The deployment of tens of billions of dollars towards “green economy” projects in the United States provided for in the budget law to fight inflation (Inflation Reduction Act or IRA), recently adopted in Washington, could harm Quebec’s ambitions in certain sectors.
According to an analysis prepared by the Institut du Québec, in partnership with the Alliance Switch, which brings together business and environmental stakeholders, key sectors of the green economy in Quebec such as hydroelectricity, the production of green hydrogen and the development of the “battery sector” to support the electric vehicle industry could see their competitiveness called into question by the scale of the budgets and projects provided for in the American legislation.
“Although the IRA (Inflation Reduction Act) promotes North American partnerships, it is not certain that Quebec companies will be able to systematically take advantage of this new market,” warns Emna Braham, director general of the Institut du Québec (IDQ).
“For example, the IRA does not contain any clause to restrict to North America the supply of specialized and commercial electric vehicles such as trucks and buses, a niche in which Quebec is trying to position itself. »
Hydroelectricity
In the renewable energy market, note the IDQ and the Alliance Switch in their analysis report, “Quebec’s hydroelectricity could be less competitive” if the massive investments in public funds planned for solar and wind energy in the United States United to increase production by 40% within ten years was to “bring down the price of this energy over time, whereas according to Hydro-Québec’s forecasts, the cost of electricity supply should rather increase in Quebec”.
green hydrogen
In the emerging green hydrogen sector, Quebec’s business ambitions could also be undermined if, “with the support of government aid, American green hydrogen sells for half the price within ten years than ‘It does not currently cost Quebec to produce this gas,’ warn the IDQ and the Alliance Switch in their report.
In this context, underlines Luc Belzile, principal economist of the IDQ, “it remains to be seen to what extent Quebec is ready to commit public funds to allow this green hydrogen sector to be competitive with the international “.
Battery sector
According to the IDQ and the Switch Alliance, the scale of the financial aid for green economy projects provided for in the American budget law (IRA) could also “put a spoke in the wheel of the Quebec government, which is trying to attract battery cell producers” as part of its battery sector development strategy.
How ? “To attract such investments, Quebec could find itself in direct competition with certain American states which can count on additional incentives” from the federal government in Washington.
In such a context, the IDQ and the Alliance Switch anticipate, “it may be that Quebec would benefit from concentrating on certain aspects of its strategy [de filière batterie] and to neglect others”.
Technical minerals
Analysts from the IDQ and the Alliance Switch anticipate that the mining sector in Quebec will benefit from the increased demand for technical minerals essential to the production of electric vehicles. This increased demand could stem from the improvement of tax credits for American buyers and users of electric vehicles.
Since the demand for such minerals is already on the rise, this is a real business opportunity for Quebec.
Denis Leclerc, President and CEO of Écotech Québec, member of the Switch Alliance
However, he says, “to take full advantage of it, Quebec will have to develop its technical minerals by transforming them into products with high added value, while ensuring compliance with environmental standards and the social acceptability of the projects. of extraction and transformation”.
“Investors and clients of technical minerals mining companies are increasingly considering environmental, social and governance (ESG) factors in their choice of mining projects and technical minerals suppliers,” said Martin Vaillancourt, Director General of the National Group of Regional Environmental Councils of Quebec and member of the Switch Alliance.
“This is why Quebec has every advantage in not reducing its requirements in this area. On the contrary, technical mineral companies that comply with the Quebec framework could even get a head start with investors. »
The most affected Quebec policies
Plan for a green economy 2030
This is the framework policy of the Quebec government for the fight against climate change and adaptation to it. It aims to reduce GHG emissions in Quebec by 37.5% in 2030 compared to 1990, by relying heavily on the electrification of transportation.
Battery sector development strategy
This Québec strategy is based on three priority actions: 1) exploit and transform minerals to manufacture battery components; 2) produce electric commercial vehicles; 3) develop battery recycling using avant-garde Quebec technologies.
Plan for the beneficiation of critical and strategic minerals
While the demand for critical and strategic minerals is growing rapidly, this plan aims to position Québec by promoting the exploration, development and exploitation of these minerals, as well as their recycling and optimal use.
Export Recovery Action Plan.
This plan aims to raise the value of exports to 50% of the GDP of the Quebec economy.
Among the sectors targeted as priorities, that of clean technologies and the green economy receives particular attention.
Source: analysis by the Institut du Québec and the Alliance Switch