Big, smart grids, clean tax credits, buy Canadian: green businesses’ to-do list for Carney

The words “climate,” “cleantech,” and “renewables” were largely missing in action during Canada’s federal election, overshadowed in voters’ minds by more immediate concerns around national economic sovereignty in the face of US tariffs, the cost of living, and an overstretched healthcare system. 

Yet, the climate crisis is a thread lock-stitching these top-of-mind issues together: from discussion of cross-country clean power grids, through skyrocketing insurance claims linked to extreme weather, to the ongoing damage being done to Canadians’ health due to fossil-fuel-generated pollution from industry, construction, and cars and trucks.

Congratulating Prime Minister Mark Carney on his election win, Rick Smith, president of policy research thinktank the Canadian Climate Institute, declared the country’s progress under the stewardship of the Liberals now hinged on climate change being recognized as “an economic imperative in this time of global economic upheaval and uncertainty.”

“Canada has an opportunity to act on climate change in ways that grow our economy and support Canadian innovation, invest in our communities, capitalize on our competitive advantages, and expand our trade horizons,” he said, with Canadian-made solutions.

Canada’s National Observer has been canvassing opinion on what the incoming government should prioritize as Carney begins his four-year term. 

The renewables developer: ‘First things first’ for investment certainty 

 Michel Letellier, CEO of Montreal-headquartered renewable energy company Innergex — acquired last month by Quebec pension fund giant CDPQ in a $10-billion take-over deal — believes the new government should tackle “first things first,” namely finalizing the Clean Electricity Investment Tax Credit (ITC).

The ITC, which entered law as a draft last June but is in limbo during prorogation of Parliament, “needs to be finalized straight away,” he said. 

“For the energy transition to accelerate in our country, we need the investment certainty this would provide,” he said, referring to the 15 per cent credit that the program offers for capital spending on renewable energy projects, as well as small nuclear reactors and clean energy storage banks, through to 2035. 

A close second for Letellier is increasing funding to the Canada Infrastructure Bank (CIB) to continue strategic investments that will advance renewables and other clean sectors. Letelier sees the CIB, set up in 2017, as key not only to progressing “new green projects of many types,” but also as a means of creating equity stakes for Indigenous communities in the clean economy of the future.

“This is the ultimate place for First Nations to get finance to participate [in the energy transition],” he said. “This will be super-important, having true Indigenous participation in all we build going forward.”

Letelier also notes a “given” on his list is building big transmission projects, including a nationwide clean energy corridor. 

“More long-distance HVDC [high voltage direct current] infrastructure — and greater transparency on the existing networks around capacity availability on the country’s transmission connection – should both be “key priorities,” he said.

Letellier would also like to see a regulatory shake-up to cut project permitting times to speed up wind, solar and energy storage plant roll-out. 

“This must be made to be less of a struggle.”

He also thinks the government should renew focus on grassroots buy-in to the energy transition, through technologies, such as smart thermostats, heat pumps, and the “power of the microgrid.”

“We need to not only think of more clean power production, though of course this is very important, but also of efficiencies on the consumption side,” said Letelier.

“We can smooth the peak [of power consumption] with smart technologies and then, once we have more and more EVs connected to our houses, we have them as ‘rolling batteries’ connecting and disconnecting from the grid — that will create enormous savings in demand.”

The technologist: Prioritize Canadian and ‘overinvest’ in alternative energy

Ottawa should fast-track investment in Canadian companies, prioritizing support for those with majority shareholders, directors and headquarters in the country, said Mike Andrade, CEO of Toronto-based Morgan Solar.

Morgan is developing power output-boosting AI operations software for solar farms, as well as innovative photovoltaic concepts that can be built into net-zero urban architecture, including energy blinds that can generate electricity while cutting power use for heating, cooling and lighting. 

The company, which started in 2010 developing a mirror-based concentrating solar technology, is backed by Arctern Ventures, a Toronto-based venture capital firm.

“This is the only way to truly make sure that the benefit stays in Canada, because these days it's more about the shareholder wealth that you can create and where that stays,” he said.

Andrade said he understands the need for government support to lure manufacturing like electric vehicles, but the money often goes to foreign multinationals. "They need to make sure that they are earmarking a certain percentage of the money to also go to Indigenous Canadian companies. Maybe 10 per cent or so,” he said.

Governments like to “shovel out large dollars” to big projects backed by major companies with many employees, said Andrade. That strategy doesn’t work for sectors like the automotive industry and energy, he said, which are in the midst of being disrupted by technology revolutions and other forces.

“When faced with change and risk, the answer is to diversify,” he said, suggesting governments divest from “overweighted” traditional oil and gas companies and utilities, and “over-invest in alternative energy sources” to accelerate the transition from fossil fuels to renewables in the country's energy mix.

Andrade flagged similar ideas while working on the Canadian government's cleantech economic strategy in 2016, he noted, but they fell on deaf ears.

“The issue is not the policies but the fact that they get co-opted by the usual suspects,” he said, referring to the fossil fuel industry. “This is because they have the money, the lobbying and the jobs.”

The startup: Turn tariff threat into pension fund ‘buy Canadian’ moment

US President Donald Trump’s tariff war and threats to annex his northern neighbour have spurred a “buy Canadian” movement, said Hanif Montazeri, CEO of Ontario-based Enersion, a maker of next-generation heat pumps. Now, Ottawa should push Canada’s big pension funds to do the same.

The country’s eight largest pension plans hold more than $2.3 trillion in assets but on average invest only 25 per cent domestically. That, according to Bloomberg, compares badly with the 41 per cent invested in the US.

More pension money streaming into the Canadian economy would go a long way in boosting capital-starved startups, not least in the cleantech space, Montazeri said, adding “that even failed ventures contribute to long-term ecosystem growth.”

Enersion sources some of the main components for its innovative nanomaterial-based heat pump from the US, shipped them to a manufacturing plant near Toronto, and then sent the pumps back across the border to US customers. 

That has become vastly more complicated in recent months. “We have been fairly stuck with tariff issues, unfortunately,” Montazeri said. “Have had some of our parts stuck at the border for the last two weeks! Not fun.”

Carney should look to bring in experienced technology innovators with “solid track records” to help draft policies to underwrite clean technology. “They work on the front lines and understand the gaps best,” Montazeri said.

A “streamlined process” to allocate capital to startups would help, too. Start with seed funding and further investments for early-stage companies until the fastest-growing can raise money from equity investors, he said. 

“This would minimize early-stage overspending while sustaining top-tier investments.”

Most of all, Montarzeri added, consult with start-ups who are on the market front lines.  “Ask successful startups to identify funding models that work and the ones that don’t.” 

The critical minerals miner: Forging a supply chain ‘takes coordination and urgency’ 

Canada is rich in critical minerals and the world — including US President Donald Trump — wants them. 

The federal Liberals promised to double exploration tax credits and accelerate approvals for projects key to the energy transition and electrifying the economy. Provinces, including Ontario, Quebec and BC, have made similar pledges to fast-track critical mineral mine approvals. 

“They all say the right words, but how is that going to be operationalized? That’s what I’ll be looking for,” said Christine Burow, chief marketing officer for Torngat Metals, which is developing a rare earths mining project in Quebec and Labrador.  

One idea that got scant attention during the federal election campaign — though widely discussed in the critical minerals and metals sector — is the importance of Canada developing a Canadian rare earths industrial supply chain, linking mining to processing to high-value manufacturing.

Rare earths are a group of 17 metallic elements with unusual magnetic, luminescent and electrochemical properties, which are key ingredients in everything from the permanent magnets used in wind turbine generators, through electric motors, to mobile phones, as well as for a range of military technologies. 

China dominates the mining and processing of rare earths – including making magnets – and wields considerable influence in pricing and exports of the materials, with Beijing’s recent ban on the sale of seven rare earths to the US part of a wider trade war that has triggered a search for alternative suppliers, including Canada.

Torngat’s Strange Lake project, which is developing a deposit holding four of the seven rare earths on China’s banned list, is due to complete environmental impact studies by the end of the year and start production in 2028. 

Rare earth oxides processed at Torngat’s proposed plant in Sept-Iles, Que. are envisioned to be used in making permanent magnets as part of a domestic supply chain for manufacturers of EV batteries to wind turbine generators.

“This is essentially what China did. They decided if you have rare earths, you can control the downstream supply chain,” said Burow.

Burow believes Carney’s government needs to set clear frameworks for development of the country’s critical mineral ecosystem to move the first 10 “active” rare earths projects into production. 

Government financing at this point would be a staunch help in forging the first links in a critical minerals supply chain, she said, as would a floor price for rare earths to “provide stability in a market sensitive to Chinese manipulation.” 

The ability to track rare earths and related products from origin to end-use would also “ensure ethical sourcing throughout a Canadian supply chain,” she added.

“We can do it, but it needs a coordinated effort and a sense of urgency,” Burow said.