It's Becoming Clear Canada Doesn't Have A Game Plan For Clean Technology

Vague, non-specific commitments in recent federal budgets put Canada's economy at a disadvantage to clean tech giants like China.

03/13/2018 12:19 EDT | Updated 03/13/2018 12:26 EDT

The emerging new global economy is that of a clean technology economy — the age of resource economies reaching the end of an era. But you would never know that if one based one's assumptions on the Trudeau administration's Budget 2017 and Budget 2018. No game plan is presented.

Chris Wattie / Reuters
Environment Minister Catherine McKenna.

The story line we are getting from Catherine Mckenna, the environment minister, is that the Kinder Morgan pipeline should proceed while Canada protects the economy. But it remains unclear how a collection of provincial low-carbon price mechanisms is a plan for transition to clean technologies any more than clothing one's children is a complete plan for raising children. There is no such thing as an effective, single-policy fix. This puts Canada at disadvantage with respect to its competitors.

Budget 2017 set aside allocations for "access to financing for cleantech firms," "promoting the demonstration of clean technologies" and "investing in research and development for clean energy and transportation" — $51 million, $25 million and $0, respectively, modest amounts for the 2017-18 fiscal year. Somewhat greater amounts were slated for each of the succeeding four years, ending in 2021-22. These projections lack credibility. The characteristic of a budget is that it's only the amounts dedicated to the upcoming fiscal year that count.

Budget 2018 confirms the absence of specific clean tech commitments by eliminating Budget 2017 allotments for upcoming years, replacing them with the vague budget items like "establishing better rules to protect the environment and grow the economy" and "pricing carbon pollution and supporting clean growth."

China installed more solar generation capacity in one year than Hydro-Québec installed during its entire electrical production existence — all electrical sources combined.

This sharply contrasts with extracts of a speech of China's President Xi Jinping, Oct. 18, 2017:

"We will step up efforts to establish a legal and policy framework that promotes green production and consumption, and promote a sound economic structure that facilitates green, low-carbon, and circular development."

"We will enforce stricter pollutants discharge standards and see to it that polluters are held accountable."

"What we are doing today to build an ecological civilization will benefit generations to come."

True, Xi Jinping is a centralizing dictator who has appointed himself for lifelong rule, but new technological developments become instantaneously international. Hence, the country which takes the lead dominates. This phenomenon applies to China in all clean tech domains.

As implied above, the Canadian model is primarily focused on imprecise federal-provincial-territorial agreements.

China Stringer Network / Reuters
Workers install solar panels at a floating solar plant in Huainan, Anhui province, China.

In 2017, China spent $132.6B on clean energy investments and installed 53 GW of new solar generation capacity, a mind-boggling record considering that the entire electrical production capacity of Hydro-Québec is 47.2 GW. China installed more solar generation capacity in one year than Hydro-Québec installed during its entire electrical production existence — all electrical sources combined.

China has doubled its installed solar capacity target for 2020 to 213 GW. China's windpower sector will likely increase installed capacity by 110.4 GW by 2020, bringing the total to 264 GW for that year.

On electric vehicles, as indicated in my previous HuffPost Canada Blog, China's sales/credit quota system on the minimum percentage of each manufacturer's sales of New Energy Vehicles (NEV) (electric, plug-in hybrid and fuel cell vehicles) begins with 10 per cent in 2019, 12 per cent in 2020 and 20 per cent in 2025. Chinese automakers and their respective foreign partners appear to be lining up to meet the challenge.

Here in Canada, we merely follow in the footsteps of the U.S. government, never having had any rules of our own. Thus, action taken in the U.S. is mimicked in Canada.

The balkanized Canadian carbon-pricing schemes appear weak-kneed compared to what China has in mind.

In the U.S., the new CEO of Ford, Jim Hackett, is lobbying the Trump administration behind closed doors to weaken the U.S. fuel consumption standards for the 2022 to 2025 period. And the soon-to-be outgoing CEO of Fiat Chrysler, Sergio Marchionne, has described the migration to electric vehicles as something which would crush the industry. Rumour now has it that Chrysler is seeking a new partner or purchaser. Will the Canadian and U.S. governments have to bail out the U.S.-based automakers again?

Add to the equation the Government of Canada's lack of interest in supporting domestic electric vehicle technology manufacturing and/or sales. Québec's Lion, an electric school bus manufacturer that uses Québec's TM4 electric direct drive technology, plans to locate a new manufacturing plant in California to take advantage of California's $10-million grant program for new school bus electrification. TM4's main fabrication plant is that of a joint venture in China with Prestolite E-Propulsion Systems.

Not surprisingly, Catherine Mckenna has had to admit that Canada's quick fix by way of carbon pricing is not working, stating that Canada's emissions have risen this year. She blames this result on the inaction of the Harper government instead of proposing sector-specific corrective measures. However, even if one puts aside China's array of multiple complementary sector-specific measures to advance the transition to a green economy, the balkanized Canadian carbon-pricing schemes appear weak-kneed compared to what China has in mind.

China Daily China Daily Information Corp - CDIC / Reuters
An employee assembles an electric car along a production line at a factory in Qingzhou, Shandong province, China.

Chinese clean tech leadership initiatives will soon be topped off the world's largest carbon pricing system. The system will begin with applications to the electrical power sector, but would be rapidly expanded to include high energy-consuming and high energy-emissions industries giving China a capability to meet or exceed the Paris Accord requirement. On latter considerations, the Chinese system will include targets on energy consumption plus carbon and energy intensity. It will also address particulate matter.

While the trading system will offer flexibility on compliance stipulations, violations will be cost-prohibitive. To make the system work, China is training 39,000 environmental enforcement officers.

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The consequences the China-Canada contrast are such that Canada will be left with the unenviable role of importing Chinese technologies while its resource economy, the tar sands in particular, flounders.

This is a long-term problem for generations to come. We are already seeing the signs, the Desjardins Credit Union Cleantech Fund being very telling. For the top 10 countries in which this Canadian fund invests, Canada is not on the list!

Canada's Budget 2018 lacks a coherent comprehensive package of complementary measures.

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