Frédéric Verreault]

The forest sector generates more contributions to the GDP than steel and aluminum. The forest sector generates more contributions to the GDP than automobiles across the country. In the report, we really focus on GDP—an obsession with GDP. The numbers are clear. Based on the numbers, the path is straight ahead to have policies that fit this contribution.

[The Chair, Liberal, Terry Duguid]

That's a nice way to end, Mr. Verreault, on the importance of the sector to Canada and to our economy.

Colleagues, on your behalf, let me thank our witnesses not only for appearing today, but also for all the work on the task force.

I can assure you this will be a very important consideration in the final forestry report that we issue. Again, thank you for your service to our country.

As we let our witnesses go, colleagues, I have a few things before we break.

Colleagues, this completes the testimony for the forestry study that we've undertaken. We are going to need recommendations for the forestry industry study to allow the analyst to draft a report over the summer. In discussion with the analysts and the clerk, we are suggesting Friday, July 3, as the date to receive recommendations from all members. How does that sound to you? It's a couple of weeks away.

[Some hon. members]

Agreed.

[The Chair, Liberal, Terry Duguid]

Then we have the energy export study. We're still looking for recommendations for that as well, by June 19. That would be this Friday. Of course, this is the energy export study. This was our first energy study, not the one that we're undertaking now, because that will carry over to the fall.

Finally, this is the last meeting before the summer adjournment period, and I wanted to take a moment. These meetings don't happen by magic. As you know, colleagues, we have amazing analysts here. We have a clerk, who will be moving on from—

Pardon me?

[Corey Hogan, Liberal, Calgary Confederation, AB]

You called them amazing and then you just called him “clerk”.

[Some hon. members]

Oh, oh!

[The Chair, Liberal, Terry Duguid]

He's leaving so....

To our fantastic clerk, Jean-Luc, thank you.

Of course, to all of the support staff, including our interpreters—where are they?

[A voice]

The interpreters are remote today.

[The Chair, Liberal, Terry Duguid]

They're remote.

Thank you, interpreters.

Of course, I want to thank all of you, colleagues. This has been, in my view, a constructive committee. I think we've generally got along and the exchanges have been respectful. There are different perspectives, of course, but I have certainly detected a lot of commonality and that is being reflected in some of our reports, so thank you for being a great committee.

With that, have a great summer, everyone. Thank you.