Canada Needs a Green Industrial Policy

Bentley B. Allan

Ottawa Citizen, January 27, 2020, A7. Available here.

Canada must take strategic action to support green industry to find its place in the 21st century global economy. It can learn how by paying attention to recent European successes.

 The Liberal government’s climate policy survived the 2019 Canadian election. Indeed, over 60% of the Canadian electorate voted for parties that supported robust climate action. This is remarkable in a country where oil and gas revenues account for roughly 7% of GDP.

 But Canada is behind on its Paris goals and is on track to miss its own modest 2030 targets by 15%. The imperative is clear. Canada needs to vastly increase its climate policy ambition. But how?

 It is now clear that the 21st century will be a global century of decarbonisation. Countries that position themselves in renewable energy and other low-carbon technologies now will benefit. Those that wait, will be left out. To establish a place in this new global economy, Canada must develop a green industrial policy.

 Green industrial policies use investment, regulations, and industry collaboration to bolster technological change. But more than technocratic regulations and procedures, Canada needs a clear project that will focus and mobilize the energies of government, business, unions, civil society, and the research community.

 To do this Canada can learn from recent European experiments in green industrial policy. Take the European battery alliance. The European battery alliance is a collaboration between the European Commission, EU member states, corporations, unions, and the research community. In two just 2 years, the European battery alliance has kickstarted a European battery industry. Prior to the initiative, only 3% of the world’s batteries were produced in Europe, and most of that production was owned by Asian firms. By 2028, Europe is expected to produce 15-20% of global production.

 This is an astounding achievement in a short period of time. It demonstrates the strategic vision and collective purpose necessary to compete in the coming green global economy.

There are two key lessons. First, the European battery alliance is backed by taxpayer money. Germany pledged €1 billion in state aid and France pledged €700 million. The European Investment Bank has provided cheap loans to support the early factories. But the project has also attracted significant private capital investments from car manufacturers and financiers like Goldman Sachs, which has just announced it will spend US$750 billion on green investments.

Canada has initiatives to support green innovation, but these funds are not disbursed according to overarching strategic priorities. The government simply receives loan applications. A green alliance for Canada would mobilize industry and provide funds in targeted areas.

Second, the European alliance rests on creative learning across government actors, businesses, unions, and researchers. The alliance started by mobilizing an existing public-private partnership called InnoEnergy. InnoEnergy is a business network that connects businesses and the research community, supporting innovation and technology deployment. InnoEnergy was charged with surveying industry to formulate a strategic action plan to create a European battery ecosystem. Over 260 companies and research groups have participated in the network, which works closely with the member states and European Investment Bank. The key to successful cross-sectoral collaboration is establishing processes that allow for actors from diverse sectors to learn from one another in a creative, constructive way.

By providing vision, funding, and a process for creative learning, the Government of Canada can forge the ambitious cross-sectoral collaboration that Canada needs to take its place in the 21st century global green economy.

Bentley B. Allan is Assistant Professor of Political Science at Johns Hopkins University.