The Parliamentary Budget Officer, Yves Giroux, believes that the federal government has shown a certain optimism in assessing that the production incentives offered to Northvolt will be profitable in nine years.
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The federal government has somewhat overestimated the benefits that will be generated by the Northvolt project in Montérégie, where the Swedish company will manufacture battery cells for electric vehicles, in particular thanks to production incentives of up to 4.6 billion dollars, observes the Parliamentary Budget Officer (DPB).
In a report unveiled on Friday, Yves Giroux indicates that the total amount of these subsidies, modeled on the Inflation Reduction Act of the American administration, will not be recovered before 2037, while the Trudeau government had suggested that #x27;it could be sooner.
By presenting the project on September 28, the federal government, in its press release, anticipated that profitability would be achieved within five to nine years after full implementation of the project. This will not be the case, according to Yves Giroux.
Based on Northvolt's projected annual production schedule, PBO estimates the $4.6 billion production subsidy to break even at 11 years, it writes.
This period also differs from the nine years mentioned in the response to the request for information made by Mr. Giroux to the Minister of Innovation, Science and Industry, François-Philippe Champagne , specifies the report.
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The difference, underlines the DPB, is explained by the fact that the federal government took into consideration for its projections that the Northvolt plant will be in full production as soon as it is commissioned, whereas usually , this is done gradually.
We have the same methodology, but the counter does not start at the same time, he summarized on Friday in an interview with Radio-Canada.
The gap between his assessment and that of Ottawa, that said, is not fundamental, Mr. Giroux nuances. For a project of this magnitude, where the timetable is not set in stone, this is not something out of the norm, he emphasizes.
That the federal government has expressed more optimistic projections than its own does not surprise it either, to the extent that Ottawa had done the same thing to assess the profitability of subsidies of this type promised to Volkswagen for its future plant in St. Thomas, Ontario.
While Prime Minister Trudeau estimated in April that it would not take more than five years for this financial support to generate equivalent economic benefits, the PBO estimates, in its Friday report, that the wait could ultimately be three times longer.
Last September, Mr. Giroux calculated that the production subsidies offered to Volkswagen, for its future St. Thomas site, and to Stellantis-LGES, for its factory under construction in Windsor, would, according to the combined schedules of these companies, profitable in about 20 years, in 2043.
His Friday report, however, is more precise. According to him, the break-even point for the financial support offered to Volkswagen will be reached in 15 years, while, in the case of Stellantis-LGES, it will be necessary to wait 23 years after the start of production, next year. /p>
According to the PBO, the total cost of the financial assistance to manufacturers of batteries for electric vehicles which was offered by the governments of Canada, Ontario and Quebec will amount, for the period from 2022-2023 to 2032-2033, to $43.6 billion, or 15.6% more than what has been announced so far.
To arrive at this gap of 5.8 billion, Yves Giroux assumes that, just as in the case of Volkswagen, the support offered to Stellantis-LGES and Northvolt will not be taxable, whereas it should have been. ;be normally.
He even specifies that assuming that support for the manufacturing of electric vehicle batteries widens the deficit, the costs of the public debt of the federal and provincial governments will increase the total costs of the assistance provided by an additional $6.6 billion.
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On Network broader economic impacts on the supply chain.
The document, he says, also fails to emphasize that more than two-thirds of government aid is conditional and payable over a decade.
Conservative MP Gérald Deltell, for his part, believes on the contrary that the PBO report demonstrates that the Liberals are incapable of calculating the amounts that will be spent.
Each time, the Parliamentary Budget Officer calls them to order, he emphasizes, also evoking the overly optimistic projections of the Trudeau government in relation to the profitability of the production incentives offered to Volkswagen.
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Minister Pierre Fitzgibbon believes that the federal estimate according to which the production incentives promised to Northvolt will be profitable within nine years “is the right one”.
The Quebec Minister of the Economy, Innovation and Energy, Pierre Fitzgibbon, for his part noted Friday, on the sidelines of a conference before the Relations Council international companies of Montreal (CORIM), that, in the case of Northvolt, profitability over 11 years rather than 9 did not make a big difference.
He also argued that the mega-factory that the Swedish company wishes to establish on the border of Saint-Basile-le-Grand and McMasterville will remain in operation more than 10 years and the benefits will therefore be felt well after the planned end of the production incentives.
Finally, Mr. Fitzgibbon indicated that under the agreement concluded with Northvolt, it will not be able to benefit from these government subsidies if it leaves Quebec within five years. I think we have protection that is quite interesting, he concluded.
According to the terms of the agreement presented earlier this fall, the federal government will cover two-thirds of the production incentives ($3.1 billion) offered to Northvolt for its project in Montérégie, while the Quebec government will assume one-third of the subsidy ($1,000,000). 5 billion dollars).
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