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In Ensuring a Resilient Recovery, Will Canada Lead, Follow, or Be Left Behind?

Canada must do more to fund a resilient recovery. IISD’s research into stimulus packages in Europe and Asia shows four areas of opportunity.

Calls for green economic recovery plans are piling up, both here in Canada and around the world. Joining environmentalists in voicing their concerns are the International Monetary Fund, World Bank, leading economists, and some of the world’s biggest companies and investors.

Recent polling data shows Canadians agree; a majority believe we must keep up efforts to combat climate change regardless of the health and economic impacts of COVID.

Extreme weather events have not stopped while the world is on lockdown: just last week, the most powerful cyclone in 20 years hit eastern India and Bangladesh, with India now bracing for another; two dams in Michigan were breached in what is being called a “500-year flooding event”; and scientists warned of a grim outlook for Atlantic hurricane season.

The Task Force for a Resilient Recovery, of which IISD is a member, is currently formulating recommendations for how Canada can ensure our economic recovery supports the jobs, infrastructure, and growth needed to keep us competitive in a changing climate.

Our recovery efforts have started on the right foot, but we must do more

Canada has already made steps in the right direction by announcing the conditionality of COVID-19 loans to large businesses based on the disclosure of climate impacts and risks, a first-of-its-kind approach that has garnered international interest. Another welcome move was the federal government’s decision to put CAD 1.7 billion into helping clean up orphaned and abandoned oil and gas wells.

But Canada can and must do more or risk getting left behind while the rest of the world moves on. IISD’s research into stimulus packages in Europe and Asia, which will feed into the Task Force’s recommendations, shows four areas of opportunity:

  • Buildings: Australia, New Zealand, South Korea, and the European Union (EU) through its Green Deal, are rolling out energy efficiency retrofits for low-income homeowners and for publicly owned buildings. Public investments vary between USD 7 and USD 750 per capita (in Denmark), with the aim of saving much more on energy bills and creating thousands of local jobs. The same rationale holds true for energy efficiency retrofits in Canada, where buildings are the third largest source of greenhouse gas (GHG) emissions (13% of the total in 2018).
  • Mobility: France has committed EUR 8 billion (around USD 130 per capita) to “cash for clunkers” programs and subsidies for the purchase of electric vehicles (EVs). Iceland and China are investing in EV charging infrastructure, while the EU is considering a VAT exemption for “zero-emission” cars. In addition, the United Kingdom and many European cities have announced large investments in cycling and walking infrastructure, while China is planning more funding for high-speed rail. Mobility is the sector hardest hit by the COVID-19 crisis and the second largest source of Canada's GHG emissions (25% of the total in 2018). Using stimulus to green and electrify the Canadian mobility sector appears a viable solution, with the added benefit of preparing Canadian manufacturers to compete in export markets.
  • Nature restoration: The EU, through its Biodiversity 2030 Strategy, has committed around USD 500 per capita to nature restoration; New Zealand has committed USD 140 per capita. Similar efforts are underway in Iceland and Pakistan, with locals employed to plant trees, improve waterways, promote organic agriculture, and restore wildlife habitats. Canada is world-famous for its vast outdoors, but those spaces also suffer from industrial and agricultural pollution requiring investments in natural infrastructure.
  • Clean energy: Many countries have come up with investment plans for clean energy. Australia, Norway, and Portugal are backing hydrogen, while Denmark and Germany are building out additional wind investments. The EU has also pledged EUR 40 billion in a Just Transition Fund to support coal phase-outs, retrain workers, and decarbonize businesses. Energy is the largest source of Canada's GHG emissions—26% of the total came from oil and gas in 2018.

None of this is to suggest Canada should abandon its current climate efforts. Its existing commitment to phasing out coal, for example, is vital and needs to be complemented by investments in renewable energy, grids, and storage. Similarly, a federal carbon tax is necessary, but insufficient on its own. To meet the international commitments we have made to limit global warming by 2030, we need to use all the tools in the toolbox.

A federal carbon tax is necessary, but insufficient on its own. To meet the international commitments we have made to limit global warming by 2030, we need to use all the tools in the toolbox.

In fact, Canada was late in introducing carbon pricing and should learn from those who got there first. Europe, which has had carbon pricing for a long time, has also experienced problems with its implementation. As the above examples demonstrate, many countries in Europe have recognized carbon pricing alone is not enough and are rolling out sizable green stimulus plans now.

And, while some commentators have suggested there are risks in allowing governments to pick winners and losers in the marketplace, the history of innovation—from the Internet to the iPhone—demonstrates the critical role of direct government support in developing new technologies. Risks can and must be managed, including through private sector participation.

As we face a once-in-a-generation opportunity to shape our future, Canada also has an opening to not just keep up with international peers but show true leadership in the face of unprecedented adversity. To do any less would be a betrayal—of ourselves and future generations.