Yahoo Finance Freeland promises 'more carrots' as Ottawa's moves to boost green energy called 'cumbersome'
Ottawa will have to dangle “even more carrots” in its bid to attract capital to Canada for investments in the green energy transition amid a global race to decarbonize, Finance Minister Chrystia Freeland told a crowd of business leaders in Calgary Wednesday.
Freeland, who was born in Alberta, made the comment while fending off a pointed question during the Calgary Chamber of Commerce event which characterized the Trudeau government’s approach to the green transition as “cumbersome” compared with the more straightforward incentives contained in the U.S. Inflation Reduction Act that are expected to drive investments in emissions reductions and hydrogen production.
Specifically, Freeland was pressed about her government’s emphasis on the “stick” of carbon pricing, rather than the “carrot” of incentives such as the production tax credits deployed on a large scale south of the border in August.
“I play for Team Canada — so I am never going to accept a question that starts with the notion that our approach is more cumbersome than the American approach,” Freeland replied. “Our approach is better, of course.”
Freeland said Canada has steadily invested in the energy transition since 2015 and that more incentives are coming in next year’s federal budget.
“We need to always be the most competitive, the most attractive place for people to invest and that’s why we have been looking, and we’ll continue to look, very closely at the Inflation Reduction Act,” Freeland said. “We want to be sure that in that global race for capital, Canada remains extremely attractive — and that does mean putting even more carrots in place.”
Freeland’s visit to the home turf of the Canadian oilpatch was part of a cross-country tour to promote the federal government’s latest fiscal update, which proposed new tax credits to support capital investments in clean technology and hydrogen.
Freeland also talked up the government’s proposed $15-billion Canada Growth Fund (CGF) aimed at pulling in private capital for investments in innovative or more risky green projects.
The proposed fund has been welcomed by oilpatch leaders and other large emitters for its potential to provide certainty to companies looking to make big investments in decarbonization projects that rely on future carbon prices, through mechanisms like carbon contracts for differences. The contracts would oblige the government, through the CGF, to guarantee a future carbon price, or pay the difference if the market price falls short.
“The idea will be to de-risk necessary investments in the green transition,” Freeland said. “We think that is the right role for the government to play in this really important transition,” she continued. “The Canada Growth Fund is going to have investors with real private sector expertise, who are able to put some of those contracts in place and I think it’s going to be really important for Alberta and for Canada.”
The finance minister also faced questions about her government’s willingness to support a Canadian liquified natural gas export industry. Freeland spoke at length about the cascading impact of sanctions on Russian oil and gas as a result of the war in Ukraine and how it has disrupted the flow of energy supplies to Europe — as well as to poorer, developing countries that are unable to compete with Europe in bidding to secure alternative sources of natural gas.
Consequently, developing nations are having to revert to burning coal to meet their energy needs, Freeland said. She also pointed to recent reports of rolling blackouts and social unrest in parts of Asia thanks to a shortage of gas supplies.
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In light of those concerns, Deborah Yedlin, the chamber’s president, said development of Canadian LNG could be viewed as a “moral imperative” — a sentiment with which Freeland said she agreed.
“Canada’s rich endowment in natural resources is an economic opportunity for us,” Freeland said. “It’s also an opportunity for us to contribute to climate action and it’s an opportunity for us to be supporting our democratic allies.”
Speaking to reporters following the event, Yedlin acknowledged she was disappointed that Freeland didn’t talk about reviving previously shelved LNG export projects, such as the Énergie Saguenay LNG plant and export project proposed for Saguenay, Que., that was ultimately rejected by Ottawa earlier this year. But she added that Freeland understands the role LNG will play in decarbonizing energy systems.
“I want to believe that the minister does see it in that light and that she has not shut the door,” Yedlin said. “And from my perspective, I think we do have an advocate at the cabinet table in terms of developing Canada’s LNG.”
mpotkins@postmedia.com Twitter: @mpotkins
