In 26 years, Canada will proudly claim its position as one of the world’s net zero emitting countries. What that country looks like in 2050 will be determined by decisions we are making today.
Will we invest heavily in using our abundant resources to drive down emissions, foster the development of emerging technologies, and create cleaner energy? Or will Canada cede that space to other nations nimbler and more enterprising? By 2050, Canada will answer these questions by either having met its climate goals through seizing the countless opportunities sitting on its doorstep… or missing them entirely by letting them pass by.
Spending the better part of the last two decades working for a Canadian company that has a direct line-of-sight into the policies and economic conditions created by the United States – our largest trading partner and competitor – the contrast I see couldn’t be starker.
What stands out to me most is the uncertainty generated in Canada by a constantly shifting policy environment that fails to recognize that for major industrial decarbonization projects to get to their final investment decision, we need to know what regulations and policies are coming next. With industry and government sharing the same end goal, Canada should be looking for opportunities to collaborate so we can reach our decarbonization goals.
By contrast, the American Inflation Reduction Act was swift, decisive, and bipartisan. This means that companies will benefit from the legislation and its hundreds of billions in tax credits, loans, and grants meant to move green projects forward regardless of who holds political office. This more stable policy environment has already spurred U.S. companies across industry sectors to propose and build major decarbonization projects that will help their country take major steps towards its net-zero goals.
While Canada also has incentives like the Strategic Innovation Fund (SIF) and other investment tax credit programs in place, there is still too much policy disagreement between the partisans in the House of Commons for there to be enough certainty to get most projects to their final investment decision, let alone shovels in the ground.
So what do we need as private sector industrial players to stay the course on decarbonization? We need policymakers to understand that a predictable policy environment is key to unlocking the billions in investment from industry needed to decarbonize and further Canada’s ambitious climate goals.
Streamlined regulations with less red tape along with meaningful incentives will also offer companies the certainty they need when contemplating potential investments. If we can’t offer some level of confidence that shareholders will see a return on their investment, the decision might very well be to abandon these projects altogether or, worse still for Canada, make the investment south of the border instead.
A perfect example of this kind of capital flight can be found in the development of the liquefied natural gas (LNG) sector in both countries. In Canada, only three of 15 LNG projects that have been proposed in recent years have actually made it out of regulatory purgatory and received approval to proceed. Of those, only one has made it to the construction phase. The Canadian Energy Research Institute reports that delays in Canada’s regulatory process means that, on average, it typically took Canadian LNG projects a staggering 19 months longer to receive approval than in the U.S.
Compare these timelines to south of the border, whose proposed, approved, and constructed LNG projects quickly eclipsed our own, and you can see why the Fraser Institute’s 2022 Canada-U.S. Energy Sector Competitiveness Survey found that the U.S. was a more attractive jurisdiction for investment than Canada. And while the recent pause in U.S. LNG projects may indicate a more cautious approach for the next phase, it doesn’t detract from the country’s ability to take swift action and gain meaningful traction. (And let’s be frank: between our two countries, the U.S. is the only entity that actually had a booming LNG industry to pause.)
Let Canada’s missteps with LNG be a cautionary tale on the path to decarbonization. We – meaning current and future generations – cannot afford to have a dysfunctional policy environment that ties up projects that will make a meaningful difference towards cutting Canada’s emissions in endless red tape.
Canada, it’s time to collaborate, be aggressive, and quickly seize opportunity through industry and government co-operation. Industry is at the ready to ensure our 2050 future is bright.