Canada’s net-zero opportunities might skip some provinces

In the race to net-zero, some of Canada's largest provinces are falling behind on their support for emerging clean tech, a new report finds

Canada net-zero
Photo by Andrew G Hayes/Flickr

Canada’s provincial governments need comprehensive net-zero climate strategies to drive growth in the green economy, but some are sending mixed policy signals to the companies that will create tomorrow’s jobs, says a new report from the Canadian Climate Institute. 

In Ontario and Alberta, significant policy reversals in recent years have weakened the business case for emerging clean-tech firms, which need major local customers to commercialize and scale up their technology. 

Ontario has supported investments in electric vehicle manufacturing by auto manufacturers and in lower-carbon processes by steel companies. But the government plans to rely more heavily on natural-gas-fired power for electricity over the next decade.

“The absence of a net zero emissions strategy for Ontario’s electricity grid could result in missed growth opportunities in promising new markets,” said the report, Net Zero Opportunities, pointing to renewables, smart grids and battery storage.

The report, which includes individual provincial assessments, is a follow-up to Sink or Swim, a study released in October 2021 that analyzes Canada’s net-zero opportunities and challenges on a national scale. In the new report, the Climate Institute assesses individual provinces’ records on whether they are nurturing “transition-opportunity companies” that can become the key employers of the future.

Ontario, for example, has the highest number of workers in industries threatened by the energy transition but lacks a “consistent, comprehensive, and long-term approach” to climate policy that would support high-growth clean technology companies.

Policies that create domestic demand for low-carbon goods and services in government and the private sector are a critical part of the effort to grow companies that can take advantage of the energy transition and support provincial economies, the report concludes.

Using data from PitchBook, the Climate Institute report found that four provinces – Quebec, British Columbia, Ontario and Alberta – have all seen some success in the growth of companies that could anchor a new economy. 

However, B.C. and Quebec are leading the pack with a comprehensive approach that fosters growth in emerging companies as well as decarbonization investments by incumbent firms that can become important customers for the high-impact start-ups.

The absence of a net zero emissions strategy for Ontario’s electricity grid could result in missed growth opportunities in promising new markets.

Ontario has a high number of cleantech start-ups relative to Quebec and B.C. but falls behind its rivals when it comes to company track records in attracting growth capital and in scaling them to be globally competitive.

Alberta’s ability to capitalize on emerging sectors such as carbon capture and hydrogen “is hampered by mixed policy signals and dominance of the oil and gas sector,” the report says. Despite strong investment in renewable power, Alberta trails B.C. and Quebec in nurturing emerging companies that will seize opportunities from the transition.

In an interview, report author Jonathan Arnold noted that the pace of a climate-driven transition remains uncertain, especially as Russia’s invasion of Ukraine has increased demand for non-Russian oil and gas.

However, countries representing 90% of global demand have committed to achieving net-zero status this century, while the disastrous impacts of climate change are becoming increasingly clear and present. 

“We see this transition as inevitable,” Arnold said. “Certainly, there is short-term uncertainty . . . but if the world is serious about making progress on climate targets and reducing the long-term impacts of climate change, then this really is an inevitable transition. And we will get to a place where we have to act.”

At the Davos summit in Switzerland this week, European Commission Vice-President Frans Timmermans, U.S. climate envoy John Kerry and Fatih Birol, executive director of the International Energy Agency, addressed the challenges of current energy needs while maintaining a focus on climate concerns. 

“There was clear consensus that the right policies for addressing the global energy crisis can also bring us closer to our climate goals,” Birol said on Twitter.

The Climate Institute report argues that, despite the current surge in demand for oil, we should expect lower demand for fossil fuels and carbon-intensive products in the future and a greater need for low- or zero-carbon alternatives. “Provinces that get ahead of those changes will thrive while those that fall behind could face significant upheaval,” the report says.

Support for emerging clean-economy companies is a necessary but far from sufficient strategy for achieving clean growth and a just transition that ensures that vulnerable workers and marginalized communities are not left behind. Provinces need to embrace future-oriented sectors such as biotech and artificial intelligence while addressing education, training, social safety nets and Indigenous empowerment. If they don’t, they risk being left behind. 

 

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