THE STANDING SENATE COMMITTEE ON ENERGY, THE ENVIRONMENT AND NATURAL RESOURCES
EVIDENCE
OTTAWA, Tuesday, October 21, 2025
The Standing Senate Committee on Energy, the Environment and Natural Resources met this day at 6:34 p.m. [ET] to examine and report on such issues as may arise from time to time relating to energy, the environment, natural resources and climate change; and, in camera, for consideration of a draft agenda (future business).
Senator Joan Kingston (Chair) in the chair.
[English]
The Chair: Good evening. Before we begin, I’d like to ask honourable senators to consult the cards on the table for guidelines to prevent audio feedback incidents. Please be sure to keep your earpiece away from all microphones. Do not touch the microphone. Activation and deactivation will be managed by the console operator. Finally, please avoid handling your earpiece while the microphone is on. Earpieces should either remain in your ear or be placed on the designated sticker at each seat. Thank you.
My name is Joan Kingston. I am a senator from New Brunswick and Chair of the Standing Senate Committee on Energy, the Environment and Natural Resources.
I would invite all senators to introduce yourselves.
[Translation]
Senator Verner: Josée Verner from Quebec, deputy chair of the committee.
Senator Miville-Dechêne: Julie Miville-Dechêne from Quebec.
Senator Youance: Suze Youance from Quebec.
[English]
Senator Kutcher: Stan Kutcher, Nova Scotia.
[Translation]
Senator Clement: Bernadette Clement from Ontario.
[English]
Senator McCallum: Mary Jane McCallum, Treaty 10, Manitoba region.
Senator D. Wells: David M. Wells from Newfoundland and Labrador.
Senator Fridhandler: Daryl Fridhandler, Alberta.
Senator Arnot: David Arnot, Saskatchewan.
The Chair: Thank you. Before we start the meeting, I’d like to turn the microphone over to Senator Kutcher for a moment.
Senator Kutcher: Thank you, chair. I appreciate the opportunity.
I’m sharing with you, colleagues, for some additional and unexpected health reasons, I will not be able to continue to serve as a member of the committee. It’s been a difficult summer for me, as many of you know.
Unfortunately, in the last two to three weeks, some other challenges have come up. They will necessitate me moving back and forth from Halifax for different treatments and investigations. I won’t be able to do justice to the work this committee is doing.
If I don’t feel I’m doing the work I need to do to contribute, I don’t think I should stay in this important committee spot, and we will ask somebody else to move into this position. I wanted to let you know that so I didn’t just disappear one day, although that might happen.
Right now, the most important thing is for me to step back from this and let somebody who can make the necessary contribution to this committee, because it is a vital committee, not just to the Senate, but to the country.
Thank you, chair, for letting me have the opportunity to say goodbye to my colleagues. I look forward to seeing you in the Senate Chamber as much as possible. Thank you.
The Chair: Thank you, Senator Kutcher. We all value you as a colleague. We want you to take care.
Senator Kutcher: Thank you very much, colleagues.
The Chair: Today, pursuant to the general order of reference received from the Senate on September 25, we are hearing from Robert Hornung; he is a member of the Net-Zero Advisory Body and an independent consultant. We’d like to welcome him here this evening. Thank you for accepting our invitation to speak today about the Net-Zero Advisory Body report entitled, Collaborate to succeed: The Government of Canada’s role in growing domestic clean technology champions.
Mr. Hornung, you may proceed with your opening remarks. Then we’ll move to questions and answers.
Robert Hornung, Member and Independent Consultant, Net-Zero Advisory Body: Thank you for the opportunity to join you here this evening and speak about our report.
I would like to begin by acknowledging that we are on the traditional unceded territory of the Algonquin Anishinaabe people, from whom we continue to have much to learn about the linkages between energy, environment and natural resources.
I would also like to take this opportunity to introduce Canada’s Net-Zero Advisory Body, or NZAB. Launched in February 2021 and formalized under the Canadian Net-Zero Emissions Accountability Act in June 2021, NZAB’s mandate is to provide independent advice to the Minister of Environment and Climate Change with respect to achieving net-zero greenhouse gas emissions by 2050, including advice related to greenhouse gas emission reduction targets for 2030, 2035, 2040 and 2045; emission reduction plans from the Government of Canada, including measures and sectoral strategies that the government could implement to achieve a greenhouse gas target; and any matter referred to it by the minister.
The report I will be discussing today was developed in response to a request from the former Minister of Environment and Climate Change for advice on concrete steps the federal government could take to advance net-zero industrial policy with a view to capitalizing on the economic opportunities associated with a carbon-neutral economy.
While an energy transition is well under way globally, there is no doubt that growing geopolitical and economic uncertainty since the publication of our report in March this year makes it even more challenging to position economies for future success. To inform our advice to the minister, we reviewed international best practices and relevant literature; conducted 47 interviews with key domestic and international stakeholders, both inside and outside government; and solicited additional feedback via a subsequent stakeholder questionnaire.
In the NZAB’s view, Canada’s approach to net-zero industrial policy has traditionally been too scattered and has lacked the cohesive strategy required to enable Canada to grow cohorts of successful homegrown businesses that can compete internationally and prepare the country for a net-zero future. In our view, to achieve success in growing domestic production, creating employment and exporting high-value innovative technologies will require both a more collaborative and strategic approach to net-zero industrial policy as well as a more supportive culture and increased knowledge and expertise within government.
Our report seeks to encourage this outcome by providing eight pieces of advice structured around four key themes: prioritize sectors; convene stakeholders; establish measurable goals; and align policies, programs and funding.
On the theme of prioritizing sectors, we suggest that government focus on a few priority sectors for net-zero industrial policy to avoid spreading its resources too thin. These priority sectors should have high growth potential and together benefit all regions of the country.
We believe they should also align with the government’s vision and consider national security, economic development, energy security and net-zero and environmental goals.
On the theme of convening stakeholders, we offered three pieces of advice. First, we recommended creating formal, technology-specific forums for private-public co-design and implementation of industrial policy road maps and strategies.
It’s our view that government is poorly positioned on its own to design and implement industrial policy and needs to draw on the knowledge and experience of the private sector and key stakeholders to ensure that strategies are realistic and achievable. Such forums must meet early and often; be ongoing and sustainable; and guide all parts of the process, from defining objectives to identifying, implementing, monitoring and modifying actions.
Second, we believe such forums must ensure Indigenous participation and seek to advance inclusive growth through Indigenous partnerships.
Enabling such partnerships will require consideration of measures that ensure access to capital as well as support for capacity-building programs. At the same time, net-zero industrial policy planning should also seek to integrate with other important and long-standing Indigenous priorities.
Third, as governments generally lack the technology and market knowledge of the private sector, we believe it is important to consolidate and deepen in-house, technology-specific policy capacity across the federal government. This could be pursued by upskilling the current workforce to develop technology-specific policy experts, enhancing Canada’s national research labs or expanding the roles of independent advisory councils to provide other mechanisms for government to access that expertise and knowledge.
On the theme of setting net-zero competitiveness goals for priority sectors, we recommend it is important to set a few technology-specific, measurable, quantifiable goals that focus on innovation and are developed through the proposed private-public forums and supported by the whole government. Such goals are critical in ensuring a clear and common strategic focus for both public and private sector initiatives targeted at producing, improving or deploying technologies.
Finally, on the theme of aligning policies, programs and funding, we offer three pieces of advice. First, the federal government should align the research, development and deployment funding needed to scale Canadian firms that we see currently provided through measures such as research and development grants, tax credits or direct finance. It has historically been challenging in Canada to develop comprehensive strategies that enable Canadian firms to develop and commercially demonstrate net-zero technologies and subsequently scale into world-leading exporters.
Second, we suggest that a net-zero industrial strategy must provide clarity on roles across the federal government by having central agencies select a few priorities and assign responsibilities. For example, government-wide technology-specific working groups could align high-level strategies with the specific responsibilities of different federal departments.
Third, we advise the federal government to strategically coordinate the use of existing demand-side policy instruments beyond carbon pricing. Demand-side policies like procurement, regional hubs, regulations and consumer subsidies can all play a role in creating markets and provide early revenue and reference customers for Canadian firms.
In conclusion, the development of a net-zero industrial policy requires a strategic approach developed and implemented in collaboration with the private sector and key stakeholders that considers net-zero technologies from research through development, commercialization and deployment. This will require increased capacity within government and enhanced and sustained coordination between the public and private sectors.
Thank you for your attention. I look forward to your questions.
[Translation]
Senator Verner: On page 10 of your March 2025 report, you recommended that the government invest in priority sectors, including batteries and electric vehicles. The government announced investments worth several billion dollars, but some of those investments have not achieved the expected success owing to the more difficult political and economic context in North America. I am thinking here of LION and Northvolt. Honda Canada has also postponed the beginning of electric vehicle assembly in Ontario.
You also said in your report that the government should regularly update its knowledge and adjust its priorities. Given the precarious situation of the electric vehicle industry, would you recommend reviewing this strategy and the government’s public investment choices, since the risks and costs are ultimately borne by taxpayers?
[English]
Mr. Hornung: Thank you for the question. In this report, we took great pains not to recommend specific sectors and what the priority sectors should be. In our original report two years ago, we did identify four sectors: EVs, hydrogen, biofuels and value-added forestry.
We acknowledge that whenever government works to develop an industrial policy, there are risks involved. Certainly, we have seen some challenges in the EV sector, which I think are linked to broader challenges within the automotive sector at this time as well. We, as a group and as the Net-Zero Advisory Body, have not landed on recommendations for key sectors to pursue. However, as you note, in our report, we say it is important to monitor, review and be prepared to be flexible in terms of going forward. It is also important to recognize that in terms of developing an industrial strategy, one of the reasons that we developed this report was a concern that historically we haven’t really had comprehensive strategies that move forward.
So if you consider different sectors we might look at, we have started to make an effort in Canada to identify priority sectors. I would argue we haven’t done a very good job of identifying specific goals we’re trying to achieve. In fact, in the research for the report, one of the common messages that came back through all of our interviews with stakeholders and various experts was that historically we tend to have broad, high-level, qualitative goals and not narrow, focused, quantitative goals. So as we think about how we might revise or consider what sectors to prioritize, it’s important to look at that.
When we talked in our recommendations about the importance of having sustained private and public sector collaboration. Again, through our process, with the interviews and in speaking to stakeholders, we found that the perception was that, in Canada, historically, there has been some private sector and public sector collaboration, but it tends to be time limited; it’s not ongoing or sustained, and doesn’t necessarily address all aspects of the process. We really think it has to be a team effort for this to work.
Finally, in terms of linking together all of the different aspects of policies, it’s important that there be a clear understanding of how the different elements of a strategy fit within the broader strategy. I would argue that, again, historically, in Canada, we often have a number of different measures that are seeking to accomplish a broad objective, but it’s not always necessarily clear how they link together and support each other going forward.
Therefore, our recommendations are meant to encourage government to revisit its industrial policy, look at how its efforts compare against these four key metrics that we’ve identified that we should be testing ourselves against and then make adjustments as required.
[Translation]
Senator Miville-Dechêne: Thank you for joining us. The government continues to provide fossil fuel industries with significant funding. In 2024, according to Environmental Defence, the Government of Canada provided approximately $30 billion in direct subsidies and public funding to the oil and gas industry.
Do you think it’s possible to have a coherent net zero policy as long as these subsidies exist?
[English]
Mr. Hornung: I would start by simply saying that, from our perspective as the Net-Zero Advisory Body, in our advice to government, we’re looking to ensure that we’re making recommendations to ensure we’re on a net-zero pathway. It’s important to assess, for example, that we are moving forward with a number of recommendations now with respect to the development of major projects in Canada going forward and nation-building projects. From our perspective, it is important that one of the lenses that is looked at in terms of considering which projects to move forward with is what the long-term implications are. Does it help to keep us on a path towards net‑zero greenhouse gas emissions by 2050, or does it throw us off that path?
Senator Miville-Dechêne: What would say to answer my question directly?
Mr. Hornung: The NZAB has not offered a view on that. I am speaking on behalf of the NZAB, so I do not think I can do that. I apologize.
Senator Miville-Dechêne: Okay.
Mr. Hornung: I will say that we know and have identified, as the NZAB, that when you look at our emissions profile, when we look at the performance of different sectors in reducing emissions in relation to our greenhouse gas emissions targets, it’s clear that the one sector that has been extremely challenged and has seen significant increases in emissions over that time is oil and gas. Clearly, if we’re going to achieve net zero by 2050, we have to find ways to limit and reduce those emissions.
Senator Miville-Dechêne: I was quite surprised and disappointed by the portrait you are tracing of the government’s actions, which seem to be all over the place, especially on technology. Is there nothing? What’s the problem? If the government can’t be at a good level on technology, where are we going?
Mr. Hornung: I’m not 100% sure what you’re driving at there.
Senator Miville-Dechêne: I’m asking you this question: How serious is what you talked about, this lack of technology at the government level? That’s what I understood from your presentation.
Mr. Hornung: If I’m interpreting what you said correctly, there are a few things.
First, a very consistent message we found in terms of interviews and research was that technical capacity within government has declined significantly over time, and that we now have a situation where technical ability is limited and often localized in a few departments that are now trying to support the broader government infrastructure with technical expertise and knowledge. That is why one of our recommendations is to increase that capacity within government so it can engage effectively with the private sector in determining paths forward for different technologies and in identifying priorities.
There have certainly been efforts by government to move forward in different technologies, like EVs, hydrogen and things like that, but, again, we found in our work that those approaches have perhaps not been as comprehensive and strategic as required to ensure that all of the elements being pursued are linked towards pursuing a very clear and focused objective.
Senator Miville-Dechêne: Thank you.
Senator D. Wells: Thank you, Mr. Hornung, for appearing.
You mentioned the electric vehicle strategy and the significant amount of money that’s been put into it. With the recent changes in that strategy from the federal government, primarily based upon the tariffs from the United States, has that realignment caused a reassessment from NZAB in how they view electric vehicles or the electric vehicle strategy as one of the solutions to the net-zero target?
Mr. Hornung: Again, we’ve not had a discussion in terms of what we feel the key strategy should be at this time. Obviously, as we mentioned, it is important to review and reconsider these things.
As the NZAB, we remain confident that, looking forward to the world of 2050, electric vehicles are going to have a key role and be a key component. We look globally and see the growth of electric vehicles proceeding rapidly, even in the current context. What Canada’s role should be in that is something that is obviously going to be part of the discussions in terms of going forward. As I said, we had recommended in the past that, given where electric vehicles are going to go, it’s important for Canada to try to figure out what its role can be within that sector. We have confidence that electric vehicles will continue to be a very rapidly growing sector globally going forward. Again, it is always important to evaluate and assess strategy and decide whether adjustments are required going forward.
Senator D. Wells: Thank you for that.
I assume that the changing dynamic in that sector now — within the Canadian dynamic — would change or would cause a further assessment by NZAB in looking at where that fits, given there seems to be an exodus of electric vehicle manufacturing to the United States from Canada.
Mr. Hornung: Yes. If we are asked to consider that question, we will certainly look at it.
I will give just a bit of context in terms of NZAB and its operations. We submitted this report just prior to the election call. When the election took place, we shut down, essentially, like much of government did during that period. Recently, we’ve been focused on completing work that we began prior to that.
So we submitted this report. We’ve been working and have released a new document on the role of provinces, territories and the federal government in terms of emission reductions — the relative role of the different jurisdictions — and we offered some thoughts and reflections on that. We’re currently completing work related to the role of net emissions, and technologies and natural processes that remove carbon dioxide from the atmosphere in agricultural or forestry initiatives. We are looking forward to making recommendations on how those might fit into a broader strategy as well.
We’ve been focused on that in the near term, so we have not revisited this question.
Senator D. Wells: Thank you for that.
You mentioned the oil and gas sector as one of the things that would have to be targeted to reach net zero by 2050. What other industries did you assess? Did you assess cement, farming and so on?
Mr. Hornung: No. I had said that if we look at where emission reductions have come from to this point, we have seen them in most sectors of the economy with the exception of the oil and gas sector, in absolute terms. Going forward, we need more reductions across the entire economy.
Senator D. Wells: Yes. When you looked at the oil and gas emissions quantum, did you separate the offshore oil and gas industry in Newfoundland from what happens in Western Canada?
Mr. Hornung: No. The numbers I spoke to only deal with oil and gas in general.
Senator D. Wells: Thank you.
Senator Arnot: Thank you, Mr. Hornung, for coming today and the good work that NZAB is doing.
You’re proposing a comprehensive industrial strategy for Canada, and it seems like common sense. One of the things I’m asking generally is this: What is the reaction of the government to what I’d call the big paradigm shift for which you’re advocating?
More particularly, what single reform at the Treasury Board of Canada Secretariat, the Privy Council Office — or PCO — and the Department of Finance would most improve cross-department alignment?
Mr. Hornung: I’m going to ask you to repeat the first question because I was taken up by the second one.
Senator Arnot: How is the government responding to this common-sense report? It’s a big challenge for them, because you’re suggesting a major paradigm shift in how they work.
Mr. Hornung: As I indicated, we submitted this report to the former Minister of the Environment and Climate Change prior to the election. We did not have the opportunity to engage with the former minister on the report prior to the election.
We have not engaged the new minister on this report specifically. We have engaged the minister on, for example, the more recent provincial-territorial work.
It will be part of our annual report, which will be published soon. The minister is required by legislation to formally respond to the recommendations in our report. At a minimum, at that time, we will know.
Senator Arnot: My second question is this: What single reform at the Treasury Board Secretariat, the PCO and the Department of Finance would most improve cross-department alignment to move forward in the direction you’re recommending?
Mr. Hornung: I’m not sure I would call what we talked about in the report a reform, in the sense that it’s a specific policy, but it is in clearly defining the objectives and the role of each department towards contributing to it.
I will give one small example from the survey we did that looked at this.
Often, in an industrial policy, procurement would be considered an important part of that policy, to create a market for new technologies going forward. In engaging with government representatives, we found there were different views on that across government.
For some in government, it was clear that procurement can be a demand pull, we can do this sort of thing and it’s important to reflect that. For others, procurement should be driven by other priorities, the lowest cost, et cetera, and it is therefore only once you have a successful achievement — in essence, through industrial policy — that you engage procurement. That tension is problematic.
For example, one role of a central agency, be it Finance or something else, can be to ensure everybody is on the same page with respect to that sort of thing.
Senator Arnot: You flagged procurement as being underused. I wish to follow up and understand what would most rapidly create a home market pull and how long it would take.
Mr. Hornung: That’s a difficult question because I think it’s dependent on the technology, its application and the potential size of the market.
I’ll try to come at it this way: If we’re moving forward with industrial policy that — and I’ve tried to be clear on this — is not a federal government industrial policy, it has to be an industrial policy that is a product of a broad range of participants. I would argue including provincial governments in that regard.
When you’re looking at procurement, if you had procurement practices across the country — and across all levels of government — that encouraged moving forward with a certain technology, that’s obviously having a different impact than if you only had the federal government doing that sort of thing. It’s hard to give a blanket answer.
Procurement isn’t the only tool you can use to create demand. Essentially, you want to be able to allow technologies to move from their initial phase towards being in a position where they are commercialized, competitive and able to move forward independent of that. It’s meant to be a stepping stone to help make that happen. Again, that will depend on the technology and the application.
Procurement is an important tool in the government tool box.
Senator Arnot: Thank you.
Senator Fridhandler: I want to understand the NZAB more because it’s stated to be an independent operation, yet I believe you’re funded by the federal government and report to the federal minister. Is that correct? I want to have context regarding the level of independence you have.
Mr. Hornung: We provide independent advice; that is the best way to describe it. You are correct that we report to the Minister of Environment and Climate Change. We are supported by a secretariat that is found within Environment and Climate Change Canada.
However, all of the advice we develop and the research we commission is a product of the members of the NZAB.
Senator Fridhandler: In light of all the political change we’ve seen in less than 12 months — domestic, federal-provincial, Canada-U.S. — what is your observation on where you’re at in terms of recommendations you have to pass on and how much you need to pivot because of what’s going on today?
Mr. Hornung: The core of our mandate is to offer recommendations for how we stay on a path to net zero by 2050.
One thing we’ve seen in light of the real and significant challenges that have emerged in the last few months, particularly from south of the border, in terms of the Canadian economy, is more public discussion about potentially weakening or eliminating different policies we put in place to try to keep us on that path towards net zero.
We would argue, while there is certainly value in reviewing policies on a regular basis, especially in light of changing circumstances, the possibility exists of being flexible in terms of adjusting policies to ensure they become more efficient and effective.
For example, we have raised with the government the fact that there are negative interactions that exist between policies where they overlap. That creates an additional administrative burden. It also decreases the efficiency of the policies.
This is, perhaps, a primary example: One of the things we’ve been focused on is encouraging the government to revisit and strengthen its industrial carbon pricing system. The industrial carbon pricing system has been a major contributor to emission reductions and is projected to be the major contributor to emission reductions going forward.
However, right now, that system is challenged because the markets that exist within that carbon pricing system are not reflecting the carbon price. We have, within those markets, trading occurring where we have an incredible number and oversupply of carbon credits relative to the demand for those credits going forward. That’s driving the price of those credits down, which reduces the incentive to actually invest in things that reduce emissions going forward.
We think it’s important that the government look at how it can strengthen that system to ensure the price signal remains meaningful going forward. That’s just one example of potential adjustments to policy going forward.
As we revisit and rethink what the policy framework looks like in the light of new circumstances, we think it’s important we don’t lose sight of the long term. We need to respond to short-term challenges, but we also need to stay on track for the long term, also for the environmental reasons, because net zero by 2050 is there for a reason. Scientists have told us, essentially, that if we want to stop seeing warming, we need to stop putting emissions into the atmosphere.
More than 140 countries have net-zero targets. There are countries that are putting in place carbon border adjustments. There are all sorts of initiatives moving forward. Countries are implementing industrial policies to try to become leaders in different technologies that will be part of this.
So we think it’s important not to lose sight of that and to continue to look forward, as well.
We are concerned. Canada has made some initial progress on emissions reductions. We’ve started to dip below 2005 levels — we’re 8% or 9% below at this point — but that appears to be slowing — and stalling, perhaps — at this point. In that context, we think it’s important to ensure that, as we review and revise, we don’t lose sight of that longer-term goal around what we’re trying to do, both from the environmental perspective and the economic perspective in terms of preparing for the economy of the future.
Senator Fridhandler: I will move to the oil and gas sector; I would be remiss as an Alberta senator to not come back to that. You talked about the increase in emissions. My question is twofold. First, is that an increase in emissions on a per-unit-of-production basis, which I would suggest has to be taken into account? Second, what is your view on technological developments in industry, particularly carbon capture, utilization and storage — or CCUS — and other forms of carbon capture, and their ability to impact things?
Mr. Hornung: Sure.
The oil and gas sector, generally, has made some important improvements in terms of emissions per unit of production. Those have come down, and there have been technological innovations and other things that have facilitated that.
Those improvements have been overwhelmed by growth in productions such that absolute emissions have increased.
You’re absolutely right. In terms of looking at how we can address increases in absolute emissions, yes, carbon capture and storage is a very important potential solution there. There has certainly been a lot of discussion, for example, about the Pathways Alliance initiative in Alberta and things like that. Initiatives like that have an important role to play.
It will be interesting to understand and review the potential scaling of those initiatives and how far they can go. For example, the Pathways Alliance initiative right now will offset and sequester a significant portion of production emissions but not all of them. If production increases further, then it’s going further. So what other actions can we take or expand in that area?
But is it part of the solution? Absolutely.
[Translation]
Senator Youance: My question is quite simple: In your report, you say that national research labs in Canada should be enhanced. Which labs in particular were you referring to?
[English]
Mr. Hornung: I was going to thank you for a simple question.
I would argue that, relative to a number of other countries, our research and development capacity is relatively small, frankly, both within government and in the private sector. In the private sector, we also do less research and development than in other countries.
We have labs, particularly associated with Natural Resources Canada. In Alberta, we have facilities in Devon that are working on technologies related to the oil and gas sector. In Varennes, Quebec, we have facilities related to electricity sector and renewable energy. All of them are areas we could be strengthening.
[Translation]
Senator Youance: Okay. Are you referring to Hydro-Québec’s lab in Varennes?
[English]
Mr. Hornung: Natural Resources Canada has facilities in Varennes as well.
Senator Clement: Thank you for your testimony today. I want to respond to some of the things you said in your statement.
You said that Canada’s industrial policy seems scattered; you used the words “lacked cohesion.” How do we compare to our trading partners and their industrial policies? What would you consider the gold standard there? That’s my first question.
The second question comes from your comments about the pieces of advice and the stakeholders. You’ve talked about provincial, labour and territorial representatives, but I didn’t hear you speak about municipalities. I raise that because I was the Mayor of Cornwall, and procurement was very complicated for a small municipality. Cities spend a lot of money on procurement, but it’s complicated. We are in this political world of low taxes and crisis management, but what you’re speaking to is long-term stuff. Procurement for cities is often about the lowest price.
How do we do the right thing, and have you consulted with municipalities extensively? I would argue they are a huge player in terms of procurement and how this country will move forward with long-term planning around net zero.
Mr. Hornung: Thank you for the question.
I will first answer the first part of the question, with respect to a gold standard. In preparing the report, we reviewed industrial policy across a number of countries, particularly the United States, which I will now put a caveat upon because that policy is evolving and changing. But we also looked at the U.K., Germany, Japan and Korea. We looked at what experiences those countries have had — and that is across a number of different technologies, as well, including hydrogen, EVs and, in one instance, carbon capture.
I’ll use examples of what I think differentiates the policy. This is in the report. We talk about the need to have these forums to convene stakeholders, the targets, et cetera, so here are some of the technology-specific goals that different countries have established. There are two examples from the U.S. There is $2‑per-kilogram clean hydrogen from electrolysis by 2026. That is a very specific goal in terms of hitting a specific price point in terms of that technology. There is also 10 million metric tons per year of clean hydrogen by 2030, which is a very specific production goal that we are trying to achieve through this.
In Germany, they are looking at 10 gigawatts of domestic electrolysis. Again, that is a very clear production goal.
In Japan, they are targeting 600 gigawatt hours, or 20% of the global battery market, by 2030. Again, that is a very specific goal they are reaching out to achieve.
It’s not a high-level goal of wanting to be a leader in an area. It is actually accomplishing a specific goal in terms of what they are going to produce or what share of the market they are going to have.
Senator Clement: And we don’t do that?
Mr. Hornung: We haven’t, I would say.
I won’t go into more detail on it. However, there are examples in the report, as well, that describe, for example, some of the public-private forums that exist, which are multi-year initiatives.
I think it’s important to recognize that if we’re serious about industrial policy and trying to grow Canadian firms to become leaders in some of these areas, that’s not an overnight thing; it’s going to take at least a decade to do. So you need to ensure that you have those mechanisms in place for that long for people to go through and carry forward. Again, I don’t think we have a strong history of that.
In terms of municipalities, I didn’t mean to exclude them. Yes, they’re important players. Personally, my background is in the electricity sector — the renewable energy sector, in particular — and, yes, I would argue municipalities have been ignored in energy planning forever.
Senator Clement: Yes, for far too long.
Mr. Hornung: When you’re thinking about industrial policy, yes, it’s important that they play a role.
You’re absolutely right: There are many levers that municipalities have access to that, frankly, other levels of government don’t. That would be beneficial in trying to move some of these things forward.
Senator Clement: But they’re on your list of stakeholders?
Mr. Hornung: They were. I cannot confirm that they were part of the interview group, but the report clearly suggests that they need to be part of these forums going forward.
Senator Clement: Thank you.
Senator McCallum: Thank you for your presentation and the work you do. It’s very important to me as a First Nations member that we look after the generations that are yet to come. It sounds very dismal to me right now.
I want to look at the terminology that we use. Actually, the question I was going to ask was related to that.
We look at reducing total GHG emissions. We are looking at actions taken by a government to shape a country’s economic structure and growth to realize net zero, knowing we must increase resource extraction that has not been mitigated and has never taken part in the “polluter must pay” principle. Yet we also need more sustainable and inclusive development with a rise in clean energy technology, which also brings questionable practices. I’m looking at hydro. It’s not clean. I see that.
So we look at Canada and net zero, and we have been unfocused and uncoordinated to date. Yet we need a strategic approach. We need to avoid spreading resources too thin but also increase capacity.
My first question, which you partially answered, was around Canada learning a lot from Germany and Japan because both are mid-sized, advanced, industrialized democracies like Canada. If Germany and Japan are similar to Canada, why do they have strong net-zero industrial policies while Canada does not? You partially answered that.
Further, why are we in the position that we are today? What role do Canadians play in net zero, when we look at consumers? That’s one thing that we haven’t looked at: customer behaviour. How much does that drive that, and how much does it take away from what government is trying to do? Is this a government problem or a combined government-citizen problem? I know there are several questions in there.
Mr. Hornung: It’s a challenge that government can’t solve by itself — that’s for sure.
Senator McCallum: No, it cannot.
Mr. Hornung: Frankly, it’s of a scale and magnitude that will require all of us to engage, whether that is citizens, governments or the corporate sector going forward.
I’m going to reference another piece of work that the NZAB did earlier this year, which was essentially producing an energy system vision for net zero. People may, in looking at that, agree or disagree with some elements of it, but the point we were trying to make in releasing that was to say that when we talk about net zero — even in our discussion here, and I’ve contributed to it to some extent, I admit — we tend to focus on emissions. But we’re on the cusp and have a tremendous opportunity to rethink how we produce, use and distribute energy from whatever source it turns out to be.
Emissions are one part of that, but there are other parts that we must think about, such as affordability, access and opportunities for community and municipal involvement going forward.
When we were talking about a vision, we were saying that if we’re going to succeed and mobilize Canadians to move forward to address these challenges, we have to talk about more than emissions. We have to talk about what the potential economic benefits are that come with rethinking this a little. What are the potential benefits in terms of other environmental benefits that might come across? What are the potential benefits in terms of community building and empowering people, for example, to have more responsibility and knowledge about the energy system and be engaged in managing it going forward?
We think that it’s important to put forward a vision that people can see themselves in, in essence, and people can’t see themselves in descriptions of emissions. It doesn’t mean anything to them. People can see that in doing this, we’re working to ensure that your future energy costs will be lower. We’re working to ensure that your future energy will be cleaner. We’re working to ensure that you will have more control and opportunities to participate in energy systems going forward.
That type of vision — which we’re lacking right now, frankly, in Canada — will ultimately be important to success, because if Canadians are not behind the efforts that are under way, we will have very limited chances of succeeding.
Senator Fridhandler: You’ve commented on establishing targets and how we approach the whole problem, and I would suggest to you that Canada has always tried to be a non‑interventionist in the technology spectrum — that once you get close to commercialization, they’re hands-off but for some big projects. What are your thoughts on the government, comparatively to other jurisdictions, being more involved in the commercialization of getting it all the way through the innovation spectrum?
Mr. Hornung: The report illustrated that other countries are more successful in creating frameworks that enable somebody with a good idea to actually take it, scale it up, move it forward and commercialize it. There has been a lot of analysis in Canada that shows that there is a gap — that we have a lot of good ideas here, and then either someone leaves the country to go develop it somewhere else or a foreign company comes in, takes the technology and does something with it elsewhere.
That is a gap that, yes, we have to address and fill if our goal is to see the creation of Canadian jobs and capitalize on Canadian knowledge and expertise to contribute key solutions to this future net-zero world we’re moving towards. Yes, there is a need to step up in that regard. Completely independent of us, there have been many reports produced that have looked at options to fill the gap that now exists. I would say that if your goal is to ensure that these benefits stay in Canada, that’s an important thing to try to do.
Senator D. Wells: Again, thank you, Mr. Hornung. Given that Canada is slightly less than 1.5% of global emissions — and doesn’t even hit the top 10 in total emissions — do you make comparisons regarding Canada’s scorecard? Do you make comparisons with other countries?
How do you judge the effectiveness of what Canada is doing?
Mr. Hornung: I think there are many ways to assess the contributions that different countries are making to the challenges that we face. You’re right that Canada is a small percentage of overall global emissions, but the vast majority of countries have even smaller percentages than we do.
Senator D. Wells: But they’re not the third-largest producer of petroleum in the world.
Mr. Hornung: No, and that’s a fair comment, and we do acknowledge that. Though on a per capita basis, we’re also very high.
Senator D. Wells: Don’t get me going on per capita, because then we’ll talk about China and their 1.5 billion people or India and their 1.5 billion people. It’s not an accurate measure when you talk about per capita versus total emissions or even percentage.
Mr. Hornung: I would argue that, perhaps, but I won’t do so here.
However, if we look at the emission trends of other countries within the G7, they are making more progress than we are. In some ways, you could say that makes sense because they don’t have the same industrial base that we do, necessarily. Some people might even go further and say they’re not necessarily a cold country with great distances and so on, which also has some truth to it. But having said that, if we are looking at a situation where globally we need to get on a net-zero pathway, sitting at 8% reductions right now is not on that pathway.
We have challenges we must address in moving forward.
The Chair: Thank you, Mr. Hornung. This will have to conclude our hour, but as you can see there’s a lot of interest in what you had to say. We’d like to thank you for being here this evening. We will now go to the in camera session.
Mr. Hornung: Thank you again for your questions and for the opportunity.
(The committee continued in camera.)