While both nations, Canada and the USA are committed to reducing carbon footprints and driving economic growth, the USA has taken some substantial steps that Canada has yet to match in the green energy investment arena.
Canada requires over $80 billion annually in new investments, with a focus on private sector contributions to address climate change. However, this goal faces challenges due to the U.S. Inflation Reduction Act, which offers attractive returns for investors in the United States.
The cleantech incentives the USA is implementing are proactive and assertive. They are long-term visionary initiatives that will provide the USA with a booming sustainable new energy future for decades to come. Canada must raise the bar in order to not only be competitive in sustainable energy production and fuel exporting but also to claim its rightful place as a global green energy powerhouse.
Despite Canada having a strong target of generating 90 percent of its electrical energy from non-emitting sources by 2030 and reaching carbon neutrality by 2050, the country must develop stronger support mechanisms to reach those lofty goals. That means Canada must be hyper-assertive in developing offshore wind, positioning Newfoundland and Labrador as a world leader in green, wind Hydrogen/Ammonia production, and capitalizing on the country’s already existing prominent energy assets including hydroelectric power and oil and gas.
Canada is one of the richest places in the world in terms of its natural resource assets. It would be irresponsible not to leverage those resources to put Canada at the forefront of global green energy production.
The US Inflation Reduction Act (IRA), a massive bill aimed at boosting clean power and industry with $trillions of investment incentives, is a game-changer for the United States green energy investment climate. How is Canada doing in comparison? Let’s break it down and see what Canada can do to attract green energy investments in the same way as our neighbors in the United States.
In the US, the IRA provides a clear and consistent framework for green investments. Canada needs similar guidelines on carbon pricing, emissions reduction, and renewable energy goals. This will give investors the confidence they need to invest in Canada’s powerhouse of natural resources.
The Inflation Reduction Act (IRA) is a significant U.S. federal legislation aimed at addressing economic challenges, including inflation while promoting clean energy and sustainability. It allocates a substantial budget ranging from $380 billion to $1.7 trillion to boost clean power and industry, re-shore manufacturing, and stimulate economic growth.
The IRA introduces crucial elements such as investment tax credits and production subsidies for clean tech projects, focusing on solar, batteries, clean tech, hydrogen, and carbon capture and storage. These incentives are designed to attract investments and innovation in the clean energy sector, thus having a substantial impact on the investment climate for green energy in the United States.
The IRA’s substantial financial commitments and incentives are expected to drive a surge in investments in green energy projects and technologies in the U.S. It creates a more favorable investment climate for clean energy businesses, encourages job creation, and enhances the competitiveness of the U.S. in the global clean tech sector. This ambitious legislation serves as a benchmark for other countries, including Canada. It underscores the importance of clear policies and incentives in attracting investments to advance sustainability and reduce carbon emissions.
The US offers significant investment tax credits and production subsidies for clean tech projects under the IRA budget ranging from $380 billion to $1.7 trillion to boost clean power and industry, re-shore manufacturing, and stimulate economic growth.
Comparatively, Canada offers attractive incentives and subsidies as well but doesn’t come close to the budget range of the USA. The 2023 federal Canadian budget included a variety of measures to channel public dollars into clean growth projects to encourage private capital to follow. In total, the budget provides a handsome $70 billion to support major investments in clean electricity and clean growth.
Time is of the essence, and quick implementation is necessary to attract credible, transition-aligned investments amid the global race for capital. Here are a number of programs available in Canada to sweeten the investment pot:
In the US, there’s a strong collaboration between the government, research institutions, and private industries to drive innovation. Canada should leverage its research institutions to develop breakthrough technologies and attract investment globally.
Canada must simplify and speed up approval, permitting, and funding processes for clean energy projects. This efficiency will attract domestic and foreign investors. The faster the approval timelines, the more attractive Canada becomes in the eyes of investors. There’s only one chance to be the world’s first producer of green wind hydrogen and ammonia. This is it.
Engaging in international agreements, like the European Union’s Green Deal, can help Canada attract global investments and access innovative technologies. Canada can build on its commitment to the Paris Agreement by aligning with global efforts. Proactive partnerships and collaborative strategic alliances are key to a sustainable green energy production portfolio.
Canada’s abundant natural energy resources, like hydroelectric power, wind, and solar potential, are attractive opportunities for clean energy projects. Showcasing these resources can draw in investors. Canada can promote its rich resources as a unique selling point. Canada has a profound opportunity to be “first” in hydrogen/ammonia wind energy plays. Yesterday was the time to make those plays a reality.
Understand that achieving sustainable energy will come with increased production costs. These increases account for less than 1% of the overall cost of vehicles, buildings, and infrastructure. Canada can subsidize these costs to ensure the competitiveness of Canadian industries. Canada should consider subsidizing the increased production costs of green materials to ensure projects come to fruition as quickly as possible. Subsidized production costs in the short term will bode well for the long-term sustainable green energy industry play.
With the power of wind, Newfoundland and Labrador, Canada is one of the windiest places on earth. This makes the region a unique option that offers wind, land, and water that will supply green wind fuel to Europe and other markets.
The province of Newfoundland and Labrador has a unique opportunity to be a world leader in renewable green Hydrogen/Ammonia production. Many companies are vying for the title of “first” green hydrogen/ammonia producer in the region.
Canada should acutely focus on making its current investment initiatives and project approval processes as quickly as possible to guarantee provinces like Newfoundland take front and center stage on the green hydrogen front. Canada must be more efficient and effective, ensuring they align with global standards and attract the necessary investments that will transform Canada’s natural energy portfolio into a world-class power generator and exporter of sustainable green energy fuels.
Canada possesses enormous potential to become a leader in clean energy investments. By adopting best practices from global trends, such as clear policies, incentives, public-private partnerships, streamlined processes, and international collaboration, Canada can attract investors and drive innovation.
Leveraging its abundant natural energy resources is a key strength that should be showcased. With the right approach, Canada can position itself as a top investment destination in the clean energy sector, contributing to both economic growth and environmental sustainability on a global scale.
Canada has an incredible opportunity to attract green energy investments and compete with the US and other global leaders. By following these steps and implementing clear policies, incentives, and partnerships, Canada can secure its place as a top destination for green energy investments and contribute to a more sustainable future.
As Canada and the USA engage in the clean tech incentive race, the American giant has pulled ahead with its Inflation Reduction Act and various complementary initiatives. While Canada has made efforts to invest in a sustainable future, there are notable gaps in its approach compared to the USA.
To remain competitive on the global stage, Canada needs to streamline its investment landscape, implement transformative projects, and align its policies with sustainability goals. The clean tech industry is a promising path for economic growth and environmental stewardship, and Canada must rise to the challenge to secure its place in this race.
Carpe Diem, Canada!
Did you enjoy this article?