Canada’s low-carbon future depends on governments and businesses working together

As published on LinkedIn

2020 closed with a significant — and potentially game-changing — push from the federal government to address climate change. Within the span of three weeks, it tabled its Net Zero legislation and released an ambitious climate change plan entitled “A Healthy Economy and a Healthy Environment” backed by strategies to advance clean fuel, hydrogen and small modular reactors.

The cumulative effect of these policies is to ensure that Canada exceeds its 2030 targets via a series of broad-based measures, a price on carbon scheduled to reach $170 a tonne by 2030, and a proposed $15 billion funding envelop that could potentially be topped up in the next budget. This plan, the Net Zero legislation and the strategies released shortly thereafter also aspire to chart a course towards achieving Net Zero emissions in Canada by 2050.

Meanwhile, Canada’s business community continues to build on its long track record of finding innovative solutions to meet environmental challenges. Around the same time as the government’s announcements, some Canadian businesses unveiled their own initiatives to help the country reach the goal of Net Zero by 2050:

• Nutrien, which is the world’s largest provider of crop inputs and services, released its new carbon program to help growers produce more food with less land, water and environmental impact.
• Rio Tinto and Alcoa, which are two of the world’s largest mining and metals companies, celebrated the completion of construction on the ELYSIS Industrial Research and Development Center in Saguenay-Lac-Saint-Jean, Québec — a joint project with the goal of producing Net Zero carbon aluminium.
• Canadian Pacific Railway, which has roots going back to 1881, announced its plans to develop North America’s first line-haul hydrogen-powered locomotive.

These are just a few examples of how Canadian businesses are stepping up.  

But Canada can do even more to position itself as a leader in the low-carbon transition, including exports of products and technologies that would enable other countries to reduce their emissions while generating significant economic growth within the country. On the same day that the federal government released its climate plan, the Industry Strategy Council released its report “Restart, Recover and Reimagine – Prosperity for All Canadians.” 

The Industry Strategy Council, which spent nearly seven months examining ways to enhance the wealth and prosperity of Canadians, reiterates the need for a post-COVID economic growth strategy. It rightly argues that Canada should play to its comparative advantage and pair its natural resource endowment with Canadian ingenuity to help other countries transition to a low-carbon future. Few would argue that Canada has the means necessary to capture key growth markets such as hydrogen, carbon capture and storage, small modular reactors, battery technology, smart electricity grids and biofuels.

Carbon capture, utilization and storage (CCUS) is a perfect example. Last September the International Energy Agency concluded that reaching Net Zero globally is virtually impossible without CCUS, especially in a world where 40 per cent of its electricity continues to be generated from coal. Accordingly, cost-effective Canadian CCUS technology has considerable export potential, while in Canada it can lower emissions in many emissions-intensive industries and play a critical role in the development of blue hydrogen. 

Other countries are moving quickly to cement their place as an early adopter and key supplier of CCUS technologies. A broad suite of government initiatives are underway to support the R&D and infrastructure costs necessary to deploy CCUS at scale (see the United Kingdom’s Green Industrial Strategy and Norway’s Longship initiative), while the United States has been leveraging private sector investment through a tax credit instrument since 2018. It is important that Canada not be left behind.

A practical question for decision makers in 2021 is whether we should stick with the status quo – a fragmented and underperforming industrial policy – or pursue an innovation agenda that is more focused and intentional.  A targeted strategy that supports private sector research, the cost-effective adoption of low carbon technologies, and the scaling up of promising technologies is something we argue for in our paper “Powering a Strong Recovery” and will be a focus of our work this year. 

Let’s make 2021 the year we move decisively on an economic growth strategy, and back collaborative efforts by our political and business leaders to put the country on the path to Net Zero.