Climate change is one of the greatest challenges of our time. Failure to act decisively will create significant long-term issues for our economy, our communities, and the quality of life for future generations. A coherent and effective response to the challenge can unleash significant economic opportunities that will position Canadian companies to compete in the low-carbon transition, create highly skilled and well-paid jobs and improve the prospects for reconciliation with the Indigenous Peoples of Canada.

A successful strategy to combat climate change requires a true partnership between the public and private sectors. Companies are designing their strategies to meet climate goals, encouraged by shareholders, regulators, employees and customers to demonstrate their societal responsibility and ensure their products and operations come with a lower carbon footprint. Many are ready to invest significant sums in transforming their business, but they face an uncertain policy environment and conflicting signals from all levels of government.

Indigenous communities increasingly are benefiting from resource and infrastructure development through employment and skills training, fostering Indigenous-owned businesses and support for community development. Successful partnerships have been built when the community has a voice in how development is undertaken and how they can share in the benefits. As they have noted, the country’s path to net zero goes straight through Indigenous communities. Canada’s business leaders recognize this reality, and many are building stronger relationships to ensure cleaner energy projects also create expanded opportunities for Indigenous Peoples.

There is a need to increase capacity within communities to allow adequate assessment of project benefits and risks, to determine what kind of partnership is best for the community in question and the role it will have in ensuring Indigenous rights and traditions are respected.

Many Indigenous communities would prefer to have an ownership stake in projects on their traditional territories. But they often lack the resources to make such a significant investment and face barriers to accessing sufficient capital due to lack of collateral or lack of a financial track record that satisfies traditional lenders. Also, as non-taxable entities, Indigenous communities cannot access investment tax credits for CCUS and those recently announced in the Fall Economic Statement. Overcoming barriers to accessing capital is key for improving Indigenous participation in clean energy projects. Interesting new approaches are emerging – the Alberta Indigenous Opportunities Corp. recently provided low-interest financing that was instrumental in allowing a number of First Nations to secure an equity interest in several Enbridge pipelines. We suggest there is a need for a more focused strategy nationally to enhance Indigenous access to capital.

A key challenge is that Indigenous communities often do not have the security to offer to traditional lending institutions. A federal loan guarantee program for Indigenous financing should free up more private funding, especially through Canada’s major financial institutions. It’s worth noting that the Prime Minister’s December 2021 mandate letter to his natural resources minister tasked him with developing a National Benefits Sharing Framework. A loan guarantee program and business capacity funding could be housed within such a framework to fast-track these policy advancements. As noted elsewhere in this paper, we believe there is a compelling case for expediting approval processes for Indigenous-led energy projects. In turn, this should make financing more readily available to Indigenous communities.

Recommendation from the Business Council of Canada
The federal government should establish a loan guarantee program to support Indigenous access to competitive capital for equity partnerships in natural resource projects. It should also make available funding for Indigenous groups to engage in commercial due diligence and business capacity building necessary to support successful partnerships with the private sector.

Conclusion

Canada is uniquely positioned to achieve its climate goals for 2030 and 2050 while also expanding its supply of cleaner energy sources and innovative technologies that can help the world solve today’s energy security challenges and tomorrow’s net-zero transition needs. But urgent action is needed.

It will require a true partnership amongst various levels of government, the private sector and Indigenous leaders and a laser focus on the country’s most impactful opportunities. It undoubtedly will mean vastly larger public and private investment and a coherent policy framework that will encourage sustained levels of investment over the coming decades. And it will require an industrial strategy that pushes Canada’s innovation capabilities and allows it to compete with other countries also seeking to secure national advantage in the coming clean energy transition.