The next few weeks will be crucial for the governments of Quebec and Canada and the green transition. With investments of US$370 billion in the green economy by 2032, theInflation Reduction Act (IRA) aims not only to accelerate the energy transition, but also to repatriate certain strategic supply chains to the United States.
The European response was swift: the European Council proposes to strengthen the competitiveness of European industry to net zero emissions and to support the rapid transition towards climate neutrality. The plan is built around four pillars: a predictable and simplified regulatory environment; faster access to finance; improving worker skills and opening up trade for resilient supply chains.
These reindustrialization policies, through the decarbonization of the economies of the world’s two largest economies, are changing the balance of power with third countries like Canada.
From upstream to downstream of the major industrial value chains, from the extraction of minerals and critical materials, through the transformation and manufacture of everyday products, the IRA effect and the European Green Deal will be gigantic.
Our governments must make choices and act decisively. Switch, the alliance for a green economy, which for 10 years has brought together stakeholders from the worlds of business, the environment and finance, considers that Quebec and Canada have critical and strategic natural resources, manufacturing capacities with a reduced carbon footprint, distinctive economic niches, clean technologies ready to compete on an international scale, not to mention a reserve of creativity and innovation to make people blush.
In order to realize this full potential and while respecting eco-responsibility, programs and support for targeted companies or industrial projects must certainly benefit from an incentive tax environment and increased funding, but above all from criteria for allocating these precious funds linked to the transition to a greener and more inclusive economy. Successfully decarbonizing our domestic industry requires massive and sustained investment efforts to ensure access to the right energy, development and access to the right technologies, while ensuring the responsible and sustainable adaptation of our labor -work. Private capital, which already cannot cope with the task, is now being attracted elsewhere, thus weakening the transition of Quebec and Canadian industry as well as the jobs of our middle class.
Similarly, following the example of European and American partners who are not shy about introducing new green tax incentive measures, governments here will have to optimize their tax structure, by protecting or even reducing the overall tax burden, and by transforming it to encourage taxpayers to adopt more sustainable behaviors.
Switch suggests that the government set up a working group whose mandate will be to optimize eco-taxation, in particular by continuing the gradual and predictable reduction in industrial emissions, by promoting the production of biofuels, by broadening access to accelerated depreciation capital expenditures to targeted sectors and the research and development tax credit for clean technology SMEs and by coordinating changes to municipal eco-taxation.
Some will say that soaring interest rates and inflation require immediate support measures for the population. With the climate emergency and the economic context, a sustainable approach is needed to prepare for the green transition and help ensure that our workers can continue to thrive in a resilient way and will not have to face industrial relocations which could prove disastrous for Canadian households economically, socially and environmentally.
The report of the Intergovernmental Panel on Climate Change (IPCC) released last week demonstrates that without immediate and significant reductions in greenhouse gas emissions, it will be impossible to limit global warming to 1.5°C. The Switch Alliance recalls that a serious change of direction is urgent and necessary, the current context imposes a redefinition of our industrial policy in order to maintain and accelerate the ecological transition allowing to decarbonize our economy.