Canada can learn from China, Indonesia and Morocco as it develops industrial policies designed to diversify the economy and build new clean-technology industries, according to Aaron Cosbey, senior associate with the International Institute for Sustainable Development.
Cosbey is an author of the July 2026 report Industrial Policy for the Battery Age: Lessons from China, Indonesia, and Morocco, which examines policy across the battery value chain from mineral extraction and processing to battery manufacturing and electric vehicles.
In an interview with Energi Media, Cosbey said successful industrial policy must combine multiple policies rather than rely on subsidies to individual factories or sectors.
Governments need infrastructure, education, research and development, efficient permitting and other broad economic measures, he said. Sector-specific policies can then support manufacturing, consumer demand, charging infrastructure, export development and investment.
China offers the clearest example of the full approach. Its support for batteries and electric vehicles developed over many years and included manufacturing incentives, research, infrastructure and policies designed to create a large domestic market for EVs.
Cosbey cautioned that China’s success was the product of long-term planning rather than a rapid policy intervention. Electric vehicles, batteries and other clean technologies had been identified as strategic sectors years before the industries reached their current scale.
The lesson for Canada, he said, is that future prosperity depends on identifying industries with long-term growth potential and developing the capabilities required to compete in them.
Indonesia illustrates a different strategy. As the world’s largest nickel producer, the country banned exports of unprocessed nickel in an effort to capture more value domestically. Companies seeking to mine Indonesian nickel were required to invest in processing capacity inside the country.
That policy has attracted substantial processing investment, but Indonesia has had less success extending the strategy into battery and EV manufacturing. Cosbey said the experience demonstrates that control over a critical mineral can help move a country into processing, but does not automatically create an integrated downstream manufacturing industry.
Morocco has followed another path. It already had a major export-oriented automotive industry, industrial-chemical expertise based partly on phosphates, a skilled workforce and preferential access to the European market. It is now using those capabilities to attract investment in batteries and electric vehicles.
Cosbey said Morocco demonstrates an important industrial-policy principle: countries are more likely to succeed when they build new industries from capabilities they already possess rather than selecting sectors disconnected from their existing economy.
That principle could apply directly to Canada. Ontario has an established automotive manufacturing and parts ecosystem, Canada possesses significant critical-mineral resources, and Quebec’s low-carbon electricity can provide an advantage for energy-intensive manufacturing.
The interview also highlighted Alberta’s Bitumen Beyond Combustion research as an example of a potential new industrial opportunity. Technologies under development could convert bitumen into non-combustion products including carbon fibre and asphalt binder, creating higher-value markets beyond conventional fuel production.
Cosbey said industrial policy also requires strong coordination across government. Ministries responsible for natural resources, transportation, environment, finance, research and other areas need to work toward common objectives. Canada’s federal structure adds another layer because many energy, electricity and industrial-development decisions are provincial.
He said the federal government’s current critical-minerals, automotive and electricity strategies represent progress compared with earlier Canadian policy, but questioned whether Canada has developed a clear process for identifying the sectors in which it intends to build future competitive advantages.
The broader challenge is speed and coherence. China spent years building the industrial system that ultimately produced its current battery and EV industries. Morocco used existing manufacturing capabilities and trade access to move into adjacent sectors. Indonesia successfully captured more mineral-processing activity but shows how difficult it is to continue moving down the value chain.
For Canada, the cases suggest that industrial policy will succeed only if governments can connect existing resources, technologies and manufacturing capabilities to future markets through a sustained, coordinated strategy.
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