Justin Trudeau’s Liberals want to be able to point to immediate, tangible benefits when they roll out “green recovery” policies aimed at simultaneously helping rebuild the economy and save the planet.
That wish helps explain why a certain type of relatively traditional stimulus spending to which short-term job-creation and emissions-reduction figures can be attached – building retrofits, electric-vehicle charging infrastructure – seemingly has momentum in Ottawa heading into fall’s parliamentary session.
But if Canada wants to be a leader – to export solutions that help the world beat climate change’s rapidly ticking clock and not be left behind by a global economy increasingly focused on that imperative – following other countries' lead in decarbonizing some domestic buildings or facilitating more EVs on our roads won’t be enough.
The punch-above-our-weight international impact that Mr. Trudeau has intermittently promised since he took office five years ago requires seizing upon the economic disruption caused by COVID-19 to set in motion something more arduous: The development of a clean-economy industrial strategy. And the Liberals are just beginning to grapple with determining how to go about that – the scale and complexity, opportunity and risk.
Their willingness to engage in that effort, and the very early stage they’re at in it, was evident in a recent interview with Industry Minister Navdeep Bains. Speaking primarily though not exclusively of clean technology, he kept returning to the theme of preparing for the postpandemic economy by figuring out where and how to build “the Canadian advantage.”
“It’s about saying, what do we have in Canada that puts us on a unique footing relative to other jurisdictions?” Mr. Bains said. “How can we leverage that in collaboration with the private sector? How can we de-risk projects? How can we invest in research and development? How can we get more capital?”
This sort of talk, also recently heard from other corners of government and influential think tanks, horrifies adherents to the free-market consensus that took hold in the 1980s. But even before the pandemic, Canada had stayed faithful to Reagan-era philosophy longer than most trade partners, including the United States.
Now, many other governments have begun rolling out green-recovery plans that further embrace interventionism by directing resources toward technological growth in areas where they can build competitive advantage. In part that’s a response to the rise of China (with which Canada has abandoned free-trade hopes) as an economic superpower, the unsettling ways it has treated distribution of medical supplies during the pandemic, and fears of how it could ruthlessly guard the advantage it has already built in producing climate-friendly technologies.
No wonder Mr. Bains keeps talking about building off the experience of co-ordinated domestic manufacturing to meet medical-equipment needs, toward industrial strategy going forward. And no wonder, too, that there are hints of the same message from the other side of the aisle, with new Conservative Leader Erin O’Toole promising a “Canada First” economic strategy.
But the better question than whether Ottawa should be trying to bring that approach to clean-economy transition is whether it has the attention span to do so well – to identify the right technologies to promote, and the holistic strategies needed when flashy funding announcements won’t cut it.
Mr. Bains’s top example of clean-tech potential is EV batteries. His argument is that between Canada’s reserves of component minerals and auto-manufacturing experience, it’s uniquely positioned to develop a supply chain that benefits everywhere from remote mining communities to Ontario’s industrial heartland. So far, most related policies that the government has introduced or floated have to do with increasing domestic demand for EVs, which for the junior partner in a continental auto market might not do much to get them made here. It’s unclear, from talking to him or others in Ottawa, what the government might do to get from Point A to Point B in developing the industry – and likewise with many other forms of clean tech.
Buzzy opportunities are not currently in short supply. There are arguments, from climate activists and industry groups and entrepreneurs, for why Canada is well-positioned to pivot its resource sector toward carbon capture, geothermal or energy storage; why it could lead on decarbonizing concrete or steel; why its agricultural sector could play a role in greening the world’s food supply. (The second example that Mr. Bains cited in the interview, after EV batteries, was plant protein.)
There are also plenty of ideas floating around for policy levers that could help: tax incentives to counter Canada’s relatively low-risk investment culture; tweaks to government procurement processes to help early-stage companies gain traction; retraining to help workers adapt from old industries to new ones; infrastructure investments; higher carbon pricing to reward low-emissions technologies; removal of regulatory barriers; straight subsidization of targeted sectors.
But few of these are going to be one-size-fits-all, or a silver bullet for any particular technology. Targeting clean-tech sectors will require an exercise in understanding and trying to remove obstacles to their growth. Some such efforts will fail, because if there was less risk, the private sector would handle it on its own. Much of it will be unglamorous.
There is the odd example where it’s possible to see the wheels turning. The development of hydrogen as a fuel source may be the best example, with Ottawa working toward announcing a sector-specific strategy this fall. But it’s already behind several other countries in that regard, it remains to be seen how comprehensive its approach will be, and it needs to be moving on several such fronts at once.
Now is not an easy time for a government, especially a highly centralized one, to be starting this kind of heavy lifting. Decision-makers remain preoccupied with emergency management, amid a new surge of COVID-19 cases.
But maybe it’s also an ideal time to do so. With short-term stimulus measures, the Liberals have to worry about jumping the gun while the pandemic is still raging. That’s less a concern when looking further ahead in ways that won’t pay off for a while, which the capacity of a large government in which many people aren’t on the coronavirus frontlines should allow.
Clean-tech strategy needn’t be the centrepiece of Mr. Trudeau’s political messaging this fall. But the hard work has to start happening, if Canada is to emerge from the current crisis better knowing its role in the global effort to avert future catastrophe, with a chance to reap the economic benefits of being at the forefront.