“$2 Trillion Transition” report from the Royal Bank of Canada
November 18, 2021 | Charles Lin
Image by Alexander Lesnitsky from Pixabay
The Royal Bank of Canada (RBC) released a new report “The $2 Trillion Transition: Canada’s road to Net Zero” in October 2021. The report uses established modelling methods to map and cost pathways for Canada to reach net zero by 2050. We summarize here the key points.
Six pathways to Net Zero
- Double the supply of green electricity generated from wind, solar, hydro and nuclear, with natural gas to supplement power during peak demand periods. The provincial grids should also be better connected.
- In the oil and gas sector, promote technological innovation to reduce emissions, including cutting back on methane emissions and scaling up carbon capture methods.
- In the building sector, retrofit 4.5 million homes to reduce emissions from space heating, and phasing out fossil fuel burning systems in favour of electric power and the use of heat pumps.
- Make mainstream the use of electric vehicles through federal policies such as banning of new gas-powered passenger vehicles by 2035, and mobilizing public and private investments to improve charging infrastructure and battery technologies.
- In the heavy industry sector, government and industry promote policies and investments in low emission technologies, such as green steel technology, industrial heat pumps, and carbon capture methods.
- In the agriculture sector, reduce emissions through less use of fertilizers, better livestock production and waste management, and promotion of carbon sequestering of trees, plants and soils.
What are the costs?
The report estimates governments, businesses and communities in Canada would need to spend about $60 billion a year for 30 years to reduce emissions by 75% from current levels, to help Canada reach net zero by 2050. This works out to $2 trillion over the next 30 years. The report also notes for context that Ontario alone spends nearly $70 billion a year on healthcare, an essential priority.
The Net Zero opportunity
The report states $2 trillion over the next 30 years is a large but affordable amount, especially when measured against the expected economic returns, such as new technologies and products, and industries where Canada can potentially be a global leader. Additional opportunities include new approaches to sustainable finance to generate the $2 trillion, and the retraining of 100,000 workers with new green skills and up to an additional 200,000 workers with such skills by as early as 2030. A long-term commitment to carbon pricing will help to create these opportunities. The report also notes while reducing emissions is costly, the cost of inaction is also high. By acting to cut emissions now, we can avoid even higher costs in the future.
Appendix: Resource material
Charles is a retired atmospheric scientist based in Toronto. He stays busy as founder and lead of ImpactNetZero, keeping healthy in mind and body, and reading stories to his two grandchildren.