February 2023

By Bentley Allan and Michael Bernstein

There is a risk that Canada could miss out on the huge opportunities available in the low-carbon transition because our investment environment is less attractive than that in the United States. In particular, the US Inflation Reduction Act (IRA) has opened up a wide gap between the revenue available from public-policy sources for new low-carbon technology deployment in Canada versus the US.

Creating a Canadian Advantage looks at seven low-carbon technology cases and recommends two policy options to address this imbalance: a systematic narrowing of revenue gaps by converting uncertain carbon market revenues into bankable revenues, using a policy like contracts for difference; and the strategic deployment of production tax credits as part of an industrial policy push in high priority sectors.

This working paper reports the preliminary findings of an ongoing research project to analyze the differences in policy-based economic incentives for decarbonization in Canada and the US. These findings may be refined as the research evolves.