- In The $2 Trillion
Transition RBC Economics and Thought Leadership lays out the cost
and opportunities of Canada's
journey to Net-Zero
- Canada is the world's
10th largest emitter, with annual emissions up 25% since
1990
- With significant investment in current technology,
Canada could get 75% of the way to
Net-Zero
- To reach 2050 targets, a bolder plan is needed to deploy
carbon capture in oil and industrial sectors, change from internal
combustion to electric vehicles, retrofit millions of buildings,
and generate all of Canada's
electricity from renewable sources
TORONTO, Oct. 20, 2021 /CNW/ - The weather events of 2020
and 2021 made clear that climate change is one of the most pressing
issues facing Canada today and
that the time for Canada to act
on, and invest in, the journey to net-zero is now. The question
becomes – how does Canada get
there, and what will it cost?
In The $2 Trillion
Transition, RBC Economics and Thought Leadership outlines its
analysis of the costs and benefits of Canada's transition to a net-zero economy; the
strategies Canada must focus on to
meet its 2030 and 2050 emissions targets; and the policies needed
to guide Canada on the transition
without hobbling any one region, or the whole economy.
"Global economies in the U.S., Europe and Asia are already embarking on economic
transformations on the path to net-zero and Canada urgently needs a plan for leading in
that effort," said John Stackhouse,
Senior Vice-President, Office of the CEO. "To meet Canada's 2050 emissions targets, every
business will need to invest in new technologies, products and
processes to enhance their competitiveness in a world of
technological disruption and innovation."
But while there has never been more Canadian intellectual,
political and corporate capital aimed at climate change,
Canada still needs a thoughtful
action plan for transitioning to net-zero economy. To inform
Canada's journey, The
$2 Trillion Transition lays out
six pathways – as well as their cost and feasibility - that are the
most viable opportunities for Canada in this transformation.
According to the report, Canada
will need to invest at least $2
trillion of public and private money over the next 30 years
in new energy systems, vehicles and industrial processes. And the
pathways that will need to be prioritized include doubling the
supply of green electricity to decarbonize the grid; reducing the
carbon intensity of Canadian oil and gas; retrofitting and cutting
emissions from buildings; accelerating electric vehicle uptake and
innovations in battery and biofuel production; reducing emissions
in heavy industry; and making agriculture more efficient and less
energy intensive.
The report also highlights how there will also be a call on
Canadians to take more chances and make more choices to adopt new
technologies, help scale new ventures and develop new habits. To do
this, the report highlights eight key policy recommendations in the
report to drive this transformation forward:
- A national policy on electrification. Federal incentives
will be needed to develop better links between provincial grids,
harmonized regulations and coherent pricing. The goal: double
production over the next 30 years.
- A national strategy for green skills. A federal Green
Skills Grant could retrain existing employees, while provincial
programs could support career shifts to the fast-growing fields of
carbon capture, hydrogen, renewables, EV production and
maintenance, and building retrofits. The goal: train up to 200,000
new workers in green skills, and reskill 100,000 existing workers,
by 2030.
- Long-term commitment to carbon pricing. Canada's plan to increase the national carbon
price through a measured, decade-long strategy should be reaffirmed
by the federal government, provinces and major business groups, to
signal it to the world as a shared priority. The federal government
should also allocate a significant (and clearly defined) portion of
the revenue to technology development and adoption.
- Leveraging climate to enhance U.S. trade. Canada should engage the U.S. in bilateral
talks around climate policy, with a focus on strategic supply
chains, energy products and emissions-reduction technologies. The
two governments should also explore a border carbon adjustment to
be applied to heavily traded goods, to ensure North American
products aren't put at a disadvantage by explicit or implicit
carbon prices.
- An industrial strategy for carbon capture, utilization and
storage. The federal government and major industrial-emitting
provinces should agree to a new framework for CCUS, including
research grants, long-term tax credits for carbon stored,
regulatory flexibility for rapid construction, and new approaches
to public-private-Indigenous investment in infrastructure, with
particular and urgent focus on abating oil and gas emissions.
- A national action plan for sustainable agriculture.
Small farmers will need access to new technologies to measure
carbon in their soils and plants, and credit for carbon stored.
Government will need to support investment in ag tech, training for
new processes, and monitoring systems across the country.
- Super-charging electric vehicles. With deposits of many
critical minerals needed for batteries, a highly skilled auto
workforce, and decades of experience building cars, there's a good
case for Canada to be a lynchpin
in regional battery manufacturing. Ottawa's proposed EV mandate (all passenger
vehicles sold by 2035 must be zero-emission) is a step in the right
direction. With the right policy, Ottawa could ensure more of those vehicles
contain made-in-Canada
batteries.
- Rapid retrofitting. Canada's plan to retrofit more homes must be
urgently accelerated. A program designed to help owners manage the
disruptive deep retrofit process and bring down costs by bundling
similar retrofits across homes would be a good start. So too is a
Net-Zero building code that avoids the need to retrofit recent
builds. The goal: retrofitting 4.5 million homes by 2030, a third
of buildings built before 2010.
"Canada's opportunity to lead
in this global transformation is a matter of years, not decades
away," continued Stackhouse. "And even as we address other pressing
priorities – caring for an aging population, managing technological
disruption and fostering more inclusive economic growth – the right
plan on climate will help us move on these priorities, too. But if
we do not move with urgency, Canada's window for gaining access to new
markets, and attracting talent and capital in a modern global
economy will quickly close."
The report will also be accompanied by a special Disruptors
mini-series called "The Climate Conversations" where John Stackhouse will dig into Canada's quest for net-zero with some of the
world's leading voices on climate and Canada's transformation, including:
- Mark Carney, the UN's
special envoy on climate and finance;
- Professor Katherine
Hayhoe, a world-renowned climate scientist and Chief
Scientist from The Nature Conservancy;
- Mark Little, CEO, Suncor
Energy; and
- Michael McCain, President
& CEO, Maple Leaf Foods
To learn more about The $2
Trillion Transition and to join the conversation on
climate in Canada, please visit
RBC.com/netzero. And to learn more about RBC's climate commitments,
please visit our new Climate Hub RBC.com/climate.
About the report
The $2
Trillion Transition is a critical pillar of the RBC's
climate strategy. Based on a year of economics research, data
analysis and client conversations, the report maps out pathways for
a just Canadian transition to a carbon-neutral economy, and how
businesses and communities can use this transition to drive
positive change. In addition, the report has identified and priced
key ways to accelerate the shift.
The interactive digital report will aim to:
- Lay the foundation for a multi-year exploration of climate
policies and their economic impacts.
- Seed conversations around innovation, business strategies and
sectoral outlooks.
- Inform constructive, non-partisan public policy dialogue around
a just transition.
About RBC
Royal Bank of Canada is a global financial institution with
a purpose-driven, principles-led approach to delivering leading
performance. Our success comes from the 88,000+ employees who
leverage their imaginations and insights to bring our vision,
values and strategy to life so we can help our clients thrive and
communities prosper. As Canada's
biggest bank, and one of the largest in the world based on market
capitalization, we have a diversified business model with a focus
on innovation and providing exceptional experiences to our 17
million clients in Canada, the
U.S. and 27 other countries. Learn more at rbc.com.
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activities. See how at rbc.com/community-social-impact.
SOURCE RBC