Addressing climate change creates enormous economic opportunities for Canada, but this won’t just happen by itself.Jeff McIntosh/The Canadian Press
Mark Carney is the United Nations special envoy for climate action, chair of Brookfield Asset Management, and head of transition investing at Brookfield Corp. He is the former governor of the Bank of Canada and the Bank of England.
The world is at an inflection point. Seven years ago, country policies were driving global warming of over 3.5 C from pre-industrial levels by the end of the century. By last year, they were consistent with 2.4, and country commitments, if fulfilled, would limit warming to 1.8.
Over the past seven years, annual clean energy investment has tripled to more than US$1-trillion. New policies in the United States and European Union are now consistent with the quadrupling of clean energy investment by the end of this decade, which is needed to get the world on track for 1.5. The new imperative of energy security and the sober realities of geopolitics are rewiring globalization. Access to clean energy at large scale is becoming a key determinant of country competitiveness.
These dynamics are making the tall task of addressing climate change possible, and they are creating enormous opportunities for an energy superpower such as Canada. The next few years will be crucial to turn our decarbonization plans into better jobs and brighter futures for all Canadians.
But this won’t just happen, not least because we need change on the scale of the Industrial Revolution at the speed of the Digital Transformation. Now is not the time for laissez faire. We need the engagement of all levels of government, industry and finance.
First, governments, business and finance should all have net-zero transition plans, assess progress regularly and act quickly to close gaps. Policies need to combine carrots and sticks. Independent bodies should assess the adequacy of measures, so Canadians can hold their institutions to account.
Second, governments should set interim targets and clear goals for key sectors, such as a clean electricity grid by 2035. Canada starts well ahead, and we will have a huge competitive advantage if we expand generation while eliminating emissions. In the wake of the recent federal budget, the right technology-neutral incentives are coming into place. Now it is essential to accelerate permitting and to share gains upfront with Indigenous groups and local communities.
We must also move forward on a comprehensive plan for oil and gas, which accounts for over a quarter of our emissions. I grew up witnessing the innovation and determination of the engineers, entrepreneurs and governments that created the oil sands, and I’m convinced that Canadians can do it again to deliver low-risk, low-cost and low-carbon energy for the transition. This should be a top priority, not least as carbon capture is essential for new energy solutions such as blue hydrogen. We can create the industries and jobs of the future, with the skills of the present.
Third, a major lesson from global progress is that credible government climate policies create a virtuous circle of major investment, greater decarbonization, more jobs and faster growth. Canada is on the cusp of that virtuous circle. A comprehensive Canadian policy framework is being built, founded on a carbon price, bolstered by contracts for differences, and complemented by tax credits and funds for the development of solutions from hydrogen to small modular reactors. It will pay dividends for decades if we can execute over the next five years.
That’s why the climate policy debate should be grounded in expected outcomes, not competing slogans. We need a competition of ideas, not a denial of purpose. And if someone proposes to repeal a measure, they should replace it with something at least as effective. If politicians want to put carbon back into the atmosphere with one hand, they should take more out with the other.
That future is a stronger economy with better jobs for all. Our future competitiveness will be grounded in the general-purpose technologies of a low-carbon world: highly skilled workers, a clean grid, artificial intelligence to optimize and transition finance to build. These, combined with our unique trading relationships from North America to Europe and Asia, are Canada’s greatest advantages.
Finally, there’s the question of the bill. To discipline spending, we should distinguish between investment and operating expenditures with a green golden rule, and assess all policies on carbon value for money. We need to use our limited public resources to maximum effect.
Walls of private money are now chasing opportunities and turning them into jobs. Low carbon is becoming the driver of competitiveness as the clean revolution takes shape from Melbourne to Mumbai, from New York to Nairobi.
Every one of those places would trade places with us in a heartbeat because nowhere in the world can match what Canada brings to the table: our people, resources, capital and values.