Image credit: Dave Chan

Good climate policy makes for excellent economic policy

Global energy transition now propelled by economic and energy-security concerns, according to global leaders

Last week, at a climate-policy conference in Ottawa hosted by the Canadian Climate Institute and the Net-Zero Advisory Body, one theme emerged clearly: yes, meeting climate targets is important. But it’s the economic and energy-security imperatives that are real rocket fuel powering the energy transition right now. 

Chris Stark, the pragmatic Chief Executive of the UK’s Committee on Climate Change, with a legal mandate to track and advise governments on climate progress, explained it this way: “We spend more and more time in the UK thinking about the ‘co-benefits,’ the wider impacts to reducing emissions and what they look like. Net zero is a scientific and legal goal. But we won’t reach it if we only emphasize the climate reasons.”

Chief among those co-benefits? Economic payoffs. 

Andrew Light, the U.S. Assistant Secretary of Energy, sounded ebullient when describing the scope and scale of the Inflation Reduction Act, which he called “the biggest climate-energy bill that has ever been passed in United States history.” Half a trillion dollars is on the table to open new avenues for growth in the U.S. economy, “the most massive, biggest thing we’ve ever put together.” 

Canada, the mouse sleeping next to the elephant, has woken up to take note of this unprecedented economic opportunity. Prime Minister Justin Trudeau’s clear message to the conference: the world has changed, and is presenting new opportunities—if Canada is ready to seize them.

 “We spent a lot of time talking about the imperative of fighting climate change, and the challenge of fighting climate change,” the Prime Minister said. “It’s only more recently that we’re starting to see the opportunities we’ve been talking about, as the world is shifting.” 

Many speakers made the point that the stage is now set for a dramatic acceleration in the energy transition. Russia’s invasion of Ukraine, rather than knocking action on climate change off the political priority list, is supercharging its momentum. 

“The economic case and the energy-security case for climate action has never been stronger,” said Sara Moarif, Head of Environment and Climate Change at the International Energy Agency. “We’re seeing an alignment of priorities that has been triggered by this crisis in Ukraine. It’s a global energy crisis, which we have not had for some time, and these do lead to big shifts. This crisis is underscoring that our energy system is fragile, and unsustainable on a lot of different levels,” she said.

The United States is clearly thinking along the same lines, as Andrew Light stated: “If you are getting your supply from someone willing to weaponize that against you, that’s not sustainable. Watching today’s news should be the biggest incentive for accelerating the clean energy transition.” 

One undercurrent throughout the day was the desire for stability in a volatile world: an end to inflation, stabilizing the increasingly unpredictable climate, and above all, policy certainty. Ministers Wilkinson and Guilbeault both emphasized the importance of bringing predictability  to industry and business by putting into place policy around Carbon Contracts for Differences, to ensure the carbon price into the future. 

I closed the conference buoyed by what I heard from our global guests: real alignment on goals and outcomes on the path to net zero. It’s important to meet our climate targets—and the Prime Minister was emphatic that it would happen with the comprehensive policies now in place—but it’s also important for countries to be aligned on how the energy-transition supports their broader strategic objectives and will make their countries safer, healthier, and better off. 

“[Canada] is now on track to meet 40 to 45 per cent [emissions reductions]  by 2030,” said Prime Minister Trudeau. “We are going to do it not only because it’s the right thing for the planet but because it is the competitive advantage.”