Open letter: Calgary Chamber consults on the Building a Green Prairie Economy Act

Calgary Chamber of Commerce – Submission to the Federal Government’s Consultations on Building the Green Prairie Economy Act

Alberta’s opportunities for growth in the green economy

Alberta’s economy is well positioned to seize opportunities for growth in the green economy. A sustained focus on economic diversification, fostering a competitive business environment and attracting investment has laid the ground work for the province to be a power house in emerging sectors such as low-carbon energy and agriculture, technology and innovation, and tourism. Based on the priorities of our membership, the Calgary Chamber believes the following opportunities offer the most significant potential for economic growth in the green economy:

1. Emerging energy solutions and decarbonization

The strength of Alberta’s traditional natural resources sector has positioned the province as a world leader in the development of sustainable energy solutions and decarbonization technologies. With some estimates suggesting global energy demand is expected to increase by 47 per cent by 2050, Alberta businesses are pioneering the innovations that will support the world’s future clean-energy needs.

Regionally, opportunities in sustainable energy products such as hydrogen, renewables, and critical minerals offer businesses a diversity of energy production opportunities in the green economy. Moreover, investments into decarbonization technologies such as Carbon Capture, Utilization and Storage (CCUS), bitumen beyond combustion (BBC), and energy storage ensure these same businesses continue to benefit from Alberta’s traditional economic strengths and opportunities to export these technologies to national and international markets.

To position Alberta for continued success in the green economy, we encourage the government to support emerging energy solutions and decarbonization technologies in the following ways:

Carbon Capture, Utilization, and Storage – Attract investment to CCUS projects by expanding the existing Investment Tax Credit (ITC) on CCUS to a production tax credit that supports costs incurred prior to final investment decisions, direct and indirect production costs, and includes a direct pay option. Moreover, recognizing the capital-intensive nature of CCUS projects, support low-cost access to capital for junior and mid-sized businesses, to ensure they benefit from economic opportunities created by developing or accessing CCUS sites.
Energy storage – Develop and implement incentives for low-carbon energy storage technologies, including pumped hydro and battery storage. Additionally, develop grant programs that support research and development into energy storage solutions, enabling Alberta companies working in the sector to commercialize their intellectual property.
Biofuels – Promote the development of biofuels through investments into the required value-chain infrastructure to ensure Alberta can leverage its agricultural expertise and abundance of biofuel feedstocks to capitalize on associated economic opportunities. This includes the introduction of a Producer Tax Credit (PTC) to ensure Alberta remains competitive against other jurisdictions pursuing similar opportunities.
Hydrogen – Introduce targeted refinements to the proposed ITC for Clean Hydrogen so that the ITC supports costs incurred prior to FID, direct and indirect production costs, and includes a direct pay option. Additionally, ensure government support for hydrogen is based on the carbon intensity of the hydrogen produced as opposed to which process is being used.
Renewables – Extend the gradual phase-out of proposed ITCs, including the Clean Technology, Clean Technology Manufacturing, and Clean Electricity ITCs, for renewable energy projects beyond 2030, such as large-scale wind and solar projects, to ensure Alberta businesses can access the long-term financing needed to continue commercializing renewable projects.
Critical minerals – Prioritize amendments to the Income Tax Act that will allow Alberta companies exploring and developing critical minerals in the Western Canadian Sedimentary Basin to qualify for Canadian Exploration Expense and Canadian Development Expense treatment. This will enable the issuance of flow-through shares to companies, ensuring Alberta businesses have access to the capital needed for critical mineral production opportunities. Moreover, recognizing Alberta’s strength in midstream chemical processing, collaborate with other levels of government on the development of a national battery metals value chain that creates investment opportunities for Alberta businesses.
Advanced nuclear technologies – Implement financial and regulatory supports that encourage investment in advanced nuclear technologies such as Small Modular Reactors. This includes working with Alberta’s post-secondary institutions to fund educational programming that can reskill and upskill professionals for future career opportunities in the industry, as well as partnering with the provincial government to develop clear and consistent regulations that pave the way for the future deployment of these technologies.
Electrification – Electrifying Alberta’s economy has a significant role to play in emissions reduction. Moreover, as Canada’s only deregulated electricity market, increasing electrification of the provincial economy also presents significant opportunities for business growth. To this end – keeping affordability and reliability top of mind – the government should further the advancement of electrification by streamlining approvals for low-carbon energy projects and ensuring the longevity of necessary financial and regulatory supports.
Net-zero electricity – With Canada’s 2030 Emissions Reduction Plan expected to significantly increase demand for clean electricity, and provincial analysis suggesting the complete decarbonization of Alberta’s grid could require an additional $44 to $52 billion in investment, there are significant economic opportunities and challenges associated with achieving net-zero electricity. To this end, the government must extend the gradual phase-out of proposed ITCs such as the Clean Electricity to ensure Alberta businesses can access the long-term financing needed to continue developing net-zero electricity projects. Moreover, work to provide the long-term policy and regulatory certainty businesses require for continued long-cycle investments into Alberta’s electricity market.

2. Technology and innovation

Alberta’s technology and innovation sector is drawing global attention. Already home to over 3,000 technology companies, the long-term outlook for the sector’s growth is promising. With five consecutive years of record-breaking venture capital investment, new companies continue to flock to the province and are increasing successful when they arrive – nearly 40 per cent of Alberta startups now report annual revenue greater than $1 million.

The sector is also playing a critical role in positioning Alberta as a leader in the development of the technological solutions needed to actualize the green economy. The province’s focus on addressing environmental, social and governance (ESG) issues in the energy sector has made it a hot bed for technology companies looking to develop innovative solutions for ESG applications. Analysis suggests that 39 per cent of Alberta-based tech companies focus on environmental challenges, 45 per cent on social challenges and 18 per cent on governance issues. Considering estimates have placed that value of ESG investment market at USD $53 trillion globally by 2025, it is clear investing in the continued development of Alberta’s technology and innovation sector is an investment in the province’s continued economic success.

To capitalize on technology and innovation opportunities in the green economy, we encourage the government to support the sector in the following ways:

Incentivize the development of telecommunications networks – Competition in the telecommunications sector is essential to incentivizing the continued development of telecommunications networks and technologies. To this end, the government must ensure Canada’s competition policies enable market competition amongst existing and prospective telecommunications businesses. This includes ensuring policies support Allies in making foreign direct investments within Canada’s telecommunications sector.
Establish a Federal-Provincial-Territorial (FPT) table on digital policy – Businesses within the telecommunications sector have expressed considerable support for the government’s openness towards collaboration on Canadian digital policy. Recognizing the opportunities digitization has for emissions reduction, the federal government should establish an FPT table that includes government departments, industry regulators and businesses to collaborate on the development of digital policies that can support emissions reduction and economic growth.
Incentivize digital adoption networks – With the potential to reduce Greenhouse Gas (GHG) emissions by up to 20 per cent, the government should expand grant funding available under the Canada Digital Adoption Program to incentivize large businesses in GHG-intensive industries to prioritize digital adoption. Additionally, recognizing small and medium-sized businesses are often slower to adopt digital technologies, evaluate the creation of a Digital Adoption Small Business Tax Credit that incentivizes digitization regardless of a business’ size.
Grow early and mid-stage start-ups – Support the growth of Alberta’s early and mid-stage start-up companies by expanding access to grants and funding opportunities that provide access to low-cost, non-dilutive capital.
Support proof-of-concepts – De-risk private investments and support the adoption of emerging technologies through the introduction of tax incentives for businesses that elect to pilot emerging technologies within their operations, allowing Alberta-based businesses to obtain proof-of-concept for their novel products and technologies.
Incentivize local investment – Provide incentives that encourage Canadian venture capitalists to invest in Canadian companies by offering compelling financial supports that minimize investment risks.
Invest in research and development capacity – Leverage Alberta’s world-leading research universities to drive sectoral growth by investing in the expansion of their research and development programs and facilities.
Address the shortage of tech talent – Prioritize investments in infrastructure projects that enhance community vibrancy, including arts and cultural institutions, transportation infrastructure and post-secondary institutions to attract founders, developers and investors to the province.

3. Agriculture and agri-food

With one-third of Alberta’s land used for agricultural purposes, an annual value of $56 billion and employing approximately 275,000 people, the sector is critical to the continued economic success of the province. Moreover, the sector is already well-positioned for success in the green economy. Alberta agriculture and agri-food businesses are leaders in environmental stewardship, leveraging techniques such as rotational grazing and technological solutions such as renewable energy to reduce their environmental impacts.

Alberta’s agriculture and agri-food sector also holds additional economic promise as world food demand continues to increase. Climate Change, the war in Ukraine, and other socio-economic factors have all contributed to rising food insecurity – in 2022, an estimated 258 million people across 58 countries and territories suffered from acute food insecurity, the highest number in seven years. With one of the most productive agricultural economies globally, investing in the sector can contribute to reducing global food insecurity and grow Alberta’s economy, with some experts suggesting investments in the sector can double the value of the province’s agri-food exports to $25 billion by 2030

To support the continued success of Alberta’s agriculture and agri-food businesses in the green economy, we encourage the government to support the sector in the following ways:

Address the sector’s ongoing labour shortage – Ensure businesses can access the talent they require by refining the Temporary Foreign Worker (TFW) program. This includes working with the province to increase provincial nomination limits and partnering with other federal government departments to review the cost of conducting a Labour Market Impact Assessment (LMIA), ensuring the cost of an LMIA does not prevent businesses from leveraging TFWs.
Address access to low-cost capital – Support businesses in accessing low-cost capital by expanding Farm Credit Canada’s loan products to include equity-based loans, ensuring current and prospective Alberta agriculture and agri-food businesses have a long-term partner to support their operations. Additionally, create a niche “technology adoption” loan, enabling smaller farms to adopt technology such as controlled environment agriculture.
Eliminate the digital divide – Provide equal economic opportunities to all agricultural and agri-food businesses by ensuring rural-based businesses have access to high-speed broadband internet. This will require accelerating deployment of funding through the Universal Broadband Fund, subsidizing the adoption of telecom services in underserved communities, and identifying incentives to encourage private-sector investment in telecommunications infrastructure. Moreover, engage Canada’s telecommunications sector to reach an agreement on a review of Canada’s spectrum policy. This includes assessing a potential increase in the number of spectrum licenses and determining whether “use-it-or-lose-it” conditions for all spectrum licenses deemed critical for delivering universal coverage is necessary.
Support alternative revenue generation opportunities – Provide businesses with additional opportunities to generate revenue by reducing barriers to participation in Alberta’s carbon offset market. This includes the creation of funding programs that support investments in carbon offsetting, insetting and technology adoption.

4. Tourism

Alberta offers an abundance of highly desirable tourist attractions and experiences, with people travelling from around the world to visit our province for its natural wonders. The sector is also a critical component of a strong and diversified Alberta economy. According to research conducted by the Tourism Industry Association of Alberta, in 2021 – despite lingering impacts of the pandemic – the sector generated $6.3 billion in visitor expenditures, supported nearly 59,000 jobs and contributed $720 million in tax revenues for all levels of government.

With the value of Canada’s tourism sector anticipated to reach nearly $21 billion by 2027, there are significant opportunities for Alberta’s tourism sector to drive regional economic prosperity. To position Alberta’s tourism sector as a contributor to economic growth in the green economy, we encourage the government to support the sector in the following ways:

Support Alberta’s position as a sustainable tourist destination – Many tourists are drawn to Alberta for its breathtaking natural landscapes. Ensuring we continue to attract these tourists requires positioning and promoting Alberta as a sustainable tourist destination. To this end, the government should allocate funding to regional destination management organizations that have prioritized actions to reduce their carbon footprint.
Enhance regional transportation infrastructure – Invest in, and expedite the development of, regional transportation infrastructure that connects tourists to Alberta’s various tourist destinations, such as innovative rail projects. Within Calgary, this includes infrastructure that connects the Calgary Airport to downtown and beyond, enhancing the city’s position as a jumping-off point for regional tourism.
Address the sector’s ongoing labour shortage – Ensure businesses can access the talent they require by refining the Temporary Foreign Worker (TFW) program. This includes working with the province to increase provincial nomination limits and partnering with other federal government departments to review the cost of conducting a Labour Market Impact Assessment (LMIA), ensuring the cost of an LMIA does not prevent businesses from leveraging TFWs.

Maintaining and enhancing Alberta’s economic competitiveness

Alberta has historically enjoyed a reputation as one of the most competitive business environments globally, benefiting from low corporate taxes and business-friendly policies. However, recent legislation in Europe and the U.S., including the introduction of the Inflation Reduction Act (IRA), have changed the competitive landscape of the global economy. As other countries look to attract the investment required to build their own green economies, businesses are increasingly deploying capital in jurisdictions with compelling financial incentives as well as efficient and predictable regulatory environments.

Recognizing this, maintaining Alberta’s economic competitiveness will require the federal government takes the following actions:

1. Streamline and harmonize regulatory processes and review periods for federally designated projects

The introduction of legislation in Europe and the U.S., such as the Inflation Reduction Act, has meant Canada has strong competition for global investment dollars. While Canada may be unable to match all the financial incentives offered in other jurisdictions, the federal government can still position the country as a destination of choice for investment by fostering the most competitive regulatory environment possible. To this end, identifying ways of streamlining and harmonizing regulatory approval processes and timelines for major projects can support investment attraction by ensuring Canada’s regulatory system can respond to industry demands promptly.

2. Provide clarity on financial supports that further Canada’s net-zero ambitions

In the International Energy Agency’s Net Zero by 2050 – A Roadmap for the Global Energy Sector report, they suggest that in order to achieve net-zero emissions by 2050 global energy investment will need to reach USD $5 trillion by 2030 and USD $4.5 trillion by 2050. Considering the energy sector will remain a significant contributor to Alberta’s economy into the future, the government must move to finalize the details of currently proposed federal incentives to provide clarity on project economics and bolster investor confidence. This includes the Investment Tax Credit for Carbon Capture, Utilization and Storage (CCUS), Investment Tax Credit for Clean Hydrogen, Clean Technology Investment Tax Credit, and Clean Electricity Investment Tax Credit. Failing to do so has the potential to result in lost investment dollars for Alberta and could significantly delay the deployment of private capital needed to support the future green economy.

3. Expedite the development and implementation of Carbon Contracts for Differences (CCfDs)

Canada’s carbon pricing regime has been instrumental in driving investment in decarbonization as abatement becomes more economical than compliance payments. However, recognizing future policy makers could modify or eliminate the carbon price – destabilizing existing project economics – many businesses and investors remain cautious of committing significant capital towards the continued development and commercialization of clean technologies. To this end, the government should finalize a system for CCfDs for large capital investments. Doing so will support Alberta’s long-term economic success as financial markets will be able to reliably quantify and finance projects backed by a CCfD.

4. Support market access investments

Canada must remain aware of its obligation to support Allies’ continued success and security in the green economy. Geopolitical shocks such as the War in Ukraine have resulted in a situation where our Allies are looking for a secure and reliable supply of energy while at the same time striving to decarbonize their respective economies. To this end, Allies in Europe, Japan and South Korea have all turned to Canada has a trusted partner in developing and maintaining supply chains for environmentally responsible energy. Having rebuffed many of these asks, the government is both neglecting our obligation to support democratic Allies and an opportunity for sustained economic growth. The Canadian government must recognize the goals of supporting Allies energy security and global emissions reduction are not mutually exclusive – Alberta has the resources and expertise to facilitate both objectives. To this end, the government must strengthen Canada’s supply chains, committing capital to advance the recommendations within the National Supply Chain Task Force 2022 Report and collaborating with other levels of government on investments into the development of transportation corridors, ensuring businesses can export their goods and services to international markets.

Leveraging partnerships to maximize economic growth

Regionally, the federal government has taken concrete steps to position itself as a partner in realizing Alberta’s economic goals in the green economy. The introduction of significant financial incentives that facilitate investment into decarbonization technologies, establishment of grant programs that support research and innovation, and tabling of legislation that offers a roadmap towards ensuring all Albertans continue to benefit from well-paying jobs is proof of the government’s commitment to the continued success of the Albertan economy. However, there remains opportunities for improvement.

As the government considers how they can build and strengthen existing partnerships to support regional economic growth, we encourage a focus on the following:

1. Prioritise Indigenous economic inclusion and reconciliation

A significant success story in Alberta’s journey towards economic inclusion and reconciliation has been the establishment of the Alberta Indigenous Opportunities Corporation (AIOC). Established in 2019 as a first-of-its-kind Crown corporation, the Alberta government created the AIOC to facilitate investments by regional Indigenous communities into natural resource and related infrastructure projects. With the authority to provide up to $1 billion in loan guarantees, the AIOC has been fundamental in reducing barriers to, and the cost of, participating in major capital projects. In early 2022, the program’s success led to the Government of Alberta expanding its investment remit to include agriculture, telecommunications and transportation projects.

To date, the AIOC has facilitated over $400 million in loan guarantees for Indigenous investors, including a landmark deal between 23 Indigenous and Métis nations to provide a $250 million equity loan for the purchase of a working interest in seven major pipelines in Northern Alberta. As a result of investments such as these, Alberta’s Indigenous communities have project ownership opportunities that provide long-term, stable revenue streams that can be leveraged for further community and economic development.

To support Indigenous inclusion in the future green economy, the federal government should prioritize the creation of a federal loan guarantee program similar to the AIOC. This includes consultation with the Government of Alberta to identify lessons learned, as well as with Indigenous communities across Canada to understand the barriers they continue to face to participating in major capital projects.

2. Collaborate with other orders of government to maximize financial incentives for decarbonization

Federal supports for decarbonization have been instrumental in supporting the continued success of Alberta businesses in the global energy transition. Of note, businesses across sectors have welcomed the introduction of strategic tax incentives, including the Investment Tax Credit for Carbon Capture, Utilization and Storage (CCUS), Investment Tax Credit for Clean Hydrogen, Clean Technology Investment Tax Credit, and Clean Electricity Investment Tax Credit. However, maximizing the economic potential of these credits will require a holistic approach to the implementation of financial incentives for decarbonization in Canada.

To this end, the federal government must collaborate with provincial and territorial governments to ensure that where feasible, incentives available – or which will become available – at the regional level are stackable with those currently offered by the federal government. In doing so, the federal government can simultaneously support regional economic growth and national emissions reduction.

July 4 2023