Countering China’s clean-tech dominance continues its rise to top of Canada-U.S. agenda

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A senior U.S. official spent his time in Ottawa this week carting around a printout from the International Energy Association.

It was a chart forecasting international supply chains for clean technologies in 2030, based on existing and announced projects. And it showed China dominating sectors pivotal to the global transition to a low-carbon economy – including supplying more than two-thirds of batteries and key minerals such as refined cobalt and lithium that go into them, and similar shares of renewable-power components.

Geoffrey Pyatt, the U.S. Assistant Secretary of State for Energy Resources, was here to speak to a Canadian Climate Institute conference. But he seized the opportunity to meet with federal officials and emphasize working together to shape future trade networks, before it’s too late.

“Canada occupies a uniquely significant role vis-à-vis the United States on these issues,” Mr. Pyatt said in an interview, pointing to intertwined continental industries and Canada’s wealth of critical minerals. And he said that requires overcoming the shared problem of North American industries moving on slower timelines than Chinese ones.

Mr. Pyatt’s effort was the latest evidence of how counterbalancing China on clean tech has taken an increasingly central role in Washington’s relationship with Ottawa, on the heels of a similar message delivered last month by U.S. ambassador David Cohen.

And it shed some light on Washington’s priorities, as it attempts a balancing act with Beijing on climate-related matters heading into the COP28 climate summit in Dubai later this month.

Negotiators from the U.S. and China met this week to seek common ground in advance, as Joe Biden’s administration simultaneously tries to forge co-operation on reducing carbon emissions.

Mr. Pyatt, who manages diplomatic relations around energy policy, nevertheless didn’t hold back in warning that energy security is threatened by reliance on an unreliable trade partner. A former ambassador to Ukraine, he likened it to Europe’s mistake depending on Russian oil and gas exports.

A hint of that danger – albeit much milder, for now, than the Russian invasion of Ukraine that caused a European energy crisis – came with China’s announcement last month of export controls on graphite, a key component in electric-vehicle batteries.

Mr. Pyatt gave the impression that meetings with Canadian officials, including a sit-down with Deputy Minister of Natural Resources Michael Vandergrift and a casual conversation with Natural Resources Minister Jonathan Wilkinson, reflected shared recognition of the need to develop domestic supplies of graphite, cobalt, lithium and other critical minerals. Ottawa is currently rolling out a $1.5-billion strategy to help with infrastructure and other mining-project needs.

But he also acknowledged much lengthier regulatory process in Canada (and the U.S.) than in China and the developing economies where it has built its mineral empire.

There is merit to moving more deliberatively to ensure high environmental and ethical standards, Mr. Pyatt said, but it can’t be at the expense of the market fully taking shape before opportunities are realized. And there is added urgency, he said, because hundreds of billions of dollars in U.S. subsidies for low-carbon sectors are lined up for a decade only.

“This is a commodity industry that typically operates in 10- or 15-year planning cycles,” he said. “We’re asking them to move faster, and that collides with the regulatory and permitting processes in both of our countries. But it’s certainly something that President Biden has taken on as a priority across the administration.”

Encouraging Ottawa to do likewise was not Mr. Pyatt’s sole message during his visit. He also spoke about Canada’s role – which he said has been strong – in helping position Ukraine for a postwar role as an energy exporter, an effort the White House tasked him with leading on the U.S. side.

Heading into COP28, there were also talks around co-ordinating action on curbing methane emissions from natural gas production, and leading international efforts to reduce reliance on coal power.

It’s on accelerating the shift away from coal that Washington is primarily trying to encourage Beijing to up its environmental game – to join a “race to the top” in climate policy, per language of Mr. Biden’s that Mr. Pyatt invoked – even as it tries to slow China’s conquering of clean tech export markets.

But on this front, too, Mr. Pyatt sounded more cautionary than conciliatory, warning that all the investment in decarbonization – through imports or otherwise – could go for naught unless China does its part domestically.

“All the progress that we’re making in Canada or in the United States on energy transition and decarbonization is gonna count for nothing if we can’t get a handle on the large volume of coal power that is still being built across Asia,” he said, “most of which is driven by China.”