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Canada has committed tens of billions of dollars to revitalizing its battery sector. History suggests it needs a strategy to make sure that bet pays off
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Published Aug 12, 2024 • Last updated 1 hour ago • 4 minute read
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The federal government, having committed tens of billions of dollars to the buildout of a Canadian electric vehicle battery supply chain, still has work to do to ensure the nascent industry not only survives the ups and downs of market demand, but thrives, according to a new report.
The report, released Monday by Accelerate, an industrial alliance of key battery sector players, lays out a strategy “to establish Canada as a global leader in battery technology by 2035,” and recommends removing regulatory barriers and creating new funding mechanisms to raise another $3 billion in public and private investments.
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“Canada has made a huge bet on batteries with strategic investments in up to 195 GWh of battery production across three facilities,” the report commissioned by Natural Resources Canada’s Energy Innovation Fund said. “The task now is to maximize the value of these factories by building the production networks around them into an innovative ecosystem that increases efficiency and advances the core technology.”
Moe Kabbara, one of the three authors of the report and an advisor to Accelerate, said the genesis of the report was that Canada has a rich history of battery innovation, but the sector did not receive support at critical moments.
For example, in the 1980s, Moli Energy was a Vancouver-based company and among the first in the world to manufacture lithium-ion batteries. The report estimates that Moli received $120 million in government support, but it then fell badly out of favour when one of its battery cells caught fire.
Most of our winners were lost
Moe Kabbara
According to the history laid out in the report, after the conflagration, British Columbia called in a loan, which forced the sale of Moli to a Japanese consortium for $5 million, which the authors characterized as a bargain-basement price given their estimate that the company had $58 million in assets.
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“We haven’t been really able to cash that out in terms of being able to say, ‘Hey, here’s a leading Canadian battery company,” Kabbara said. “Most of our winners were lost.”
To ensure that Canada can compete in batteries, which are the subject of intense global competition, the report makes a number of specific and general recommendations, including removing regulatory barriers and creating new funding mechanisms.
It said Canada must focus on an industrial strategy that supports the scale-up of battery production and captures the value of intellectual property produced within the sector.
Bentley Allan, also an author of the report and an adviser to Accelerate, said that part of the report is about setting targets for Canada, so there’s some accountability and a way to measure success. To do this, they studied the battery sector in Korea and the critical minerals sector in Australia to look at what other jurisdictions have done.
Much of the report is focused on innovation. It lays down energy density performance targets, dates by which battery prices should drop and when battery chemistries should change.
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“Those targets are important,” Allan said. “We need to make sure we know exactly what the technological targets are that we’re trying to achieve here.”
We haven’t been really able to cash that out in terms of being able to say, ‘Hey, here’s a leading Canadian battery company
Moe Kabbara
By 2035, the report suggests Canada should seek to increase the number of Canadian-owned firms in the battery sector by tenfold, which it suggests should contribute about 20 per cent of the battery value chain in North America. It also sets a benchmark for these companies to secure 1,000 patents by that time, which the government should support by enhancing the patent processing system to make it faster and more flexible so that the technologies can be shared among domestic companies.
Some recommendations are practical. It calls for the creation of a central coordinating body that can unify government, academia and industry to implement its roadmap and a government “problem-solving team.”
Other recommendations are highly specific, such as attracting $3 billion in public and private investments in the battery supply chain: $500 million for advanced manufacturing, $1 billion for emerging technologies and $1.5 billion for demonstrations and pre-commercialization projects.
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“The idea is that we want Canadian companies to play in the global supply chain and play in the global market,” Kabbara said.
He said that given Canada’s proximity to the United States, there is a history and a real risk of domestic companies being purchased by larger U.S. companies, an outcome that would deprive the Canadian economy of some of the benefits of building out a battery supply chain.
Kabbara said he doesn’t think Canada can ban such acquisitions, but it can support domestic companies, especially startups, through market ups and downs to make sure those companies don’t end up being sold for bargain prices if they hit a stumbling block.
To that end, the report recommends “a dedicated Battery Innovation Venture Fund” to provide early stage capital. It also recommends expanding the Office of Energy Research and Development’s funding program so that it can provide “larger grants for growth-stage companies.”
A third recommendation is that Canada implement research and development minimums for publicly supported companies to ensure they are contributing to the country’s innovation ecosystem.
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“These are problems that everybody has been talking about for two decades,” Allan said, “and we tried to say very clearly how an industrial policy for batteries could solve them, or at least what the government could do in the short term to address this. If we’re going to build something bigger, then we need a broader plan than just plunking down battery plants.”
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Publish date : 2024-08-12 03:26:00
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