News from the IPL
RESEARCH
Dan Munro & Creig Lamb, Shift Insights
Despite the importance of employer-sponsored training, little is currently known about how much Canadian employers invest in training, what kinds of training they offer, how it is delivered, what impacts it has, or how investment and opportunities differ across sectors, regions, and employee characteristics. Canadian data on the levels, kinds, trends, and impacts of employer-sponsored training are largely unreliable, out of date, and/or ill-suited for comparison across time and jurisdictions. Developing even a rough picture of the employer-sponsored training ecosystem in Canada is difficult. This report draws on available literature and data to develop the best possible picture of employer-sponsored training levels and trends; types and modes of delivery; what motivates and hinders training investment; and how investment is distributed across sectors, types of firms, and learners.
MEDIA
Dan Breznitz unmuzzled: Canada Innovation Corporation architect explains how we got here
BetaKit
In this podcast, IPL Co-Director Dan Breznitz discusses the recently announced Canada Innovation Corporation—now a $2.6 billion program over four years, with $1.3 billion going to absorb IRAP. The discussion touches on what the CIC is missing, who might make a good CEO, and why the Crown corp. comes with carrots and sticks.
Editor's Pick
DOE Releases New Reports on Pathways to Commercial Liftoff to Accelerate Clean Energy Technologies
U.S. Department of Energy
The U.S. Department of Energy (DOE) recently announced the launch of its Pathways to Commercial Liftoff, a set of reports that represent a new department-wide initiative to strengthen engagement between the public and private sectors to accelerate the commercialization and deployment of key clean energy technologies. The reports provide the private sector and other industry partners a valuable, engagement-driven resource on how and when certain technologies—beginning with clean hydrogen, advanced nuclear, and long duration energy storage—can reach full scale deployment. The new initiative underscores the critical role that DOE plays in enabling widespread commercial adoption of the clean energy technologies that are essential to meeting President Biden’s ambitious goals of achieving 100% clean electricity by 2035 and a net-zero emissions economy by 2050.
Cities & Regions
SSTI outlines ideas for planning, design of EDA Tech Hubs
SSTI
This article summarizes SSTI's response to the U.S. Economic Development Administration’s request for information to inform the planning and design of the $10 billion regional Technology and Innovation Hub (Tech Hubs) program. SSTI argues that a deliberate, well-considered plan providing ample opportunity for regions to both comment on proposed program guidelines and develop local partnerships is needed. In short, EDA should resist the temptation to get the money out the door as fast as possible.
Statistics
Research and development personnel, 2020
Statistics Canada
Gross expenditures on research and development (R&D) reached $41.9 billion in 2020 on strong spending by the federal government and businesses in Canada. At the heart of this spending are talented R&D professionals involved in the creation and improvement of products, processes and services through scientific and technological innovation. The total number of full-time equivalent (FTE) personnel engaged in R&D in Canada rose by 12,230 FTEs to 276,640 FTEs in 2020. This marks the fourth consecutive year-over-year gain and is almost double the increase recorded in 2019 (+6,600 FTEs).
Economic implications of the climate provisions of the Inflation Reduction Act
John Bistline, Neil R. Mehrotra, and Catherine Wolfram, Brookings Institute
The climate provisions of the Inflation Reduction Act (IRA) signed by President Biden in August could dramatically transform the energy sector of the U.S. economy, but the costs and the extent of new investment are highly uncertain, suggests a paper to be discussed at the Brookings Papers on Economic Activity (BPEA) conference on March 30. They estimate the cost of the legislation could be as much as around $1 trillion, considerably higher than government estimates. But, according to the authors, even expenditures that high would be cost-effective when compared with the social cost of carbon (the economic costs, or damages, of emitting one additional ton of carbon dioxide into the atmosphere).
Innovation Policy
Will the Response to the US Inflation Reduction Act Reveal Canada’s Lack of Green Industrial Policy?
Brendan Haley, Broadbent Institute
This article argues that industrial policy should be designed to achieve Canada’s societally relevant goals—not as a defensive response to American events. Haley notes how Canada’s apparent need to defensively respond to the US Inflation Reduction Act should spur some hard thinking on the purpose of industrial policy, the policy approach our country needs, and how to successfully implement it. Canadian industrial policy needs to be rooted in democratic aspirations to decarbonize all sectors of the economy, while advancing equality and creating meaningful work in a net-zero emissions future.
Report of the Advisory Panel on the Federal Research Support System
Policy Digest
Department of Finance Canada
Budget 2023 contained several policy announcements to facilitate Canada's transition to a clean economy. The introduction to chapter 3 emphasizes the need to build "our generation’s version of the Transcontinental Railway", noting that "Canada has the potential to become a clean electricity superpower with a cross-Canada electricity grid that is more sustainable, more secure, and more affordable."
Many of these initiatives were framed as a response to the clean technology incentives offered by U.S. Inflation Reduction Act. Specifically, the document emphasizes that "if Canada does not keep pace, we will be left behind. If we are left behind, it will mean less investment in our communities, and fewer jobs for an entire generation of Canadians. We will not be left behind."
The document lays out a 'made-in-Canada plan" centered on three tiers of federal financial incentives:
1) An anchor regime of clear and predictable investment tax credits, which will be broadly accessible to eligible organizations. In addition, many of these new credits will be accompanied by provisions to ensure that workers see the benefits of a clean economy;
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Clean Electricity Investment Tax Credit ($6.3 billion over four years starting in 2024-25, and an additional $19.4 billion from 2028-29 to 2034-35) - 15 per cent refundable tax credit for wind, concentrated solar, solar photovoltaic, hydro (including large-scale), wave, tidal, nuclear (including large-scale and small modular reactors), abated natural gas-fired electricity generation, stationary electricity storage systems that do not use fossil fuels in operation, equipment for the transmission of electricity between provinces and territories. Both new projects and the refurbishment of existing facilities will be eligible. Taxable and non-taxable entities such as Crown corporations and publicly owned utilities, corporations owned by Indigenous communities, and pension funds, would be eligible for the Clean Electricity Investment Tax Credit.
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Clean Hydrogen Investment Tax Credit ($5.6 billion over five years, $12.1 over ten years) - Levels of support will vary between 15 and 40 per cent of eligible project costs, with the projects that produce the cleanest hydrogen receiving the highest levels of support. the Budget also creates a 15 per cent tax credit to equipment needed to convert hydrogen into ammonia, in order to transport the hydrogen.
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Clean Technology Investment Tax Credit ($6.9 billion from 2023-24 to 2027-28) - Tax credit for Canadian businesses in adopting clean technology at a 30 per cent refundable rate first introduced in 2022 Fall Economic Statement, now expanded to geothermal energy systems. The FES noted that eligible projects include: Stationary Electricity Storage Systems that do not use fossil fuels in their operation, including but not limited to: batteries, flywheels, supercapacitors, magnetic energy storage, compressed air storage, pumped hydro storage, gravity energy storage, and thermal energy storage; Low-Carbon Heat Equipment, including active solar heating, air-source heat pumps, and ground-source heat pumps; and, Industrial zero-emission vehicles and related charging or refueling equipment.
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Investment Tax Credit for Clean Technology Manufacturing ($4.5 billion over five years, and an additional $6.6 billion from 2028-29 to 2034-35)- Refundable tax credit equal to 30 per cent of the cost of investments in new machinery and equipment used to manufacture or process key clean technologies, and extract, process, or recycle key critical minerals, such as renewable or nuclear energy equipment; processing or recycling of nuclear fuels and heavy water; manufacturing of grid-scale electrical energy storage equipment; manufacturing of zero-emission vehicles; and, manufacturing or processing of certain upstream components and materials for the above activities, such as cathode materials and batteries used in electric vehicles.
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Investment Tax Credit for Carbon Capture, Utilization, and Storage ($520 million over five years)- Budget 2022's credit was given further details, including prorated support for dual use heat and/or power equipment and water use equipment; extended to CO2 using dedicated geological storage in British Columbia; Require projects storing CO2 in concrete to have their concrete storage process validated by a third-party based; Include a recovery calculation for the investment tax credit in respect of refurbishment property.
2) Low-cost strategic financing;
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Canada Infrastructure Bank - CIB will invest at least $10 billion through its Clean Power priority area, and at least $10 billion through its Green Infrastructure priority area, sourced from existing resources
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Canada Growth Fund - Legislative amendments will enable the Public Sector Pension Investment Board (PSP Investments) to manage the $15 billion assets of the Canada Growth Fund to deliver on the Growth Fund’s mandate of attracting private capital to invest in Canada’s clean economy. One of the investment tools the Canada Growth Fund will provide to support clean growth projects is contracts for difference.
3) Targeted investments and programming, where necessary, to respond to the unique needs of sectors or projects of national economic significance.
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Strategic Innovation Fund - The Budget adds $500 million over 10 years to SIF for cleantech. The SIF will also direct up to $1.5 billion of its existing resources towards projects in sectors including clean technologies, critical minerals, and industrial transformation. Since 2018, the Strategic Innovation Fund has created or maintained more than 105,000 jobs, and used $6.9 billion in contributions to leverage $67 billion in private investment across 107 projects.
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Smart Renewables & Electrification Pathways Program - $3.0 billion over 13 years, starting in 2023-24, to Natural Resources Canada to recapitalize this program and renew the Smart Grid program
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Clean Fuels Fund - As announced in Canada’s 2030 Emissions Reduction Plan and Budget 2022, the $4.2 billion Low Carbon Economy Fund supports the installation of emission-reducing technologies for provinces and territories, businesses, Indigenous communities, and other organizations; As announced in Budget 2021, the $1.5 billion Clean Fuels Fund encourages investment in the production of clean fuels, including clean hydrogen and biofuels;
Finally, the document notes that these three tiers of incentives "will be underpinned by Canada’s pollution pricing systems and large-emitter credit markets, which Budget 2023 proposes to reinforce with other tools, such as contracts for difference."
An open question remains as to which Budget 2023 funding envelopes will be allocated as incentives for the Volkswagen battery plant, announced on March 13, 2023. The document notes that "projected costs of this agreement have been fully accounted for in Budget 2023. Further details and announcements will follow in the coming weeks after finalization of the agreement by Volkswagen." Recent analysis by the Transition Accelerator estimates that a 45GwH/year battery plant would generate on average $2.06 billion a year for 10 years in production tax credits under the U.S. IRA. Volkswagen reportedly told EU officials that it expected to reap €9bn-€10bn (C$13.2-14.7) in subsidies and loans from the Inflation Reduction Act and other US programs over the lifetime of the factory.
See also BetaKit's summary of the Budget and stakeholder reaction, CCI's response, U15's response, and RBC's analysis. Finally, see the Canadian Climate Institute's analysis of the budget and explainer for the different options to implement carbon contracts for difference
Links to recent IPL webinars
Does Canada have an effective innovation policy?
March 16, 2023 |11:00AM - 12:00PM, Online via Zoom
Since 2000 Canada has witnessed a proliferation of Innovation Strategies, including the 2017 Innovation and Skills Plan. Yet our innovation performance continued to deteriorate throughout this period. The 2022 Federal Budget began with the admission, “Our third pillar for growth is a plan to tackle the Achilles’ heel of the Canadian economy: productivity and innovation.” What factors best explain Canada’s dismal innovation performance over the past two decades? Join us for an IPL webinar with two of the most insightful analysts of Canadian innovation policy.
Moderator: David A. Wolfe, Professor of Political Science and Co-Director, Innovation Policy Lab
Panelists:
Shirley Anne Scharf, Ph.D. Shirley Anne Scharf is Visiting Researcher with the CN-Paul M. Tellier Chair on Business and Public Policy, Graduate School of Public and International Affairs, University of Ottawa and has her Ph.D. in Public Administration, School of Political Studies at U of O. Her dissertation, “Canadian Innovation Policy: The Continuing Challenge” (2022) examines the key dimensions driving the gap between policy intent and impact, and the consequences for Canada’s innovation eco-system.
Travis Southin, Ph.D. Travis Southin is a postdoctoral fellow at Carleton University’s School of Public Policy and Administration working with the Transition Accelerator on net-zero industrial policy. He completed his PhD in Political Science from the University of Toronto in 2022. His dissertation, titled “Overcoming Barriers to Policy Change: The Politics of Canada’s Innovation Policy,” illuminates the political barriers constraining the Government of Canada’s ability to shift its innovation policy mix away from neutral/horizontal policy instruments towards more targeted innovation policy instruments.
Events
16th Workshop on The Organisation, Economics and Policy of Scientific Research
13 – 14 April 2023
The Max Planck Institute for Innovation and Competition and TUM are organising the annual workshop “The Organisation, Economics and Policy of Scientific Research” at the Max Planck Institute for Innovation and Competition in Munich. We aim to attract contributions from both junior and senior scholars on topics related to the organisation, economics and policy of scientific research. A minimum number of slots are reserved for junior researchers (PhD students or postdoc scholars who obtained their PhD in 2020 or later). Please submit previously unpublished papers or extended abstracts (min 3 pages) by 15 January 2023. We strive to notify authors by 27 February 2023.
18-19 April 2023 / Ottawa, ON
The 22nd Annual Research Money conference will be taking a deep dive into innovation policy weeks after the federal budget comes down from Ottawa. Over the span of two days, keynotes and expert panels will examine Canada's innovation policy, the implications of federal budget 2023, the newly announced Canadian Innovation Corporation and how a focused industrial policy can improve Canada's productivity and innovation performance. This highly anticipated conference attracts 200+ leaders and practitioners from academia, government, industry, finance and the not-for-profit sector. Following the in-person conference, the R$ Webinar Series will continue the conversation from May to November 2023, exploring a range of topics related to the conference theme in a series of free webinars.
Atlanta Conference on Science and Innovation Policy
May 24-26, 2023, Georgia Institute of Technology Global Learning Center, Atlanta
The Atlanta Conference on Science and Innovation Policy provides a showcase for the highest quality scholarship from around the world addressing the challenges and characteristics of science and innovation policy and processes.
June 27 to 29, 2023, Toronto
The 6th International Conference on Public Policy (ICPP6) is coming to Toronto! Organized by IPPA, ICPP6 is hosted by the Toronto Metropolitan University's Faculty of Arts and Public Policy graduate studies programs and will take place at the University's premises in downtown Toronto from June 27 to 29, 2023, with a Pre-Conference on June 26. This conference includes a panel chaired by IPL Co-director Dan Breznitz called "Organizational Evolution in Innovation Policy."
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This newsletter is prepared by Travis Southin.
Project manager is David A. Wolfe