New research shows how Canada can compete in a low-carbon economy

New data shows what Canada can do to compete for low-carbon investment

Toronto, ON – Canada must take urgent action to close the incentive gaps for low-carbon technology investment. We’re at risk of missing out on big opportunities because our investment incentives aren’t competitive with the United States.

That’s the conclusion of new modelling released today in a working paper by Clean Prosperity and The Transition Accelerator.

The working paper is the first attempt to show the dollar value of the incentives offered by the Canadian and US governments for low-carbon technology investment. It looks at seven key technologies, including electric vehicles, solar energy, hydrogen, direct air capture, sustainable aviation fuel, and carbon capture and storage.

“Compared to the United States, Canada isn’t yet a competitive destination for low-carbon investment,” said Clean Prosperity Executive Director and working paper co-author Michael Bernstein.

“It’s as if Canada is offering companies a coach ticket with the chance of an upgrade, while the Americans are offering to send them straight to first class. But there are strategic moves we can make to fix that.”

Last August, the United States’ Inflation Reduction Act (IRA) introduced massive subsidies for a wide range of low-carbon tech, mainly in the form of production tax credits. Canada introduced its own incentives in response, but so far these measures aren’t enough to make Canada as attractive as an investment destination.

However, “There’s an opportunity here for Canada to take advantage of. With a smart industrial policy response to the IRA, Canada can stay competitive and grow a prosperous low-carbon economy,” says co-author and Transition Accelerator Research Director, Bentley Allan.

The working paper recommends that the federal government introduce new measures in Budget 2023 to improve Canada’s competitiveness as a destination for low-carbon investment, namely:

  • Carbon contracts for difference, a kind of insurance policy on the future value of carbon credits that will give firms the confidence to make big decarbonization investments.
  • Strategic financial support for industries where Canada can compete globally and generate significant economic benefits, good jobs, and manufacturing value added.

How the specific measures proposed by Clean Prosperity and The Transition Accelerator in their new working paper could help close the incentive gap between Canada and the United States.


How contracts for difference could boost blue hydrogen

One industry the working paper examines is blue hydrogen production, which can be produced with low greenhouse gas emissions and offers an emissions-free, affordable fuel for transport trucks, trains, ships, and airplanes.

The IRA tax credits are worth about a dollar per kilogram of hydrogen. In Canada, investment tax credits deliver a subsidy of only about nine cents per kilogram—in a best-case scenario, where firms are allowed to benefit from separate tax credits for carbon capture and hydrogen production.

A blue hydrogen facility in Alberta, for example, could become a competitive investment proposition if the federal government guarantees the future value of the facility’s carbon credits using a carbon contract for difference.

With a contract for difference to backstop the value of its carbon credits, the Alberta facility’s guaranteed annual revenues rise from $0.09/kgH2 to $1.05/kgH2:

Average annual revenue incentives for blue hydrogen facilities in Alberta and Texas, 2023-2032 (Canadian dollars)

Strategic financial support: where?

In addition to carbon contracts for difference, the working paper recommends that the federal government provide targeted support in areas where Canada has a strategic advantage.

These are industries where Canada can compete globally and generate significant economic benefits, good jobs, and manufacturing value added. Examples include:

  • Direct air capture: A production tax credit for direct air capture could help launch a major new industry that will be critical for meeting our climate targets, while also generating clean economic growth.
  • Electric vehicles: The government could fulfil Canada’s ambition of creating a complete mines-to-mobility value chain by complementing existing investments in EV production with incentives for upstream mining of critical minerals and midstream chemical processing.
  • Sustainable aviation fuel: With additional public support, Canada has the resources and expertise to develop a significant sustainable aviation fuel industry, which could generate economic benefits in rural communities across the country.


Read the Working Paper
Creating a Canadian Advantage: Policies to help Canada compete for low-carbon investment

New roadmap aims to accelerate Canada’s battery metals industry to meet EV demand

The Transition Accelerator’s newest report is a call to action for a bold national strategy from the Battery Metals Association of Canada (BMAC) in partnership with Accelerate, Canada’s Zero Emission Vehicle Supply Chain, and the Energy Futures Lab.

newly released report outlines a national strategy roadmap to create a made-in-Canada battery metals value chain. The roadmap outlines concrete actions, policy recommendations and cross-cutting initiatives that if implemented, have the potential to position Canada as a global competitor in electric vehicle (EV) production.

In order to retain its global position, meet its climate goals, and keep pace with growing demand, Canada will need to produce 1.3 million zero-emission vehicles (ZEVs) by 2030. Addressing the importance of battery metals to meet these needs, the report proposes a shift in the status quo. While upstream mining and downstream manufacturing are well established, the report positions midstream operations, i.e. chemical processing of mined materials into battery active materials, as the crux of a competitive, integrated supply chain driving demand for upstream mining as well as supply for fabrication.

While the development of an electric vehicle ecosystem represents a once-in-a-generation opportunity to support long-term Canadian prosperity, getting there will require deliberate, strategic action from government and industry. If Canada wants to lead the way to a net-zero world and be a competitor in its economy, we need to set bold targets, clear timelines, and collaborative goals. This report and the roadmap it provides are the first steps on the way to that robust national strategy.

Bentley Allan, Ph.D, Lead Author and Resident Fellow at The Transition Accelerator

The development of an EV ecosystem industry represents a once-in-a-generation opportunity. Working collaboratively in partnership with BMAC, the Energy Futures Lab and Accelerate, the report was led by Transition Accelerator’s Resident Fellow for Green Industrial Policy, Bentley Allan, who proposes that “Canada needs a roadmap that provides these targets, timetables, and priority actions to guide and align investments. A roadmap is, in turn, the foundation of a national industrial strategy that positions the industry in the broader domestic and international landscape”.

To accelerate Canada to net zero, the roadmap illustrates the need for a collaborative effort:

  • Reaching targets will require a public-private-Indigenous partnership
  • The formation of an independent organization and an autonomous government agency or task force
  • Guidance for said agency/task force in the form of clear targets and an adaptive set of policy tools to meet the challenge at hand.


The roadmap for Canada’s Battery Value Chain is just that, a mechanism to be brandished for action to provide prosperity on the path to net zero. Find the full report and executive summary here.

New Report Recommends Paradigm Shift in Approach to Tackling Climate Change

Ottawa, ON – Reaching net zero greenhouse gas emissions will require major changes in the large-scale systems we use to meet societal needs, such as the way we produce and distribute energy or move people and goods. To meet this challenge, Canada needs a paradigm shift from trying to do a little bit of everything to reduce emissions to accelerating real change by strategically focusing on building out key regional and sector-specific pathways to net zero. This is the core message behind the Pathways to Net Zero report, a decision support tool released today by The Transition Accelerator, a pan-Canadian registered charity focused on reaching net zero while solving other societal challenges. The report is available to read at

Written as a reference document and tool for those making climate policy and investment decisions, the report provides assessments of different pathways to net zero for eight critical sectors, assigning different technologies and approaches a green, yellow or red designation based on their viability. Overall, the report takes a transition and an energy systems approach, recommending that government policies need to focus on how to accelerate the transformation of systems and sectors that generate greenhouse gas emissions while delivering other societal benefits, rather than on advancing incremental emissions reductions at the lowest cost per tonne by a specific date.

With this in mind, the report calls on policymakers and investors to first focus on decarbonizing sectors where net-zero technologies and approaches are already available. This means prioritizing decarbonizing electricity, accelerating electric vehicle deployment and performing mass building retrofits, since these sectors are in the more mature ‘diffusion’ phase of their decarbonization transition. For Canada to successfully reach net zero by 2050, it must commit to these viable, ready-to-deploy solutions and put Canada on a path to decarbonization now.

“Rather than just setting a regulatory and policy framework and letting the marketplace determine the pace and scale of Canada’s net zero transition, it is vital that governments target efforts and commit now to the solutions that will get us there,” said James Meadowcroft, a research director at The Transition Accelerator and the lead author of the Pathways to Net Zero report. “Without similar past commitments from governments, Canada would not have built a national highway system or have developed the oil sands.”

The report also underscores that Canada needs to consider what its future net zero energy system will look like, and build pathways to get there. For example, the report identifies decarbonized electricity, low-carbon fuels like hydrogen and biofuels, carbon capture and storage and negative emissions solutions, and dramatic changes in technologies, business models and social practices in the end use sectors as essential elements of Canada’s future clean energy system.

The Transition Accelerator will be updating the Pathways to Net Zero report periodically, adding new chapters that provide assessments of additional sectors. Click here to read the Pathways to Net Zero report.

New Initiative to Support a Robust National ZEV Supply Chain

Montreal, QC – The Transition Accelerator and Electric Mobility Canada (supported by Dunsky Energy Consulting) are pleased to announce the launch of a new initiative aimed at building a robust, cross-Canada Zero Emission Vehicle (ZEV) industry supply chain. Focused on ensuring Canada positions itself for the rapid transition to ZEVs currently underway, the initiative will seek to bring together key players across the country, from mining to mobility, from R&D to commercialization, from assembly to infrastructure, and from B.C. to Nova Scotia.

“The initiative’s goal is to better understand the industry’s evolving landscape, identify Canadian strengths and gaps, and develop an action plan to support the formation of a Canadian ZEV Industry Coalition,” states Daniel Breton, President & CEO of Electric Mobility Canada. “The findings and outcomes of this project will help better support the evolution of a sustainable and robust ZEV supply chain, and leverage Canadian expertise and leadership.”

“Canada has a unique opportunity to take advantage of the rapid market transition toward ZEVs. We are the only country in the western hemisphere with the full package: economic reserves of all the key minerals for battery production coupled with highly-skilled labour; a well-oiled automotive industry including multi-class vehicle manufacturing and parts; and a low-carbon grid to power it all. Canada can leverage these unique strengths to position itself in the global ZEV market through convening industry, government, researchers, trade associations, and NGOs to help get us there,” states Philippe Dunsky, President of Dunsky Energy Consulting.

The automotive sector is one of the largest manufacturing segments in Canada, including light-duty, medium-duty, and heavy-duty vehicles, as well as auto part manufacturing. With the global trend toward electrification and smart mobility, there is a strong need to future-proof Canada’s automotive sector to ensure it retains its leadership during this critical transition.

“Canada is uniquely positioned to attract investments by leveraging its natural resources, clean energy, skilled workforce, manufacturing expertise, and world-class R&D,” closes James Meadowcroft, Research Director, The Transition Accelerator. “By working collaboratively, this group will be assessing what’s needed for Canada to show its leadership in the emerging global ZEV supply chain.”