Global uncertainty means Canada must rise up and compete in the new era of ‘Friendshoring’ – National

The federal government is looking to capitalize on a new era of « friendshoring » among democratic nations with a new set of clean technology and natural resource investment incentives designed to try to keep Canada competitive in a global economy increasingly focused on ecology.

In Thursday’s fall economic statement, Finance Minister Chrystia Freeland, who is also the country’s deputy prime minister, said the global economy is at a « turning point » and Canada can be on the point of benefiting from this change with its rich reserve of resources. which are in high global demand.

« We are entering an era of friendship – a time when our democratic partners and their most important businesses seek to shift their reliance from dictatorships to democracies, » Freeland said in a prepared copy of his speech to the House of Commons.

« We have the natural resources to fuel the global transition to net zero and to support our allies in their energy security as this transition continues to accelerate. »

Global economic tensions and the push by democratic countries toward net-zero economies underpin many of the new initiatives outlined in the Trudeau government’s fall economic statement.

The document describes how inflation and record interest rates are slowing economic growth, but also how global forces such as Russia’s war with Ukraine and supply chain problems have also taken their toll. with efforts to stabilize the cost of living for Canadians.

Canada is not alone in struggling with these volatile global market conditions, but it can benefit from countries and private sector companies looking to invest in green technologies and clean energy solutions as they seek to prioritize trade and investment with countries that share their values. , Freeland said in his prepared remarks.

But the US Inflation Reduction Act also appears to have played a role in spurring Canadian efforts to better follow the US in clean energy investments and incentives.

The bill includes nearly $400 billion in tax incentives, grants and loan guarantees for clean energy sectors, including power generation, electric cars and battery manufacturing.

Ottawa has been gripped by a lack of business investment in Canada in recent years, a senior government official told reporters Thursday.

The US inflation bill, designed to boost foreign direct investment, was a game-changer by creating a « gravitational black hole » for foreign capital, the official said, describing it as an « aggressive and ambitious industrial policy » the United States.

That’s why Thursday’s fiscal update includes measures to increase investment in Canadian green technologies in addition to new initiatives focused on clean energy, electric vehicles, battery manufacturing and critical minerals.

The Fall Economic Statement proposes a refundable tax credit equal to 30% of the capital cost of investments in electricity generation and storage systems, including solar, wind and hydro solutions, as well as low-carbon heating equipment, such as heat pumps and solar systems. heater.

This tax credit will also apply to zero-emission industrial vehicles and related charging or refueling equipment, such as hydrogen or electric heavy-duty equipment used in mining or construction.

To benefit from the full 30% credit, companies will have to respect certain working conditions in order to guarantee the creation of “good jobs” thanks to this measure.

The financial update also outlines the design, operations and investment strategy of the $15 billion Canada Growth Fund announced in Budget 2022.

The mandate of this fund will be to make investments to attract private sector investment in Canadian companies and projects that reduce emissions and accelerate the development of key technologies, such as low-carbon hydrogen and carbon capture. and projects that take advantage of Canada’s natural resources. .

In another move to match the US Inflation Act, Ottawa reaffirmed its commitment – ​​announced in the 2022 budget – to establish an investment tax credit for clean hydrogen production.

In the coming weeks, the Ministry of Finance plans to launch a consultation on the best way to implement this tax credit based on the carbon intensity of the life cycle of hydrogen.

Freeland says she believes the global transition to net-zero technologies and the trend of democracies banding together to reduce dependence on foreign dictatorships represent « the single most important opportunity for Canadian workers and Canadian businesses. for a generation. »

« With significant investment tax credits for clean technology and clean hydrogen, we will make it more attractive for businesses to invest in Canada to produce the energy that will power a net-zero global economy, » said said Freeland, adding that the country is at “a pivotal moment. »

The global green transition calls for an industrial transformation on a scale only comparable to the industrial revolution itself, and Canada has the labor, natural resources and manufacturing base to lead this. transformation, she said.

« We can lead the global economy in a way that far exceeds our footprint as a country of just 39 million people… But we can’t wait, because time really doesn’t wait. »

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