Originally published by The Hub
Of the many modern miracles that humanity has leveraged to build our civilization, fossil fuels surely rank near the top of the list.
Fossil fuels have been the backbone of industrialized society, providing us with cheap, reliable energy that has helped us achieve an unprecedented level of prosperity.
And yet, our dependence on burning hydrocarbons to generate energy has come with some unwanted side effects. We’ve raised the concentration of carbon dioxide in the Earth’s atmosphere to the highest level seen in 3.6 million years, and increased the average surface temperature of the Earth by about 1.2 °C, relative to pre-industrial levels.
In Canada, climate change is increasing the risk of things like lyme disease, wildfires, and droughts, while also posing risks to biodiversity. And this country is warming at twice the global rate. Already Canadians are feeling the effects of all that greenhouse gas.
Sure, some effects of climate change in this country may be positive — like longer growing seasons in some regions. But that may be offset by droughts, flooding, and other extreme weather.
Even if the impacts on our planet don’t concern you, the impacts on our economy should. The Bank of Canada has identified climate change as one of the biggest risks facing the Canadian economy. Canada could be $100 billion poorer by 2050 if we don’t do more to halt the advance of climate change.
Global investors are making it clear that they will be redirecting capital to low-carbon business in the coming decades. Insurance companies are warning that climate change could lead to much higher premiums, and may even make some homes uninsurable.
The economic risk for Canada is particularly acute given our position as one of the world’s largest producers of oil and gas. The sector directly added $114 billion to the national economy in 2019, and supported more than 176,000 jobs. The low-carbon transition must respect the need to maintain good jobs and a strong economy.
The scale and speed of the transition needed to avoid crossing climate red lines is hard to fathom. Reaching net-zero emissions by 2050 requires the world to not only sustain the extraordinary emissions reductions we achieved during the pandemic, but to continue reducing emissions at that same rate every year for the next three decades. Never mind that Canada’s emissions remain stuck at the same level they were back in 2000.
If those challenges weren’t stark enough for Canada, here’s another — the fight against climate change threatens to destabilize Canada not just economically but also politically, pitting a range of interests against each other in tensions that are often simplistically characterized as East against West, rural against urban, indigenous versus non-indigenous.
Now for some good news: addressing climate change also presents a significant economic opportunity for Canada — if we choose to seize it. Recently, the International Energy Agency estimated that investment in clean energy could grow to USD $4 trillion per year by 2030, if the world gets serious about achieving net-zero. Based on Canada’s contribution to global GDP, our pro-rata share of this new clean-energy investment could be $80 billion per year, more than twice the $30.8 billion average annual investment in the sector between 2010 and 2017. In fact, if Canada can just secure its share of the market, we will have a cleantech industry larger than our auto sector is today.
Clearly this is no passing fad. The net-zero train is leaving the station, and the time to jump on is now. Already a fifth of the world’s 2,000 largest public companies have committed to net-zero targets, together representing $14 trillion in annual sales. Notable net-zero adherents in this country include Canadian National Resources Limited, the Canadian Steel Producers Association, Cenovus, and the Mining Association of Canada.
Canada can win in the new cleantech marketplace. There’s every reason to believe that we can capture an outsized share of those trillions in investments, and the jobs and wealth that come with them. We have the most highly educated workforce in the OECD, including world-class expertise in engineering and infrastructure. We have one of the cleanest electricity grids in the world. We have the natural resources that are urgently needed to achieve the net-zero transition, like battery minerals, natural gas that can be split into clean hydrogen, and the geology to sequester vast amounts of carbon dioxide. We’ve got the land to produce carbon-neutral biomass. The list goes on.
Importantly, Canada’s oil and gas companies can be an important part of the low-carbon future. Their expertise — and their access to capital — are well-suited to producing clean energy for Canada and the world.
In fact, there is already significant growth in renewable energy investment on the prairies, driven by enabling regulatory and environmental conditions. Not only are solar and wind taking off, but there are also thousands of dormant oil and gas wells waiting for new life as sources of lithium, geothermal energy, and clean hydrogen — not to mention their potential as safe storage for captured carbon emissions. This is just the beginning, as long as we can find the political will to go after the opportunities in front of us.
Canada has no time to waste. The race is on to capture the cleantech market, and competition will be fierce. The U.S. has proposed trillions of dollars in investment in everything from electric vehicles to small modular nuclear reactors. Promising Canadian cleantech firms are investing in plants south of the border because of a more attractive U.S. investment environment.
That’s where leadership comes in. We need more political leaders who can guide Canada on this path of economic opportunity. Leaders who can prepare Canada for the enormous economic transformation we need to undertake, while also addressing the legitimate concerns of people who are understandably nervous about what it will mean for them and their communities.
The global transition to a low-carbon economy is underway. There’s a prosperous future awaiting Canada on the other side of that frontier, but we have a lot of work to do to get there.