Canada has to become much more active in building a battery ecosystem

TORONTO—In the transition to a net-zero world, a key role will be played by electric vehicles powered by batteries. This is one of the most achievable ways to reduce greenhouse gas emissions and make progress on our climate goals. The technology is already here. Climate change policy-makers from China, the United States, Japan, Korea, and the European Union are all looking to electric vehicles as both a solution to bringing down greenhouse gas emissions and as an industrial opportunity to create a wave of new investments, innovations, and jobs. By 2030 electric vehicles—from cars and trucks to school buses and public transit—could be firmly established as the new mobility. Ford Motor Co., for example, believes that 40 per cent of vehicles sold in 2030 will be electric. Where will Canada fit in? Canadian consumers will be buying electric vehicles. But will we also be building new companies and businesses, with new jobs, in the fast-growing world of electric vehicles and batteries? So far, words outweigh action. As always, we have big ambitions. But we don’t have a plan. In its climate change “strategy” published last December—'A Healthy Environment and a Healthy Economy'—the federal government boasted of a future where for people around the world “Made-in-Canada" would mean the cleanest and most sought-after green products in quality and sustainability. “There is no country better placed to own that brand than Canada,” it said. But achievement is quite different from mere words. As part of this dream, billions of dollars of federal funding would be used, it said, “for the development of a Canadian battery innovation and industrial ecosystem. This funding will build on Canada’s natural resources and leading expertise to develop an end-to-end battery ecosystem in Canada, from mineral extraction and processing, to research and design, to manufacturing, and all the way to recycling.” Budget 2021 added to this cash pool. Yet we are years behind what other countries are doing. The European Union, for example, established the European Battery Alliance to build a powerful battery industry back in 2017 and, since then, has invested roughly $90-billion, with 15 large-scale battery cell factories now under construction and production forecast to exceed that of China. Moreover, Europe is developing its own technology and intellectual property. In Canada, four years later, we are still talking about doing something similar. (We have also been painfully slow to develop a plan for hydrogens.) Moreover, Industry Canada was unable, when asked, to provide a detailed supply chain for electric battery production or to provide a technology roadmap on changes needed for auto parts for electric vehicles. As David Pathe, who is stepping down as CEO of Sherritt International, told The Financial Post recently, Canada needs to be “more strategic about how we develop that industry from a national industrial policy perspective,” adding that “it needs to be more than raw materials.” Canada, he said, should be more ambitious. Last year, Canada and the U.S. signed the Canada-U.S. Joint Action Plan on Critical Minerals Collaboration, updating it this year to put greater focus on critical minerals for electric vehicle batteries, with lots of warm words about being in this together. But Canada could still end up as largely a raw material supplier since the U.S. impedes Canadian exports of manufactured products. For example, Lion Electric, the Quebec manufacturer of electric school buses, is building a factory in Illinois, with an expected 745 jobs and a production capacity of up to 22,000 vehicles a year. U.S. 'Buy-American' protectionist polices make it hard for companies like Lion to export to the U.S. This issue must be resolved if there is to be true North American cooperation in jointly building a battery ecosystem. The Winnipeg-based International Institute for Sustainable Development says in its recent report, '10 Ways to Win the Global Race to Net-Zero', that Canada has to become much more active in building a battery ecosystem. “We are well behind leading nations, and the competition with the United States will undoubtedly be fierce” for investments despite agreements on critical minerals. “Lots of talk, limited action,” is the way Clean Energy Canada describes government policy so far. While the 2021 federal budget, for example, lists a number of programs with a total potential of grants and other initiatives running into billions of dollars, much of this money is intended to pay foreign corporations to invest here. But we must also build Canadian companies with their own proprietary technologies if we are to win. Clean Energy Canada—a centre at Simon Fraser University working with businesses, researchers, and others to promote clean energy technologies—recently assembled executives from the auto and other battery-related industries, including Magna International, GM Canada, the Automotive Parts Manufacturers Association, the Mining Association of Canada, Lion Electric, and Lithion Recycling, to set an agenda for building a battery supply chain in Canada. What it found was that “there is very limited activity happening at any stage along the supply chain. Notably, none of Canada’s mined minerals are feeding into the battery value chain, Canada generally lacks metal refining and chemical processing capacity related to better grade materials,” adding that “Canada doesn’t have any significant active material manufacturing and is not producing battery modules, cells, or packs at commercial scale.” There is no plan. At the same time, it warned, U.S. states will be competing hard for battery giga-factories where Ford and GM are already investing billions of dollars in such plants. And while there is much boasting by the government on Canada’s mineral base, “we’re seeing no significant investments in building and bringing future capacity online,” the Clean Energy report said. Likewise, it said, Canada needs an activist industrial policy which would include “an industrial roadmap or electric mobility strategy that identifies where the country wants to go and how to get there,” including development of its own proprietary technology. So that’s the message: Ottawa needs to wake up before this becomes another lost opportunity. David Crane can be reached at crane@interlog.com. The Hill Times