Dave McKay is the President and Chief Executive Officer of Royal Bank of Canada
As Canada prepares for the historic UN summit in Glasgow, Scotland, next month, we need to see the climate as an opportunity to transform every sector of our economy.
Our country’s ambitious climate goals include a 40 percent reduction in emissions by 2030 and a complete transition to “net-zero” by 2050. We are behind this time. With our current path and pace, we could be on our way to a reduction of about 27 percent by the end of this decade and at least 30 percent of emissions saved by 2050. We are not tackling climate change fast enough. And we need to systematically make the biggest economic change of our lifetime so that we create prosperity for Canada rather than destroy the Canadian industries and territories on which Canada depends. Business as usual won’t get us there.
According to a new RBC research report, rapidly scaling up and scaling up climate activities and investments will require a new playbook – one that entails an estimated $60 billion annually, or $2-trillion in total, for the next 30 years. And a new playbook should provide long-term stability, faster decision-making and better coordination on how to deploy capital to bolster demand and supply. This includes focusing on the technologies, practices and sub-areas that matter most to achieve net-zero.
Canada has made good progress in many areas. We have leading innovators in key climate technologies, and there are subsidies and incentives to adopt them. And we’re using levers like progressive carbon pricing.
However, we are too fragmented in our approach, and do not have enough policy certainty or funding commitment to generate the momentum needed to reach our climate goals. For example, how do we build a network of electric-vehicle charging stations, improve battery capacity, drive new electric-vehicle registrations – they are currently 2 to 3 percent – and about doubling our electricity. It will be important to have tight coordination. supply. By adopting a more connected and holistic approach, Canada can become an active player in the next generation of the auto industry.
Another example where better coordination can scale and accelerate the pace of reaching net-zero is agriculture. The sector represents a significant source of emissions, but there is also an opportunity to invest in new technologies and food production processes that reduce emissions and make Canada more competitive globally. This includes ensuring that agricultural land is an activated carbon sink, increasing the electrification of farm equipment, new planting strategies and biofuel production.
Our report concludes that there are six paths Canada can follow in more coordinated ways – from buildings and electricity generation to sustainable agriculture and electric vehicles. Organizing and bringing these pathways to life will require a separate construction to bring stakeholders and climate activities together. The government may explore the merits of creating a new public-private entity – one that is seeded with public and private capital, including indigenous capital, and able to draw on the capital market to attract more.
Any potential body will also need transparent governance and public accountability, while there must be direct lines between federal and provincial governments to ensure that regulations are not slowing down the mission. And finally, any coordinating construction will need to be protected from political cycles, the way the Canada Pension Plan Investment Board is to maintain independence to ensure that the climate agenda is not partisan lines or federal-provincial divides in three decades. stays above.
To function effectively, any entity would also need to be enabled by some major policy changes to ensure speed and stability. Some potential areas could include more concentrated use of revenue from carbon pricing, increasing home retrofits and stimulating greater consumer demand for green products.
Together, this would represent a courageous move but one that is needed. It won’t be easy, and big decisions have to be made. Canada needs to raise unprecedented amounts of capital while facing a challenging outlook for economic growth, significant debt from the pandemic response and an aging society. But if we get this right, Canada can accelerate growth and put us on the road to net-zero.
In doing so, we will help save our planet, usher in a new era of ideas and innovation to create prosperity and jobs for Canadians, and position our economy for long-term sustainable growth.
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