Science and Research Committee on Sept. 26th, 2024

[The Chair, Liberal, Valerie Bradford]

We're going to get started. It's Thursday afternoon, and I know that some people have flights later—and not that much later. In the interest of being timely, we're going to get started.

I call this meeting to order. Welcome to meeting number 98 of the House of Commons Standing Committee on Science and Research.

Today's meeting is taking place in a hybrid format. All witnesses have completed the required connection tests in advance of the meeting.

I'd like to remind all members of the following points.

Please wait until I recognize you by name before speaking. All comments are to be directed through the chair. Please raise your hand, members, if you wish to speak, whether participating in person or via Zoom. The clerk and I will manage the speaking order as best we can.

For those participating by video conference, click on the microphone icon to activate your mic, and please mute yourself when you are not speaking. There is interpretation for those on Zoom. You have the choice, at the bottom of your screen, of the floor, English or French. Thank you all for your co-operation.

I want to welcome MP Coteau, who is on the screen. He is taking the first hour for MP Diab. Thank you for covering for us.

Pursuant to Standing Order 108(3)(i) and the motion adopted by the committee on Thursday, May 23, 2024, the committee resumes its study of innovation, science and research in recycling plastics.

It's now my pleasure to welcome, as an individual, Dr. Benoît Lessard, professor and Canada research chair, from the University of Ottawa; from Dow Canada, W. Scott Thurlow, senior adviser, government affairs; and by video conference, from Nova Chemicals Corporation, Sarah Marshall, vice-president, polyethylene marketing.

Up to five minutes will be given to each of our witnesses for opening remarks, after which we'll proceed with rounds of questions.

Dr. Lessard, I invite you to make an opening statement of up to five minutes. The floor is yours.

[Professor Benoit Lessard, Professor and Canada Research Chair, University of Ottawa, As an Individual]

Thank you for the invitation and the opportunity to speak today.

Polymers, which make up plastics, can be modified, tuned and functionalized to provide improved mechanical strength, better adhesion or even impart electrical conductivity. The research in the developing of new polymers has the potential to improve the lives of all Canadians while also providing an economic advantage to Canadian industry.

For example, we can build more fuel-efficient airplanes using lighter polymer composites, reduce packaging size using thinner but more durable polymers, and manufacture safer electric vehicle batteries using polymer electrolytes.

New polymers are an important area of research for current and next generation products.

However, with new polymers come new challenges. Seemingly small changes in the polymer structure can influence how this polymer will degrade in our environment and how it needs to be recycled as well as how the breakdown products will affect human health and how the corresponding microplastics will engage with our environment. Without simultaneously developing new strategies to protect our society, these new materials can become a significant problem that we don't even see coming.

When new polymers are developed, we usually produce them on an industrial scale and then throw them away, so they end up in the environment. Only afterwards do we discover how toxic they are.

This is the problem we are now facing with polyfluoroalkyl substances, like PFAS, which are breakdown products from Teflon and other fluorinated products. It's important for polymer scientists and polymer manufacturing to engage with toxicologists at the design phase, not when it's already everywhere in our environment.

For example, at the University of Ottawa, we are rolling out a program that brings together toxicology experts and polymer experts, biologists, chemists and engineers to develop more sustainable polymers from the start. We are developing new high-throughput toxicology assessment tools to reduce the time needed to evaluate toxic components of polymers, which, in some cases, can hopefully replace the need for animal testing and speed up the process.

The goal is to develop new polymers for new applications deemed non-toxic from the start.

We're just one research group, but we hope our work inspires similar initiatives across the country and the world. Universities are focused on shaping future industry leaders and the way they think. I haven't met a student who isn't worried about plastic pollution and doesn't want to work on solving this problem.

We provide opportunities for these growing minds to do research and develop solutions for problems we face now and will face in the future. The strength of academic research is the freedom to explore and develop new approaches and new directions where the only focus is understanding the world around us and what makes it better. Academic research is the canary in the mine, providing early warning for things to come while also working on possible solutions.

Universities are developing new materials, technologies, systems and processes that sometimes go against established standards but could open up new opportunities.

It is from academia that true disruptive change will originate, because we are not in the business of selling products or pleasing shareholders but of simply developing better alternatives. We often work with Canadian industry to help them innovate and solve problems, but we also spin off our own companies when solutions don't fit existing industries.

The role of academia is to look to the future. We shape the leaders of tomorrow, we anticipate social problems that could arise and we come up with disruptive solutions with the potential to change the path we're on.

We aim to solve the problems of today and those of tomorrow.

Thank you.

[The Chair, Liberal, Valerie Bradford]

Thank you very much.

We now turn to Mr. Scott Thurlow for five minutes, for his opening statement.

[W. Scott Thurlow, Senior Adviser, Government Affairs, Dow Canada]

Good afternoon, Madam Chair. I'm proud to speak to the committee today about Dow Canada.

Our main product in Alberta, polyethylene, is sold to customers across Canada and worldwide to make durable industrial goods as well as packaging and consumer products. We also supply industry in the region with other petrochemical derivatives. Dow announced a multi-billion dollar expansion and decarbonization of our Fort Saskatchewan facility, and I am pleased to discuss that during the question and answer session. In Ontario we have two manufacturing facilities—one in Scarborough and one in Sarnia. These facilities produce emulsions and specialty plastic resins, respectively.

This committee is undertaking a massive project, and it's very important work. I provided the committee with information about the work that Dow has done around the world to recover plastic waste and return it to the economy and, as you can see from our materials, I can personally attest to how London, Ontario, plastic was transformed into my lawn furniture. I am happy to talk to the committee about other advents in that technology, including our low-carbon and bio-based Crocs, which are a very comfortable potential market for recovered plastic.

The enormity of the challenges are so broad that it's difficult to distill into a five-minute presentation, so we will focus on three recommendations for the committee to consider as it contemplates this very important work.

First, we need to create demand for this recycled content. In April, Dow CEO Jim Fitterling publicly stated that our company is in favour of a recycled content mandate for plastic packaging. The right way to do this is to ensure that it is both ambitious and achievable over time. Recycled content mandates send clear economic signals that incentivize investments and circularity. In creating mandates, however, we recommend that policy-makers think about the unintended consequences of regulatory decisions. We need policy signals that recognize that plastic recovery allows us to displace virgin resources and reuse materials that have already been extracted. This is a mechanism to reduce our scope 3 GHGs.

Our second recommendation is for the creation of an accelerated capital cost allowance tax credit that would allow for the rapid depreciation of any investments made by the private sector to collect, treat and transform plastic waste and return it to the economy. I provided the committee with a chart that details the “materials ecosystem” for plastic production—a road map through which science and economics break down the unwanted materials and reconstitute them into the basic building blocks for plastic production and then reassemble them into something useful once again. It details each point in the process where infrastructure can be improved to recapture plastic waste. The stages—and it truly is a circle—start with the final product, then include the application itself—collecting, sorting, cleaning, mechanical separation, biowaste designs for circularity—and then return the resin to the manufacturing process to the “final product”.

A key challenge for growing the circular economy is that, often, recycled materials are much more expensive than those made from virgin resin. A tax credit that can shrink the delta between the price of virgin resin and the costs associated with the recovery and transformation of post-consumer resin would be welcome. I provided the clerk with a copy of our pre-budget submission that focuses on the need for this tax credit. Ultimately, the committee and the government need to recognize that governments themselves are spending money in dealing with this waste, so any investment that private industry makes will ultimately reduce the capital that the municipalities spend on that waste management.

Our third recommendation is to be as open-minded as possible when looking at the possible markets for these post-consumer plastics. The various permutations of the concept of mass balancing gives many in industry heartache. We should not be looking to limit the markets that these recovered materials could be entering, but instead supporting policies that help drive investment in technologies that can recycle more material to a higher quality, and these include chemicals recycling.

We should not place artificial barriers in any resulting policy. We urge this committee to recommend to the Government of Canada that recycled content mandates remain technology-neutral, and to ensure that the focus of any recycled content mandate is to maintain the value of these resources and prevent fugitive plastic waste from entering the environment. By returning waste plastic into the economy, we are solving two environmental problems at the exact same time.

I welcome any questions that the committee members may have.

[The Chair, Liberal, Valerie Bradford]

Thank you very much, Mr. Thurlow.

We now turn to Ms. Marshall, on screen, for her opening statement of five minutes.

[Sarah Marshall, Vice-President, Polyethylene Marketing, NOVA Chemicals Corporation]

Good afternoon. My name is Sarah Marshall, and I'm the vice-president of polyethylene marketing for Nova Chemicals.

Madam Chair, thank you for inviting me to appear before the committee.

By way of background, Nova Chemicals is Canada's largest petrochemical company, employing 2,500 people in high-value jobs. From our headquarters and western Canadian research facilities in Calgary to our large manufacturing operations in both Ontario and Alberta, our teams work diligently to reshape plastics for a better and more sustainable future.

Our multi-billion dollar investments in Canada over the past decade include a recent $3-billion Canadian expansion in Ontario, which started up this year, providing high-performing polyethylene resins that enable lighter-weight monomaterial packaging for our customers in Canada and around the world.

We fully agree that plastic—an essential material for modern life—does not belong in the environment but in the economy. We strongly advocate for greater levels of investment in recycling infrastructure, education and innovation, matched with effective policy, to achieve the circularity and elimination of plastic waste we all seek.

Nova occupies an important role in the work we do to help our customers design for circularity from the beginning. Our material science innovations allow brand owners to create monomaterial packaging that can be recycled in many existing municipal systems. From stand-up pouches to bread bags, the benefits of designing for circularity are significant, as it delivers product safety and functional performance and enables recycling to ensure plastic stays in the economy.

As many of the committee members will know, there are two forms of recycling, mechanical and advanced—or sometimes called chemical recycling—and both technologies are required. Mechanical recycling is a “here today” technology, ready to be deployed quickly. We invested in Merlin Plastics in British Columbia to improve recycled plastics for demanding packaging applications and, in Indiana, we are in the late stages of construction of our first-ever Nova recycling facility to reclaim stretch films and produce over 100 million pounds of recycled polyethylene a year. We are actively looking to build more facilities like the one in Indiana as we grow high-quality recycled products that are in demand from brand owners.

Nova is an active collaborator on plastics recycling in Canada. We are knowledge partners in the Canada Plastic Pact and founding members of reciChain in Canada, a plastic recycling traceability initiative. Earlier this year Nova announced our new centre of excellence for plastics recycling. We envision this as a hub for knowledge exchange and technology development for the circular economy of plastics. We received over 50 submissions from prominent Canadian universities to our first request for project proposals, and several projects are currently in the early stages of development.

We suggest the following three things to accelerate Canada's path to circularity. First, build up both volume and quality of recycled feedstock through harmonized extended producer responsibility and accelerate the build-out of recycling infrastructure, including feedstock sortation. The Canada Infrastructure Bank could help to fulfill this need.

Second, work together with the provinces to ensure clear and harmonized labelling of products for recyclability so consumers can make educated choices on purchases and enhance the consistency of feedstock for recycling.

Third, grow the Canadian expertise and leadership on plastic recycling R and D. Federally, this could be done through a SR and ED “super credit”, for example, which doubles the credit for plastic recycling R and D. Additionally, join us in growing the network of scientists working on recyclability across Canada at various academic institutions, as Nova is doing today with our centre of excellence.

Chair and members of the committee, during my career and in my different roles with the company I have seen this industry evolve. I'm an engineer by training, and I worked for many years in research and development before my recent roles in sustainability and, now, marketing. We are in a period of recycling innovation like nothing I've seen before. Industry is ready, investing and able to be part of solving the challenges of recycling.

Thank you for taking the time to study this important work. We remain committed to assisting you in accelerating Canada's opportunities to build up the recycling industry, grow our innovation and collaborate on the path to circularity.

Thank you.

[The Chair, Liberal, Valerie Bradford]

Thank you. You're right on the button.

All of our witnesses were very timely this afternoon, so thank you for that.

I'll now open the floor to members for questions. Be sure to indicate to whom your questions are directed.

We'll kick this off with MP Tochor for six minutes, please.

[Corey Tochor, Conservative, Saskatoon—University, SK]

Thank you, Chair.

Thank you to our witnesses.

Mr. Thurlow, I have introduced a private member's bill that would amend the Canadian Environmental Protection Act.

Do you have any views on this private member's bill?

[W. Scott Thurlow]

Certainly.

Going back as far as 2019, Dow and I, personally, have told committees like this one that the use of the CEPA to regulate plastics is the wrong statute, used the wrong way, to solve the wrong problem. I would urge members to support your private member's bill.

We have a decidedly different approach on that, and it's both carrot and stick. While there is an appropriate use for regulations, we don't think that the criminal law power is the right one. This is something we have said several times to committees like this one.

[Corey Tochor, Conservative, Saskatoon—University, SK]

You mentioned waste plastics, and I believe you talked about bio-Crocs.

What are some other products that we could consider or that the industry is considering, so that we can repurpose some of the waste we have?

[W. Scott Thurlow]

My feet don't care where the resin comes from. It's comfortable. When I'm sitting on a dock, all I care about is the comfort and the fact that I have this product.

We have an entire division that's dedicated to performance materials and finding those new applications for recovered content. We have a bio-based technology called Ecolibrium, which is enabling polymers for footwear applications and other performance materials. It is both looking at recovery of the plastics and also a lower carbon footprint. We're very proud to partner with Crocs, the first footwear brand that we're aware of to go to market with this new type of recovered technology. This technology is good also for improving the recyclability of the product so that it's not going to incineration or to a landfill.

[Corey Tochor, Conservative, Saskatoon—University, SK]

In your presentation, you talked also about.... I believe you're expanding into Alberta, or you're currently in Alberta. Tell us a bit about what the impacts of that are for our economy and for Alberta and the company itself.

[W. Scott Thurlow]

Sure.

In 2021, we announced that we were going to be tripling the size of our production facility in Fort Saskatchewan. It is a very large investment. At the same time, we are going to be reducing our carbon emissions at that site to zero. We're tripling our capacity and making our product zero emission.

That presents many challenges. There's technology that has to be adopted. We have several partners that are going to be part of that. It's partly through CCUS. There is a strong Alberta system for carbon capture, utilization and storage there. Obviously, certain tax credits are very helpful for investing—CCUS and the hydrogen tax credits. We have a plan to return to operation by the end of 2029, so it's an enormous amount of work.

[Corey Tochor, Conservative, Saskatoon—University, SK]

Pun intended, but I'll let you unpack a little comment you made earlier about the CEO of your company regarding recycled content mandates for plastic packaging.

[W. Scott Thurlow]

At what was known as the INC-4 meeting in Ottawa, a United Nations meeting on plastic and plastic waste, our CEO was very direct in saying that we support a plastics recycled-content mandate.

I would tell you that, like other regulated mandates, you have to have both the carrot and the stick. That's actually one of the beauties of what was then known as the renewable fuel standard, as designed by Prime Minister Harper's government. You had both the incentive side to increase ethanol production and also the mandate side that would create the market demand for that.

When you have a reasonable and achievable recycled content standard, it is a really strong signal to the financial sector to say that these are investments that these companies are making, and we can rely on those regulatory signals to lend them money and make sure that these investments can be capitalized on. It's a very important part to any type of a regulatory mandate.

[Corey Tochor, Conservative, Saskatoon—University, SK]

Speaking about financial instruments, you talked a bit about accelerating the capital cost of recovery on new investments.

Has it worked in the past? What are some examples? Is it something that we should consider in the study?

[W. Scott Thurlow]

The carbon capture, utilization and storage tax credit that we've seen pass through federal budgets and the hydrogen tax credit are absolutely proof positive that these types of capital-intensive projects can be supported by tax credit work.

What you do when you accelerate the depreciation is allow for the recovery of sunk capital to be recaptured faster. Tax credits only work when you make money. When you make money and you have a tax obligation, you can then subrogate that tax obligation against the taxes that you owe. It encourages people to invest capital in a very specific way to achieve a public policy objective.

[Corey Tochor, Conservative, Saskatoon—University, SK]

I have only 30 seconds left.

It's probably in the written brief. For you and for the other witnesses, if there's any additional information, you can always submit it in a written brief for the study.

Can you, as in the written brief, talk a bit more about the mass balancing and how it has challenged other companies in other countries? Unpack that as well, if you would.

[W. Scott Thurlow]

I would be happy to.

In the two or three seconds we have left, I want to say “technology-neutral”. Make sure in your recommendations that you tell the Government of Canada that anything that calculates the percentage of recycled plastic that goes into a succeeding product is done so in a technology-neutral way and we're not excluding markets for these polymers.

[Corey Tochor, Conservative, Saskatoon—University, SK]

Thank you.

[The Chair, Liberal, Valerie Bradford]

Thank you. You're right on the button.

We'll now give the next six minutes to MP Jaczek.

[Helena Jaczek, Liberal, Markham—Stouffville, ON]

Thank you so much, Chair.

Thank you to all our witnesses.

My first question is for Mr. Thurlow.

You heard Professor Lessard talk about his approach and what he's doing in terms of his research in making sure that the breakdown of polymers does not result in toxic substances.

Could you explain to us how Dow in fact adopts, I presume, these sorts of practices within their facilities to ensure there is no toxicity in new products?

[W. Scott Thurlow]

In Canada, we are the beneficiaries of the Canadian chemicals management plan, which is arguably the most arduous one around the world, depending on your perspective.

There are different rules that are required before any new activity is undertaken. In the case of a material that is not on the domestic substances list, you are required to file what's known as a new substance notification. The new substance notification would require both efficacy and toxicological data. An onus is placed on industry to prove that something is in fact safe to be used in this particular application.

Canada has an incredibly robust chemicals management system. If you could refer to the testimony on Bill S-5, you'd see that ENGOs and industry agree that Canada's system is one of the most rigorous in the world for that particular application.

Now, do we take that one step further? Absolutely, we do. Dow is at the forefront, as is Nova, and I'm sure Ms. Marshall can add to this. It's the responsible care ethic. The responsible care ethic is one that has been recognized in over 60 countries and on the floor of the United Nations. It has a United Nations certification for the work we do to ensure that the communities in which we operate have the information they need to make an informed decision about what's happening.

[Helena Jaczek, Liberal, Markham—Stouffville, ON]

Thank you.

Professor Lessard, having heard Mr. Thurlow, would you agree that Canada's regulatory system in this area is very robust and successful?

[Prof. Benoit Lessard]

Yes, Canada is definitely a leader in the world, for sure.

What I was referring to is the development of new plastics and, depending on the application or depending on the material, the level of rigour that is needed to get these out. If we could reduce that, we could maybe get these materials out faster, or if we can do a more thorough analysis.

We're trying to develop ways to speed up the process and to get better information on the toxicology of these new materials as they're being made. Instead of making them and then finding out that they're toxic, if we're designing them with toxicology in mind, we can speed up the process and help the manufacturing of better materials faster.