ENVI Committee Meeting

    I call the meeting to order.

     Good afternoon, colleagues.

    For the first hour, we're here in public for a briefing on the net zero accelerator fund.

    We have officials here from the environment department and the Department of Industry. Of course, we also have our commissioner of the environment and sustainable development.

    I'm told there are only two opening statements, one from Francis Bilodeau and the other from Commissioner DeMarco.

    Without further ado, we'll start with Mr. Bilodeau, if that's okay.

     Thank you.

     Before I begin my remarks, I'd like to acknowledge that we're gathered on the traditional unceded territory of the Algonquin Anishinabe people. I'd like to take a moment to thank the Anishinabe people and pay respect to their elders.

    I'd really like to thank the members of the committee for giving us the opportunity to present the strategic innovation fund's net zero accelerator in more detail, and to answer your questions about the accelerator and its objectives.

    I'd like to note that my colleagues and I at Innovation, Science and Economic Development are thankful that the audit conducted by the commissioner of the environment has led to such interest in the program. It is my hope that by answering your questions today, I can provide more clarity about the NZA's mandate and operations.

     To aid in this—further to your committee's request of June 4—ISED has provided copies of all term sheets and contribution agreements signed through the NZA and a copy of the NZA tracker tool. Due to the sensitive nature of some of the information that has been shared with you, I'll be happy to discuss these documents in more detail during the in camera portion of the meeting.

     Climate change is a complex challenge, and the NZA addresses it with a multi-faceted solution across three pillars.

    The first is decarbonizing large-emitting sectors. The second is accelerating industrial transformation. The third is advancing clean technology development and Canada's battery ecosystem. The NZA tracker tool provides a detailed snapshot of progress towards these investment pillars. Projects signed to date, across all pillars, are expected to generate emissions reductions of roughly 11.2 megatonnes.

     Through the first pillar, the NZA is encouraging significant investments by large emitters to reduce their near-term greenhouse gas emissions. These efforts towards GHG reductions from this sector also enhance our competitive edge in a globally decarbonizing economy. To date, three agreements, including with Algoma and ArcelorMittal Dofasco, have been signed to decarbonize the steel-making industry and are expected to generate reductions of about 7.2 megatonnes.

    Beyond these signed projects, other large-emitter projects are in our pipeline and continue to advance through due diligence. We expect these projects could add up to 10 megatonnes in additional reductions.

    These major transformation projects require government support. This support helps companies lower their investment risk and significantly reduce their greenhouse gas emissions in the short term, while remaining financially viable in a competitive market.

    However, a company's decision-making rests on a number of factors. Barriers to a final investment decision include high initial costs, low project maturity, risks associated with the adoption of new technologies, and changing material and labour costs.

    Pillar 1 projects are the main target of the commissioner's audit. However, the accelerator also supports projects that promote the development of clean technologies, as well as the transformation of businesses and industrial sectors to achieve carbon neutrality by 2050. Pillar 2 and 3 projects present an estimated reduction of four megatonnes, resulting from both on‑site reductions and the deployment of clean technologies.

     Projects funded under NZA pillar 2 and pillar 3 include Svante, a company building equipment needed for carbon capture and storage. With a manufacturing facility in Burnaby, British Columbia, Svante will support the carbon capture and storage needs of hard-to-abate sectors, including cement, steel, and oil and gas in Canada and around the world. The deployments of Svante's innovative technology are expected to contribute to significant GHG reductions in Canada and globally. The market for carbon capture is growing, with regulations in place in Canada, the U.S.A. and Europe, highlighting the growing demand for these technologies.

    In terms of advancing clean technology development and Canada's battery ecosystem, the NZA has invested in projects such as Volkswagen's PowerCo battery cell manufacturing project and GM's electric vehicle manufacturing efforts. These projects are pivotal in developing a robust Canadian EV ecosystem.

    Just as electric vehicle projects are helping to build the supply chain and secure the future of Canada's automotive sector, the net zero accelerator is helping to transform Canada's economy by advancing emerging clean technologies such as small modular reactors, nuclear fusion, carbon capture and sequestration, next-generation aircraft and many more, across Canada.

    For all accelerator-funded projects, Innovation, Science and Economic Development Canada ensures that the contractual obligations and performance requirements defined in the initiative are met. Where the accelerator is able to assess significant greenhouse gas reductions as a result of a project, contribution agreements include obligations to reduce or meet emissions intensity standards. These agreements also include provisions that impose consequences if minimum thresholds are not met. Greenhouse gas reductions are monitored and tracked through progress reports.

    Beyond the environmental benefits, NZA investments set commitments to foster substantial economic activities. Since the launch of the NZA, companies have committed to creating and maintaining over 36,000 jobs and to create over 14,000 co-op positions.

    They've also made research and development commitments totalling $4.5 billion. Those are not insignificant numbers. Indeed, they highlight the critical impact that projects funded through the NZA can have on Canada's economy in addition to supporting global climate goals.

     I hope that the documents that have been submitted to the committee will provide a clearer picture of the broader investment principle that underpins the NZA.

    Thank you for giving me the floor.

    Thank you very much, Mr. Bilodeau.

    Commissioner DeMarco, you now have the floor.

     Mr. Chair, I am pleased to be here today to discuss our report on the strategic innovation fund's net-zero accelerator initiative that was tabled in Parliament in April 2024.

     I too would like to acknowledge that this hearing is taking place on the traditional unceded territory of the Algonquin Anishinabe people.

    Joining me today is Nicolas Blouin, the director who led the audit team.

    The net-zero accelerator initiative aims to lower greenhouse gas emissions by incentivizing Canadian industries to decarbonize their operations. Our audit focused specifically on manufacturing, and we looked at whether Innovation, Science and Economic Development Canada managed the initiative to decarbonize the manufacturing industries in accordance with Canada's climate goals and with due regard to value for money.

    We found that Innovation, Science and Economic Development Canada had failed to attract the country's largest industrial emitters.

    At the time of the audit, only 15 of the 55 companies with the highest emissions had applied for funding under the initiative, and 2 companies had signed an agreement. The application process is long and complex, requiring companies to spend an average of 407 hours on it. This probably didn't help the department attract more applicants.

    Only 2 large and 15 smaller emitters had signed a contribution agreement, for a total value of $3.2 billion. However, only five of these companies had signed an agreement to reduce their greenhouse gas emissions. These commitments amounted to just 6.2 megatonnes of greenhouse gases, representing less than 1% of the country's total emissions.

    We also found that there was no industrial decarbonization policy that involved all relevant government organizations. Such a policy would provide Innovation, Science and Economic Development Canada with a clearer picture of which industries are most in need of funds to reduce emissions.

    Our audit uncovered significant gaps, and the department provided vague responses to our recommendations. I am therefore concerned about what the department plans to do to address these gaps.

    Mr. Chair, this concludes my opening remarks. We look forward to answering any questions you may have.

    Thank you, Commissioner.

    Before we start the questions, I'd like to indicate the following: for the next two hours, I'm going to pretend it's the same meeting. We won't start the second hour with six-minute rounds, but we will continue with five-minute rounds. In other words, the first round will be six minutes, and all the others will be five minutes.

    Ms. Collins, do you have a question?

     Mr. Chair, it was my understanding we'd have two meetings, one in camera and one public, and that those would be two separate meetings.

     Since the witnesses don't change.... We're going in camera, but it's not like we have a new set of witnesses.

     Mr. Chair, the difficulty is that this plan severely cuts off the time the Bloc and the NDP have to question witnesses. It changes that pretty dramatically. It means that our follow-up questioning is shorter than normal, and my understanding is that we were going to have two separate meetings.

     I understand, and I can see that one would always want to get more time. I get that.

    Just to clarify, it's not more time; it's just the amount of time that would be normally allotted if we were having two separate meetings, one in camera and one public.

     Just a moment. I'll defer to the committee.

    Do I have UC to start over again with a six-minute round in the second hour?

    Yes, that's fine.

    Okay.

    Mr. Mazier, go ahead.

     Thank you, Chair. Thank you to the officials for coming out this afternoon.

    This question is for ISED.

    How much money was given to PowerCo through the net zero accelerator fund? What was the dollar amount, please?

    The contribution is $700 million. Zero has been disbursed to date.

    The amount is $700 million. Is that correct?

    That's correct.

    They got $700 million. PowerCo is owned by Volkswagen Group, a German company that made over $450 billion in revenue last year.

     How many emissions are supposed to be directly reduced as a result of this $700-million handout?

    Chair, maybe you can stop the timer.

    There are a number of projects. Are you asking for specific megatonnes? We do have the information, but we just need a minute to get to it.

    Can we pause the time?

    Yes, but then the question becomes this: Do we do this every time somebody has to look up something?

    How many emissions—

     I will answer. Obviously, this is a battery deal, and if you look at the types of investments, you see that our first pillar is about the large industrial emitters. They're intended to get to emissions in the 2030 timeline.

    Battery deals are part of our second and third pillars, which are intended to build the technologies for the future and to build the economy of the future.

     I realize there are different pillars and all that, but can you tell us how much emissions will be directly reduced by a $700-million handout to this company?

     The investments we are making are intended to build technology—

    It's just a yes-or-no question. Can you tell us how many emissions have been reduced?

    Our GHG emissions that we have calculated in a quantitative amount are those up to 2030. These are intended to generate GHG emissions beyond that, and so I—

    Does that mean you can't tell us? You can't tell us.

    There is no quantitative —

     You can't tell us how many emissions have been reduced—

    I have a point of order, Mr. Chair.

    —for $700 million—

    Mr. van Koeverden, go ahead.

     —to a multinational billion-dollar company.

    Excuse me, Mr. Mazier—

    These are non-partisan witnesses who are here to help inform our reports. They are not partisans and they're not to be berated by my fellow MPs. I think that's inappropriate. They're not on trial for something, and that type of conduct is inappropriate.

    We'll continue, but I think Mr. Bilodeau's answer was pretty clear. There are two phases, one of which includes GHG reduction estimates, while the second phase is more geared towards laying the groundwork for the future. It's not that he doesn't want to say or that they've never thought about the issue; it's just that's the way it's divided up.

    Anyway, we'll continue.

    I'll ask the question again.

    How many emissions are supposed to be directly reduced as a result of the $700-million handout to PowerCo? How many emissions? Can you tell me, yes or no? That's a pretty simple question. Do you have any idea?

    That's contradictory, Mr. Mazier.

    I will try to answer.

    Mr. Mazier, you're saying.... I stopped the clock, but just so that we set the tone, there's a contradiction in your questioning there. You're asking how many, and then it becomes a yes-or-no question.

    I'll let Mr. Bilodeau take care of himself.

     I'll move on. How about that?

    Go ahead, Mr. Bilodeau.

     I'm sure we're going to hit our stride here. It's going to be smooth.

     To be clear, our calculations are based on emissions going up to 2030. Beyond that, calculating emissions is a very unclear science. We've not done quantitative assessments, but we expect that the investments in batteries and the electrification—

    You can't tell us.

    I have a point of order, Mr. Chair.

     I have a second question. This one's pretty clear-cut.

    I'm sorry, Mr. van Koeverden.

    Excuse me, Mr. Mazier. I've stopped the clock. We have a point of order.

     The plan is to finish at 6:30.

    What's the point of order?

     Just as Mr. Bilodeau started answering the question, Mr. Mazier interjected again. I would like to hear the answers.

    That's not a point of order.

     This is $8 billion, Adam. It's $8 billion, for heaven's sake.

     Let's just tone it down a bit.

    Go ahead, Mr. Mazier.

     Again, this is for ISED. The environment committee ordered the government to release the contracts for the $8-billion net zero accelerator fund. When we went to read the contracts, over 360 pages had been completely ripped out.

     Who ripped out these pages?

     To be clear, no pages were ripped out. Pages were redacted.

    We tried to ensure that the committee and Parliament would have all the available information they need to properly hold the government to account and do their work. At the same time, we have obligations that are both legal and contractual, and so, working with the committee, we built an approach that is intended to ensure that you have information in camera.

    We obviously have a legal obligation to consult with third parties on the use of this information—

    You did not answer my question, because there were pages ripped out of the contracts. They were numbered and there were pages ripped out of the contracts—a total of 360.

     This is what 360 pages look like. There are 360 pages that were ripped out of these contracts.

     Who ripped them out? I saw them. I went and I read through the contracts, and 360 pages had been ripped out. Who ripped them out?

    Mr. Mazier, I think this qualifies as a prop, especially since there's nothing written on those pages.

    This is the point.

    I understand, but it is a prop. I would prefer that we didn't use props.

    This is what it looks like, though, Chair—

    You made your point about 360 pages, but let's not use props—

    I'll just leave them right here. There they are.

    —because it's going to go sideways if we start using them.

    An hon. member: [Inaudible—Editor]

    I don't have to remove them. I guess the truth hurts.

    Who ripped the pages out of the contracts?

    The department removed information that was deemed commercially confidential in the context of our third party consultations with the recipients.

    It was the department that ripped out the pages.

    The department removed information that was deemed commercially confidential by third party recipients.

     Did the minister know that these pages had been ripped out?

     The minister would have been made aware of the information that is being provided to the committee.

    The minister is purposely ripping pages out of the contracts to hide information from this committee.

     The department is meeting its contractual obligations to recipients and its legal obligations vis-à-vis existing statutes to ensure that information that is commercially confidential and could cause prejudice to companies is not released.

    What is the government's emissions reduction target for the $8-billion net zero accelerator fund?

    Reports by both the Auditor General and Environment Canada have articulated that the program is expected to meet a reduction of between 19 and 20 megatonnes. It's our anticipation that the program will meet approximately that amount.

     The time's up.

     Madame Chatel is next.

    Thank you very much, Mr. Chair.

    I thank the witnesses for being with us, because it's important to talk about how we're going to shape Canada's economy to be successful on the international stage. We don't want to lag behind.

    There is an enormous transformation of all the world's economies. The strategic innovation fund and the net zero accelerator are important funds to kick-start and turn the wheel or the tiller to really steer Canada's industrial sector towards transition and success in the economy of tomorrow.

    Mr. Bilodeau, thank you for being with us, as well as all your colleagues. I'd like to ask you a few questions about this global race for clean technologies. Can you explain how the net zero accelerator is helping to position Canada on the international stage?

    In my presentation, I talked about the three pillars of the accelerator. The first pillar aims to reduce greenhouse gas emissions in the shorter term, i.e., by 2030. To date, we have invested in three major emitters. We expect there to be a more direct and immediate impact on reducing greenhouse gas emissions to meet our 2030 targets.

    The second pillar, which focuses on industrial transformation, aims to help industrial sectors make the transformation they need to reduce the greenhouse gas curve.

    Finally, the last pillar, which focuses on clean technologies, aims to build the technologies that will enable not only Canada, but the world to have the technologies needed to meet global greenhouse gas reduction targets. In my opening remarks, I actually mentioned the example of Svante, a company that captures greenhouse gases.

    There has indeed been significant investment in the battery and electric vehicle ecosystem. In Canada, around 20% of greenhouse gas emissions come from transportation. Globally, transportation is also a major source of emissions. The efforts that will be made to have the technologies to reduce these emissions are crucial to achieving global goals.

     To date, the net zero accelerator has provided $4.5 billion in financing for 23 projects, including those of three major issuers. Explain to us the importance of investing in such projects to position Canada well in this economy and technology and have a prosperous economy in the future.

    So far, among the three projects that have been funded under pillar 1 is Algoma Steel's project to replace its blast furnace technology, which will enable the company to transition to a low-emissions economy, while continuing to run its operations, create jobs and advance Canada's economy. The second project is with ArcelorMittal. This project will help modernize practices and reduce greenhouse gases in the steel sector. Finally, the third project, from Heidelberg Materials, will capture greenhouse gases at the cement plant.

     If you hadn't removed the confidential information from this report and the Conservatives had made it public, it could have jeopardized the competitiveness of Canadian companies. Could Chinese or other companies have stolen technology from Canadian companies?

    There are reasons why certain information must remain confidential. Firstly, we have a legal obligation to do so. Secondly, companies have considered that disclosing this information could jeopardize their competitiveness.

    It's important for the government to be a trusted partner in attracting and making investments. For example, the willingness of large issuers to work with the government depends on how much trust they have in it, and how well it will fulfil its obligations enshrined in agreements with them.

    Making this information public could therefore jeopardize our ability to act effectively in the future.

    It is therefore very irresponsible of the Conservatives to ask for this information to be made public. This could not only harm current companies and their global competitiveness, but also prevent others from participating in our programs.

    As I said, first we have a legal obligation to do so. Secondly, these companies expect the government to respect the obligations set out in the contribution agreements, notably the protection of the companies' commercial and confidential information, so as not to harm their competitiveness. This will enable the government to maintain companies' confidence in it, and to act now and in the future.

    Thank you, Mrs. Chatel.

    Ms. Michaud, welcome to the committee. It's your turn to speak.

    Thank you, Mr. Chair.

    Witnesses, thank you for being here. I appreciate it.

    I'm replacing Ms. Pauzé. I'm not very familiar with the net zero accelerator. I understand that this program was set up to encourage or incentivize Canadian companies to contribute to national efforts to reduce greenhouse gases. The government has targeted a greenhouse gas reduction range of 40% to 45% by 2030. As I understand it, the program calls for investing $8 billion for a reduction of 19 to 20 megatonnes of greenhouse gases.

    Mr. Commissioner of the Environment and Sustainable Development, I'm particularly interested in your audit findings. You were quite critical of the method of calculating emissions reductions, as well as the follow-up that is done, or less done in this case, with the various companies.

    One of your findings is that the accelerator is not attracting Canada's largest emitters, because the process is perhaps too long and too complex to obtain financing. We're talking about an average process time of one year and eight months. Considering this, do you think the accelerator is achieving its objective of going after the biggest emitters, who could make a bigger effort to reduce greenhouse gases? Can you tell us more?

    Thank you for the question.

    As I said in my opening statement, we have found that the net zero accelerator is failing to attract the largest emitters. It has steel mills and a cement plant, but that's not a lot of companies when you look at the 55 largest emitters in Canada. This is one of the concerns we expressed in our audit.

    The lack of a horizontal industrial policy for Canada and value for money, from a value-for-money perspective, are also among our concerns. The calculation of the value Canada's taxpayers are getting for their money from this fund has not been made public. These examples illustrate the biggest concerns we have about the net zero accelerator.

    Thank you.

    According to your observation, Mr. DeMarco, how does the government follow up with companies to ensure that the subsidies given actually lead to a reduction in greenhouse gases? I'm talking about the follow‑up done by the people who oversee the program, through the Department of Innovation, Science and Economic Development, or the Department of Environment and Climate Change.

    How can we be sure that there will, in fact, be a reduction in greenhouse gases emitted by the company, once the subsidy has been awarded? Is close monitoring carried out? If so, how is this monitoring or calculation carried out? The fact that the calculation or tracking method used at the moment does not correspond to international standards is also, I believe, one of your findings.

    Do you have any concerns in this regard? I'll leave it to you to explain.

    We are concerned about the lack of compliance with assessment standards.

    Mr. Blouin, can you add some clarification on this subject?

    Thank you, Commissioner.

    With regard to the monitoring of projects as such, the department could tell you more about the details. However, there are indeed provisions in the agreements that provide for follow-up and accountability of the companies, which ensures in a way that the companies that commit to reducing their greenhouse gas emissions will honour these commitments within the framework of the project.

    The second part of your question concerns calculation methods. As part of the program, we detail a number of shortcomings in internationally recognized standards for certain calculations used to estimate the greenhouse gas reduction impact of particular projects.

    If I'm not mistaken, the program was introduced in 2020, or perhaps it was announced that year. I imagine that the greenhouse gas reduction target was set at 2030 because that's the government's target.

    Mr. DeMarco, do you think we're on track to reduce greenhouse gas emissions by 19 or 20 megatonnes? Will the $8 billion make it possible to achieve this reduction, as the government has estimated?

    I'm not sure the department is on the right track.

    We looked at the agreements, and only five of them had a reduction of a certain number of megatonnes. When we looked at those five agreements, we calculated that they represented only six or seven megatonnes of carbon dioxide equivalent. It's possible that there will be further emissions reductions, but the agreements only guarantee a reduction of six megatonnes. We don't know if we'll be able to reach 19 megatonnes.

    Thank you.

    Ms. Collins, you now have the floor.

     Thank you to all of our witnesses for being here today, especially Commissioner DeMarco. Thank you so much to your whole team.

     One thing that was shocking to me when I sat down to look at the documents was the number of pages that were redacted.

    Mr. DeMarco, when you looked at those, it was completely unredacted. Is that correct?

    The audit team goes through the piles of documents in a digital format. Mr. Blouin can explain to you the nature of the free access provision that we have in the Auditor General Act and what he obtained.

     I have a very short amount of time. Were they unredacted documents?

    They were unredacted.

    Thank you.

    When it comes to sending parliamentarians unredacted documents, I'm curious. When I looked at the information, it said “minimal redactions”. Despite the theatrics of some of my colleagues, I do agree that 360 pages...and those were just the ones that were removed. When I looked at other pages, huge sections of them were redacted.

     It does leave me with this question: Why aren't parliamentarians being given more information? Were all of those redactions absolutely necessary?

    A connected question to that is this: If we hadn't had our staff in with us, would there have been fewer redactions?

     I appreciate the question. There are two elements to the answer.

    Number one is with regard to the statutory standing of the OAG in its own act.

    Number two is the parameters under which they're provided. It's under an NDA, which the committee, in the second session, will not be under. In the context of our obligation vis-à-vis the proponents, our requirement is that we consult with them and seek their permission. That's what we did.

    With regard to the nature of it, 300 pages may seem a lot, but these are 300 in the context of multiple thousands of pages. The type of information is almost identical across the sections that have been redacted, and they're primarily around the statements of work.

     I did notice that there were a few contracts that weren't redacted as heavily. I was curious about the difference. Was it just the permission given by those third parties or...?

    The items that were redacted are of two natures.

    Number one is private, personal information and number two is primarily commercial information. The commercial information for almost all of them is around the statement of work and how they anticipate doing their work, which could be prejudicial, or they feel is prejudicial, to their capacities to remain competitive. That is based on requests of the recipients.

    As my final question, if it had just been members of Parliament who were accessing the documents, would the redactions have been...?

    I believe the legal.... I understand it is the same.

     It would have been the same, regardless.

    Yes.

    I have more questions about that, but I'll leave that for the in camera session.

    Turning back to you, Commissioner DeMarco, can you talk a little bit about what you mentioned around the horizontal industrial decarbonization policy?

    My NDP colleagues and I have been calling for a comprehensive industrial strategy. We see the impact the U.S.'s Inflation Reduction Act has had and we have not stepped up to that same level here in Canada. Can you highlight how a comprehensive industrial green strategy would help us attract investment?

    Also, what are your reflections on the Inflation Reduction Act?

     Yes. I'd be pleased to.

    As you see from today, you have more than one department involved in the whole-of-government endeavour to meet the 2030 target, but in some ways, each acts in a silo.

     What a horizontal industrial decarbonization policy for the Government of Canada would do would be a big-picture plan to guide all of the different departments, including the two that are here today, as well as NRCan, for example, in guiding their efforts as to where to best invest, from a value-for-money point of view, Canadian taxpayers' money.

     It's essentially the grand plan that would be weaving together all of the different elements of Canada's various subsidy programs for this sort of thing. In the absence of a grand plan, there is the fear that each department will work too much in their own silo and won't maximize the value for money and act in a way that is considered coherent among all of the programs.

     You provided some recommendations and mentioned the responses to those recommendations. Just for clarity, was it just to ISED that those recommendations went? You mentioned that some of the responses were vague. Was the response vague to this recommendation in particular? Can you speak a bit more to that?

     Yes. As we indicated in the report, our audit uncovered the larger issue that the Government of Canada as a whole needs to address.

     Each department has its own mandate, but sometimes an audit—even though this one has only one auditee, ISED—reveals a larger problem that admittedly ISED itself can't resolve on its own, unilaterally. It would need assistance from central agencies and government as a whole.

    That's recommendation 4.20, where we recommended “a strategic horizontal approach” to detail “the steps to reach Canada's climate goals”.

    This is what we just spoke about, and indeed—

    I'm going to have to stop—

    —their response is vague. That's their response to that recommendation 4.20.

     I'm going to have to stop there. We're well over time.

    We'll go to a second round of four-minute and two-minute rounds.

    Next is Mr. Deltell.

    Mr. Deltell, you have the floor for four minutes.

     Thank you, Mr. Chair.

    Good afternoon, colleagues.

    Ladies and gentlemen, witnesses, welcome to your Canadian Parliament.

    Remember that we're here to talk about $8 billion in taxpayers' money. Let's also remember that the program we're analyzing today is called the net zero accelerator, and that its objective is to reduce targeted greenhouse gas emissions by 40% to 45% by 2030. The public documents to which we currently have access directly target a foreign company, namely Volkswagen, which received $700 million from Canadian taxpayers.

    Mr. Bilodeau, I don't want to know the Caramilk secret. I don't want to know how they're going to make the batteries, where they're going to make them, or what technology they're going to use. Your goal is to reduce emissions. My question is clear: by what percentage will greenhouse gas emissions be reduced using the $700 million of taxpayers' money given to this foreign company?

    My answer to your question is twofold. First, the objective of the program is not just to reduce emissions in the short term, but also to transform and develop technologies. Therefore, when we consider the impact of the program, we must also think about the jobs created and the economic spin-offs.

    Next, as I said earlier, I still don't have a figure to give you. We expect...

    That's the problem, Mr. Bilodeau. We're talking about $700 million. I understand that your objective is long-term and all that, except that your objective is also to reduce greenhouse gas emissions by 40% to 45% by 2030. I'm not making this up; it's in your mandate letter.

    You've given $700 million of Canadian taxpayers' money to a foreign company, and you can't tell taxpayers what percentage of emissions will be reduced with that money. How do you expect people to have confidence in you, your project and your initiative?

    More specifically, this project was funded under pillar 3, which aims to transform...

    Mr. Bilodeau, I'm not talking about pillars here, but rather taxpayers' money. Canadians have just given $700 million to a company to reduce greenhouse gas emissions. By what percentage will greenhouse gas emissions be reduced with this $700 million?

    I don't have any more information than I did last time.

    Mr. Bilodeau, that's very unfortunate. You understand that Canadians have a right to have accurate numbers when their money is being spent.

    I want to remind—

    I have a point of order, Mr. Chair.

    Mrs. Chatel, you have the floor.

    A question that can't be answered is being repeated. When we talk about the transition to a green economy, how can we know the exact figures in advance? It's repetition, it's not—

     I have a point of order, Mr. Chair.

     Go ahead, Ms. Collins.

    This just seems like it's going into debate.

    I'll make that determination.

    What I would say is that, yes, there's repetition, but that's the prerogative of the questioner. If the questioner feels that repetition will, over time, bring out new aspects of the question, then that can be their questioning strategy. I understand what the tactic is—

    Mr. Gérard Deltell: That's not a tactic. That's a fact.

    The Chair: No, no; what I'm saying is that in terms of questioning, it's okay. You can do that.

    Mr. Gérard Deltell: I will. For sure.

    The Chair: What I'm saying is that I don't agree with Madame Chatel's point of order. You can ask the question as many times as you want, because it may be a way to shake the tree loose a bit.

    Go ahead.

    Let's be very clear, and I'm saying this to everyone.

    Mr. Bilodeau, I'm not attacking you, I'm attacking the whole initiative. In the mandate letter for the net zero accelerator initiative, it says that it's aiming to reduce greenhouse gas emissions by 40% to 45%. I'm not making up a number. My question is not based on an answer that's not available, but rather on a letter of intent, a mandate letter, which states that your objective is to reduce emissions by 40% to 45%. However, you're unable to specify the reduction you will achieve through a company to which you have awarded $700 million.

    Canadians recently learned that a green energy investment fund, a sustainable technology development fund, contained $500 million. Of that, $390 million—almost four out of five dollars—was not managed ethically or according to the rules. Canadians have a right to wonder why the figures aren't available.

    I'd like to talk about something else, and that's Lion Electric. We're talking about $50 million here. As you know, unfortunately, Lion Electric is experiencing considerable difficulties, which no one is happy about. Earlier this week, the mayor of Saint‑Jérôme gave his opinion on the matter. He reminded us that Justin Trudeau visited the Lion plant itself three years ago to announce a program to support the purchase of buses by school transportation in Canada, but that the program never really materialized. That's $50 million, and I'm not the one saying that the program never came to be. It was the mayor of Saint‑Jérôme.

    Your time is up, Mr. Deltell.

    Mr. van Koeverden, you have the floor for four minutes.

     Thank you very much, Mr. Chair.

    Thank you to our witnesses for coming today.

    For my part, thank you for protecting the integrity of these contracts from partisan games. I've never run a multi-billion-dollar company before, but I think I'd be rather reticent to provide every single detail of these contracts, given how toxic various Parliaments have become over the last couple of years.

    I think it's important that they have funding agreements. I also think it's important that we get reports and timely information and that they be scrutinized. I think that's been done very, very well. I'm also glad that the integrity of that confidential information between a multi-billion-dollar organization and a nation is important to protect. It's also important for our competitiveness. We don't want companies to say in the future, “I don't want to be used for partisan reasons. I just want to do business.”

    In the case of the decarbonization of the steel industry in my region, in Hamilton, we're very grateful for the improvements that this will make to our atmospheric pollution. I also know that just down the road from Milton, in St. Thomas, we're going to see huge growth in jobs thanks to the Volkswagen factory and others down in that region.

     I'll say that over the last couple of weeks in particular, the leader of the Conservative Party, Pierre Poilievre, has been talking about jobs. When asked about their plans to lower emissions and fight climate change, they really only respond with one answer, and that's technology. I think immediately of technologies like decarbonizing our steel industry, improving electrification and working towards cleaner large industrial manufacturing techniques.

    Could you point to job creation? I know that's not necessarily directly in your mandate, but the rust belt in Ontario has—

     I have a point of order.

     Go ahead, Mr. Mazier.

     This is on the net zero accelerator. This is to reduce emissions. It has nothing to do with jobs. This study is all about where the $8 billion went and how many emissions have been reduced.

    The member opposite, Dan Mazier, might want to simplify this, make it about just one thing and suggest that the net zero accelerator fund is just an emissions reductions plan, but that's not the case. It's not solely for emissions reductions.

    Yes—

     It does many other things.

    Okay, Mr. van Koeverden.

    To be fair, Mr. Bilodeau, in some of his answers, referenced....

     I'm going to have to pause the meeting. Any time I pause the meeting, it eats into the time of the meeting.

    Mr. Bilodeau did mention that one of the pillars of the program was directly tied to to job creation. Of course, the green transition is all part of the big ball of wax we call moving to a greener economy. I wouldn't spend too much time on jobs, but it's not entirely out of the frame.

    Go ahead, Mr. van Koeverden.

    I know that the Conservatives would like everything to be very, very simple. I also know that they brought 360 blank pages indicating that they have done a tremendous amount of research on this.

    It is about more than just lowering our emissions. It's about investing in the green economy. That's why we continually say that if you don't have a plan for the environment, then you don't have a plan for the economy.

    In this context, this is absolutely true. Our manufacturing sector in southwestern Ontario is a large-emitting sector. It always has been, but as we know, we've lost a lot of jobs from the rust belt. It's where I grew up and where I live. Now this government is investing in a very competitive environment, I'd say.

    The competitiveness of the Inflation Reduction Act down in the United States basically informed us that we needed to invest in order to attract these jobs and this investment in these technological opportunities.

    Could you speak specifically to jobs in St. Thomas with respect to how important these investments are for the steel industry, particularly in Hamilton and Algoma?

    I will ask Stephanie in a moment to talk specifically about St. Thomas.

     On the broader picture, our estimate is on the basis of agreements to date. We estimate that about 36,000 jobs will be created and that R and D commitments exceeding $4.5 billion will be made.

    It's important to recognize that we're seeing a major shift in the industrial landscape, and part of the objective is to support Canada as we shift and the economy changes. Investments like Volkswagen, though $700 million is a large investment, represent only 10% of the total investment that is being made in Canada.

    While there is certainly an objective in the short term, particularly around pillar one and achieving short-term megatonne reductions, there's certainly a broader objective to the program around the restructuring of the economy and the development of the technology that will help both Canada and the world reduce GHG emissions.

    Thank you.

    Ms. Michaud, you have the floor for two minutes.

    Thank you, Mr. Chair.

    Mr. Bilodeau, when I was asking Mr. DeMarco my questions, you didn't seem to fully agree with what he was saying. So I'm going to give you the opportunity to answer those questions yourself: I'm going to ask them all at once and give you the rest of my time to respond.

    We have about five years left to meet the 2030 target. Do you think we're on track to reduce greenhouse gas emissions by 19 to 20 megatonnes with this $8‑billion investment?

    Do you agree that the process is too long and complex for some businesses wishing to benefit from this program? If so, why do you think that is?

    Why is it not attracting the large emitters, the ones that I, for one, think should be reducing their greenhouse gas emissions the most?

    With respect to your first question, the department's estimates indicate that current investments are expected to result in a reduction of about 11.2 megatonnes in greenhouse gases. The target of 6 to 7 megatonnes is what's specifically mentioned in the contractual agreements. You have to understand that companies would be subject to penalties if they didn't meet the targets in their contract. In our conservative estimate, these contracts will have a greater impact on emissions than the 6 to 7 megatonne target specified in them. We estimate that the projects being studied will help achieve a reduction of about 20 megatonnes of greenhouse gases. There is certainly some uncertainty around these figures, because there is always uncertainty around the projects in which we invest.

    As for the fact that the projects would be long and complex, you have to understand that the average investment is $200 million. The department believes that an investment like that requires due diligence and time. In addition, the Government of Canada is usually the first to invest in these projects. That means that our investments generate activity and interest in them and that there is still a lot of time left to participate.

    Thank you very much.

    Ms. Collins, you have the floor.

     The environment commissioner laid out in his report that there was “incomplete due diligence on greenhouse gas emission reduction commitments”. He has noted his concerns here here and also in the report about value for money, given that the reduction commitments weren't strict enough and also that standard practices weren't followed.

    Were there any concerns raised in the drafting of this audit or when the minister was approving projects? At any point, did people raise these concerns before the audit happened?

    There are maybe two elements to my answer. In terms of value for money—

    I'm sorry. Could you start with a yes or no, in terms of whether anyone raised these concerns before the audit occurred?

    Do you mean in terms of incomplete due diligence?

    Were there any concerns raised about incomplete due diligence on greenhouse gas emissions reductions, about value for money—given that the emission reductions were not strict enough—or double-counting or not following standard practices?

    Value for money would not have been our own assessment in terms of—

    I'm sorry; do you mind starting with the question? Did anyone—

    The minister was fully informed of due diligence—

    And no concerns were raised?

    —and in all instances, it was the recommendation of the department that the projects—

    But were any concerns raised at any point by the minister or anyone in your department before this audit took place?

     Not to my knowledge.

     Thank you.

     The commissioner noted that projects could be fast-tracked with a letter from the Prime Minister. Is that standard practice in other departments?

    I should clarify. In all instances, projects went through full due diligence of the department. That includes a review by the GHG committee and the investment review committee.

    In some instances, where time was of the essence, the program provided for—

    Is that a normal process in other departments?

    In all instances, projects were approved by one cabinet committee or the other, either by full cabinet or Treasury Board—in all instances by Treasury Board—and it is not in deviation with what we might see in programs.

    Thank you.

     Mr. Leslie is next.

    Thank you, Mr. Chair.

     I'd like to start with a fairly straightforward question.

    What is the government's emissions reduction target? I'm using the word “target” specifically. What is the emissions reduction target of the $8-billion net zero accelerator fund?

     As per what was reported in the OAG report and by Environment Canada, we expect 19 to 20 megatonnes.

    My question refers to the target of the program's $8 billion in spending. What is the target of emissions reductions?

    At this point, any specific targets that would have been included in the policy approval are cabinet confidence.

    To clarify, “cabinet confidence” means that it must be kept secret.

    That's correct.

    Why would the target number of emissions for $8 billion need to be kept secret?

    As I said, I am bound by cabinet confidence, so at this point I do not have....

     Could you guess why a number would need to be kept secret?

    I wouldn't provide conjecture in that space.

    Okay.

     The Liberals gave $61 million to Pratt & Whitney, which is a subsidiary of Raytheon Technologies, a multi-billion-dollar aerospace and defence company, to develop a new type of engine.

    Do you think that this company could develop a new engine without $61 million of taxpayers' money?

     I believe that the investments provided help secure Canadian mandates, the development of technology in Canada and work in Canada. Hopefully, this will lead to technology that will lead to the decarbonization of a fairly emissions-intensive sector.

     In the case of that contract, how much could be non-repayable? How much may not be paid back to the government?

    I think that's information that is within the realm of the contribution agreement, which I would propose is appropriate for the second part of the discussion.

    Okay.

     Do you see why it's frustrating for the folks I represent—folks all of us represent—when we're seeing taxes increase on seniors, on home heating and on life in general, and we're seeing billions of dollars handed out to big companies with parent companies based sometimes in Canada and sometimes in Europe or in other nations around the world, without an actual commitment of any type to reduce emissions? Do you see why that's frustrating for folks?

     I have no comment on that.

     Okay. Well, I view it in many ways as a blank cheque for big companies, and I think many taxpayers do too.

     As discussed earlier, the environment commissioner discovered that you did not conduct value-for-money audits. I'll continue in that space. Since you won't tell us what the target of the entirety of the program is and we have no credible data to ensure that emissions reductions actually take place and therefore can't measure the cost-effectiveness, how can you guarantee to the folks whom I represent that there has not been wasted money?

    I could say that the projects were all individually reviewed in quite thorough ways for a number of factors, including job creation, technology development and, particularly for the ones that are in pillar 1, their megatonne reductions until 2030.

     The due diligence process is actually fairly rigorous; hence, we were discussing the length of time it makes in the help to support the development of Canadian industry.

    I would hope that it's rigorous. I think expecting anything less is simply insane.

    However, there has also been a double-counting of emissions across various other programs, as reported by the commissioner, and a clear lack of focus, I think.

    Going forward, will the department be doing value-for-money audits on future programs of this nature? Has the lesson been learned, or are we going to continue to provide vague responses back to the environment commissioner?

     The time is up. We'll go now to Mr. Longfield.

     Thank you, Mr. Chair.

    Thank you to the witnesses.

     I'm going to focus my questions with Mr. Bilodeau.

    Thank you, Mr. DeMarco, for being here again at the committee.

    When Mr. DeMarco was last at our committee, we talked about the gap between policies being launched and then getting results on the greenhouse gas reductions. I'm looking at this from two different angles.

    First, I've worked on electric arc furnaces in steel mills. They're massive. When you shut down an electric arc furnace, you shut down the steel mill, so with regard to the timing to work on those furnaces, sometimes you have to wait years to get into the production schedule to work on a furnace. I've also worked on the dryer kilns in concrete plants, and it's very much the same: When the kiln goes down, the plant goes down, so when we're looking at the large emitters in pillar 1, we're actually talking about getting right to the heart of their operations, and that's not an easy thing to do.

    The second part of my comments would be with regard to working with the board of directors. I've sat on the boards of international companies. The Canadian division has a Canadian managing director. It's a separate balance sheet within a larger organization. You have to ask for capital for your region. You have to get board approval for capital for your region, and then you have to expend the capital and implement the improvements that you've pitched to the board in order to get approvals.

    Between getting things through boards of directors and through production, could you talk about the real-life challenge of businesses trying to implement net-zero programs that we've put forward?

    I appreciate the question.

     I think the decisions that face companies that are making very large investments with a view to decarbonizing are multiple. Obviously, they have shareholders and they have business imperatives.

     I will actually ask Stephanie, who is more directly involved in the negotiation and the collaboration with the companies, to maybe provide a bit more—

    Thank you.

     I am not looking for excuses for the businesses; I'm looking at the real-life consequences of trying to get a program implemented.

     Mr. Chair, I would say that the member is correct. These are incredibly complex, large, high-risk projects that often require significant inputs into decisions for the companies to decide to make final investment decisions.

     In the case of a lot of the projects under pillar 1, and as is the case in a number of the projects that we continue to have in our pipeline, we're often the first in with regard to providing a commitment towards a project—not disbursing funding, not signing a contribution agreement, but in sending a signal that this project is going to advance Canada's net-zero objectives—and we do that.

     As the audit actually pointed out, I think six out of the 10 CTA projects at the time of the audit were in their feasibility studies. The companies need to take a look at a lot of things. They need to look at making sure that they have the full financial stack. They need to make sure that they're going to look at regulations. They're also going to look at risk—

     Thank you. I'm on limited time.

    At the same time, we're competing against other organizations in other countries that may also be seeking federal compensation for some of their large capital projects, so it is a global market we're competing against. Is that fair to say?

    Thank you very much.

    That concludes the first hour of our meeting.

    Before we take a short break and begin the in camera portion of the meeting, I'd like to ask the committee a question. As we know, during the in camera portion, each member has the right to be accompanied by an assistant, as do the whips and House leaders. It's a well-established right.

    Do I have the permission of the committee to invite the support staff who support the witnesses to stay in the room? Most of them are sitting in the front row behind the witnesses.

     Voices: Agreed.

    Perfect.

    We will now take a break before we go in camera. The meeting is suspended.

    [Proceedings continue in camera]