Ehren Cory, CEO of Canada Infrastructure Bank, in Toronto on April 19.Tijana Martin/The Globe and Mail
Five years after the Canada Infrastructure Bank hired its first employee, the Crown agency is nearing a milestone, with almost $10-billion in investment commitments. And it is starting to answer critics who have said it has been too slow to get off the ground.
The Canada Infrastructure Bank (CIB) added $2.5-billion in investment commitments in the fiscal year that ended March 31, bringing its cumulative total to $9.7-billion, according to financial results released this week. Forty-two of its commitments, totalling $9.3-billion, have financing in place and have completed due diligence. In the past year, the bank has more than doubled its cumulative deal volume.
This pace of investment is still short of the $3-billion to $5-billion the federal government expects the CIB, an arm’s-length Crown agency, to deploy annually from an initial allocation of $35-billion in public money. The government established the bank so that it could use that money to make early investments and favourable loans, with the aim of attracting private investors to new or stalled Canadian infrastructure projects that might otherwise be deemed too commercially risky, or that need large up-front investments that will take years to pay back.
After years of unglamorous work to build the Crown agency from scratch and get a grasp on the array of projects that need extra help to get started in different provinces, cities and industries, chief executive Ehren Cory said he thinks “we’re now in full stride and have the ability to do things at pace.”
“We’ve built a pipeline now of projects where I can say with some confidence that every year we will keep going at the pace we’re now working, and invest $3-billion to $5-billion incrementally each year in new projects,” he said.
Mr. Cory, who took the helm at the CIB in 2020 after leaving a previous role as president and CEO of Infrastructure Ontario, is under no illusions about how thorny and time-consuming it can be to get large infrastructure projects off the ground – or how impatient policy makers, politicians and investors can be after decades of under-investment in Canadian infrastructure.
It is not uncommon for people to say the CIB is off to a slow start, he acknowledged. After its first three years of operations, in 2021, it had eight investment commitments worth only $3.1-billion. In Ottawa, opposition parties have even called for the bank to be shut down, citing what they see as inefficiencies.
Mr. Cory counters that the quiet early years of the CIB were “a natural ramp-up.” Infrastructure assets take years to develop and build, then deliver benefits for decades.
“The CIB was not out hunting for shovel-ready projects,” he said. “In fact we’re the antithesis of that. We’re looking for projects that are stuck, that are blocked and they need unsticking.”
Over the past year, the federal government has defined the CIB’s investment priorities more sharply, steering it first toward priority areas such as electric-vehicle charging, small modular reactors for nuclear power and low-carbon fuels such as hydrogen. The government has also pushed the bank to invest in carbon capture, utilization and storage technology.
And in the most recent budget, the Liberal government tapped the CIB as its “primary financing tool for supporting clean electricity generation, transmission, and storage projects,” directing the bank to invest at least $10-billion in clean power and another $10-billion in green infrastructure.
Those investments will consume most of the CIB’s funds that hadn’t already been earmarked for priorities such as public transit, broadband, and trade and transport.
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“That’s a pretty clear signal that they want us to be going deeper into that sector, to make bigger investments in that sector, and to make more of them,” Mr. Cory said. “So that’s what we’re doing.”
There is sometimes a “perceived tension” between the arm’s-length CIB’s mandate to act commercially and the firmer hand government has taken in steering its investments, he said. But he added that the Crown agency was designed to respond to the public policy priorities of the day.
“I just want to be really clear: This is how it’s supposed to work,” he said. “Government sets the policy frame, we go find the investments.”
Of late, the CIB has backed some notable projects in its priority areas. It committed $970-million in an agreement with Ontario Power Generation to develop Canada’s first small modular reactor – a new, smaller class of nuclear reactors to generate power. And it agreed to provide a $277-million loan to a joint-venture partnership to build Canada’s largest biorefinery. The other investors in that project include Shell, Suncor and the government of Quebec.
Its approach also won some validation when an $800-million battery storage project it backed two years ago attracted two new private-sector investments from renewable energy producer Northland Power Inc. and construction company Aecon Group Inc.
Yet Mr. Cory still has to make the case to critics that the CIB is a necessary tool to build Canada’s next generation of infrastructure, especially when it comes to green investments.
The federal government is now in the process of launching the $15-billion Canada Growth Fund, which will be run by the Public Sector Pension Investment Board. Like the CIB, it will have a mandate to use public funds to draw private capital into investments in businesses and projects that help decarbonize Canada’s economy.
Mr. Cory said he believes the CIB and the Growth Fund can be “complementary” rather than competitive, making a “natural hand-off” as Growth Fund initiatives mature to a point where they can be deployed in larger-scale infrastructure projects.
“We have never had the problem of having too much money in the infrastructure space, certainly not in the last 50 or 60 years,” he said. “This is an ‘all-hands-on-deck, we need all of the tools in the toolbox’ problem, not a ‘we might crowd each other out’ problem.”