Science and Research Committee on Sept. 26th, 2024

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

Thank you.

Mr. Thurlow, I was happy to hear you acknowledge that there are certain federal policies that have been essential to attracting investment by Dow, presumably with some of your projects. Could you elaborate a bit on some of those particular policies that you've found useful?

[W. Scott Thurlow]

In the last federal budget, we saw the implementation legislation for the CCUS legislation, which is the carbon capture, utilization and storage tax credit. That's something our partners will be taking advantage of as they sequester the carbon that is released through the chemical process to create polyethylene.

The second thing that was very important was the creation of the hydrogen tax credit. The hydrogen tax credit is one that our partners will use to create the hydrogen infrastructure to fuel this facility in a GHG-free way or a GHG-sequestered and -reduced way.

These particular tax credits are very useful. There are obviously many other federal, provincial and municipal programs that add to that. I think the advice I would give to this committee is to recognize that we don't just live in Canada. We live in a world, and that world is fierce in competition for attracting this type of investment. We should be creating these types of incentives to invest in Canada, because the investments we're talking about are generational. They're going to be there for 50, 60 or 70 years. The very small investments at the front end of those will pay a dividend over time.

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

Do you have any comments on the price on carbon and how that affects your business?

[W. Scott Thurlow]

Absolutely. In our 2021 announcement, and to this day, our CEO has been very clear that the price on carbon is actually one of the reasons we are investing in Canada.

That decarbonization delta is important to ensuring that we can best monetize the investments we make to reduce these GHG emissions. A market-based system for the trading of carbon credits is one that has been internationally recognized by many different types of economists, and I say “types of economists” very deliberately, because it's not just The Wall Street Journal. It's colleagues, like the one to my right, who recognize that carbon is itself an asset.

Now, are there different models for reducing GHGs? Absolutely, there are. In Alberta, we benefit from the Alberta TIER system, which is integrated into the industrial carbon market.

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

Do I have time left?

[The Chair, Liberal, Valerie Bradford]

You have 13 seconds.

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

I will give that up.

Thank you.

[W. Scott Thurlow]

I'm sorry. That was my fault.

[The Chair, Liberal, Valerie Bradford]

They were great questions, though.

Next in line, we have MP Blanchette-Joncas for six minutes.

[Maxime Blanchette-Joncas, Bloc, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Thank you, Madam Chair. I will happily take my fellow member's 13 seconds.

Mr. Thurlow, thank you for being with us today.

I see that Dow Canada is one of the biggest plastics producers in the world. When you're making all that plastic, do you think about the inevitable stage when the products made from your plastic reach the end of their life cycle? One of the many products you sell is low-density polyethylene resin, a nightmare for recycling plants because of how difficult it is to recycle. How do you justify using a product that ultimately has zero capacity to be recycled?

[W. Scott Thurlow]

You raise several very important points simultaneously.

Forgive me, but I can't answer your question in French given the technical component.

I would say two things. The first is that the example you gave of mixed recycling is actually the best example of why we need to consider advanced recycling and chemical recycling, because those advanced and chemical recycling mechanisms are able to best break down those polymers into something that can be easily reused.

What we do there is create a building block, and when you are able to distill these very complex mixtures of molecules back down into the original ethylene, or whatever the other polymers and monomers may be, you can then redeploy them.

How do we do that simply and easily? That's a multi-million dollar question that we're working on and we continue to work on. We still believe that the primary driver for that is improvements in the materials ecosystem that I referred to in my presentation.

There are many different areas where we can make investments to improve the recapture of these products, because—let's be honest—this is valuable material that we are just throwing away. We should be able to reposition and reinvest into these materials, and that would preclude the need for us to have virgin resources coming out of the ground.

[Maxime Blanchette-Joncas, Bloc, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Thank you for those details.

I'll give you a second to put your earpiece back in, so you can hear what I'm saying in my mother tongue, one of the country's two official languages.

Do we have that chemical recycling infrastructure in Canada? We're hearing about all kinds of solutions, some of which you just mentioned, but the infrastructure is missing.

[W. Scott Thurlow]

We don't have them yet. I would tell you that in 10 different provinces, we have 10 different systems. In some provinces, we have 100 different systems based on the municipalities, and that's not great news. I will tell Mr. Cannings that British Columbia has the best of the 10.

What we would tell you is that, if we could get that material collected in a much higher, much safer and much more thorough capacity, it would be easier for companies like Dow and Nova to deploy chemical recycling technologies into very specific places to take advantage of the critical mass of waste resources.

[Maxime Blanchette-Joncas, Bloc, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Thank you.

Please put your earpiece in, so you can hear me. It's important that you are here today, so I want to ask you the right questions, which is part of my job.

What I take from your comments is that we're behind on innovative solutions. I see there's some willingness on the part of your company, or even the industry, when it comes to chemicals. Can you give me an idea of how much is invested in R and D as a percentage of revenue?

[W. Scott Thurlow]

Again, that's a very good question.

We live in a global economy and we are part of the Alliance to End Plastic Waste, which has, I believe, a $400-million endowment. Sarah might be able to correct me on that if she has the numbers handy in front of her.

We do our own investments into these recovered products because there is a developing market for these products. Some of our customers are looking for a higher recycled-content resin, but I don't think there is a hard and fast number.

Again, I think the investment side needs to start from the municipalities and the provinces. They're the ones that are at odds with our ability to partner with them from time to time, because across the street from Guelph you have a completely different system in Hamilton. We need to streamline those, and I think Ms. Marshall said the exact same thing. The better we can do at ensuring they work together, the easier it would be for us to invest.

[Maxime Blanchette-Joncas, Bloc, Rimouski-Neigette—Témiscouata—Les Basques, QC]

I take it, then, you don't really have any numbers for the share of revenue or amounts you invest in R and D to foster innovation.

[W. Scott Thurlow]

I'm sorry. I did misunderstand that.

I don't have the number in front of me, but I can absolutely endeavour to provide an answer in writing to the committee.

[Maxime Blanchette-Joncas, Bloc, Rimouski-Neigette—Témiscouata—Les Basques, QC]

What are you looking for from the federal government?

The role we have is to regulate informed by science and evidence. I'm trying to figure out how you can do your fair share.

You're at about 3% or 4% of your revenue—$56 billion to use a round number, or $56.9 billion to be specific. Are you looking to get funding support to help you invest more in R and D? Is that what you're looking for, specifically?

[W. Scott Thurlow]

I will reiterate the recommendation we made, which is to have an accelerated capital cost tax credit that would allow us to get much more out of the investments that we would make in Canada. I would remind you that we're not just investing in Canada. We're investing everywhere around the world, and if we get a good idea somewhere else, we're going to import it into Canada.

I would remind the committee that, on the investments we're making for Saskatchewan, this is the first of our fleet of polyethylene facilities that we are going to update around the world. The work we do in Canada is going to resonate into other jurisdictions.

[The Chair, Liberal, Valerie Bradford]

That's our time. I didn't want to cut you off because that was exciting.

Thank you.

Now we'll turn to MP Cannings for six minutes.

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

Thank you.

Thank you to the witnesses here today.

This is always very interesting, and I wish I had more time. I'm just going to start with Mr. Lessard.

You talked about your work in creating new polymers and all the various things that we can benefit from there, but it seems to be going counter to a need for recycling, because one of the problems with recycling is that we have this wide array of polymers, whether it's polyethylene, polypropylene, polyvinyl chloride or whatever.

Can you talk about when you create a new polymer? How easy is that polymer then disassembled and made into a new plastic? Where is the toxicity? Is it in the monomers that come from the breakdown? I have a whole bunch of questions, but for this study we're doing, can you can talk about how you square your work to create a higher diversity of plastics with how do we up the recycling?

[Prof. Benoit Lessard]

There were a lot of questions in there.

I'll start by saying that in developing new materials or new plastics there's often a goal in mind. You want to make a material stronger so that you need less of it to reduce the weight of your vehicle, for example. There's a lot of research in aerospace in trying to make lighter planes, or in safer batteries by making polymers so that you can have polymer electrolytes. There are a lot of examples of developing new materials, but yes, unfortunately, even the smallest change in the polymer structure can change not only its mechanical properties or its application but its toxicology and how easily it can be broken down.

When I think of recycling, we wouldn't talk about recycling paper and metal in the same sentence. Some of these polymers can be completely different, and they have to be handled completely differently. The addition of one extra carbon can make it water soluble or such that it needs to be heated to a hundred degrees hotter to be handled. The small changes can have huge implications.

In terms of where the toxicology comes from, it can come from a lot of different places. It could come from, for example, the catalysts or unreacted monomers in manufacturing if there are impurities left over, or it could be from the actual polymer as it starts to degrade, is being worn down and enters our environment as a microplastic or other things like that. The toxicology can come from different aspects.

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

I'll turn to Mr. Thurlow.

Again, when we're talking about recycling and when you're suggesting mandates, I assume that, before we bring in mandates, we'd want to make sure that there is the material there to meet those mandates. That comes back to incentives for people to recycle things, with the sorting to create the volume of material that Dow or anybody else would use.

Where do we begin on that? It seems like we have to work on the whole circle all at the same time. I'm just wondering how your company and how the government can ensure that happens as quickly as possible. We're supposed to get down to 75% by 2030. How are we going to do that?

[W. Scott Thurlow]

We have to make sure that our targets are achievable, for starters, and it's one step at a time. I made reference to the Canadian renewable fuel standard earlier. It was a good departure point. The reason it was a good departure point is that they took a lot of time, through Natural Resources Canada, to study the issue, to understand what was possible and what could be blended into the fuel mix, to learn how it was going to be produced, to see where it would come from and to see what the long-term GHG implications of that would be. That is work that is under way right now, and it's under way in many different parts of the world.

I think what I would tell this committee is that every part of the materials ecosystem can be improved. Therefore, we start working on the things we have in front of us, and when we have a recycled content mandate, you will see people who take long-lead financial decisions to upgrade their operations, but it has to be in law.

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

In terms of that volume, does it help if we have a whole bunch of product that's just polyethylene of some sort? Then we can sort that and handle it as polyethylene to make Crocs, or whatever you're making your Crocs from.