It’s rarely a great idea to compare yourself to someone else. You can end up dissatisfied with something about yourself or about what they have and you don’t.
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Psychologists have a name for this behavior. It’s called social comparison.
The theory suggests that people value their own personal and social worth by assessing how they compare to others. This is helpful for children who are learning social behaviours from each other on the playground, but hopefully by the time they reach adulthood they know it is no longer beneficial.
For those working in the Canadian green energy sector, a little social comparison couldn’t be helped when the federal government released Budget 2023. Hopeful that investments into clean technologies would be increased to better compete with the massive investments and tax credits available to their U.S. counterparts through the Inflation Reduction Act (IRA), they were disappointed.
But not necessarily deflated.
At the 2023 Value of Biogas East Conference, held by the Canadian Biogas Association in Toronto last month, the two federal policies were compared during a fireside chat between CBA executive director Jennifer Green, ClearBlue Markets vice-president Robyn Gray, and PAA Advisory managing director Dan Pfeffer.
The companies provide public affairs, communications and advisory services for clients in the green energy sector.
The intention of the IRA is to “catalyze a domestic supply chain” to remove pressures and challenges that the U.S. is facing from China, Russia and other places, said Gray. Total spend within the IRA legislation is nearly US$500 billion, but the big piece of the pie is for clean energy and climate change mitigation, worth nearly $400 billion.
“This is a game-changer piece of legislation. It’s the biggest climate change piece of legislation that’s been seen in the U.S.,” Gray said.
And because the U.S. is our neighbour and biggest trading partner, “they’re the elephant, we’re the mouse, and when the elephant sneezes, we feel it, we feel it all through ourselves. So we can’t ignore it.”
The U.S. is also mobilizing the money quickly. Announced last August, numerous projects have been announced and tens of thousands of jobs created.
In its Fall Economic Statement, the Canadian federal government had “an incomplete response” on the energy file, said Pfeffer. While it’s not aiming to match the IRA dollar for dollar, a “glaring” exception was the recently announced Volkswagen EV battery plant to be built in St. Thomas, where the Canadian government will provide up to $13 billion.
A similar plant is being built in the U.S. by Volkswagen, which will receive an equivalent amount from the IRA.
Budget 2023, released in March, provided a few more details regarding clean energy funding, particularly for hydrogen-fuelled clean technologies. It doesn’t provide specifics for the production of biogas or renewable natural gas (RNG). Pfeffer noted the budget briefly mentions consultation on biofuels, but no one is sure what this means or will entail.
Green said when she asks the federal government about biogas and RNG, it wants to know how the IRA is accelerating the opportunity and appetite for biogas and RNG in the U.S., and how that affects Canada.
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“How do you compare,” she asked. “You have a big fat carrot in the one hand, and nothing in the other.”
Gray said in the IRA, biogas and RNG are included in a lot of texts for tax credit and tax incentives. An investment tax credit (ITC) and a production tax credit (PTC) are available, which she said is a nicer alternative for companies than having to wait for a funding program.
“There is a lot of policy uncertainty and conditions that comes with that.”
Tax credits are not always a benefit, however. Pfeffer said an ITC is only useful for up-front costs, but a PTC is an ongoing credit that is helpful for providing financial assurances to project builders and financiers. He said the Canadian government doesn’t seem to have an appetite for a PTC.
Industry stakeholders in the biogas and RNG sectors are hopeful that the “consultations” held by the government will be more forthcoming, and at least attempt to keep up with the best looking kid on the playground.