Industrial Policy: Lessons for Canada from Around the World

Like many parts of getting to a net-zero economy, Canada’s industrial policy — strategic government actions to build and shape the industry — will require more deliberate attention, including efforts to rebuild government capacity. Experts from Europe and Canada came together to discuss best industrial practices for developing an emission-free economy, Canada’s unique advantages in the coming transition, and the policy and governance tools needed to reach our economic and climate goals. This also provided an opportunity to announce the launch of the Centre for Net-Zero Industrial Policy.

• Bridging policy and governance: Moving Canada’s economy into a just, sustainable, and prosperous future will require a dynamic structural transformation. Policy instruments like R&D investments, tax credit for green sectors, and public procurement will need to be paired with better governance structures and deliberate capacity-building in public sector organizations.
• Good industrial policy means bringing business and other stakeholders together: The familiar adage that the government shouldn’t pick winners and losers “is not what modern industrial policy is about,” said Dr. Altenburg. Broad transformations in agriculture, housing, urban planning have always relied on policy-driven changes that have never been exclusively delivered by market forces, he added, as these cannot solve all the coordination challenges, resulting in uncertainty for investors.
• Coordination is key: Even if we had a carbon price reflecting the true cost of climate change, it wouldn’t change the need for coordination between government and the private sector, said Dr. Altenburg. Whether increasing charging infrastructure to keep up with EVs, deploying hydrogen to replace fossil fuels or ramping up low-carbon steel production, governments must help coordinate investments and catalyze solutions to chicken-and-egg problems in new supply chains and the supporting infrastructure.
• Look to global best practices in effective industrial policy: Experts drew parallels between Canada and Norway, two countries with similarly resource-driven, but less diverse economies than some of their larger neighbours (such as the U.S. or Sweden). Similar to how Norway has historically used hydropower to create a decentralized regional strategy, Canada can also use its power sector as a structural enabler for regional approaches to supporting the net-zero transition and economic development.
• Clarity of purpose and vision is essential, but so is flexibility and preparing for the unexpected.: “There has to be a very clear target and a clear goal, and everybody has to be on the same page” in terms of getting there, emphasized moderator Dr. Bentley Allen, adding that “[The solutions] might not be where you want them to be.”
• Building the workforce of the future: It’s not just about compensating or retraining workers, shared Dr. Mikheeva, emphasizing the need for lifelong learning and labour mobility between different professions to deliver on green industrial goals with a public purpose. Germany’s dual vocational training system, where skill development is driven by the private sector, was highlighted as a way the country is connecting workforce training with industrial sector needs.