When world leaders convened in Paris a little over 5 years ago to negotiate a new climate change agreement, their discussions were largely framed around economics—the price tag associated with taking action but also the costs of inaction.
Fast-forward to 2021 and the framing has changed.
As President Biden said in his opening of the Leaders Climate Summit this week, "The countries that take decisive action now to create the industries of the future will be the ones that reap the economic benefits of the clean energy boom that’s coming."
In a few short years, we have crossed a critical threshold: Climate change is no longer simply perceived as solely an environmental imperative but as an economic opportunity.
It’s not just politicians taking note of this: from Bay Street to Wall Street, the challenge and opportunity of confronting climate change are top-of-mind. “No issue ranks higher than climate change on our clients’ lists of priorities,” writes Larry Fink, head of BlackRock, in his 2021 letter to CEOs.
In a few short years, we have crossed a critical threshold: Climate change is no longer simply perceived as solely an environmental imperative but as an economic opportunity.
Buoyed by this collective shift in focus, and spurred on by an American leader keen to make amends for the climate inaction of his predecessor, world leaders gathered at President Biden’s summit to ratchet up their national climate commitments.
The United States unveiled a new target of reducing greenhouse gas emissions 52% below 2005 levels by 2030. The EU, Japan, and the EU all increased their ambition, too, as did Canada, with Prime Minister Trudeau announcing an increase to our 2030 target, from a 30% reduction to 40%-45% below 2005 levels.
Canada was able to make this bolder commitment thanks in no small part to the actions and efforts of the federal and (some) provincial governments since 2015 through the Pan-Canadian Framework on Clean Growth and Climate Change. Building on that effort, the federal government’s Healthy Environment, Healthy Economy plan, released last December, outlined how Canada would achieve a target of at least 32%; with the introduction of Budget 2021 and continued alignment with the United States, the country is now on track to achieve a 36% reduction in greenhouse gases by 2030.
The federal budget takes several critical next steps in pursuit of the twin goals of emission reductions and low-carbon competitiveness. In particular, there are strategic investments in retrofits, net-zero innovation, and nature—all consistent with areas of opportunity identified by the Task Force for a Resilient Recovery and international benchmarks.
Our private sector has lagged behind its global peers ... a more proactive and collaborative approach to seizing opportunities in Canada is warranted.
A more ambitious target will of course require additional spending in the years to come; how much will need to be set aside, exactly, remains to be seen, but the CAD 108 billion the federal government has invested in climate action and clean growth since 2015 is relatively modest. For comparison, President Biden’s infrastructure plan comes in at USD 1 trillion—and this, it bears mentioning, is a de facto climate plan; if it can pass through Congress without much modification, it represents "the country’s one shot to pass meaningful climate legislation in the next few years, if not in the next few decades."
In Canada, Prime Minister Trudeau has more tools at his disposal enabling his government to rely less on spending, including a federal backstop price on carbon pollution (that will increase to CAD 170 per tonne in 2030) and regulations requiring the phase-out of coal-fired power and production of cleaner fuels. These measures will be needed to achieve the deeper reductions to which Canada has now committed, and more of a helping hand from provinces—particularly those currently lagging behind in their climate efforts—will be essential to success.
While government can do its part to capitalize upon the economic opportunities arising from climate solutions—from zero-emission vehicles (and their supply chains) to hydrogen to renewable power and more—ultimately, it’s Canada’s business community that will keep us in the hunt or see us fall behind. To date, our private sector has lagged behind its global (particularly European) peers, and while there are some encouraging signs that Canadian business leaders recognize this, a more proactive and collaborative approach to seizing opportunities here is warranted.
The federal government’s CAD 8 billion Net Zero Accelerator fund can play a key role in unlocking and scaling solutions, from the auto sector to industries such as cement and steel, so long as it applies green strings, is laser focused on truly innovative ways to significantly cut pollution, and avoids subsidizing technologies that are too incremental in nature. To capitalize on this fund, and catalyze needed business leadership toward net-zero, the Energy Transitions Commission may serve as a useful model to replicate in Canada.
Finally, we must remember our responsibility to support those who are least responsible for the climate crisis but hit hardest by its impacts: developing countries. President Biden used the Climate Summit to announce his intent to double U.S. climate finance to developing countries by 2024—including a tripling of funding to help countries adapt to climate change. Prime Minister Trudeau was less definitive, but stated that Canada would build on its existing commitments to climate finance in the months ahead. Indeed, it should follow Biden’s lead with a major new investment, or risk becoming the worst climate-finance performer in the G7.
As we slowly but surely work to put the pandemic behind us, it is reassuring to know that we haven’t lost sight of the climate crisis, and in fact are gearing up our efforts to tackle it. Canada’s new 2030 target is ambitious but achievable, and with a strong collective effort from all levels of government and Canadian businesses we can not only achieve it but raise our ambition even further.
