With the exception of the period devoted to rebuilding countries devastated by the last world war, government policies for industrial development and innovation have mainly aimed at the creation of start-ups (start-ups).
It is frowned upon to help a company that is doing well to become better, and experience has shown that the State is not very adept at choosing the sector which will win the innovation race, any more than the champions of that sector ! What minister could have justified subsidizing a company with the ambition of consolidating the “convenience store” sector as Couche-Tard did? Further proof of the effectiveness of a cross-sectoral policy, such as the Equity Savings Plan (REA), which undeniably contributed to financing the growth of this worldwide success! There are cases, of course, where the state directly supports an industrial sector, such as defense in the United States, or aeronautics in Brazil and Europe, but these policies have remained the exception and not the rule in Western countries.
But the climate emergency has changed everything! This traditional approach has been shaken up by industrial and innovation policies demonstrating vigorous state voluntarism and an appetite for risk unequaled in times of peace.
In the United States, theInflation Reduction Act created a shock wave, which prompted leaders in France, the United Kingdom, Canada and elsewhere in the world to radically change their approach.
States no longer have to choose a sector, the climate emergency imposes it: it is that of energy transition.
States no longer have to hesitate about the budgets to devote to it, because the United States, a capitalist country par excellence, saw Congress adopt in August 2022 a plan of fiscal and financial measures of more than 500 billion dollars, including 400 billion dedicated to the energy transition. This plan reduces the risk of private companies working on the energy transition, and increases the expected return. The vast majority of the funds are intended for producers and distributors of renewable electricity, users of electric means of transport and greener manufacturers as well as more ecological agricultural enterprises. The law aims for a 31 to 44% reduction in GHGs in the next decade, rather than the initially planned 24 to 35%.
This new highly interventionist industrial development policy forced other Western states to react. They immediately entered into competition to attract, retain and promote the growth of companies at the heart of the energy transition. The recent $13 billion subsidy granted by the Government of Canada to Volkswagen to convince it to set up its battery plant in Ontario rather than in the United States is an eloquent example of this.
For concerted action
However, the fight against climate change is a global and not a local issue, because GHGs know no borders. The benefits of discoveries in terms of GHG reduction and green technologies have no more borders, regardless of their country of origin. Obviously, there are private and national gains associated with the decarbonization industry, but its very nature and the challenges of the energy transition should favor concerted action between States rather than unbridled competition to grant the most subsidy. important.
All States would benefit from this international cooperation. It is in this spirit that a framework agreement between Quebec and France on the energy transition must be seriously considered. The two states already have experience with several framework agreements and since they have different strengths and problems in the fields of energy and decarbonization, they have complementary expertise and experience. France is in a situation of energy scarcity while Quebec enjoys relative energy abundance; France must quickly fill its green energy deficit and has already implemented many decarbonization initiatives, while Quebec is lagging behind in this regard.
In addition, French businesses could take advantage of Quebec’s geographic and commercial positioning in North America, just as Quebec businesses would in Europe.
This competition between states to subsidize rapid decarbonization should be favorable to them.
This agreement should cover the fundamental and applied research sectors carried out in our universities and businesses and provide for exchange programs for experts and specialists in green energy, decarbonization, the use of artificial, digital and data science in the energy transition. Our public and private institutions, as well as our cities, would be invited to create a common ecosystem to accelerate technological innovations and identify policies favorable to a successful and inclusive transition. We could even envisage a new model of ownership of private-public-binational companies!
This would allow the sharing of risks and returns associated with large-scale renewable energy projects or decarbonization investments.
I hope that our respective governments will seize on this idea and make it their own, because I believe it holds promise for the necessary and urgent energy transition.
* This text is a summary of an intervention at the conference in honor of Philippe Aghion surrounding the awarding of an honorary doctorate by UQAM on the foundations and economic impact of innovation, on May 4 at Montreal.