As its contribution to realizing this goal, Canada committed to achieving a net-zero-emissions economy by 2050, formalizing this pledge with the Canadian Net-Zero Emissions Accountability Act, along with a series of interim emissions-reduction targets.2 As an additional step, Prime Minister Justin Trudeau announced at the 2021 Leaders’ Summit on Climate that Canada would seek to cut emissions by 2030 to 40%–45% below 2005 levels, a more ambitious reduction than the 30% committed to in the Paris Agreement.
Most Canadians understand that global temperature swings and more frequent extreme-weather events pose significant risks to our way of life. Political parties also recognize this, which is why all federal party platforms have commitments to address climate change. Economic costs associated with the transition to a lower-emissions future are also widely acknowledged, yet the public discourse is nevertheless often expressed as a trade-off between the environment and the economy. This is a false choice: If sound policy and businesses decisions are implemented, we can achieve our emissions targets while minimizing costs.
There are four key economic reasons for acting now—in big, bold, coordinated ways—to achieve Canada’s net-zero-emissions target:
Recognizing that all nations stand together. With international peers and trading partners accelerating their pathways to decarbonization, Canada must also make investments in mitigating emissions and advancing green industries to support economic growth and increase living standards. Soon, emissions-reduction strategies will be required to attract international capital, as global funds are increasingly dependent on environmental, social, and governance (ESG) strategies in their investment focus. Many pension fund and asset managers—including the world’s largest, such as BlackRock and Vanguard—have made public statements that they’ll be publishing the proportion of their asset allocations that are aligned with net zero and increasing scrutiny of investments in high-carbon-emitting sectors.3 Governments are also involving ESG considerations in their decision-making. US President Biden’s cancellation of the Keystone XL Pipeline Project—which, of course, had an economic impact on Canada—is just one high-profile example.
Seizing the opportunity to lead the global energy transition. As the worldwide economy looks to make significant reductions in GHG emissions, Canada has a unique opportunity to build upon its respected history in the energy industry and accelerate the shift toward low emissions and clean energy. If we move more quickly than other nations to a low-emissions future, we can realize potential economic opportunities to profit from our resulting accumulated knowledge, technology, products, and services. Significant possibilities involve exporting hydrogen and increasing exports of liquefied natural gas (LNG), both of which could lower global carbon emissions. There’s also a potential to increase trade of our professional technical services as we build expertise in areas including carbon capture and storage.
Achieving economic prosperity. Carbon pricing, environmental regulations, and large-scale investments in technologies and infrastructure can lower emissions, all with limited transition costs. Modelling by Canada’s Ecofiscal Commission, the Conference Board of Canada, and Deloitte all show that the country can move to a low-carbon future and maintain economic growth across regions, as long as the affected areas get adequate support during the transition periods. And as noted previously, accelerating progress is essential for economic prosperity, since costs increase if progress is delayed.
Addressing risks sooner to reduce future costs. The COVID-19 pandemic has underscored the importance of prudent planning and risk mitigation. According to the Global Preparedness Monitoring Board (GPMB), an independent body aiming to ensure readiness for global health crises, “It would take 500 years to spend as much on investing in preparedness as the world is losing due to COVID-19.” In its report A world in disaster, the estimated cost of preparing for the pandemic would have been $5 per person, or approximately $39 billion globally. In reality, $11 trillion in economic output has been lost globally thus far.
While COVID-19 has had devastating social and economic effects, the lessons learned present an opportunity to accelerate green investment. As countries around the world look at how they can stimulate economic growth after the pandemic, many are funding green infrastructure including $9.2 billion through the Investing in Canada Plan, the European Union’s Green Deal valued at €1 trillion (C$1.5 trillion)4 and US President Joe Biden’s proposed jobs, infrastructure and green energy bill valued at US$2 trillion (C$2.5 trillion).5
