The historic climate change bill just passed by the US Congress could have implications for cementing Canada's role in the transition to clean transportation.
passed legislation last week that established tax incentives for electric vehicles assembled in North America.
This North American approach has made several headlines by offering an amicable solution to the months-long conflict between Canada and the United States.
What received less attention in the bill was the big money, including hundreds of millions of dollars, to revitalize a new domestic industry of parts for electric vehicle batteries.
Ripple effects could eventually reach across borders to distant Canadian mining communities.
At stake is geopolitical rivalChina to power the future of automobiles. It's a growing US concern about becoming dependent on important minerals.
President Joe Biden invoked the US Defense Production Act earlier this year, a project to reduce US dependence on rival nations. made funding available.
He now has the funding to do it: $500 million after the recent pushed another $600 million to This upcoming law has set aside the Ukraine aid bill to the old multi-billion dollar loan program. Added.
These funds are now at Biden's disposal to enact his stated plans to develop new suppliers of lithium, nickel, cobalt, graphite, manganese, and heat pumps. can.
An "opportunity" for Canada
Some of that funding could be used to launch a new battery his component project in Canada. Canadian officials hope so.
They point to documents recently posted to the White House website.Panel: Explicitly noting Canada's inclusion as a domestic source under the US Defense Production Act, It said it could create opportunities for cooperation .
"There is an opportunity to take advantage of some of the way [the bill] is structured," Kirsten Hillman, the Canadian ambassador to Washington, said in his CBC News interview.
"This encourages domestic production [within the United States]. It also includes Canada as a domestic source of supply. So we look forward to sharing the opportunity."
The broader story of the new bill that Biden will soon be signing is that it is the most significant US federal government action yet against climate change.
The FBI's raid on former President Donald Trump's home last Friday sent relatively little media coverage into the country's political upheaval.
What that big climate bill does
However, analysts who have studied the bill saymore than $400 billion in Cdn will contribute to carbon emissions. I expect it to have a big impact. Tax credits and subsidies for a wide range of energy projects.
According to these estimates, US greenhouse gas emissions have increased from31% to 42%It is projected to decline rapidly to somewhere between 31%. 85} from 2005 levels would put the United States significantly closer to meeting her 2030 target under the Paris Agreement.
The so-called Inflation Reduction Act would remove he billion tons of greenhouse gases from the atmosphere, says Princeton University's Zero Lab - which is the current global Equivalent to reducing his 2% of emissions.
But there is uncertainty in projections: One reason estimates vary widely is the uncertainty of how soon new energy projects will start.
View | US EV Tax Credit Helps Canadian Auto Sector: The consumer tax credit for American-made electric vehicles has been expanded to include electric vehicles, batteries, and vital minerals produced in North America.
Here is an example of that uncertainty. It is the credit of the electric car that has become a hot topic.
has been frustrating relations between Canada and the United States for almost a year. An earlier version of the bill, formerly known as Build Back Better, allowed only the United States. - Assembled vehicle to access certain tax credits.
What happened to the EV tax stimulus?
It raised the threat of trade retaliation. Ottawa warned that the bill would violate the new North American Trade Agreement and wipe out auto jobs and investment in Canada.
Flavio Volpe, president of the Canadian Association of Auto Parts Manufacturers, has used the friendly language of the new final bill to reduce Canadian employment. I called it a remedy.
"Maybe I dodged a missile."
But wait. The new, friendlier language has an important caveat. Now the US automaker says the new credit is virtually useless in the current situation.
For electric vehicles to qualify for up to US$7,500 in new version credits, vehicle batteries will increasingly need North American components.
problems from his 50% to his 100% of the battery in 2024. North America does not produce many battery components.
"When additional procurement requirements come into effect, [vehicles] will not be eligible for the full deduction. Zero," said a The letter states: industry lobby groups.
Analysis by the bipartisan Congressional Budget Office found thatcars receive tax credits. It will be.
In the bill's 10-year financial forecast , the CBO would pay just enough for the U.S. Treasury to provide full credit. It grew to just over 1 million vehicles in an estimated 10 years.
This is due to his estimated 150 million total auto sales in the United States during this decade. } less than 1%. During that period, percentage of vehicles sold will increase to electric vehicles.
Conclusion: Few cars are expected to have enough North American components to qualify.
That's where Canadian mining comes in.
Senator Joe Manchin, the primary architect of the final version of the bill, has repeatedly expressed skepticism about the original plan.
He said it made no sense to plunge into the era of electric vehicles when the United States' main adversaries were still strangling critical inputs.
However, after Manchin's visit to Canada earlier this year, Manchin expressed his opinion that the two countries should cooperate more closely on minerals. Stated.
This new bill appears to be designed to do just that, through tax credits for North American automobiles and cash for critical minerals projects.
If a US mining company wishes to access some of its funds, it can submit a proposal to the US Government.
Québec mining projects
A company with an eye on US public money happens to be making significant investments in Quebec.
Keith Phillips, president of North Carolina-based Piedmont Lithium, said it was still unclear what terms the U.S. government would set and what projects it would fund. said.
Details regarding the administration of the bill will be revealed in regulations to be drafted in the coming months.
"I don't know if anyone has made it perfectly clear what the priorities are," he said in an interview with Mr. Phillips. said in
His company is a minority investor whose lithium mine in Quebec is set to begin production next year.
The next goal is to build a plant for value-added processing in Quebec with a number of partners, his Sayona Mining in Australia.
This project has just started and no sites have been selected yet.
Phillips said it would cost him $600 million to build a similar plant in the US, and public funding is the lifeblood of a project with little bank-backed history. said.
"It's a priority, of course," he said of figuring out the possibility of US federal government financing.
"If we had government support, it would be very helpful."
Building the North American Battery Industry
Also, the Canadian government recently 227} budget of $4 billion to develop the nation's important mineral sector.
But North America is starting to fall behind.
Canada, for example, has a small share of the world's discovered deposits of lithium, cobalt and manganese.
Brian Kingston, president of the Canadian Association of Automobile Manufacturers, was relieved by some changes in the US bill.
But he still worries — Automakers must significantly improve charging capacity, energy infrastructure and sales incentives to meet zero-emission sales targets set by Ottawa It is not possible.
North American Battery His supply his chain, he said:
