The federal government needs to invest more strategically in clean technologies and improve data gathering to support climate goals and clean economic growth, says a new report by the Canadian Institute for Climate Choices.
“One of the key takeaways is the importance of thinking about climate change, economic growth and the well-being of Canadians in an integrated way,” Rachel Samson, clean growth director at the independent national research institute in Ottawa, told Research Money. “We really can’t afford to think about them as separate policy issues anymore.”
Climate change is increasingly an economic issue for Canada, as the global transition to a low-carbon economy drives changes in markets and investor preferences, she said.
This transition needs to be thought about well in advance to create plans and strategies to help minimize negative impacts from the low-carbon shift, such as disappearing jobs in some regions and communities, Samson said.
The institute’s report, aimed mainly at governments and policymakers, defines clean growth as “inclusive economic growth that reduces greenhouse gas emissions, strengthens resilience to a changing climate, and improves the well-being of Canadians.” The document sets out 11 new statistical indicators for measuring clean growth and what it would take to achieve it.
“This is a new way of thinking, a new policy paradigm that will hopefully drive different ways of developing policy,” Samson said.
The federal government should break down ministerial silos and establish explicit cross-mandate accountabilities among departments and agencies to develop policies that integrate climate, economic and social objectives, she said.
Ottawa also needs to invest strategically, while leveraging private sector money, in clean technologies that produce wide-ranging societal benefits rather than a return on investment for only one company, Samson said.
For example, government investment in large demonstration projects, to validate and scale up pre-commercialization technologies such as geothermal energy or hydrogen transportation fuel, would be very helpful, she said.
Government also needs targeted near-term investments and procurement policies to encourage adoption of homegrown cleantech, such as electric buses and other zero-emissions vehicles being built in Canada, she said.
There’s also a lot of scope for investing in green infrastructure such as electricity transmission lines, electric vehicle charging stations, hydrogen fuel pipelines and small modular nuclear reactors, she added.
“We need a suite of ‘push policies,’ the policies that are driving research and development, demonstration of technologies and commercialization,” Samson said. “But we also need that technology adoption side [or] demand-pull,” driven by incentives such as carbon pricing and government procurement programs.
The report found a lack of data needed to measure progress across all 11 clean growth indicators, especially for climate change resilience and adaptation.
“Data is fundamental to doing good analysis and good research, and good analysis and research is fundamental to developing good policy,” Samson noted. Federal investment to gather more data and more reliable data, through Statistics Canada, Environment and Climate Change Canada, Public Safety Canada, and Natural Resources Canada, should be a priority, she said.
In 2018, environmental and clean companies accounted for about 3% of Canada’s GDP ($66 billion in 2018 dollars) and 1.7% of total employment (317,085 jobs), according to the institute’s report.
Cleantech industry still growing, despite COVID 19
Sustainable Development Technology Canada (SDTC) funded 53 cleantech projects across Canada in the last fiscal year ending March 2020, said Annette Verschuren, chair of the arm’s-length federal foundation.
SDTC-supported companies generated $2.7 billion in annual revenue, supported nearly 15,000 jobs and created 1,500 new jobs, she told SDTC’s annual meeting, held September 18 online and which focused on Canada’s target to achieve net-zero emissions by 2050. Those companies attracted $535 million in follow-on support from SDTC’s partners.
“The growth of cleantech in Canada shows there is no shortage of homegrown Canadian innovation, and it’s growing,” Verschuren said.
Navdeep Bains, Minister of Innovation, Science and Industry, attended the meeting via video to announce $24.8 million in new SDTC funding for nine new cleantech projects across Canada.
SDTC, with 120 companies in its portfolio, is the largest funder of clean tech SMEs in Canada.
Since the start of the COVID-19 lockdown, SDTC has approved $42 million for 30 companies, in partnership with accelerators and provincial clean tech funders across Canada, Verchuren said.
Leah Lawrence, president and CEO of SDTC, said SDTC-supported companies managed to raise about $700 million in equity from January through August this year, about two-thirds of it after the COVID pandemic started.
Michele Della Vigna, commodity equity business unit leader at Goldman Sachs, told the meeting that the path toward net-zero emissions, or “decarbonization,” can unlock about $16 trillion in global investment to 2030.
Goldman Sachs expects that 2021 will be the first time in history that the global investment in renewable power will be larger than the investment in upstream oil and gas, he said.
Even in the midst of a COVID-triggered economic recession, he added, “There has been a major realization from politicians worldwide and from corporate [leaders] that decarbonization remains a major business opportunity that needs to be pursued.”
However, to take advantage of that opportunity, the country needs an industrial strategy for each sector that prioritizes cleantech designed, produced and delivered by Canadian firms, Karen Hamberg, vice-president of external affairs and sustainability at Vancouver-based Westport Fuel Systems, told the SDTC meeting.
The Liberal government in the Throne Speech on September 23 promised to launch a new fund to attract investments in making zero-emissions products and cut the corporate tax rate in half for these companies. The government also said it would support investments in renewable energy and next-generation clean energy and technology solutions, including electric vehicles and charging stations.