Navigating the future: Canada’s economic imperative in the net-zero transition

Transforming our energy systems to net zero is as much about economic survival and competitiveness as it is about environmental responsibility

The push for net-zero emissions started as a necessary response to climate change, aimed at reducing greenhouse gas emissions to mitigate environmental disaster. However, it’s becoming clear that striving for net zero is also sparking a new Industrial Revolution, reshaping the global economic landscape. This shift is turning net zero into a measure of economic competitiveness, pushing countries into a race to adapt or risk falling behind. For Canada, transforming our energy systems to net zero is now as much—if not more—about economic survival and competitiveness as it is about environmental responsibility.

The International Energy Agency forecasts that fossil-fuel consumption could peak by 2030 based on current policies. This shift is supported by significant moves from oil-dependent nations. For example, Saudi Arabia’s Aramco has stopped its expansion plans to increase oil-production capacity, indicating a major pivot towards renewable energy sources. Saudi Energy Minister Abdulaziz bin Salman explained the rationale behind this shift, saying: “The future problem on energy security, it will not be oil. It will be renewables. And the materials, and the mines.” The global commitment to moving away from fossil fuels is firm. For Canada, the question is not whether this transition will happen, but how we can position ourselves to economically benefit.

For Canada, it’s clear that a one-size-fits-all approach won’t cut it. Different regions have different strengths and challenges, and we need to tap into that diversity. The federal government has been footing the bill for a lot of the green shift, covering 80 per cent of investments over the last 10 years. That’s a hefty tab that isn’t going to fly forever. We need to get private dollars into the game and make sure our regional economies are leading the charge in areas where they’ve got a leg up.

What does this mean in practice? It means making it easier and more attractive for private companies to invest in clean energy and tech. We’re talking tax credits, modernizing regulations, and setting up clear rules that give investors the confidence to put their money down. It’s about leveraging what each region does best.

Take Alberta, for example: it’s staring down the barrel of needing to move away from its traditional fossil fuel income. That sounds like a tough spot to be in, and addressing it will require vision and ingenuity, but Alberta has a suite of options to build on its existing strengths to transform its economy. For example, blue hydrogen offers a pathway to upgrade natural gas to a net-zero compatible fuel using the province’s resources and expertise to thrive in a net-zero future. Similarly, in Ontario and Quebec, the growth of the electric vehicle battery supply chain is building on the success of the automotive sector, a comparative advantage in critical minerals, and access to low-cost clean electricity.

We need to harness promising technologies, and lean into our natural resources in smarter ways to keep Canada on the map as a global energy and materials provider. We also need to be brutally honest about the hurdles: from getting the tech right, to making sure the numbers add up, and everything in between.

To truly unlock the economic benefits of the net-zero transition, we now need to reimagine our energy systems and tailor them to the unique economic, social, and political landscapes of each region. Achieving this will require more than technological adoption. We need a nuanced approach that integrates techno-economic assessments, societal needs, and political realities, ensuring that the transition works from both an environmental and an economic perspective.

We need independent analysis and open dialogue with key partners. Only through this approach can we accelerate the most viable pathways for each region, avoid dead-end pathways, and ensure alignment between regional strengths and federal ambitions. By tapping into what each part of Canada does best and pushing the envelope on innovation, all backed by solid research, we can build an energy system that’s not just resilient and affordable, but also positions Canada as a major player in a net-zero future.

As published in The Hill Times, February 28, 2024

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