While the U.S. continues to levy tariffs and create an environment of policy uncertainty, Canada is well positioned to attract foreign direct investment and lead in numerous clean industries of the future — if the newly re-elected Carney government seizes this unique economic moment. After all, political leadership is a choice.
The world is still heading towards a low-carbon global economy, and better-cleaner-cheaper will be the recipe for success. The countries and industries that make better performing products with a cleaner emissions profile at an affordable cost will boost their economic competitiveness. Others will fall behind.
With the Liberal Party once again in office, they must now act to identify areas in which the country has major competitive advantages to support low-carbon industries that could give rise to high-growth economic sectors of the future and position Canada as a global economic powerhouse amidst a shifting world order.
One of those areas is in critical minerals and battery manufacturing. Critical minerals are foundational to a variety of end-use applications across various sectors. Canada is home to dozens of minerals and metals deemed critical, which should be leveraged to build robust supply chains for battery manufacturing to enable applications such as electric vehicles and utility-scale energy storage that serve the needs of a modern power grid.
Domestic critical mineral supply chains can also help reduce reliance on foreign nations, protect against tariffs, and improve balance of trade. The Canadian Critical Minerals Strategy is a good start toward crafting such a vision.
A second area is in harnessing geothermal energy resources. Canada already has a remarkably clean electricity supply, but more will be needed to service load growth from factors such as electrification of energy end-uses across the economy and population growth. Geothermal energy is a clean, firm generation resource that is available 24/7 and has major potential to be produced in western Canada in particular.
A third area is in supporting a suite of approaches that remove carbon dioxide directly from the atmosphere. With its extensive land area, vast coastlines, rich natural resource base, bounty of clean energy resources, skilled workforce, and suitable geology for carbon storage, Canada has all the right ingredients to become a major global player in building an industry that removes carbon dioxide from the atmosphere at large scale.
From planting trees to building machines that filter carbon dioxide directly from ambient air to removing carbon dioxide that has already been taken up by our oceans, the opportunities are endless to become a world-leader in this nascent but growing industry. Whereas many industries have made billions of dollars while dumping their pollution in the atmosphere, there is now an opportunity to make billions of dollars cleaning up the atmosphere.
Why the focus on decarbonization? In Canada, 2023 was the fourth-worst year on record for insured losses and marked the second year in a row where insured damages from natural catastrophes and severe weather events attributed to climate change surpassed $3 billion. Record-breaking wildfires alone led to billions of dollars in damages in that same year. Absent sufficient measures to address climate change, incurred economic and other damages could slow Canada’s annual growth in GDP by $25 billion.
The good news is that we have many of the necessary technological advancements to begin fixing the climate problem and create a better world.
Canada must make decarbonization a cornerstone of its economic self-interests to better compete in the global economy and chase one of the biggest wealth creation opportunities of our generation. Many countries can make steel, fertilizer, and cement, but can they claim it’s as clean as Canada’s?
This is our opportunity to usher in a new era of economic prosperity and establish a strong geopolitical position on the world stage. Leaning away from decarbonization could leave us struggling to unlock new value creation across the economy and to keep pace with innovative first movers.
For example, Canada’s large-emitter trading systems have been a dominant driver of reducing emissions across the economy, attracting major investments into the country. Those systems offer a major differentiator for the Canadian economy by enabling the export of lower carbon-intensive goods to global markets that attract buyers seeking those environmental product attributes.
Furthermore, cleaner exports will provide an easier pathway to regulatory compliance through carbon border adjustment mechanisms such as the one already underway in the EU or those under consideration such as in the UK.Winston Churchill is credited with the saying “never let a good crisis go to waste.” This is sage advice, especially as it relates to climate change. A healthier, more prosperous future is within reach if we work together to build broad coalitions in support of energy innovation and the next generation of climate solutions. Business virtue does not have to come at the expense of business value.
Tim Bushman is the Director of Policy and Research at Carbon Removal Canada.
