“Sink or Swim” report from the Canadian Institute for Climate Choices
November 8, 2021 | Charles Lin
Image by David Mark from Pixabay
The Canadian Institute for Climate Choices (CICC) released a new report “Sink or Swim: Transforming Canada’s economy for a low-carbon future” in October 2021. The report analyzes what this transformation could mean for Canada, and provides policy advice on how the country can create a smoother transition, and mobilize private capital to ensure Canada remains competitive. We summarize here the key points.
The transition to a global low-carbon economy is accelerating
Many countries, including Canada, have already committed to reaching net zero emissions by mid-century, and are putting in place policies to achieve this goal. These countries currently represent over 70% of global GDP and over 70% of global oil demand. While the general direction of the transition is clear, there are uncertainties and risks in specific markets, such as newer markets or where “wild cards” – high risk technology solutions still in early stages of development – are needed.
The stakes in this transition are high for Canada
Industry sectors in Canada that are vulnerable in the transition include oil and gas, mining, heavy industry, and auto manufacturing, which generated $300 billion in export and investment value in 2019. These sectors account for 70% of goods exports, 60% of foreign direct investment, and over 800,000 jobs in the country. Stress tests, conducted on publicly traded Canadian companies under different transition scenarios, show companies in vulnerable sectors would need to make major investments in the transition in the coming decades to remain competitive and avoid significant profit loss.
What Canada needs to do to succeed in the transition
The report provides four recommendations, summarized below.
- Government policies and regulations should account for long-term competitiveness and promote demand for products with growth potential. For example, a mandate to require all vehicles sold after a certain year to be electric would create demand and improve competitiveness for manufacturers.
- Public investments and tax incentives should be targeted to sectors with export and growth potential to mobilize private investments. This would mean less public support for activities with decreasing long-term global demand, such as coal mining and oil production, and more for potential growth sectors such as hydrogen, renewables, and carbon capture.
- Governments at all levels should work together to develop transition plans to support workers and communities. These plans should attract new sources of growth and jobs, and provide skill training for communities that are reliant on transition-vulnerable industries.
- The federal government should work with the Sustainable Finance Action Council, regulators, provincial governments, and Indigenous organizations to accelerate the corporate disclosure of climate risks, and expand the availability of climate risk data that stakeholders need to make decisions in the transition.
The transition is an opportunity for Canada
The report states Canada can build a more sustainable economy through the net zero transition. Success will happen only with creating a shared vision of a better future and working together to achieve this vision. It also notes slow and steady will not win the race to capture opportunities in rapidly changing markets; this is a time when bold and innovative actions are most likely to succeed.
Appendix: Resource material
CICC resources, including the full report and a summary report, are available here. There is media coverage of the report by the Globe and Mail, Toronto Star, and Global News. We also have an earlier article on CICC’s report “Canada’s Net Zero Future”.
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.