5 Low-carbon and Resilient Trade and Competitiveness

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By engaging in international markets for low-carbon and resilient products and services, Canada can enable and reinforce clean growth over time. Trade in low-carbon and resilient products and services is also an important measure of Canada’s competitiveness as global markets shift.

Canada can contribute to a positive global cycle in trade. Development of better and cheaper climate-related technologies, goods, and services in Canada can help grow exports to countries seeking to improve climate outcomes—which provides new (and clean) opportunities for economic growth here at home. At the same time, imports of climate-related products and services from other countries can help grow global markets, driving additional global innovation and cost reductions. Imports can also provide Canadian consumers with more choice at better prices, while reducing the carbon emissions embodied in goods and services that Canadians produce and consume. If enough countries become part of this positive cycle, climate action will become cheaper and easier over time.

Headline Indicator #5: Trade in Low-carbon and Resilient Goods and Services

To measure Canada’s climate-related trade, we track the country’s exports and imports of environmental and clean technology (ECT) merchandise and services between 2012 and 2018.1 As Canada transitions to 2050, expanding ECT trade over time is an important component of clean growth and making Canada more competitive in a low-carbon global economy. 

As Figure 5.1 illustrates, trade increased in absolute terms and as a share of GDP since 2012. In 2012, trade in ECT represented about 1.2 per cent of Canada’s total economy, generating $20 billion in GDP; by 2018, the share of GDP increased to nearly 1.6 per cent and generated $30 billion (inflation-adjusted). This trend in Canada is consistent with broader trends in international markets, where demand for climate-related goods and services continues to grow at a rapid pace (Analytica Advisors, 2017; Elgie & Brownlee, 2017). 

As Figure 5.1 illustrates, the current share of trade in ECT is small, representing roughly one and a half percent of Canada’s total economy. It also shows that growth in ECT trade has been relatively slow when adjusted for inflation. Still, it is important not to minimize the total value of these traded goods and services. Trade in ECT grew at a faster rate than Canada’s total economy. And as discussed in Indicator #3, the sector represents around three per cent of Canada’s GDP when both exports and domestically purchased ECT are considered. 

Several other trends are noteworthy. For both exports and imports, manufactured goods were the most heavily traded type of ECT merchandise or service by value (about 65 per cent of total ECT imports and 45 per cent of exports in 2018). In particular, trade in complex manufactured goods experienced some of the largest growth. Trade in biofuels (both exports and imports) also increased significantly, driven in large part by mandated blending requirements by provincial and federal governments. Finally, it is notable that while exports of clean electricity (nuclear, renewables) represent over one-tenth of Canada’s total ECT exports (by value), they did not grow over this period. In every category, most of Canada’s trade in ECT—like the rest of Canada’s international trade—was with the U.S., accounting for 75 per cent of exports and 61 per cent of imports (Provenzano et al., 2019).

  1. See full definition of ETC in Indicator #3.