Washington has given Canada’s electric vehicle and clean-tech 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 the point is not to waste it. This weekend, the US Senate voted in favor of the Inflation Reduction Act $369 billion in climate and energy spending, which advocates billed as Washington’s largest initiative to combat climate change. Bonus: despite earlier White House plans to exempt foreign-made cars from the bill’s tax credit for electric vehicle buyers, the final legislation doesn’t leave out important trading partners like Canada. The bill’s passage in the Senate is a major victory for President Joe Biden after months of His green agenda appeared to be overshadowed by fears of soaring consumer prices and an impending recession. The legislation now goes to the House of Representatives for approval before Mr Biden signs it. To date, America’s inability to muster support to do what is necessary to reduce emissions in its economy, the world’s largest, has hindered global progress – and the job has only gotten harder. For Canada, a huge opportunity lies in the incentives of electric vehicle legislation, particularly the tax credit, which amounts to US$7,500 for each new car. Globe editorial: Joe Biden’s climate surprise is good for the planet and Canada Analysis: Can the most far-reaching climate deal in US history finally secure Biden’s legacy? Although Mr. Biden initially appeared to adopt a buy-American-eligibility stance, the new bill specifically extends incentives to electric vehicles made across North America, following persuasive lobbying by Canadian federal and provincial governments and industry officials. who pointed out that a fifth of the approximately two million cars and trucks manufactured in Canada each year are exported to the U.S. The automaker has criticized the incentives, saying they would not apply to enough vehicles on the market today because of the number of auto parts that come from other countries, notably China. But manufacturers could solve this problem – for example, by sourcing parts from North America. The legislation proposals also require critical minerals used to make batteries for electric vehicles to be produced or processed in countries with which the US has free trade agreements. Canadian mining companies are already trying to boost domestic supplies of these minerals. But Canada is still missing a solid game plan to create all elements of its electric vehicle industry. Such a strategy should include the domestic and foreign owners of assembly lines, as well as the suppliers of the components that are bolted there. According to Matthew Fortier, chief executive of Accelerate, an alliance created to map out plans for Canada’s zero-emissions vehicle supply chain, Canada’s plan must also include battery manufacturers, battery recyclers, miners and companies developing technology that goes to electrification Transport Canada. 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 the industry’s success. “The focus must be, for Canada, on defining our position in the North American and global EV industry,” added Mr. Fortier. “We have a once-in-a-generation opportunity here. We have the critical minerals that the world needs, we have a mature and integrated automotive sector and we have governments that believe this is important.” Accelerate includes officials from manufacturing, mining, environmental groups, academia and organized labor. It was created last year in response to concerns that Canada was lagging behind Europe and other regions in developing the infrastructure needed to support an integrated electric vehicle industry, even as Ottawa moved forward with plans to mandate 100% of young people own vehicles. sold here by 2035 will be of the zero-emission variety. To date, federal and provincial governments, notably Ontario and Quebec, have focused on attracting investment in vehicle and battery manufacturing outside of Canada’s borders. Now, Mr. Fortier said, the trick will be to use those investments as hubs for all the other parts of the economy that feed electric vehicle manufacturing, including areas like software development and artificial intelligence. “The way we’re really going to stick and really lead the pack is to recognize that our opportunity is bigger than just assembly, bigger than auto parts, bigger than batteries,” he said. “This will require targeted planning.” Jeffrey Jones writes about sustainable finance and the ESG sector for The Globe and Mail. Email him at [email protected].
