Adedokun Waliyu 
Canada’s climate change policy is now being driven by U.S. President Joe Biden’s absurdly named Inflation Reduction Act, since the legislation isn’t about reducing inflation but providing US $369 billion ($486 billion Canadian) in taxpayer subsidies to energy developers.
Not just to so-called “clean” energy companies in order to reduce industrial greenhouse gas emissions, but to the fossil fuel sector as well — which is pleased the IRA means the U.S. is not going to impose a national carbon tax on its fossil fuel industry, unlike Canada.
The difference is that Prime Minister Justin Trudeau and Environment Minister Steven Guilbeault believe in taking a “carrot and stick” approach to reducing emissions — green energy gets the carrots, fossil fuels get the stick.
Biden’s approach is carrots for everyone.
Prior to the IRA being passed last year, Canada already had a climate change plan — committing more than $200 billion of taxpayers’ money to it, in addition to imposing a national carbon tax/price in 2019.
But now we’re suddenly engaged in an additional, ruinously expensive bidding war with the U.S., offering tens of billions of dollars in taxpayer subsidies to foreign companies.
Biden’s IRA is the reason the governments of Canada and Ontario just committed $14 billion in subsidies to Volkswagen to build a $7-billion electric vehicle battery plant in St. Thomas, Ontario and $16 billion in subsidies to Stellantis to build a $5-billion EV battery plant in Windsor, Ont.
These are mainly in the form of tax credits contingent on production levels, but so many things have to go right to make these investments work — including getting permits for controversial mining operations in northern Ontario’s ring of fire to provide the raw materials for EV batteries — that the whole thing is a crap shoot.
Canada scored a win last year when it got Biden to agree Canadian-made EV vehicles will qualify for consumer tax credits in the U.S. — the absence of which would have destroyed Canada’s auto sector.
But the wave of the future is Canada engaging in never-ending subsidy wars with the U.S. on this file — with an economy nine times the size of ours — putting us in the unenviable position of sleeping with an elephant.
