Last week, the federal government announced that it was tabling the Net-Zero Emissions Accountability Act in the House of Commons. The act enshrines into law the government’s goal of achieving a net-zero economy by 2050. While grand in vision, Bill C-12 is not explicitly a roadmap to achieving a net-zero economy. It creates legal accountability around reporting on Canada’s progress on the journey to net-zero. But as the fifth anniversary of the Paris Agreement approaches, Canada continues to fall behind on its targets. So how do we transition from where we are today to a position of climate leadership and economic resilience?
As the planet becomes increasingly inhospitable for humans, we face both a crisis and an opportunity. Canada is a large country with a small population, and we rely on international trade to fund our well-being. Exports represent almost a third of our national economy, and nearly 25% of all exported goods, representing $538 billion, come from the energy sector. One in five Canadian jobs stems from goods-producing industries, including manufacturing, resources and agriculture. It’s critical that building a more sustainable nation include lowering emissions while protecting the livelihoods of seven and a half million Canadians. This represents not just an opportunity for Canada to lead but an opportunity to prosper.
There are three big levers we can pull to get there.
The first and most obvious is to lower Canada’s industrial emissions. We already have a national strategy, the Pan-Canadian Framework on Clean Growth and Climate Change (adopted in late 2016), including a Canada-wide carbon price. However, Canada is on track to fall short of its 2030 Paris Agreement targets by about a third. While the Trudeau government continues to tease its detailed plan to reach net-zero emissions by 2050, Canada (like many other countries) has a track record of missing its ambitious climate targets.
That leads to the second lever: helping other nations reduce emissions while reaping the economic rewards. One way to do this is to focus on growing Canada’s innovative low-carbon exports, an area in which we have some existing advantages.
The Canadian labour force can rightly claim deep expertise in engineering, research, design, business and financial services from our long history as a resource-heavy economy. We also enjoy a vast and accessible market for exports to our southern neighbour (Canada exported approximately US$337 billion of goods in 2019 to the U.S.), which is predicted to improve as Biden moves into office and enforces his Build Back Better economic recovery plan.
As governments and multinational corporations continue to announce net-zero commitments, the market pull for low-carbon innovation is white-hot. Canada can take advantage of this trend by doubling down on support for innovation at home while exporting technologies that reduce our economy’s greenhouse gas intensity. For example, Canada is home to the Quest carbon capture and storage facility, which has captured five million tonnes of C02 for an Alberta oil refinery in the last five years, equal to the annual emissions from 1.25 million cars. Exporting the technological innovation that allows projects like Quest to succeed will support other nations in meeting their climate targets using low-carbon Canadian innovations.
Another example of low-carbon export opportunities is in C02-based materials and products. “Carbontech” is an emerging sector in which materials typically manufactured using fossil fuels are instead made by recycling existing C02 emissions. A vast array of materials can be manufactured using this method, including concrete, jet fuel, paints, plastics, fertilizer, carbon fibre, even synthetic protein and food. Making these materials from recycled C02 emissions could reduce seven billion tonnes of C02 by 2030, representing roughly 15% of annual global C02 emissions, according to estimates by the Global C02 Initiative at the University of Michigan.
Though this innovative sector is still in its infancy, it’s not hard to map a pathway to a future in which Canada is a leader in emerging technology. In fact, 40% of the teams participating in the NRG COSIA Carbon XPRIZE, a $20 million prize for the development of new and emerging C02 conversion technologies, are Canadian technologies. British Columbia’s Carbon Engineering is already pulling C02 from the air and turning it into fuel, and Calgary’s Carbon Upcycling Technologies’ materials are used to manufacture everything from consumer goods to C02-based plastics. The estimated total addressable market for C02-based materials already exceeds $8 trillion.
The third lever is also perhaps the most controversial. It involves Canada exporting products where most reduction occurs through use. One hotly debated route is exporting natural gas as a replacement for coal-fuelled power. According to studies by MIT and Johns Hopkins University, natural gas, if done right, can reduce comparative coal emissions by half. Natural gas is not, however, a climate panacea. As the American National Academies of Science, Engineering, and Medicine has pointed out, uncontrolled methane leaks from natural gas can undo all the positive effects of lowering the carbon footprint.
Using carbon-based fuels, like natural gas, as a bridge to a green transition is a complex topic; the details of execution matter. We owe it to current and future generations to lean in to this topic’s nuances, challenges and opportunities as we plan for the future.
The global conversation around fighting the climate crisis and decarbonizing our global economies is starting to move beyond hope and into practical policies and business plans. Getting this right is not automatic and will take work, capital and planning, but the opportunity for Canada is there, so let’s seize it.
Marcius Extavour leads climate, energy and environment work at XPRIZE. His work includes the $20 million NRG COSIA Carbon XPRIZE, a global competition to recycle C02 into valuable products as a way to decarbonize our economy and avoid dangerous climate change.
Dan Zilnik is the president of AFARA. His firm works on the math, science and economics of sustainability, focusing on energy systems and the economics of the circular economy.