Canada’s climate change policies need more strategic investment. CIBC Capital Markets’ The Hon. Navdeep Bains, Vice-Chair, Global Investment Banking, joined Financial Post to discuss #climatechange issue

The interview text below:

We recently penned a piece for the financial post where you talked about Canada keeping up with our neighbors to the south with respect to the climate policy. You talked about some of the elements that we have to offer with respect to hydrogen and with respect to critical minerals and, and Climate Technology. What do we need to do and why is it so important? To keep up with what the Biden administration is doing?

$150 trillion Larissa, that’s the amount of money that’s going to be deployed over the next few decades for us as a society to reach to net zero. So if we have these ambitious climate targets to deal with the climate crisis, it’s going to require a fair amount of investments in different technologies. And to your point, the inflation Reduction Act that was just introduced in in the US couple on top with the chips Act, as well. As the infrastructure bill, the US is now deploying $79 billion a year on climate technology. So that’s a lot of investments that are being made in the US creating a lot of green jobs. And my take is it’s important for Canada not only to have a plan to reduce our carbon footprint, but also have a plan that will create jobs or bring more investments to Canada. And so as you highlighted, I focused on three areas for Canada. To hone in on we can’t be all things all people but where do we have strengths that speak to our talent, our resources and the technologies that we can truly scale? And I honed in on the opportunities when it came to hydrogen technologies, for sure, carbon sequestration of battery battery battery storage, for example, looking at a whole range of different initiatives around critical minerals as well so these are three areas where Canada can definitely grow. We are waiting on the government’s fall economic statement.

I guess to see what’s going to be there with respect to the Canada Growth Fund, budget 2023 usually comes out you know this better than anyone around the first quarter of the year. What can we expect to see? What do you hope to see what’s to your point? The Growth Fund is a great example of what Canada already has in place. If you look at for example, some of the previous investments we made with the net zero accelerator fund. This is a $12 billion fund to support research and development to support Climate Technologies. And also in Canada we have a price on pollution. So if you take these three measures in into account we have a strong foundation, but we need to do more in order to reach our climate goals. And again, as I say attract investments and create jobs. And so I’m hoping that growth fund looks at what the US has done. In particular if you look at some of the announcements that governments have made in the past, they’ve said that they want to introduce a 30% investment tax credit for clean technologies. So we need to quickly act in order to align ourselves with the US particularly some of the measures they bought for for solar and wind. This provide long term predictability for some of the institutional investors. I think Canada has a unique opportunity in this space as well.

Let’s talk about the bigger picture now. Under the Paris Agreement, countries are committed not just North America, but countries around the world are committed to cutting carbons and greenhouse gas emissions. Does geopolitics change things we’ve seen what happened earlier this year with Russia’s invasion of Ukraine? Does this change the picture? And change the approach now?

For sure, fragmentation is a real issue when it comes to geopolitics. When you’re dealing with the climate crisis, you need to collaborate and bring countries together and have a multilateral approach. And when you don’t have that approach and you have a fragmented situation unfolding internationally, that makes it very difficult because pollution doesn’t end at the borders. And we saw recently with the floods in Pakistan, or the droughts in Africa, the heat waves in Europe climate crisis, and what we’re seeing right now is real and it’s impacting societies globally. And unfortunately, things are progressing a bit when it comes to the geopolitical situation in terms of the lack of collaboration in this space. For instance, when the Speaker of the House of Representatives Nancy Pelosi went to visit Taiwan.

China responded by saying they’re going to withdraw from having a dialogue with the US when it comes to climate change and addressing climate change. So these type of geopolitical issues are real with cop 27 coming around the corner in Egypt as well. Developing countries want some of the wealthier nations to step up. And deploy more resources to support adaptation, for example, and help these countries get off of coal. And so, you know, countries are dealing with inflation or dealing with high energy costs. And so they’re less reluctant to again deploy funds to some of these other nations. And so these are real geopolitical challenges. That we’re seeing before us that makes it very difficult to reach the 2030 and 2050 targets that have been set.

We started off talking a little bit about your former position, and I’m wondering in the time that you were in office, you’ve been a member of parliament since 2004, the Minister of innovation, science and industry from 2015 to 2021. How has Canada’s climate policy energy policy, how has our approach changed? So there’s been a clear recognition that our environmental policy needs to be aligned with that economic policy? And when I was the minister, one of the things that I focused on in government was to say we have to help with the energy transition not only with new technologies and new companies, but also some of our traditional sectors as well. For instance, LSS is a project where I worked with Rio Tinto and will work with Alcoa to come forward with a carbon free aluminum smelting process. And this is an initiative again, that’s transforming that sector, or to work with the automotive sector to bring in the first electric vehicle mandate in Oakville for them to build not only vehicle but batteries here in Canada, and since then, we’ve seen a fair amount of investments in that space. So I think that’s the key component that I envision is that our industrial policy needs to speak to the energy transition and create opportunities across the country. And I would say going forward, the opportunities are enormous. If you look at what’s happening in Atlantic Canada, with the investments in hydrogen, or the electrification of our manufacturing in Quebec and Ontario, coupled with the opportunities in critical mineral extractions. And then in the prairies, if you look at Blue hydrogen and carbon capture, utilization and storage, that supports British Columbia and its ability to export clean energy so we truly have a pan Canadian approach and opportunity here. And I think the key takeaways is that the environment and those environmental goals that we talked about earlier are important, but they need to be closely connected and linked to our industrial and economic policies.

And then just before we let you go, your thoughts on China Canada’s economy, the Bank of Canada continues to raise interest rates in the hopes of cooling some of those inflationary pressures. Your thoughts on the inflation picture we’re seeing the harm that’s been caused by high inflation across the world is not only in Canada, but this is truly a global inflationary environment. And so I think we need to be mindful of the fact that we need to avoid a situation where we have high levels of inflation and low levels of growth for an extended period of time. So that’s something that we’re keeping a close eye on and we’re hearing a lot from our clients. But also I think it’s important to have alignment of monetary and fiscal policy. For example, we just recently saw in the UK that government introduced significant measures, the New Conservative Prime Minister, and his trust and her team introduced new measures around significant tax cuts. And that created a lot of havoc in the markets and the currency also, as well plummeted. And I think that speaks to the fact that if we are trying to bring inflation down it’s important to have alignment between our fiscal and monetary policies as well. But overall, make no mistake, this hurts the the most vulnerable in our society. And so it’s incumbent upon governments to continue to target measures to support the most vulnerable but it’s also important for businesses to have that predictability going forward knowing that inflation will be low so they can make investments and they can execute on their strategic priorities going forward.


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