The federal election results suggest that the first priority of the NDP must be electoral reform to bring to an end the politics of fear and the strategic vote, which favours the Liberals and Conservatives alike.

The second priority must be to engage Canada, for the first time, in an urgent migration to a green economy. The Liberal record on shifting to clean technologies is nothing short of insignificant, one of the worst records among developed countries. Meanwhile, China, and to a lesser extent, the European Union and California, are changing global economic, energy, and transportation paradigms.

Canada missing out

Canada has promising opportunities to be a part of a revolution in which batteries become the new oil. The country has both extraordinary lithium supplies in Quebec and an auto industry in Ontario. But while other countries are cashing in, Canada’s lack of government support for the research, development, and manufacturing requirements has thus far kept us out of the picture.

In order of importance, based on 2018 data, Australia is the world leader in lithium production at 51,000 tonnes, followed by Chile at 16,000, China at 8,000, and Argentina at 6,200.

It is heartbreaking that Canada is not on the preceding list because, in the next decade, there will be exceptional growth in the electric vehicle and energy storage battery markets. In 2020 alone, more battery manufacturing capacity will come on stream than the total capacity available in 2016. Global demand for batteries will double in five years and rise tenfold by 2030.

Electric vehicles are already the largest single market for batteries.

Lithium-ion markets are expanding faster than most projections, not only because of the growth of the electric vehicle market, but also because of energy storage associated with renewable energy production. Energy storage addresses the intermittent production of energy from solar energy and wind power, stockpiling surplus production for use during the low power-generation periods. The energy storage growth rate may become exponential since renewables, combined with energy storage, can now be delivered at less expense than the old formula of maintaining fossil fuel peaker plants for the time periods when energy demand is high.

The current principal obstacle to the growth of the lithium market is a shortage of supply at the production end. Hyundai’s and Kia’s production of electric vehicles cannot accommodate demand because of a lack of batteries. That is, automakers that outsource their battery inventory are at the mercy of a handful of electric vehicle battery manufacturers. The top five manufacturers responding to increasing demand for lithium-ion batteries, in order of production output, are LG Chem, CATL, BYD, Panasonic and Tesla.

And battery supply is also a function of research and development, with many automakers hesitant to invest in their own battery production because of the need to keep pace with technological improvements.

This is comparable to a conventional automakers not having in-house expertise on internal combustion engines and no production capability for these engines. Tesla has an advantage in this regard. It has an exclusive arrangement for research and development and its own, and the world’s largest, battery production capacity in collaboration with Panasonic.

Canada’s weak clean tech sector

Nemaska Lithium is a case in point of the Canadian government’s neglect of global green economy developments. The company’s proposed projects consist of a lithium-ion Whabouchi mine, located in the James Bay region of Quebec, near the Cree community of Nemaska, and an electrochemical plant in Shawinigan, Quebec.

But this company has been losing money and has failed to complete its financing, forcing it to eliminate nearly half of its jobs — 64 out of 130 employees. A tentative agreement with London-based Pallinghurst Group made in summer 2019 for $600 million and 46 per cent of control of the company has stalled. In the absence of sufficient financing, the company has closed its Shawinigan demonstration processing facility. The government of Quebec has invested $130 million for 13 per cent equity, but it is simply not enough and definitely not in the league of federal subsidies for fossil fuels, including the $4.5 billion spent on Trans Mountain assets for a pipeline project that will likely never be built.

Critical Elements, another James Bay, Quebec, lithium stakeholder, cannot acquire sufficient financing and North American Lithium of the Abitibi region in northwest Quebec has filed for bankruptcy. Sayona Québec (Glen Eagle), Galaxy Resources (Lithium One) and Lithium Guo AO (Perylia Canada) are other northern Quebec firms waiting to enter the exploding global market.

From the mines, to the manufacturing of battery cells, and complete batteries Canada should be well positioned to be a major player in lithium battery industry. This is not happening despite Quebec having four per cent of the global lithium supply; graphite, aluminum and copper sectors; Chinese electric buses being purchased in Canada very often including patented technology from Québec’s majority U.S.-owned TM4; Hydro-Québec having a patent in solid-state batteries; the proximity of an auto industry in Ontario and North America at-large; and Quebec having its own electric school bus and truck manufacturer, Lion.

The path to success is complex because it requires a supply chain linking lithium producers, cathode manufacturers, and the makers of electric vehicles. A transfer of fossil fuel subsidies to clean tech would be more than enough to resolve this impasse.

The fate of Canada’s lithium and battery production potential is a reflection of exceptionally weak Canadian clean tech sectors. Not surprisingly, the Business Development Bank of Canada, with its miniscule budget allotments up for financing clean tech firms up until the fiscal year 2021–22, is experiencing great difficulty in identifying companies in which to invest. Clean tech companies supported by the bank are not meeting performance targets or are defaulting.

The Liberal Party of Canada’s 2019 election promise to cut taxes in half for companies that produce zero-emission technologies constitutes a real disconnect from reality — Canadian clean tech firms need significant financial support before they are in a position to pay taxes.

The $600 million for clean tech start-ups announced in January 2018 does nothing to alter this picture.

China’s global lead

China will continue to dominate most or all clean tech sectors for which batteries play major roles. This domination comprises 45 per cent of current global investments in renewables; 2 million electric vehicle sales in 2019, which may rise to 50 per cent of vehicles sales by 2025 in the world’s largest vehicle market; and energy storage.

But there’s a lot more to this story than what China is — and what Canada isn’t — doing.

While China has 50 per cent of the world’s lithium processing plants for battery grade products, it only has 10 per cent of lithium raw material. Nevertheless, nearly two-thirds of global lithium-ion battery production occurs in China. By 2021, the country is anticipated to account for 73 per cent of battery production capacity.

China’s legislated quotas for zero-emission vehicles, combined with incentives, partially explain why there is a concentration of battery manufacturing there. Another reason is the requirement that every electric vehicle sold in the country be equipped with batteries made in China. This has resulted in 190 battery suppliers in China.

These factors have propelled China’s Contemporary Amperex Technology Ltd (CATL) battery manufacturer to not only become the largest electric vehicle battery manufacturer in the world, but also grow to have a presence in Europe and the U.S.

The rise of the Chinese company BYD to one of the world’s top five battery manufacturers is a result of its being a totally-integrated electrification company. It is the largest electric vehicle manufacturer in the world, making passenger electric vehicles, urban transit buses, and trucks. Like Tesla, it manufactures its own batteries for its vehicles. It also manufactures batteries for mobile phones, tablets and computers as well as energy storage.

European attempts to establish their own battery manufacturing capabilities are spotty. Germany recognizes its importance, and consequently has a proposal to the European Commission for a $1.1 billion subsidy to build up the European battery manufacturing sector.

CATL has major plans for the European market. In June 2019, CATL disclosed that it would spend $2 billion on a European battery production and research facility in the German state of Thuringia. The plant is in keeping with CATL having been selected as the supplier for BMW, Volkswagen, Daimler, Volvo, Bosch PSA, and Jaguar Land Rover. The German CATL plant will start operations in 2022 and will have an initial capacity of 14 GWh/year, which will eventually be increased to 24 GWh/year with 2000 employees.

Volkswagen, which aims to be the world’s number one manufacturer of electric vehicles and terminate production of internal combustion engine vehicles over the next few years, will spend $33 billion between now and 2023 on restructuring for electric vehicle production. The company expects to sell 15 million electric vehicles by 2025. Accordingly, it plans to invest $50 billion in batteries and build a battery facility in the city of Salzgitter, together with Northvolt, that will eventually be capable of producing 24 GWh of batteries a year.

The internal combustion engine’s days are numbered

Between 2018 and 2025, rapidly declining costs of batteries are expected to half their price. Battery costs have dropped 80 per cent in the last nine years. A detailed analysis by Dr. Maximilian Holland anticipates that electric large volume compact cars and SUVs will be price competitive in 2022, while luxury vehicles already achieved parity in 2019. In April 2019, Bloomberg New Energy Finance also predicted purchase price parity by 2022 in the European Union.

This means that the days are numbered for gasoline powered vehicles because the energy and maintenance costs of an electric vehicle are lower than that of the traditional vehicle. Maintenance costs are less because there are 2000 moving parts in an internal combustion engine vehicle compared to only 20 for an electric vehicle.

But here again, Canada is not pulling its weight in supporting Canadian companies involved in manufacturing electric vehicles and parts. Many are moving their clean tech activities outside Canada, have been bought out by foreign interests, or are focusing on Chinese investments.

NDP needs to push minority Parliament to advance Canada’s energy transition

Suffice to say that batteries are critical to disruptive changes in global paradigms.

China’s legislation, policies and dominance in both electric vehicles and energy storage, together with technological advancements, are impacting the economies of scale and hence the price of batteries. These tendencies are enhanced by European Union legislation that will include fines per vehicle sold beginning 2020 for automakers not complying with their increasingly strict corporate average vehicle emission standards.

With 60 per cent of the global oil consumption associated with the transportation sector, the end of the petroleum era is well underway. If Canada continues on the same Liberal course, the country will ultimately make the transition to a green economy, not because of its own efforts, but rather because of external factors. But Canada will be missing out on its chance to be a significant player in the development and manufacturing of home-grown clean technologies.

It is hard to fathom who will be buying Canadian tar sands oil once a new pipeline is completed.

The NDP understands a major change in the fundamentals of the Canadian economy is necessary. Economic and sustainable development is imperative to achieve environmental goals, but also because Canada must be a part of the emerging green economy.

Believe it or not, this is critical for Alberta too since it is headed towards a dead end in the absence of economic diversification. More Alberta oil and gas wells will be decommissioned this year than new wells drilled. There are 93,000 inactive wells in the province.

There is no reason why Alberta’s technological expertise cannot be applied to clean technologies. The establishment of a clean technology integration centre in Alberta modeled after the U.S. National Renewable Energy Laboratory (NREL) would be a good place to start. The NREL is on a 327-acre campus, with representatives of 40 countries, and enters into research partnerships with the private sector and academia as it modus operandi. What a wonderful model to make the links between Alberta technological expertise, Canadian lithium development and battery production, renewables, electric vehicles, energy storage, carbon-neutral buildings, and the Canadian auto industry.

There’s plenty of money that can be transferred from fossil fuel subsidies prolonging the agony of the demise of the petroleum sector to that of making Canada competitive in the rapidly emerging global electrified green economy. Here lies one of the most critical roles for the NDP in the new minority government.