Bold aspirations are not enough

TORONTO—It is quite a promise. But in its recent Throne Speech the Trudeau government pledged it would “ensure Canada is the most competitive jurisdiction in the world for clean technology companies.” It didn’t spell out how we would know it had kept its promise. Until we know, it’s just a boast. While promises come easy, achieving success is quite another matter. Bold aspirations are not enough. Climate action, the Throne Speech said, “will be the cornerstone of our plan to support and create a million jobs across the country.” But how will this happen? What is the strategy? Is there a plan? It makes a great deal of economic sense to use the transition to a low-carbon world as an opportunity to create new sources of good jobs, new export potential, and the wealth needed to fund valued public goods such as health care and education. Since its election win in 2015, the Trudeau government has boasted of its plans for a green economy—a world leader, no less—and has committed billions of dollars to the project. But while many of the measures may make sense, we have little idea of what this spending is accomplishing overall, or whether we are getting good value. There appears to be no overarching strategy—and no set of technology priorities or innovation milestones which would allow Canadians to see whether programs were working or not. One sign of whether policies are delivering value for Canada is whether many of these green policies are leading to the creation or scaling up of Canadian-owned companies so that production of innovative green technologies also occurs in Canada—rather than facilitating R&D branch plants for foreign companies that will use the intellectual property for production elsewhere. For example, while reiterating the government’s worthy goal of achieving net-zero carbon emissions by 2050, the Throne Speech stated that “a good example of adapting to a carbon-neutral future is building zero-emissions vehicles and batteries.” This should mean that Canadian companies are developing and producing some of the technologies. While the decision by the Ford Motor Co. to convert its Oakville, Ont., factory into an assembly plant for electric vehicles, with generous subsidies from government, is welcome because it means the plant will not be shut down, it’s not clear if new Canadian technology, including batteries, will be in these vehicles. Yet the Throne Speech gives the impression that Canada will soon be producing batteries for electric vehicles. “Canada has the resources—from nickel to copper—needed for these clean technologies. This—combined with Canadian expertise—is Canada’s competitive edge,” it says. While we have mineral resources, this is not the same as actually making Canadian-designed batteries. In fact, there is little capacity in Canadian companies to design and build batteries, while our leading university centre for lithium battery research—Dalhousie University—is tied into a research and development commitment with Tesla, helping the U.S. company advance its battery technology. This is another example of how foreign corporations use Canadian talent and universities to develop intellectual property that will be used to create jobs and wealth elsewhere. It is also another example of a bigger problem—our failure to use public policy to build Canadian companies that have the intellectual property to provide good jobs at home and export sales abroad for a higher-value economy. Too much of our knowledge is used to benefit workers and wealth creation in other countries. You could see this in the Trudeau government’s approach to development of the Toronto waterfront as a smart and green city-within-a-city. Rather than using this as an opportunity to build up Canadian companies to lead the project and develop clean and smart technologies for urban development worldwide, the Trudeau government favoured turning the project over to Sidewalk Labs, a subsidiary of Alphabet/Google in the U.S. Hydrogen fuel cells provide another example. The Trudeau government is planning a hydrogen/fuel cell strategy, finally recognizing the possibilities of this technology as part of the green transformation. Yet this is catch-up. Canada, in the mid-1990s, had a lead on much of the world. But our public policy was not supportive while other countries invested and Canada’s early lead was lost. Ballard Power’s major shareholder today is a Chinese company while Hydrogenics, the other leading Canadian player, was recently taken over by a U.S. multinational. For both companies, almost all of their revenue came from foreign sales. Accelerating the green economy means moving fast on innovation and by scaling up the most promising Canadian technologies and companies if we are to benefit. Smart environmental policy is the starting point because this creates the market for green innovation. As carbon pricing pushes up gasoline prices, for example, this create the incentive for automobile companies and other innovators to create electric vehicles or alternatives, such as Uber and Lyft. But governments also have many other tools at their disposal. They can provide grants and loans, or other incentives, to develop and use clean-energy technologies, including support for research and development and demonstration projects. They can use procurement policies and demonstration projects that favour innovative Canadian companies. They can set stricter building codes. They can provide tax incentives to buy electric vehicles or install solar panels. They can set energy efficiency standards. The challenge is to employ these tools in the most strategic way. Canada is doing a number of these things, but we don’t know how well they are working. And in some ways the Trudeau government has been slow to see the role of government as first customer, using public procurement and demonstration projects to help innovative young Canadian companies test or scale up their technologies. Pursuing the green economy is the right way for Canada to go. But we need much clearer priorities—including the development of Canadian companies—and ongoing review and improved transparency to track the value that various policies are supposed to deliver. We don’t see that today. David Crane can be reached at crane@interlog.com. The Hill Times