By Dan Woynillowicz

May 13, 2024

Hardly a week goes by these days without a headline documenting a big new investment in the energy transition. Recently, it was Ontario’s turn, with Honda Motor Co. announcing a historic $15 billion commitment to build a comprehensive electric vehicle supply chain from start to finish.

It was another welcome proof point that Canada can compete and win as the global shift to a clean economy continues to ramp up, and evidence that our success doesn’t hinge on government subsidies alone. In fact, our relative predictability and, well, boringness, offer skittish investors safe harbour in a global sea of uncertainty.

Canada isn’t simply a go-to location for these types of big projects because of government support. In fact, Honda will receive less support for this project than it would if it were located in the U.S. Asked why it chose Canada, Honda Motor Co.’s president referenced access to critical minerals, a clean electricity supply, a strong workforce and overall confidence in the Canadian electric-vehicle ecosystem.

Beyond these tangible benefits, there is also the intangible: stability and predictability in an increasingly volatile world. As Chris Bataille, an adjunct research fellow at the Columbia University Center on Global Energy Policy, quipped, “One of things that people keep missing about Canada is that while we’re not cheap, our rule of law and economic and political stability – i.e., our boringness – are normally second to none. That’s important in global finance, where investment risk drives everything.”

In other words, Keep Canada Boring.

The stakes are high, and the competition is fierce. Last year, investors poured nearly $2 trillion into clean-economy projects around the world. This staggering figure illustrates how markets and investors are responding to demand for materials, products and technologies made by sectors powered by clean energy and technologies.

Our relative predictability and, well, boringness, offer skittish investors safe harbour in a global sea of uncertainty.

In recent years, China, the United States, and Europe have all introduced aggressive policies and incentives in a bid to seize as much of the clean-economy prize as possible. In response, Canada has followed suit by playing to its strengths, implementing a suite of policies to build our EV market – consumer rebates, an EV supply regulation, and funding to build EV-charging infrastructure. Canada has also introduced industry incentives to supply our home market with made-in-Canada EVs, including the batteries and low-carbon steel that go into them.

These efforts are bearing fruit. Recent analysis found that Canada’s low-carbon exports have more than doubled in value over the past decade, reaching over $38 billion last year. Leading the way are exports in clean transportation, which rang in at close to $9 billion, double the value exported in 2022. This trend will undoubtedly continue, considering that Canada has now attracted a cumulative total of more than $46 billion invested in the EV assembly and battery supply chain since 2020. More production and more exports mean more jobs and prosperity for Canadians.

But, as recently reported in the New York Times, as political power has swung between the Democrats and Republicans, environmental rules have been subject to “a cycle of erase-and-replace whiplash.” Economists warn that the uncertainty this brings to business is far worse than the regulations themselves. As Marty Durbin, senior vice president for policy at the U.S. Chamber of Commerce, put it, “If the regulatory changes are just whiplash or snapback, it creates a level of uncertainty that makes it very hard to build a vibrant economy.”

Recognizing the degree to which government regulations, policies and programs have been fundamental in establishing Canada’s attractiveness as an investment destination, there’s a very real risk to securing additional projects if these were to disappear or radically change. Preserving our advantage requires that Canada doesn’t succumb to the wild policy pendulum swings that have become the norm south of the border.

No matter the partisan stripe, any government in Canada – federal or provincial – can and should recognize that we have what it takes to be competitive as markets re-orient towards net zero: a clean and growing electricity grid, an abundance of the metals and minerals the world needs, strong trade relationships providing access to global markets, robust regulatory frameworks, the innovative and entrepreneurial mindset of Canadians, and Indigenous economic reconciliation in action.

Leveraging these advantages, coupled with policy stability and certainty in a world where these are increasingly rare commodities, can ensure a resilient and prosperous economy for all.

Contributing Writer Dan Woynillowicz is the Principal of Polaris Strategy + Insight, a public policy consulting firm focused on climate change and the energy transition.