Home / 5.5 Conclusions

5.5 Conclusions

Framing the Future: Embracing the Low-Carbon Economy

Moving toward a green economy is one of the most important issues for the twenty-first century.¹³⁵ A green economy is, of necessity, a low-carbon economy. Much of the world is already moving to reduce the carbon intensity of economic growth and, in this way, transitioning to a low-carbon economy. While the Rio+20 Conference in June 2012 did not culminate in substantive agreements or new commitments on the part of nation states concerning the path toward a global green and in particular low-carbon economy, it did highlight the role of domestic and local action in effecting this transition and of the potential opportunity for countries that strategically take early action to transition.¹³⁶ While there are components of a low-carbon economy policy discussion developing in parts of Canada, such as the continuing pan-Canadian energy dialogue, there is no cohesive, collaborative, and comprehensive national approach to this issue.

Canada needs a low-carbon growth plan that builds on strengths, involves all governments, engages the private sector, and focuses on market mechanisms. The development of a low-carbon growth plan needs to be a comprehensive, inclusive, and transparent process. In Canada, this will demand open dialogue and regional input from all corners of the country. It will require strategic foresight necessitating truly pan- Canadian thinking that transcends parochial interests while giving due consideration to regional issues and concerns. This report is a starting point to get the country moving forward. The NRT has laid out a framework for low-carbon growth containing what we believe are the critical areas to be addressed and outlining necessary foundational considerations. We have offered the beginnings of a pan-Canadian vision for a low-carbon economy, and have identified actions we believe to be fundamental to stimulating low-carbon growth. These ideas are meant to lay the foundation for future work. Firstly, it is imperative to ensure that Canada has the right policy context, and so it should start with the essential conditions for low-carbon growth: creating certainty around climate, energy, and innovation policy; implementing a clear, strong, and long-term price signal on carbon emissions; establishing a more level playing field by eliminating inefficient subsidies supporting fossil fuels; and ensuring that policy and regulatory approaches are outcome-oriented, adaptive, and responsive to changing economic and environmental realities.

Secondly, it is imperative that Canada get the governance “right” to enable a transition to low carbon. Together with the essential conditions, strong governance provides the underlying support for the critical actions. Of all the governance considerations, it is imperative that federal and provincial governments show leadership and demonstrate their strong commitment to the transition toward a low-carbon economy through the articulation of a clear, coordinated and collaborative vision for Canada. This would be further enhanced by the development of a national strategy that builds upon the many regional strengths and opportunities across the country. To support the vision and strategy, implementation will require more effective coordination and integration within and across departments in both federal and provincial governments, active engagement on the part of the private sector, broader engagement with Canadians, and the establishment of a mechanism for assessing performance and providing ongoing advice.

All our ideas in this chapter merit consideration in developing a low-carbon growth plan for Canada. However, we are suggesting here that a few are critical for getting started on a low-carbon growth strategy now. The criteria against which we considered these top priorities are few and simple: implementation of the action must have broad and significant impacts in realizing a transition to a low-carbon economy; must be achievable in the near term; and should generate benefits beyond those associated strictly with the transition to a low-carbon economy.

Of all our key components of a low-carbon strategy, the most important and necessary is the establishment of long-term certainty on climate, energy, and innovation policies. For many years now the NRT has advised governments of the critical need for policy certainty on climate change. Through this most recent work, we are now concluding that in order to move to a low-carbon economy this must be complemented with policy certainty on a pan-Canadian energy strategy and an innovation policy that is focused on lowcarbon and clean technology. Long-term certainty must be established to send the right signals to the private sector that Canadian governments are serious about the transition to a low-carbon economy. It will give the necessary certainty to move the private sector, including the financial sector, to act.

Figuring out the investment and financing aspects of a low-carbon transition will be among the most challenging components; they are also, in our view, some of the most important pieces to figure out in the short term. In particular, it will be imperative that governments and financial institutions work together to substantially increase access to capital, one of the most notable barriers to supporting clean technology innovation and SMEs in Canada. While governments will need to establish the correct signals, there is a clear private sector imperative both with respect to meeting the significant investment requirements and in establishing the mechanisms for tapping larger more diversified pools of capital.

Given the forecasted growth in global LCGS markets and the relatively limited size of Canada’s domestic market, the opportunity in the global transition to a low-carbon economy lies primarily in the potential for Canadian companies to supply a portion of the anticipated growth in global demand. Canadian firms need to be strong players in international markets. There is an important role for federal and provincial governments to improve and facilitate increased access to global markets for trade and investment in LCGS. In particular governments can reduce barriers to commercialization by facilitating international collaboration between firms and between innovators and investors. They can further strengthen domestic innovation capacity and international competitiveness by implementing procurement, demonstration and verification programs.

Finally, there is an important public engagement aspect to the low-carbon transition. Many stakeholders identified further electrification of the economy as an important element of the transition. Canada has some of the lowest electricity rates in the world, but with the need for full-cost pricing of new and existing supplies, the price of electricity will rise. Therefore, there is a need for governments to engage Canadians in a conversation with respect to the real price of electricity, and why this price will likely need to increase over time. Without this understanding Canadians are not likely to be supportive of reducing GHG emissions and ultimately unlikely to support the transition to a low-carbon economy. Politicians look to their constituents for guidance on policy direction. Therefore, the low-carbon dialogue must occur throughout all sectors and levels of Canadian society.

Figure 10 presents a graphical overview of the priorities laid out in this document — NRT’s framework for low-carbon growth. It encompasses the vision, essential conditions, required governance context, and actions to move toward a low-carbon economy.

Figure 10

[135] OECD 2012b; United Nations Conference on Sustainable Development 2012; United Nations Environment Programme 2012a; World Economic Forum 2012

[136] Ong et al. 2012