Canada’s future economy is going to look a lot like its past economy — despite a much-hyped transition to renewable energy
Statistics Canada released its annual survey of investment intentions last Friday. The results were largely ignored in the wake of Russia’s invasion of Ukraine but are worth analyzing for the light they shed on the Canadian economy’s future — which is pretty much the same as the Canadian economy’s past.
Casual readers of Statcan’s analysis could be forgiven if they formed the wrong impression of what is driving investment in Canada. On the whole, its analysis describes a Canada moving to a future fundamentally reshaped by the pandemic’s impact on health care, as well as a green shift to mass transit and clean energy. Statcan’s headline was that investment is being fuelled by “strong public sector spending.” Several paragraphs recite a roll call of public transit projects, hospitals and new long-term care facilities for the elderly. Another long section is devoted to so-called “clean” energy projects across Canada, although no total is given so it is unclear how much these affect overall investment.
But the reality of investment in Canada is quite different from Statcan’s portrayal of it. In fact, investment intentions for 2022 are rising more in the private sector than in the public sector — up $13.2 billion, compared to just $10.3 billion. And far from transitioning to green energy, Canada is increasing its investments in fossil fuels by a hefty $5.4 billion to at least $44.0 billion, or nearly one-quarter of all private investment (and that excludes investments in coal and other power plants for which data is not available).
Fossil fuels remain the backbone of Canada’s energy industry, no matter how much Minister of Environment and Climate Change Steven Guilbeault spews agitprop about our shift to a green economy. Oil and gas exploration and extraction lead overall investment with capital spending of $30.3 billion in 2022. And investment in pipelines, at $11.3 billion, is the second highest it has been, despite relentless attempts by environmentalists and some governments to block them. Another $2.4 billion is going to oil refining and retailing. All this planned investment was before oil and gas prices shot up after the war in Ukraine began.
The world’s shunning of Russia’s oil and gas means Canada has missed the boat by not investing even more in its fossil fuel infrastructure in recent years to be better positioned to fill the gap in European supplies. More pipelines and LNG terminals on Canada’s east coast could be helping to wean Europe from Russian energy, but instead it is Americans who are poised to capture this market. A recent article in The Wall Street Journal boasted “America takes pole position on oil and gas” — while Canada takes its usual place in the pack. Once again, empty political posturing by Canadian leaders has meant forfeiting energy markets to American firms, with no net impact on global greenhouse emissions.
Mining, another traditional resource industry with few green credentials, makes the second largest contribution to business investment growth in 2022, with a gain of $1.9 billion. The gold mining industry plans the biggest increase, though investment is at historically high levels for copper, nickel, iron ore, and potash. Gold and potash likely will receive a further boost from Putin’s folly in Ukraine as Russia is a large supplier of both commodities.
Another sign that a green shift is not the driving force in investment is that air transport plans a $600 million increase in investment, almost returning to its pre-pandemic level. Airlines clearly expect to start flying again despite air travel’s big carbon footprint. Most other industries plan modest increases of a few hundred million in investment, nothing like the billions going to resource projects. Statcan draws attention to manufacturing investment in machinery and equipment but, overall, manufacturers are not actually changing their spending. Electric utilities do plan to invest $25.6 billion, but that’s nowhere near the levels needed if they really believed Canadians will be transitioning en masse to electric vehicles.
On balance, investment intentions suggest Canada’s future economy is going to look a lot like its past economy — despite the pandemic and a much-hyped transition to renewable energy. Oil and gas will remain our largest industry and fossil fuels the basis for the energy infrastructure needed to support our energy-dependent lifestyle and exports. As detailed by energy guru Daniel Yergin, transitions between energy sources require decades to complete because of the massive investment in existing technologies. Governments and environmentalists may delude themselves that the pandemic is spurring a rapid transition to a green economy, but the business sector has a more realistic understanding of how little the fundamentals of Canada’s economy have changed.
Philip Cross is a senior fellow at the Macdonald-Laurier Institute.
NEW YORK (AP) — Shares of Tesla soared Wednesday as investors bet that the electric vehicle maker and its CEO Elon Musk will benefit from Donald Trump’s return to the White House.
Tesla stands to make significant gains under a Trump administration with the threat of diminished subsidies for alternative energy and electric vehicles doing the most harm to smaller competitors. Trump’s plans for extensive tariffs on Chinese imports make it less likely that Chinese EVs will be sold in bulk in the U.S. anytime soon.
“Tesla has the scale and scope that is unmatched,” said Wedbush analyst Dan Ives, in a note to investors. “This dynamic could give Musk and Tesla a clear competitive advantage in a non-EV subsidy environment, coupled by likely higher China tariffs that would continue to push away cheaper Chinese EV players.”
Tesla shares jumped 14.8% Wednesday while shares of rival electric vehicle makers tumbled. Nio, based in Shanghai, fell 5.3%. Shares of electric truck maker Rivian dropped 8.3% and Lucid Group fell 5.3%.
Tesla dominates sales of electric vehicles in the U.S, with 48.9% in market share through the middle of 2024, according to the U.S. Energy Information Administration.
Subsidies for clean energy are part of the Inflation Reduction Act, signed into law by President Joe Biden in 2022. It included tax credits for manufacturing, along with tax credits for consumers of electric vehicles.
Musk was one of Trump’s biggest donors, spending at least $119 million mobilizing Trump’s supporters to back the Republican nominee. He also pledged to give away $1 million a day to voters signing a petition for his political action committee.
In some ways, it has been a rocky year for Tesla, with sales and profit declining through the first half of the year. Profit did rise 17.3% in the third quarter.
The U.S. opened an investigation into the company’s “Full Self-Driving” system after reports of crashes in low-visibility conditions, including one that killed a pedestrian. The investigation covers roughly 2.4 million Teslas from the 2016 through 2024 model years.
And investors sent company shares tumbling last month after Tesla unveiled its long-awaited robotaxi at a Hollywood studio Thursday night, seeing not much progress at Tesla on autonomous vehicles while other companies have been making notable progress.
Tesla began selling the software, which is called “Full Self-Driving,” nine years ago. But there are doubts about its reliability.
The stock is now showing a 16.1% gain for the year after rising the past two days.
The Canadian Press. All rights reserved.
TORONTO – Canada’s main stock index was up more than 100 points in late-morning trading, helped by strength in base metal and utility stocks, while U.S. stock markets were mixed.
The S&P/TSX composite index was up 103.40 points at 24,542.48.
In New York, the Dow Jones industrial average was up 192.31 points at 42,932.73. The S&P 500 index was up 7.14 points at 5,822.40, while the Nasdaq composite was down 9.03 points at 18,306.56.
The Canadian dollar traded for 72.61 cents US compared with 72.44 cents US on Tuesday.
The November crude oil contract was down 71 cents at US$69.87 per barrel and the November natural gas contract was down eight cents at US$2.42 per mmBTU.
The December gold contract was up US$7.20 at US$2,686.10 an ounce and the December copper contract was up a penny at US$4.35 a pound.
This report by The Canadian Press was first published Oct. 16, 2024.
Companies in this story: (TSX:GSPTSE, TSX:CADUSD)
The Canadian Press. All rights reserved.
TORONTO – Canada’s main stock index was up more than 200 points in late-morning trading, while U.S. stock markets were also headed higher.
The S&P/TSX composite index was up 205.86 points at 24,508.12.
In New York, the Dow Jones industrial average was up 336.62 points at 42,790.74. The S&P 500 index was up 34.19 points at 5,814.24, while the Nasdaq composite was up 60.27 points at 18.342.32.
The Canadian dollar traded for 72.61 cents US compared with 72.71 cents US on Thursday.
The November crude oil contract was down 15 cents at US$75.70 per barrel and the November natural gas contract was down two cents at US$2.65 per mmBTU.
The December gold contract was down US$29.60 at US$2,668.90 an ounce and the December copper contract was up four cents at US$4.47 a pound.
This report by The Canadian Press was first published Oct. 11, 2024.
Companies in this story: (TSX:GSPTSE, TSX:CADUSD)
The Canadian Press. All rights reserved.
‘I get goosebumps’: Canadians across the country mark Remembrance Day
Surrey police transition deal still in works, less than three weeks before handover
From transmission to symptoms, what to know about avian flu after B.C. case
Bitcoin has topped $87,000 for a new record high. What to know about crypto’s post-election rally
Wisconsin Supreme Court grapples with whether state’s 175-year-old abortion ban is valid
Twin port shutdowns risk more damage to Canadian economy: business groups
Canadanewsmedia news November 12, 2024: Union serves strike notice to Canada Post
As Toronto enters its Taylor Swift era, experts say crowd safety depends on planning
