There are different paths to achieving a net-zero economy, but getting there affordably won’t be possible with an “all of the above” approach. To keep the costs of the transition as low as possible, we need to be strategic. Setting aside false and inefficient solutions, here’s a snapshot of how our cleaner, greener future will look:

Electrified transport

EV prices reach parity and become less costly than gasoline vehicles in the 2030s, while the average range of a full battery exceeds 550 kilometres. Drivers reap a giant clean-energy dividend on fuel, saving billions on energy costs compared to the fossil fuel era.

Vehicle-to-grid technology

The batteries in tens of millions of interconnected EVs provide additional energy storage to ensure a reliable grid. By 2050, vehicle-to-grid (V2G) technology saves hundreds of billions in grid investments and puts money in vehicle owners’ pockets.

Utility-scale battery storage 

Quicker to build than gas plants, large battery farms are critical to the transition to a renewable-based electricity supply. Over the longer term, they are supplemented by V2G storage (see below), shaving billions off utility costs and consumer bills.

Green buildings

Existing buildings are retrofit with heat pumps, and new buildings are efficient, electric, EV-ready and climate resilient. Home energy bills go down and are more resilient to inflation.  

Long-distance transmission 

Sharing is caring – and also energy efficient. Rather than segregated electricity systems, jurisdictions have access to electricity-generating capacity in wider regions. Prairie sunshine powers the dinner-hour peak along the Atlantic, and winds in the East supply morning electricity in the West.

Heat pumps 

Three to five times more efficient than gas boilers, heat pumps drastically reduce the energy consumption of buildings and protect households from big spikes in fossil fuel prices. They replace many air conditioners, too, for even more savings. 

This article was published in the Knight Bites section of the summer 2025 issue of Corporate Knights magazine. Order your copy here.

The post Meet the low-cost, low-emission economy of the future appeared first on Corporate Knights.

The appeal of the AOTA position to politicians is obvious: it allows them to pander to every constituency and avoid alienating potential supporters. It is not leadership, but as political expediency it is tried and true. 

The AOTA position can also be justified as a legitimate strategy in the early phases of understanding and confronting a challenge like climate change where the path forward is not yet clear. AOTA “keeps all options open” until the choices crystallize. 

But we are no longer just beginning to consider our options for effectively responding to climate change. We know that the response must give priority to electrifying the end uses of energy and building up a supply of renewable, emission-free electricity. And from Tinseltown to Tennessee, the devastating impacts of climate change have come to America, with the global cost of wildfires, floods and killer heat waves now more than $2 trillion and growing exponentially.

We are entering the endgame in our encounter with global warming. Time is short, capital is limited, and the penalties for bad moves at this stage in the game are severe.

Climate denial 2.0 

Climate denial comes in many forms, many of which are disingenuous and driven by self-interest, but some of which are genuinely held by people informed by and with respect for the science. 

Climate denial 1.0 refers to the outright denial that anthropogenic greenhouse gases are causing global warming or, in its more extreme form, that global warming is even happening. When scientific concern about human-caused global warming began to grow, it was based on our understanding of the greenhouse effect and what the climate models of the day predicted would be the deleterious impact of continued reliance on and growth in fossil fuel combustion.

The scientific skepticism melted away in the 1990s as the models improved, rising temperatures rocketed out of the background noise, and the consequences began to multiply. 

But then a new type of climate denial began to take hold; let’s call it climate denial 2.0. This more insidious type of denial does not reject the scientific fact of human-caused climate change, but it does reject the need for or the feasibility of an urgent response. And this in turn leads to the “madly off in all directions” response – more respectfully known as “all of the above” – that characterizes too much of the current policy and business response to the climate emergency. 

Not all winners 

In our Climate Dollars project, we have been quantifying the capital costs of the transition to zero emissions for Canada by 2050, and the results underscore how much more the transition will cost if we do not make smart choices. 

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Among the clear positive choices are heat pumps, electric vehicles, wind turbines, vehicle-to-grid storage infrastructure and continental grid interconnectivity. Working together, these technologies can cut a path to zero emissions that demands about $1.5 trillion in capital investment over the next 25 years. At an average of $60 billion per year, this is well within the capability of Canadian capital spending and tracks below our own and others’ previous estimates of the cost of the transition. The returns are positive, the economic benefits are clear, and Canada would secure its position in the 21st-century global economy. 

This is not an AOTA approach. Several popular climate solutions fail to pass muster when viewed through the twin lenses of urgency and affordability. 

Deep residential retrofits. Viewed strictly as climate mitigation, deep residential retrofits cost more than the capacity investments they avoid. Unless and until the retrofit industry can come up with technological and business practices that cut the cost of deep retrofits by 50% or more, our strategy for new and existing buildings must focus on affordability, electrification and resilience to extreme weather. 

Public transit megaprojects. Public transit is an essential component of a highly functional modern urban community, but it is a slow, expensive and relatively ineffective approach to driving down emissions; it didn’t make the cut in our capital budget for responding to the climate emergency

Nuclear power generation. New nuclear capacity drives up the overall cost of decarbonization, even after allowing for the lower investment in renewables and transmission infrastructure it facilitates, so it did not make the cut either. 

When we include these options, the capital requirements increase to more than $2.3 trillion. And it goes without saying that we should be past the point where investments in the production and use of fossil fuels should still be happening. Such investments are antithetical to an emergency response to climate change. They lock in fossil fuel dependence and draw capital away from urgently needed options that can make a positive difference. They literally add fuel to the fire and when favoured provide a strong indication that climate denial 2.0 is afoot.

It’s choosing time.

Ralph Torrie is director of research at Corporate Knights.

The post Why ‘all of the above’ energy policies won’t work appeared first on Corporate Knights.

Extensive new modelling by Corporate Knights’ Climate Dollars project reveals that the rapid transformation we need is within our grasp. But the buildings and transport sectors each hold an essential piece of the solution.

• Any successful effort to bring Canada’s greenhouse gas emissions to zero by 2050 must shift the entire building stock to use heat pumps for space heating and cooling, while striking the best balance in each province between the cost and benefits of deep energy-efficiency retrofits.
• The Climate Dollars modelling places the batteries in electric vehicles at the centre of the decarbonization effort. Vehicle-to-grid (V2G) systems allow EVs to charge when solar and wind are abundant and cheap, then release part of that charge to the grid when demand is highest, reducing the cost of decarbonizing by $8,000 per vehicle – as long as those millions of EVs are on the road in time to make a difference.

The analysis shows that decarbonizing our energy system by mid-century will be a big, bold nation-building project in which every sector plays an essential part. We can meet that target faster and at less cost by looking at the electricity system, buildings and road transport as an integrated whole, rather than trying to shift each sector on its own.

Climate Dollars modelling points to a realistic path to eliminate Canada’s energy-related greenhouse gas emissions by 2050. It’s achievable and affordable, requiring a manageable share of the capital dollars the country already invests each year. It delivers hundreds of thousands of well-paying jobs in the rapidly emerging new energy economy.

The capital expenditure gap in buildings and transport

Corporate Knights set up the Climate Dollars project to measure the gap between current climate-related capital investments and the funding required to meet the country’s climate goals. Much of that investment will be for the renewable electricity supply and a project we’re calling the Trans-Canada Transmission Link that deliver the renewable energy to power Canada’s buildings, vehicles, industry and agriculture.

The other key pillars of any decarbonization plan are to make each of those sectors as energy-efficient as possible and shift their consumption from fossil fuels to clean electricity. The Climate Dollars modelling shows those changes increasing electricity demand from less than 600 to nearly 1,000 terawatt-hours per year, including 490 TWh in homes and commercial buildings and 150 TWh from road transport.

The other key pillars of any decarbonization plan are to make each of those sectors as energy-efficient as possible and shift their consumption from fossil fuels to clean electricity. The Climate Dollars modelling shows those changes increasing electricity demand from less than 600 to more than 1,000 terawatt-hours per year, including about 335 TWh in homes and commercial buildings and up to 290 TWh from road transport.

Both of these sectors can make it easier and less expensive for the grid to decarbonize. But only if they can clear a large gap between current capital expenditures and the levels that will be needed to get the job done.

For Canada’s nine million residential buildings and one million commercial buildings, the two decarbonization scenarios in the Climate Dollars analysis require additional capital expenditures between $14 billion and $35 billion per year through 2050. The more ambitious scenario, combining heat pump conversions with deep energy retrofits in the residential sector, reduces electricity consumption in all provinces but Alberta, Saskatchewan and Ontario. Heat pump conversions without the efficiency upgrades cost far less but increase the investment needed to ensure a renewable electricity supply through the winter months.

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In response to the affordable housing crisis, Canada will also see construction of hundreds of thousands of new residential buildings by 2030, the majority of them multi-family structures. They’ll all have to be built to the highest possible energy-efficiency standard and equipped with air-source or ground-source heat pumps, not fossil-fuelled heating or cooling.

In transport, additional capital investment of $270 to $300 billion over the next 25 years will be needed to complete the shift to electric vehicles and install 555,000 new public charging stations, with V2G technology turning the batteries in those cars into a valuable grid resource. Annual investment peaks at $17.5 billion in 2032 and then starts falling as the cost premium for personal EVs declines throughout the 2030s.

Decarbonizing buildings means investing in ourselves

Every aspect of the Climate Dollars modelling points to the investments that will make Canadians’ lives safer, healthier and more affordable. The buildings sector is where the response to climate change literally comes home. Our buildings must be electrified and prepared for the extreme weather that is already locked and loaded in the atmosphere as a result of past and present greenhouse gas emissions. Heat pumps and efficiency improvements in our building stock are also essential enabling investments for the electricity supply sector to be able to make the transition to a renewables-based grid. In a cascading, global climate emergency, the simplest, cheapest path to reduce the greenhouse gas emissions from building energy use is to replace fossil-fuelled heating and cooling with heat pumps at a cost of $370 billion through 2050, or about $13.6 billion per year.

More extensive building retrofits deliver benefits far beyond energy savings and emission reductions. They help protect our homes and businesses from storms and flooding, wildfires, heat waves and power outages that will become more severe and frequent as the years go by. A national energy-retrofit mission would create hundreds of thousands of jobs in a thriving, new business sector, helping to build stronger communities and avert the worst impacts of climate change.

Every aspect of the Climate Dollars modelling points to the investments that will make Canadians’ lives safer, healthier and more affordable.

Even assuming that economies of scale bring down the cost of building retrofits by 50% by 2035, it would take an additional $500 billion over the next 25 years, an average of $20 billion per year, to recondition the entire building stock. Canadians actually invest much more than that in existing buildings; in 2024 alone capital expenditures on building renovations totalled $101 billion in the residential sector and $28 billion in the commercial sector.

But while those improvements included some energy-efficiency upgrading, the priorities for building upgrades are generally directed more toward interior redecoration and refitting. This is a recurring theme in the analysis of decarbonization – it is not so much an increase in the total capital that is required but rather shifts in the way capital is allocated, projects are planned and organized, a new work force is trained and deployed, and government incentives are designed for building retrofits.

Road transport is already decarbonizing

In road transport, the shift from internal combustion to electric vehicles is already well under way. Electric vehicle sales in Canada are growing exponentially. And with the price gap expected to narrow through 2035, drivers can look forward to a clean-energy dividend on fuel of up to $1.2 trillion through 2050, after subtracting the cost of the electricity to run the vehicles.

But we’ll have to move quickly to seize the moment. The average car or light truck stays on the road for 15 years, and some commercial trucks even longer, so getting to a zero-emission fleet by 2050 means phasing out new gasoline and diesel vehicles by 2035.

Climate Dollars calculates a capital expenditure gap of $300 billion to fully electrify road transportation, including the cost of a V2G-enabled charging infrastructure. But that’s based on the assumption that the price difference between internal combustion and electric vehicles will gradually decline, reaching parity in the 2030s, with EVs then becoming less expensive than gasoline- and diesel-powered vehicles. If there were no price difference today, the capital cost of electrifying the entire road transport sector would tumble to just $57 billion between 2025 and 2050.

Decarbonizing car culture

Cars and trucks have shaped the urban form of our communities and the supply chains that sustain them for the last century. Canadians travelled an average 12,000 kilometres per person per year in 2022, not counting long-distance trips, and made 82% of those trips in cars and light trucks.

Given this heavy reliance on private vehicles, the Climate Dollars analysis shows only one viable path to decarbonizing transportation by 2050.

The sector can and should achieve some emission reductions by cutting down on the number and distance of car and truck trips, boosting public transit, moving more freight by rail, and over the short term, making internal combustion vehicles more fuel-efficient. Those are all worthy and important steps to take.

But bringing every part of the transportation system to zero emissions by 2050 must begin with rapid electrification for a fleet of cars, pickups, SUVs and commercial trucks. Along the way, vehicle-to-grid technology will dramatically reduce the cost of delivering a decarbonized electricity grid.

* * *

Corporate Knights will soon be releasing the full Climate Dollars analysis to drive discussion on the opportunities ahead, and how Canada can align with the investment strategies that allies in the European Union and elsewhere are already pursuing.

Corporate Knights is able to carry out this research thanks to support from the McConnell Foundation, the Trottier Family Foundation, the Chisholm Thomson Family Foundation and the Graham Boeckh Foundation.

The post Canada won’t meet its climate targets without heat pumps and EVs appeared first on Corporate Knights.

The vision of a decarbonized, interconnected, resilient national power grid is at the heart of recent analysis by Corporate Knights’ Climate Dollars project that sets out an ambitious plan for a zero-emission economy by 2050, all while securing and revitalizing the local economies that are the cornerstone of our national sovereignty.

It is a grid that we have only recently imagined, one based on millions of distributed, renewable generators rather than dozens of central power plants. It requires capital investments in solar, wind and storage technologies that total $700 billion over the next 25 years, in addition to the roughly equal amount of capital needed to electrify the buildings and vehicles. The capital cost for the grid investments averages $28 billion per year from now until 2050 and is below current investment level in the electric power sector in Canada, which totalled $32 billion in 2024 and is projected to reach $34.5 billion this year.

But while this total investment is well within the capacity of Canadian capital spending, realizing such a sustainable outcome requires that government make the right choices now, that both new and existing buildings are fossil fuel–free, that we develop vehicle-to-grid infrastructure that feeds the energy of EV batteries back into our grid, and that we stop building new fossil and nuclear plants.

The renewable grid builds on our current hydroelectric base and leans into the wind and solar resources that Canada has in abundance, and that are leading global growth in electricity generation investment.

• Sized to provide for the growth in electrification of buildings and vehicles, the scenario includes up to 100,000 wind turbines and 100 million solar panels to be built across Canada over the next 25 years.
• The batteries in tens of millions of interconnected electric vehicles will provide the energy storage to ensure a reliable grid, 24 hours a day, 365 days per year. By 2050, vehicle-to-grid technology cuts the cost of the national grid by half – even after putting money in vehicle owners’ pockets by compensating them for access to their batteries.

Every part of the Climate Dollars scenario is built on technologies that are proven, affordable and beginning to scale up. Getting it done will depend on government leadership in clearing regulatory and other barriers to rapid action, and an accelerated response from businesses and investors who see opportunities to prosper generated by a positive, pragmatic response to the climate emergency.

The Trans-Canada Transmission Link

At the heart of the transition scenario is what we are calling the Trans-Canada Transmission Link, a bold nation-building project as central to our future as the Trans-Canada Railway and Highway were to our past. It’s a coast-to-coast, high-voltage DC transmission line that will foster interprovincial trade in electricity to bring down the cost of decarbonization while supporting broad distribution of the benefits of the hundreds of billions of dollars of investment in renewable electricity through the coming transition.

A Trans-Canada Transmission Link will also be a more efficient means of transporting energy across the country than a new pipeline. As the energy transition unfolds, the link could transport gas-powered electricity generated in Alberta to Eastern Canada faster than pushing the gas across the country in a pipeline, with an important added benefit: the Trans-Canada Transmission Link will not be obsolete after the transition to zero-carbon sources is complete. The link will give each province access to electricity-generating capacity in any of the others, with different parts of the country using and consuming power at different times of day. With the grid itself as a coordinating point, Manitoba sunshine will be able to power the dinner-hour peak in Halifax, while Quebec’s summer winds supply morning electricity for office towers in Calgary and Edmonton.

The Trans-Canada Transmission Link is a bold nation-building project as central to our future as the Trans-Canada Railway and Highway were to our past.

A Canada-wide link also cuts the total amount of renewable generation the country will need. Rather than every province building its own carbon-free grid independently, a national link is stronger, and smarter, together. It will cost $30 to $40 billion to build, including the converter stations in each province, and deliver two to three times that much in cost savings.

The interprovincial transactions along the Trans-Canada Transmission Link will be a win for all provinces, whether they’re buying or selling electricity. The prospect of stable, new domestic markets will increase the incentive for hydropower-rich Newfoundland and Labrador, Quebec, Manitoba and British Columbia to develop their wind resources. And the easy availability of electrons through an east–west grid will help out provinces like Alberta, Saskatchewan and Ontario that will be hard pressed to independently develop all the renewable generation they need to decarbonize their economies by 2050.

The battery under your hood

Short-term energy storage, operating every hour of every day of the year, is the key to the renewable grid, delivering the flexibility to match the peaks and valleys of intermittent electricity supply with constantly fluctuating demand. In the Climate Dollars scenario, the battery under the hood of your electric vehicle is the most affordable way to deliver that reliability.

In the short to medium term, large, utility-scale batteries that can store 240,000 kilowatt-hours or more will support the transition to renewable electricity, and there will likely be a longer-term role for some of these large, more expensive batteries. In the longer run, however, the key to bringing down the cost of emissions-free electricity is to bring down the cost of storage.

In the Climate Dollars scenario, we tap into the millions of much smaller EV batteries that will be available from the electrification of road transport. The cars are generally parked 95% of the time and on any given day use only 10 to 20% of their battery capacity. With relatively inexpensive vehicle-to-grid (V2G) infrastructure that enables the cars to charge at times of day when solar electricity is abundant and partially discharge in the evening and overnight, the otherwise idle batteries become a key enabling technology for the transition to renewable electricity.

Utility and fleet managers in Canada and around the world are beginning to adopt V2G technology for load management and cost savings. In the Climate Dollars scenario, vehicle owners decide , but V2G becomes the universal way in which personal electric vehicles connect to the grid. With utility batteries costing more than $1,000 per kilowatt, access to EV batteries could be worth $10,000 to $20,000 per vehicle battery. In the Climate Dollars scenario, V2G cuts the cost of grid decarbonization in half, saving hundreds of billions of dollars – not because the car batteries are that much cheaper, but because they’re already embedded in the cost of the cars. Those vehicles, in turn, become more affordable to buy if their owners can count on revenue from a V2G contract.

Heat pumps and winter peak electricity consumption

In the Climate Dollars scenario, air-source and ground-source heat pumps are the key to eliminating fossil fuel consumption in residential and commercial buildings.

In most provinces, fossil fuels – mainly natural gas – provide most building space and water heating, and the conversion of millions of gas-heated buildings to heat pumps will result in strong growth in winter peak consumption of electricity. Fortunately, because the heat pumps are so efficient – providing anywhere from two to four units of heat for every kilowatt-hour of electricity they consume – it will require that much less energy to heat the buildings with heat pumps than it currently takes to heat them with gas.

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Nevertheless, there are millions of buildings to be converted, and the resulting growth in winter peak consumption of electricity is the defining factor in the capital investment required to establish and maintain a renewable, emission-free electricity supply.

Ensuring that all new buildings are built to high efficiency standards and retrofitting existing buildings for higher levels of efficiency can make a big difference in their peak consumption – more than $100 billion in capital savings if the retrofits are deep enough. There is also a large amount of industrial electricity consumption that occurs during the winter peak, and which could be responsive to seasonal load management and “time of year” pricing – for example, a manufacturing plant could scale back production from Christmas to the middle of February, and make it up in the spring. Here, again, the capital savings to the electricity system could add up to tens of billions of dollars.

Inevitably, though, any future grid that supplies an electrified building sector in a temperate climate will have a winter peak – in the Climate Dollars scenario, electricity consumption is higher in winter in every province. This will result in idle solar and wind capacity in the spring and the fall, idle capacity that will be available at very low cost to innovators who can devise applications for it.

Canada’s energy-supply mix in 2050

In the Climate Dollars scenario, oil and gas demand falls to nearly zero by 2050. The fuels we use for heating and cooling, vehicles, industry and agriculture are replaced by electricity, and that electricity is generated predominantly from wind, hydropower and solar.

• Wind turbines total 178 gigawatts of installed capacity with a national grid in place to balance demand, 235 GW without.
• With no new large hydropower dams in the scenario beyond projects that are already committed, installed hydro capacity remains steady at about 80 GW.
• Solar panels come in at just over 50 GW, 36.4 from utility-scale solar farms and 14 from rooftops in every part of the country.
• Total electricity end use increases from less than 600 to more than 1,000 terawatt-hours per year, including about 550 TWh in homes and commercial buildings, 150 TWh from road transport and nearly 330 TWh from industry and agriculture.

To chart a course to this renewable, decarbonized future, Climate Dollars modelled each of the separate, provincial grids that Canadians have relied on for nearly a century. The scenario includes detailed electricity supply and demand projections for most individual provinces, with an integrated analysis of the electricity supply for New Brunswick, Nova Scotia and Prince Edward Island. Highlights include:

• modest overall growth in energy and peak electricity demand in British Columbia and Quebec, with hydropower readily available and today’s heavy use of electric resistance heating creating opportunities to boost efficiency through heat pump conversions;
• increased reliance on wind resources in Alberta and Saskatchewan that are close to population centres and play a central role in decarbonizing the grid;
• more than a doubling of electricity consumption in Alberta and Ontario, with rising peak consumption in Ontario underscoring the opportunity to boost efficiency with cold-climate heat pumps and building retrofits;
• greater reliance on ground-source heat pumps in the three Prairie provinces;
• low overall energy consumption in Newfoundland and Labrador as the fossil fuel industry winds down, creating an opportunity for the province’s abundant hydropower resources to attract energy-intensive industries; and
• modest electricity demand growth in the Maritime provinces, where electric heating is already quite prevalent and the rise in peak demand is not as sharp as elsewhere.

Building new nuclear capacity increases the overall cost of decarbonization. A high-nuclear future in Ontario that includes proposed new plants at Bruce and Wesleyville costs $55 billion more than Climate Dollars’ lower-cost reference scenario, which includes only the spending already committed to rebuild old reactors.

Corporate Knights will release the full Climate Dollars analysis April 24, during Earth Week.

Corporate Knights is able to carry out this research thanks to support from the McConnell Foundation, the Trottier Family Foundation, the Chisholm Thomson Family Foundation and the Graham Boeckh Foundation.

The post How transforming Canada’s electricity grid could drive decarbonization, save billions appeared first on Corporate Knights.

The analysis identifies the investments in our buildings, vehicles and power grids that are needed to shift our energy use to electricity and set a path to a zero-emission economy by 2050.

Climate Dollars charts a practical path over the next 25 years that builds on Canada’s unique strengths and reinforces our sovereignty in a time of deep national anxiety.

Climate Dollars shows how Canada can embrace and succeed at an ambitious, achievable national building project that dramatically accelerates the shift to heat pumps for space heating and cooling and heralds a massive buildout of new renewable energy and energy storage. With rapid, widespread electrification at the heart of the plan, the modelling calls for a fundamental shift from the balkanized provincial electricity systems that grew up around the hydropower dams and enormous but inefficient fossil and nuclear plants – the last century’s glorified steam engines – that distribute centralized power via brittle, hub-and-spoke grids.

The grid of the future is something we’ve never imagined before, and we have to build it at a speed that we never imagined possible – until now. Across much of the world, the rising efficiency and plummeting cost of renewable energy and energy storage is driving investment and national strategy toward an energy future that boosts local economies and increases our resilience in the face of climate disruption, while accelerating emission reductions that can still avert the worst of the global climate emergency.

Canada’s next energy system will be built on tens of thousands of wind turbines and millions of solar panels on rooftops and in solar farms, all interconnected to a grid that enables multi-directional flows of energy and information – a Trans-Canada Transmission Link as central to our future as the Trans-Canada Railway and Highway were to our past.

This economic, technological and cultural transformation is about opportunity and gain, not loss and pain.

This economic, technological and cultural transformation is about opportunity and gain, not loss and pain, a chance to build the Canada we want while leaving no one behind. Ending the emissions that are warming and disrupting our planet can be an essential side benefit of building a future where life is more comfortable and affordable, our communities are more livable and welcoming, and our jobs and businesses contribute to building the future we want.

But we know that this shift will take place against a backdrop of deep urgency – because the climate crisis is gaining momentum. Every new building or renovation that includes fossil fuels commits us to years of additional climate pollution. The average car or light truck stays on the road for 15 years or more, and the majority of today’s new-vehicle purchases are still fossil-fuelled. So while it will take 25 years to complete this work, we won’t get it done without a massive response over the next decade.

The in-depth modelling presents an emergency plan that can renew local and provincial economies and strengthen the Canadian federation while delivering reliable, affordable energy, every hour of every day of the year. Climate Dollars shows that the cost of an effective, comprehensive energy transition is far less than what we stand to pay (in fact, what we’re already beginning to pay) for the impacts of climate change, across Canada and around the world. And there’s every reason to believe that taking action at the pace and scale we need will drive down the cost of the energy transition itself, in some cases very dramatically, as solutions scale up, efficiencies accumulate and unit costs are reduced.

Three cornerstones of the Climate Dollars energy transition

• Shifting Canada’s economy almost completely from fuels to electricity, except for a small volume of petrochemicals produced from fossil fuels, by electrifying buildings, transport, and industry and leaning heavily on heat pumps to drastically reduce the energy consumption of buildings
• Relying on the batteries in many millions of electric vehicles across the country to store renewable electricity when it’s least expensive and release it for distribution during times of day when demand is highest, while positioning Canada to become a world leader in emerging vehicle-to-grid (V2G) technology
• Saving $100 billion on the overall plan by completing the Trans-Canada Transmission Link, a strategy that makes it easier for provinces to share electricity, builds a new sense of connection and shared purpose between west and east and asserts strong, confident Canadian leadership in areas of business, technology and trade that are already seen as essential in most of the world

At a time when Canada’s prosperity is threatened by volatile oil and gas markets, and its very existence is being questioned by an even more volatile trading partner, Climate Dollars envisions a more hopeful future.

It presents a set of realistic scenarios to phase the country’s precarious fossil fuel economy down and out and replace it with a far more efficient, electrified system. The scenarios require no new commitments to large hydropower installations. And the analysis shows conclusively that by adding more nuclear generation to our future electricity mix, beyond refits of existing reactors that are already under way, ratepayers would shell out $55 billion more than necessary to decarbonize the Ontario economy.

But the promising future that Climate Dollars envisions depends on fast, strategic decisions in these key sectors:

• In the power sector, Corporate Knights modelled the transition that each provincial grid will have to go through to accommodate the electrification of buildings, transportation and industry by 2050. Our Canadian-owned electricity system will be transformed by average investments of $34 billion per year. For each province, the modelling looked at the unique factors that will shape electricity supply and demand, including climatic conditions, current and future sources of renewable electricity supply, and available electricity savings. The Trans-Canada Transmission Link reduces the cost of decarbonizing the grid by about $100 billion and emerges as the key ingredient that balances the costs, benefits, jobs and business-development opportunities across provinces and regions. Clean energy already employs more Canadians than fossil fuels, and in contrast to the flat job creation projected for oil and gas, clean energy employment is set to soar for both domestic and export markets.
• In buildings, the shift to heat pumps will unlock the affordable, reliable heating and cooling Canadians need while helping to limit the remaining demand to be met by an expanding electricity grid. National homebuilding strategies can also boost affordability and limit new energy demand by factoring in demographic trends that strongly favour apartments and condominiums, not single-family homes, for new dwelling units. While heat pumps will do the heavy lifting in decarbonizing the buildings sector, energy retrofits could save additional tens of billions in investment in the electricity supply system – and the cost of an accelerated national retrofit program could be cut by as much as 50% with a more systematic, integrated approach to the work. Capital investments in the transition to carbon-free energy stimulate local economies and job creation, and nowhere is this more true than in the buildings sector, where the jobs are created everywhere there are buildings.
• In transportation, for Canada’s growing fleet of 23 million personal vehicles and seven million commercial trucks, electrification is the key to decarbonization, given that a typical gas-powered internal combustion engine emits more than twice the weight of the vehicle in annual greenhouse gas emissions. Measures to reduce the number and length of vehicle trips will help moderate the growth in demand for carbon-free electricity, but the Climate Dollars scenario focuses primarily on electric vehicles and the charging infrastructure they will need. With the price premium on EVs set to fall sharply through 2035, Canadian drivers are on track to reap a $1.2-trillion clean energy dividend on fuel through 2050, after subtracting the cost of the electricity to run the vehicles. But fulfilling that potential will mean quadrupling capital investment over the next crucial decade.

The Climate Dollars analysis lays out an ambitious path to decarbonization at a moment when Canadians are being encouraged to think big about the future we want to build. The cost of reconfiguring the country’s electricity systems over the next quarter-century is consistent with other projections of the cost of a national energy and climate transition that is already under way. The capital expenditures this transformation will require are just a small percentage of what Canadians and their governments invest in buildings, vehicles and equipment each year. And they’re far less than the annual spending that built out our present-day hydropower dams, electricity grids and early nuclear power stations in the 1950s, ’60s and early ’70s.

Corporate Knights will release the full Climate Dollars analysis April 24, two days after Earth Day 2025.

ABOUT CLIMATE DOLLARS

The Corporate Knights Climate Dollars project views the zero-emissions challenge through the lens of capital investment. With the goal of measuring the deficit between current climate-related investments and the funding required to meet the country’s climate goals, it’s an important step in showing how Canada can meet its 2030 and 2050 greenhouse gas emissions-reduction targets.

In 2020, Corporate Knights estimated that putting Canada on a path to zero carbon would require capital expenditures of $150 billion per year throughout the 2020s and beyond – a fraction of that year’s gross domestic product of $2.6 trillion (in today’s dollars). Subsequent estimates by a variety of institutions and organizations echoed our finding that capital investments in the range of 5% to 8% of GDP would be sufficient to meet net-zero targets by 2050.

But five years later, the momentum we need is still severely lacking. And bringing Canada’s emissions to anything approaching zero, net or otherwise, by mid-century will require a radical departure from the trend over the past 30 years. Corporate Knights launched Climate Dollars in November 2023 by measuring the capital expenditures needed for decarbonization, the current levels of investment, and the business and policy strategies that will be needed to close the gap.

Corporate Knights is able to carry out this research thanks to support from the McConnell Foundation, the Trottier Family Foundation, the Chisholm Thomson Family Foundation and the Graham Boeckh Foundation.

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At the heart of the climate change challenge is the dependence on fossil fuels that is built into every sector, from buildings and vehicles to power plants and farm equipment, steel mills and breweries. With that built-in fossil fuel dependence comes locked-in greenhouse gas emissions. Sure, policies and behaviour change can reduce fossil fuel use, buy time and facilitate growth of zero-emission solutions, but eliminating fossil fuel dependence requires a transformation of that capital stock. 

The capital investment needed to decarbonize the Canadian economy was first estimated by Corporate Knights at about $150 billion per year, and the federal government and others have since corroborated that finding. For context, this amounts to the annual total raised by sales taxes in Canada. Total capital spending in Canada runs around $650 billion per year, most of which is making the problem worse and some of which, perhaps 10%, is providing some incremental moderation of emissions. Unless and until the majority of capital spending is aligned with our climate change commitments, we will not get at the root cause of the heat waves, droughts, floods and wildfires that are eating away at our prosperity.

Such an alignment is possible. Scores of innovations in recent years have opened up pathways to zero emissions. Super-efficient and fossil-free buildings, electric vehicles, cold-climate heat pumps, smart building design and operation, electrification of industrial processes, energy storage, regenerative agriculture, circular industrial production systems, wind and solar electricity, battery storage – climate solutions are growing at unprecedented rates. 

Globally, a post-fossil-fuel energy system is emerging, centred on efficiency, electrification and renewable energy. The carbon-free solutions often bring highly valued collateral benefits – better vehicle performance, healthier and more productive built environments, enhanced productivity and cost savings – that act as accelerants in the market uptake of the new technologies.

And yet, a yawning gap remains between current levels of investment in climate solutions and what it would take to get the job done. This “decarbonization capex (capital expenditure) gap” is the focus of the Climate Dollars research project at Corporate Knights. For each of the three most important sectors – buildings, transportation and power – there is an annual decarbonization capex gap of $30 to $40 billion, and the longer it takes to close it the more Canada will fall behind in the global energy transition that is underway, and the more disruptive will be the changes to our climate, our economy and our communities. 

The decarbonization gap is made up of stranded opportunities – investments needed to decarbonize that are technologically and economically feasible but that are left unrealized for a host of reasons. For many opportunities, the payback is too long for private investors or is out of scope for the traditional portfolio of the public investor. Other opportunities are stranded by perceived risk, incorrect or lack of information, lack of access to capital, regulatory roadblocks, and ineffective or conflicting public policies. Cementing the problem are underdeveloped supply chains, labour shortages, the inertia and entrenched advantages of the incumbent fossil fuel industry, as well as lacklustre rates of innovation in business models and a lack of public policies for clearing the financing and logistical barriers that are holding back progress. 

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Climate dollars: A roadmap to a post-fossil fuel future

The federal government is more than $14 billion behind on climate funding

Private investors account for 83% of all capital expenditures in Canada, and the private sector has the expertise for mobilizing capital on the scale needed to respond to the climate crisis. But timely decarbonization will require increased public investment in opportunities that are currently stranded in the gap. Corporate Knights has partnered with York University’s Schulich School of Business to develop a Canadian climate-finance index that tracks and measures private-sector climate-finance flows. 

Beyond the widely acknowledged need for more blended finance, closing the gap will require revising century-old utility mandates and regulatory frameworks, capturing inter-sector opportunities that are currently falling through the cracks, financing innovations to eliminate first-cost barriers, incentives and business models that avoid the half-measures that drive up costs in the long run, and a level of determination and cooperation across all sectors of society that has yet to materialize in Canada.

This is a big transition.  It is disruptive, messy and full of wicked complications and pleasant surprises. But the map to a low-carbon future is taking shape, the climate imperative provides a compelling destination, and pioneering explorers and innovators are finding pathways through the decarbonization capex gap.

Ralph Torrie is the research director at Corporate Knights.

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In a pitch to convince foreign investors to put their money in Canadian industries, Freeland said the federal government has “a suite of policies for the industrial transformation” worth around $120 billion. She pointed to federal climate initiatives such as the $15-billion Canada Growth Fund and more than $80 billion being rolled out in clean investment tax credits.

But there’s a major caveat to all of this: no one is tracking actual investments in the green technologies and infrastructure we need.

At least no one was tracking them until now.

Analysis from a new report from Corporate Knights’ Climate Dollars initiative shows that the federal government is at least $14 billion behind on rolling out the climate funding it had committed to spending by now. And since 2015, there has been a 30% shortfall between what the government has committed to spending on climate and what it has actually invested. It’s critical to close this climate-investment gap in order to close the emission-reduction gap.

By properly tallying up climate investments, starting with the federal government and large corporations, Climate Dollars aims to establish an accurate baseline of where we are at now versus what is required to ensure that Canada meets its 2030 emission-reduction commitments.

“With this report, Corporate Knights has given us a valuable and readable scorecard that highlights federal government initiatives to address climate change across departments and policy instruments. What was promised? What has been delivered?” writes Kevin Page, the president of the Institute of Fiscal Studies and Democracy and former parliamentary budget officer, in the inaugural Climate Dollars report, Committed and Actual Federal Government Climate Spending. “We need this information to assess, debate and adjust our collective plans to reduce carbon emissions.”

Not all countries making significant climate transition investments have had this lack of public accounting on their progress. To document the impact of the Inflation Reduction Act (IRA) – the single largest investment in climate and energy in U.S. history – the White House has published an interactive map that illustrates the levels of investment in the climate transition across the country. In addition, a research team from Rhodium Group and the Massachusetts Institute of Technology has created the Clean Investment Monitor, which provides real-time tracking of all public and private investments in emission-reducing technologies in the United States.

Without this same level of public reporting and research, the knowledge gap in Canada looms large.

The Corporate Knights research team accepts this challenge. Our Climate Dollars initiative is tracking investments in climate solutions year-over-year and compares them against what needs to be spent to reach the country’s climate goals.

Our past research has shown that it will require about $126 billion per year in Canada, including public and private investment, to meet the country’s 2030 greenhouse gas emission target.

While Freeland’s $120-billion tally is a useful starting point, quantifying how much the Canadian government has already spent, going back to 2015, on climate solutions is a harder nut to crack. It requires reviewing budget documents, fiscal updates, economic statements, departmental reports and emission-reduction plans to create an inventory. The Climate Dollars inventory looks across departments, agencies, sectors and types of investments to track the climate-investment announcements, re-announcements and actual expenditures the federal government has made since 2015.

The inaugural report tells a story of the Canadian government’s efforts to both lead the economy through the green transition and position itself as a supplier to the global market. Our research shows that direct federal spending has thus far been the largest source of the government’s funding for climate solutions, followed by loans and equity investments, and then tax expenditures and refundable tax credits.

Going forward, tax expenditures and credits are set to become the largest form of public climate spending. Budget 2023 took an approach geared to compete with the IRA’s investment package and outlined five major investment tax credits: hydrogen; carbon capture, utilization and storage; clean technology; clean technology manufacturing; and clean electricity.

There are risks to climate policy initiatives that rely on the private sector, namely that public–private partnerships tend to be slow or continue to benefit the fossil fuel industry. However, as most capital expenditures in Canada are borne by the private sector, we need Canadian business leaders to rise to the challenge.

To confront the climate threat, we will require a mobilization of capital the likes of which has not been seen since the Second World War.

Tracking climate investments is key to understanding what we should be asking for, and where more funding is needed. It also bolsters accountability by measuring how much progress is made or not made, and why.

An economy in which investment is driven toward the right mix of climate solutions will help achieve an equitable transition to a net-zero economy. Climate Dollars takes the first step toward closing the “say–do” gap for climate investments in Canada, democratizing access to information on the severity of this complex issue and driving changes in policy and behaviour.

Jessica Carradine is project lead on Corporate Knights’ Climate Dollars initiative. 

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The incrementalism that has characterized business and government responses to date is failing, and the climate crisis is tightening its grip on economies and communities everywhere. We saw in the response to COVID-19 what an emergency response looks like. How did we muster a “yes” to fighting the pandemic but haven’t been able to do so for global warming? Those dragging their heels on fighting the climate emergency have many reasons to say “no.” But none of them pass muster.

“No, it doesn’t need to be done.”

Denial of the science remains an obstacle, including simple rejection of the evidence as well as a failure to accept the urgency of the crisis we are facing.  As concluded by the 28th UN climate summit, COP28, mitigating climate requires an accelerated transition away from fossil fuels in our energy systems, and soon. Yes, we need to do it.

“It needs to be done, but no, it is impossible.”

The key solutions to the problem are both possible and being realized. They include smart grids with renewable electricity and multidirectional flows of information and energy; more efficient and electrified transport; automated, zero-emission buildings; a circular economy with materials recycling and products that are designed for durability and repair; a shift to decarbonized protein for feeding a world of eight billion people; and regenerative forestry and farming that puts a premium on ecosystem health and high value-added production.

These solutions are also growing faster than the problem. From 2019 to 2022, clean energy investment grew 29% per year, while fossil fuel investment languished. The fossil fuel system has a 150-year head start, but the growing momentum of new technologies will trump the inertia of the old way of doing things.

Yes, it is possible to build a prosperous civilization while phasing out fossil fuels; it’s the economy that comes with continued fossil fuel combustion and increased global warming that looks impossible.

“It is possible, but no, it’s not worth the expense.”

This is a common excuse for inaction, but it makes no sense. The once future and abstract costs of a changing climate are here now. They are bearing down with multibillion-dollar ferocity on households, communities, companies and governments from Linton to Lahaina, and they will come to your community too. At the same time, the costs of the solutions have been falling at unprecedented rates, and the companies that are providing the products and services we need for the transition are emerging as drivers of the 21st-century economy.

Yes, we need to phase out fossil fuels. Yes, it is possible and yes, it is worth doing.

To reset our efforts to align with a “yes” to stopping climate change, we need to heed the advice of Dwight Eisenhower: “Whenever I run into a problem I can’t solve, I always make it bigger. I can never solve it by trying to make it smaller, but if I make it big enough, I can begin to see the outlines of a solution.”

We too often focus on incremental business strategies and public policies that can narrow the gap between current emissions and zero emissions, rather than on the business ideas and policies that could close the gap altogether. The cost of putting Canada on a path to zero emissions is in the range of $125 billion per year, including public and private investment, three to five times more than we are spending.

Corporate Knights is launching a major new project – Climate Dollars – to address what needs to be done to close the gap between what we are doing and what must be done to put the economy on a sustainable footing. We will compare, sector by sector, the investments needed to get to zero emissions with the current level of investment, and we will engage leaders in business, government and civil society in developing and implementing strategies for closing the gap.

Are you ready to have that conversation? If you say “yes” to the need, the possibility, the urgency and the benefits of a zero-emission future, and are ready to move beyond incrementalism, we would like to hear from you.

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