(Ottawa) A new RBC report says Canada will need about $2 trillion to push the economy toward its “net zero emissions” goal within 30 years.
The RBC Economics report estimates governments, businesses and societies will spend at least $60 billion annually to reduce greenhouse gas (GHG) emissions by 75% from current levels and meet the carbon neutral goal by 2050.
These “green transformation” investments include government spending on programs such as vocational training and subsidies to catalyze necessary investments.
For example, investments in the power grid will be needed to meet the expected increase in electric vehicles, which will also need support to build and put them on Canadian roads, according to the report.
It would also require investment to retrofit older buildings faster than Ottawa plans, to “retrain” 100,000 workers to gain new skills in fast-growing green industries, and to provide skills training programs to help them. Adding an additional 200,000 people to the workforce by 2030.
These numbers come on top of a massive effort to deliver on liberal Justin Trudeau’s short- and long-term promises on climate change, but will be realistic, according to a Royal Bank report, if the government emphasizes some key areas.
It is not a matter of ideology, it is a matter of mathematics. And we did their calculations. We say: Well, here’s how we can bring those numbers back [d’émissions] “To zero, that’s what it will cost,” said John Stackhouse, senior vice president in the Royal Chief Executive’s Office. “We think it’s possible. So, let us focus, in business logic, on the main drivers of change in emissions. ”
Sustainability and political neutrality
Parliament passed legislation last spring requiring Canada to remove as many greenhouse gas emissions and capture the rest as possible, with a goal of achieving carbon neutrality by 2050. Liberals have not taken paths toward this long-term goal and will not do so until the day after the United Nations climate conference, COP26, Scheduled for later this month in Glasgow, Scotland.
The Canadian government has raised its emissions reduction targets for 2030, as required by the Paris climate agreement. Internal government documents indicate that liberals are well aware of the costs of achieving carbon neutrality and have sought to get banks and other private investors to help finance this carbon neutral.
Senior officials wrote to Finance Minister Chrystia Freeland in a September 2020 briefing that the country’s financial sector, including banks, “will need to play a major role” in creating a carbon-neutral economy. The summary note, written before the meeting of Mr.I Freeland, with bank CEOs, also highlights how these financial institutions can do more to “create the right conditions to support the acceleration of sustainable investment.”
In order to unlock some necessary spending, federal politicians will need to create new platforms to direct private investment into green initiatives — channels that could be similar to the Infrastructure Bank of Canada (CIB).
The Liberals created this agency in 2017 to use federal money as a way to attract private funding, but the CBI’s efforts and existence have become highly politicized—both Democrats and neoconservatives recently vowing to dismantle the agency if brought to power.
Stackhouse believes, however, that Canada needs agencies like CIB, which can be semi-autonomous in terms of selecting investments while still subject to government oversight. But in order to have a better chance of success, anything created to stimulate green investment must survive with successive governments until 2050 and must be depoliticized, Stackhouse believes.
This is a 30-year project. There will be different governments during these thirty years. So let’s create entities that can direct both public and private investment to focus on key strategic drivers. ”
The report also warns against excessive haste. If there was a sudden and significant drop in oil and gas production, government tax revenues would fall by about $8 billion annually, which the report says could hinder, not contribute to, a green transition.
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