Opinion: Why Biden’s landmark climate bill could be a big win for Canada

GM workers use human assistance automation to weld vehicle doors at the General Motors assembly plant during the COVID-19 pandemic in Oshawa, Ontario on March 19, 2021.Nathan Denette/The Canadian Press

Washington has given Canada’s electric vehicle and clean technology industries a big gift, in the form of a landmark climate bill that creates new incentives for American consumers to buy battery-powered cars. Now it’s just a matter of not wasting it.

This weekend, the US Senate voted in favor of Inflation Reduction Act US$369 billion in climate and energy spending, which supporters have heralded as the biggest climate change initiative ever launched by Washington. Bonus: Despite previous White House plans to exclude foreign-made cars from the bill’s tax credit for electric vehicle buyers, the final legislation doesn’t leave big trading partners like Canada on the key.

The bill’s success in the Senate is a major victory for President Joe Biden, after months of he It appeared his green agenda was overshadowed by fears of soaring consumer prices and a looming recession. The legislation is now going to the House of Representatives for approval before Mr Biden signs it.

To date, the failure of the United States to muster support to do what is necessary to reduce emissions in its economy, the largest in the world, has held back global progress – and the task has only s ‘aggravate.

For Canada, a huge opportunity lies in the legislation’s electric vehicle incentives, including the tax credit, which amounts to US$7,500 for each new car.

Globe Editorial: Joe Biden’s surprise climate win is good for the planet and good for Canada

Analysis: Can the most ambitious climate deal in US history secure Biden’s legacy after all?

Although Mr. Biden initially appeared to take a buy American stance for eligibility, the new bill specifically extends incentives to electric vehicles built across North America, following persuasive lobbying by Canadian federal and provincial governments and industry officials, who pointed out that four-fifths of the approximately two million cars and trucks built in Canada each year are exported to the United States

The auto industry has criticized the incentives, saying they won’t apply to enough vehicles on the market today due to the number of auto components coming from other countries, including China. But manufacturers could solve this problem, by sourcing North American parts, for example.

The proposed legislation also requires that critical minerals used to make batteries for electric vehicles be produced or processed in countries with which the United States has free trade agreements. Canadian mining companies are already looking to bolster domestic supplies of these minerals.

But Canada is still missing a solid game plan to build all elements of its electric vehicle industry. Such a strategy should involve domestic and foreign owners of assembly lines, as well as suppliers of the parts bolted to them.

According to Matthew Fortier, CEO of Accelerate, an alliance formed to develop Canada’s zero-emission vehicle supply chain plans, Canada’s plan must also include battery manufacturers, battery recyclers, miners and companies that develop technologies that go into electrifying Canadian transportation.

The strategy must include input from industry and government, he said, as well as other segments of society across the country that have a stake in making the industry a success. “The focus for Canada should be on defining our position in the North American and global electric vehicle industry,” added Mr. Fortier.

“We have a unique opportunity here. We have the essential minerals the world needs, we have a mature and integrated automotive sector, and we have governments that believe it matters.

Accelerate includes leaders from manufacturing, mining, environmental groups, universities and unions. It was created last year in response to concerns that Canada was falling behind Europe and other regions in developing the infrastructure needed to support an integrated electric vehicle industry, even as that Ottawa was moving forward with plans to mandate that 100% of new vehicles sold here by 2035 be of the zero-emission type.

To date, federal and provincial governments, including those of Ontario and Quebec, have made efforts to attract investment in vehicle and battery manufacturing from outside of Canada. Now, Mr. Fortier said, the trick will be to use those investments as hubs for all the other parts of the economy that fuel electric vehicle manufacturing, including areas like software development and intelligence. artificial.

“The way we’re really going to catch up and lead the pack is to recognize that our opportunity is bigger than just assembly, bigger than auto parts, bigger than batteries,” he said.

“It’s going to take some focused planning.”

Jeffrey Jones writes about sustainable finance and the ESG sector for The Globe and Mail. Email him at jeffjones@globeandmail.com.

Leave a Comment

Your email address will not be published.