Every shock to global oil markets reverberates here through higher costs, capital outflows and a stark reminder that much of the province’s economy still depends on energy Quebecers do not control.

Yet despite being a major exporter of clean electricity, Quebec still runs an international energy trade deficit of roughly $14 billion each year, which ties consumers and businesses directly to volatile and geopolitically unstable markets.

The old energy paradigm was defined by access to oil. The emerging one will be defined by access to clean, reliable electricity and the ability to deploy it strategically.

– Catherine McKenna and Marine Thomas

This is precisely the vulnerability the clean-energy transition is beginning to resolve. Investment in clean energy reached US$2.3 trillion globally in 2025.

In this context, Quebec stands out. More than 90% of its electricity is renewable: primarily hydroelectric, with growing wind capacity. Forty-two percent of total energy consumption comes from local renewable sources. Few jurisdictions can match this combination of low-carbon, reliable, domestically controlled power.

But advantage is not the same as leadership. Despite its strengths, Quebec is falling behind in the new electric revolution. The share of electricity in its energy mix has been stagnant for 35 years. Oil still accounts for roughly 35% of energy use, with natural gas adding another 17%.

And even with broad consensus across opposition parties, experts, industry and environmental groups, the Quebec government has delayed its emissions-reduction target by five years, pushing it to 2035. Even more concerning, after committing in 2022 to end fossil fuel exploration and production, some politicians are reopening the door to natural gas fracking. This would increase emissions, harm the environment and human health, further expose Quebec to volatile energy prices, and run counter to the economic opportunity of the clean-energy transition.

Quebec should instead invest to fully electrify its economy and lock in its clean-power advantage to deliver real energy autonomy. With clean, affordable electricity that belongs to Quebecers, the province can cut reliance on imported fossil fuels, decarbonize key sectors, grow batteries and green aluminum, and export clean power while generating revenue at home.

At the same time, expanding clean power is not straightforward. Building new hydro and wind capacity will require sustained partnerships with Indigenous Peoples and local communities – not just consultation, but shared ownership and benefits. It will require major investment, faster permitting, new transmission infrastructure and potentially deeper interprovincial collaboration, including offshore wind development in Atlantic Canada linked to Quebec’s grid. These are complex challenges, but they are now the central constraints on growth.

Montreal already offers a glimpse of what a more strategic approach could look like. It is emerging as a hub for climate, technology and finance, with strengths in low-emission aluminum, batteries and electrification, but these pieces are not yet fully aligned.

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The old energy paradigm was defined by access to oil. The emerging one will be defined by access to clean, reliable electricity and the ability to deploy it strategically. Quebec has everything needed to become a global clean-energy superpower.

Recent events in the Middle East are a reminder of the costs of the old system. These include geopolitical shocks, volatile prices and external dependence. The new system offers something different: affordability, stability, sovereignty and enduring economic advantage. But it is also competitive. Jurisdictions that move decisively will capture investment, talent and supply chains. Those that hesitate will import the industries others build.

Quebec is unusually well positioned for this shift. It has abundant renewable electricity, critical minerals and industrial capacity and a strong research ecosystem. What it lacks is not public support or natural advantage, but ambition, strategic clarity and speed.

The window is open. But not for long.

Catherine McKenna is the CEO of Climate and Nature Solutions, the founder of Women Leading on Climate, and a former federal minister of environment and climate change and minister of infrastructure.

Marine Thomas is directrice générale at Partenariat Climate Montréal. 

The post Quebec must move fast to retain its clean-power advantage appeared first on Corporate Knights.

But a Quebec green-tech investor thinks he can break the mould and go mainstream.

This winter, François Boutin-Dufresne, a serial entrepreneur based in Montreal, is launching ShareCharge, an app that connects drivers with private EV chargers. In doing so, he hopes to solve the most pernicious challenge limiting EV adoption: range anxiety.

A 2024 J.D. Power study found that nearly three-quarters of Canadians described themselves as unlikely to buy an EV, with most citing limited range as the main obstacle. Surveys in Quebec, the leader in Canada when it comes to EV adoption, show that two-thirds of respondents also felt the charging network needs expansion, especially in rural areas, although data suggest range anxiety decreases over time for EV owners. In Quebec, some 80% of charging is done at home, making the jurisdiction a prime spot for ShareCharge’s proposition.

Boutin-Dufresne, a former economist for the Government of Canada and the International Monetary Fund, draws inspiration from Uber. ShareCharge would allow users to adjust prices according to supply and demand, with rates fluctuating up or down. For example, more expensive and efficient charging equipment would cost more to rent. He predicts that increased demand during holidays or major events will create hot spots where people can earn more from their chargers. Remote locations will also enable rural owners to charge a premium.

Boutin-Dufresne believes that civil society cannot sit by and wait for the government to build out the necessary EV infrastructure. “People need to take matters into their own hands,” he says.

Filling the infrastructure gap

Quebec launched Canada’s first public charging network for electric vehicles in 2011, before the technology really took off, and now has around 6,500 public stations in Montreal and nearly 30,000 across the province.

But its reach has remained too limited, Boutin-Dufresne argues. The impetus for ShareCharge came from his own struggles as an EV owner. He was tired of what he calls EV charging deserts where he has to travel three kilometres or more to replenish his car.

Boutin-Dufresne’s brash, fast-talking demeanour is reflected in his company. Prior to its planned official rollout in December, ShareCharge already purports to be “the world’s largest EV charging network” on its website, even though it had only 150 registered providers. But Boutin-Dufresne believes the network can quickly attract 10% of Quebec EV drivers and owners of home-charging stations, representing 40,000 new places to power up an EV.

New supply-chain ‘passports’ pave the way for more recycling of EV batteries

“Chargers on the side of the road cost the city of Montreal $50,000 each; ours cost the government nothing to improve access,” Boutin-Dufresne says.

ShareCharge is planning to expand across North America, though Quebec’s abundant, low-cost hydroelectricity will make the service more affordable there than in most other regions. Boutin-Dufresne is betting that Quebec’s fierce winters increase the appeal for drivers to have access to a large private network of EV chargers.

He aims to develop partnerships with Communauto, Quebec’s popular car-sharing service, and other vehicle rental companies. He believes the charging stations will attract Uber drivers, as well as more people who are not property owners, do not have private charging stations, and park their EVs on the street.

Lack of charging stations in high-rise buildings is cutting off access to EVs

But users who want to earn passive income from their EV chargers also have to shoulder the risk of things going wrong. ShareCharge takes care of quality control and validation for those who wish to rent out their charging stations, and individuals rely on the five-star rating system to avoid renting to users with undesirable behaviour, as is done on Uber or Airbnb. The company does not, however, cover risks that may arise from its use. If someone’s charging station is located in their garage and a customer’s car catches fire, it is up to the owner of the charging station to assume the risk.

Public versus private

The company’s plans also raise questions about government subsidies for private chargers. “It’s a public policy failure that the government, which invested massively in this infrastructure, did not think ahead and come up with this idea themselves,” says Thomas Hundal, an automotive journalist in Toronto.

Critics argue that the public sector should retain control of the charging economy to make it more accessible. “Across the world, governments are following the same modus operandi: they invest public funds to build a basic charging infrastructure so that, in a second phase, it becomes attractive for the private sector,” says Colin Pratte, a transport researcher at the Institut de recherche et d’informations socioéconomiques, a Quebec-based non-profit. He argues that instead of ceding the race for better charging infrastructure to private companies that “parasitize the sharing economy under the guise of enabling it,” it would be better to optimize public networks and keep prices low. Pratte believes EV charging is headed toward a repeat of the mistakes that led to the oil shock, where gas prices became unaffordable.

The Quebec government is preparing to invest nearly a billion dollars in its EV transition by 2028. According to its 2023 projections, there will be two million EV drivers in the province by 2030, though EV sales have been losing momentum since late 2024.

Ophélie Dénommée-Marchand is a Quebec-based independent journalist with a focus on fact-checking and investigation. She’s also an encyclopedist for the Canadian Encyclopedia.

The post This Montreal start-up has a solution for range anxiety appeared first on Corporate Knights.

One of these start-ups is Quebec e-waste recycler enim. It recently announced a partnership with the Royal Canadian Mint to explore how minerals it retrieves from obsolete electronic devices – specifically, printed circuit boards – can be incorporated into the mint’s products. “Instead of digging into the ground, we’re using primary waste as our primary source material,” says Simon Racicot-Daignault, enim’s president and CEO. And it appears, for the foreseeable future at least, to be truly inexhaustible.

According to a UN report, the world generated 62 billion kilograms of electronic waste in 2022, up a whopping 82% from 2010. But only 22% of that was recycled. That’s a massive amount of untapped potential that is guiding companies like enim forward.  

Enim, Racicot-Daignault points out, is the word “mine” spelled backwards. It’s a nod to the circularity the Montreal-based company is trying to embody. Founded in 2022 by engineering firms Seneca experts-conseils and Dundee Sustainable Technologies, enim has developed a hydrometallurgical technology that eschews harmful substances such as cyanide and mercury as it extracts the valuable materials – metals, ceramic, fibreglass, minerals – in a circuit board.  

Smelting is the go-to method for most e-waste recyclers, but that process salvages just 20% of the materials, Racicot-Daignault says. “The rest goes out in fumes or in solid waste” – as gas emissions or toxic ash. Enim, by contrast, targets each resource it extracts, converting them to liquid and then returning them to a solid metallic state, reducing metal losses and the risk of toxic emissions. “It makes us really the most eco-friendly option out there,” he says. “The ceramic can be reused in construction material, and gypsum can go into drywall. So, we think we have a really unique and distinctive product versus what is being produced out of smelters.” 

Enim’s innovation caught the attention of Canada’s national mint, which has a business that goes well beyond loonies and toonies. For more than 100 years, the coin-minting authority has operated a gold and silver refinery. Among its products are precious metal bars, grain and bullion investment products. As a member of the London Bullion Market Association, it adheres to strict quality and responsible-sourcing standards. In 2023, the mint refined 6.6 million ounces of gold alone.  

“The amount of material we’re going to get from enim is a tiny fraction,” says Michelle Richardson, chief impact officer for the Royal Canadian Mint. But it’s no less meaningful and represents a chance to partner with a Canadian company that is innovating in a space that aligns with the mint’s priorities. “For us, enim is one more tool in that arsenal that might let us be a more responsible and sustainable organization,” Richardson says.  

Enim sees opportunity not just in Canadian coins for everyday use, but in the collector line the Royal Canadian Mint produces. “They have access to that market of investors that are looking for truly distinctive and traceable low-impact products” who are willing to pay more for products that have a lower carbon footprint, Racicot-Daignault says.  

The company is currently in the middle of a financing round, with hopes to start operating commercially in 2027. In 2024, it opened a 10,000-square-foot demonstration plant in Thetford Mines thanks in part to a $3-million cash infusion from the Canadian government. At full capacity, it will be able to process 10,000 tonnes of printed circuit boards a year, Racicot-Daignault says. 

“There is clearly an evolution in society, but it’s not super fast,” he says. “It’s not that in two years from now everybody will be willing to pay more. But we clearly see customers that are willing. So the trend is underway.”  

The post A Quebec company is mining used electronics to make coins appeared first on Corporate Knights.

At least, that is what leaders in Quebec are banking on, as the province gears up to assume an axis position in the world’s electrified transition. Quebec’s riches have long been on display. One of the mining capitals of the country, accounting for one-fifth of Canada’s mineral production, it has baked into its bedrock the precious elements coveted in the electric vehicle boom – graphite, nickel, copper, cobalt, platinum and the showstopper: lithium. And increasingly, the provincial and federal governments have been pouring money into the rest of the supply chain, with investments like the one slated for the green fields in Saint-Basile-le-Grand and McMasterville, a short drive from Montreal.  

Here, Swedish climate-tech giant Northvolt has plans to build a “gigafactory” the size of 318 football fields that the federal government calls the cornerstone of a unique integrated battery production line in Canada. With more than $7 billion in investments and incentives, the first phase of the project at “Northvolt Six” will have an annual cell production capacity of 30 gigawatt hours and create up to 3,000 jobs in the region. They will be making what Ottawa has called “the world’s cleanest batteries,” at a rate of one million per year once the plant is fully operational.

But big questions loom over Quebec’s battery bet, amid an energy landscape that appears to be shifting by the day. A recalibration of the explosive growth projected for electric vehicles is forcing companies such as Northvolt to shrink their global operations, even as competition from neighbouring Ontario to attract EV business grows. While protectionist tariffs against more affordable Chinese-made EVs will affect how quickly Canadians make new mobility choices, the energy transition is nonetheless moving full steam ahead in Quebec, where EV adoption is among the highest in the country.  

“Getting a car manufacturer in Quebec was not my objective,” says Pierre Fitzgibbon, Quebec’s former minister of economy and energy, in an August interview, expressing a divergent path from that of Ontario, which includes EV assembly. 

Fitzgibbon, who resigned his post in September, travelled to Japan, South Korea and China in 2019 – when “the word ‘battery’ was not in Quebec’s vocabulary” – with a goal of understanding how the Asian powerhouses had secured a head start in the EV race. He came back focused on leaning into Quebec’s competitive advantage. “My objective was: how can we transform here in Quebec our critical minerals, as opposed to what had been happening before, which was to export it on a raw basis,” he says. “We’re setting up a kind of ecosystem.”  

The provincial government touts itself as the first in the country to develop a critical minerals strategy, which it first released in 2020. At the moment, there are 25 mines in varying stages of economic evaluation or exploration to produce the minerals needed for energy transition. That’s on top of the one graphite mine, one lithium mine and two mines already extracting combinations of nickel, copper and cobalt. Quebec’s strategy is buttressed by circularity, mining the “urban mine” of used, recalled or damaged batteries that are piling up around us. In June, doors opened on the province’s first critical minerals extraction plant, by Lithion Technologies, located on the outskirts of Montreal and one of the first in North America. Once fully operational, the facility will have the capacity to shred 45,000 EV batteries per year. 

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Beyond the precious elements in its soil, Quebec’s ample hydro power – at what the minister calls a “very reasonable” price – offers companies the chance to build sustainability into their business models.  

Of course, it’s not just about access to cheap green energy. In the race to secure a place in the EV transition, governments around the world have been pushed to provide hefty incentives to lure investment (or block competition, like the 100% tariffs on Chinese-made EVs by Canada and the U.S., and lower ones in Europe). Canada and Quebec have been matching the kind of production support available under the U.S.’s Inflation Reduction Act for the Northvolt battery line, topping out at $4.6 billion. In addition, Quebec has earmarked $3.46 billion in loans, subsidies and equity investment for 15 battery projects so far. Among the recipients of the funding is a cathode factory by General Motors and South Korea’s POSCO Chemical, in Bécancour, slated to be another battery hub, or “battery valley,” near Trois-Rivières. Construction on a third joint cathode venture, also in the Bécancour area but this time between Ford, Korea’s EcoPro BM and SK On, was recently put on hold.   

Strategy speedbumps

For all its green transition promise, the efforts are not without controversy. Fitzgibbon’s resignation unleashed a wave of criticism over how the Coalition Avenir Québec government was handling energy policy, with Conservative Party of Quebec leader Éric Duhaime calling its strategy of focusing on electrification and battery production “a very risky bet, potentially even already a failure.”  

The Northvolt project, due to its scope and degree of public investment, has garnered the most scrutiny thus far, especially from environmental groups and Indigenous communities that say the government has circumvented the rules and failed to properly consult and evaluate the project. Local residents have raised concerns about the potential environmental impacts, in particular on the Richelieu River, which is a source of drinking water for some 300,000 households and a biodiverse habitat with protected fish stocks. In more extreme examples of opposition, vandals have driven nails and metal bars into trees to prevent forests from being cut down and planted incendiary devices made of bottles filled with flammable liquid on the site. No one has been injured, but it’s put the community on edge and caught company and government officials off guard.  

“It’s really a case about how the government and minister of the environment take decisions about big industrial projects,” says Marc Bishai, a lawyer with the Quebec Environmental Law Centre (Centre québécois du droit de l’environnement, or CQDE). The group has filed a lawsuit challenging the provincial government’s decision to make a change to its environmental assessment rules, thus exempting the first phase of the plant from a comprehensive impact assessment, known in Quebec as a BAPE. A court denied CQDE’s bid to halt the felling of thousands of trees on the 170-hectare site. “The government is denying the public the ability to participate in the decision, which normally happens in Quebec,” Bishai says.  

The Mohawk Council of Kahnawake has also taken Quebec and Canada to court for allegedly breaching their duties to consult, both in terms of approval of the Northvolt project and, in the case of Quebec, over destruction of wetlands.  

Fitzgibbon denies that the rules were changed for the Northvolt project, although in March, Environment Minister Benoit Charette told the media that an environmental assessment at that juncture would have delayed approval and jeopardized Quebec’s chances to secure the gigafactory. He insisted the company will nonetheless have to satisfy the province’s stringent environmental standards.  

Navigating headwinds

On the streets of the picturesque village of Saint-Basile-le-Grand, community members raise concerns about potential environmental risks from the factory, while also expressing interest in the employment opportunities the complex would generate. Long-time residents such as Annie Chabot, a 57-year-old educator, say the issue has been divisive. Chabot wishes the government had undergone a more extensive environmental assessment. “But I’m not against the project,” she says.  

Northvolt is facing other headwinds. With the projected growth of EVs slowing in the near term, driving companies such as Ford to reevaluate their plans, the company announced in July that it was undergoing a “strategic review,” prompting a flurry of media coverage speculating that Northvolt Six was in peril. The Swedish company has repeatedly stressed that it remains committed to Quebec, most recently in September, when it announced a slate of closures and mergers for several sites around the world, Northvolt Six not among them. Potential revisions to the timelines of the Quebec facility and others “will be confirmed during the fall, along with any further necessary cost-saving actions,” the company said in a statement.  

As long as we still want to decarbonize the planet, this is a very sound strategy.

 

—Pierre Fitzgibbon, Quebec’s former minister of economy and energy

Fitzgibbon says delays are to be expected. The evolving technology may affect how quickly EVs are adopted but not if they are, he maintains. “As long as we still want to decarbonize the planet, this is a very sound strategy,” he says.

Quebec, which has a track record of leading environmental policy in Canada, has shown its commitment to the electric transition through consumer policy, too.  Since 2012, Quebec has offered a healthy rebate for the purchase or lease of an EV. And it has paid off. Quebecers are buying far more EVs than the rest of the country. Electric vehicles had a 21.5% chunk of the vehicle market in the province in the second quarter of this year (compared to 9.9% in Canada overall and 8% in the U.S.). In announcing its decision to phase out the financial incentive for EVs by 2027, the Quebec government said the industry no longer needs that extra help.  

For Normand Mousseau, director of the Trottier Energy Institute at Polytechnique Montréal and a co-chair of the Quebec Commission on Energy Issues in 2013, the success of Quebec’s battery bet is far from clear. He says that there is no obligation for manufacturers such as Northvolt to source their critical minerals from Quebec, so the fully integrated supply chain may not be realized. And he thinks the province missed a critical opportunity to link the energy transition to intellectual property.

 “There was no demand from these industries to invest in any research and development in Quebec. And it’s the same in Ontario,” he says, referring to large government subsidies for EV and battery plants. “We’ve seen it with Hyundai and GM. They set up shop here, and after a few years they leave, because there is nothing that ties them in terms of higher value.” 

 Still, he acknowledges that time is of the essence as the world races to decarbonize, and “you can sit on the side and wait until you have a perfect investment, or you take bets.” 

While some supply chain investments may look shaky, others, such as the Lithion Technologies battery recycling facility, are powering ahead. It’s already processing recalled or end-of-life car batteries. “We want to be able to create the circular economy so that the batteries we produce are the greenest possible batteries,” says CEO Benoit Couture, echoing the provincial government’s larger goal.  

It’s an important cog in Quebec’s aspirations, however they materialize. Regardless, the EV economy will keep driving forward.

Natalie Alcoba is a Buenos Aires–based journalist and senior editor at Corporate Knights.

The post Can Quebec turn its green battery dreams into a reality? appeared first on Corporate Knights.

Now the Quebec government has announced that wind energy will become a larger piece of the province’s energy puzzle – as it will for the rest of the planet. One Longueuil-based company, betting big on wind and solar, is well positioned to fill the rising demand, at home and abroad. And that company has risen to the top of Corporate Knights’ 2023 ranking of Canada’s Best 50 Corporate Citizens. 

Three decades of renewable energy

For more than 30 years, Innergex Renewable Energy has developed, owned and operated clean electricity facilities in Quebec. The company was founded in 1990 after the provincial government called for private sector bids to develop small hydro-generation facilities. A decade later, Innergex began scouting out locations for wind turbines in the Gaspé region, partnering with TransCanada Corporation (now TC Energy) on its first wind energy bid.  

Having acquired B.C.’s Alterra Power Corporation in 2018 and Chile’s Energía Llaima in 2023, Innergex is now the largest independent renewable-energy company in both Canada and Chile, with expansion plans in the U.S. and France. Today, the $870.5-million company has a gross installed capacity of 4,244 megawatts (MW) of wind, solar and hydro – that’s more installed renewable capacity than the entire province of Ontario. And it plans to double that by 2025.

The ambitious energy transition plans of both the U.S. and Canada will require a lot of new clean energy. The U.S. government has committed to reducing greenhouse gas emissions by 50 to 52% by 2030 from 2005 levels, and Canada is aiming for a 40 to 45% reduction. Innergex CEO Michel Letellier plans to take advantage of these greening trade winds. 

“There are few gains to be expected from hydroelectricity,” says Letellier at his Longueuil office on the South Shore of Montreal. Although a third of its facilities rely on hydroelectricity, Innergex plans for a diversified future. “The best sites for dams are occupied. And we won’t get more than 1.5%, maybe 2%, additional output from [existing hydro facilities]. In Quebec, wind power is the most promising.” 

Decarbonization, energy security and independence will translate into growth for renewable-energy producers, confirms Anne Perreault, senior portfolio manager at Desjardins Global Asset Management. “Investors like that Innergex is diversified [solar, wind, hydro and batteries] and operates in several countries. But they have questions about financing growth. Currently, 84% of the credit line is used. So partnerships will need to be formed.”

A solid partner: Hydro-Québec

Since February 2020, Innergex has had a solid partner: Hydro-Québec. The Crown corporation (which topped the Best 50 ranking three of the last four years) paid $661 million in exchange for a 19.9% stake and committed to investing $500 million in joint projects. “The absence of reference shareholders made us too vulnerable to predators. We needed a shareholder who, without necessarily holding a majority stake in the capital of a company, has a stake large enough to influence its decisions,” says Letellier. “Every public company wants to maximize shareholder value. However, in our industry, value is not measured per quarter. We look at the long term. Hydro-Québec protects us from stormy weather.” 

So far, this strategic alliance has resulted in one joint venture: acquiring the 60 MW Curtis Palmer portfolio of run-of-river hydroelectric plants in New York State. “We definitely want to establish other partnerships with Hydro-Québec, both in the U.S. and Quebec,” Letellier says.

On both sides of the U.S.-Canada border the future looks bright: governments are adopting policies and tax credits to encourage the rapid deployment of renewable-energy projects. Through the U.S. Inflation Reduction Act and budget measures announced in Canada, governments have trumpeted new incentives for renewables. But tax credits are only part of the equation to transition to renewable energy; transmission lines are critical to move the electricity generated to where it’s in demand. 

“Our biggest challenge, in Canada and the U.S., is the interconnectedness of projects. All the developers aim for the same locations, creating bottlenecks. We desperately need more pipes,” says Letellier, referring to the need for more transition lines. The U.S. Midwest, for example, could be a Klondike for solar and wind power, but the majority of potential customers are in urban areas on the coasts. 

No renewable-energy company will reach its targets without greater distribution capacity, Letellier explains. “Who will build those new transmission lines? Public utility companies? Private sector? This complex ownership structure and construction costs explain the lack of lines.” 

Agreements with 31 Indigenous communities

Also critical to renewable-energy projects are community relationships. Innergex prides itself on its close ties with the communities that live near its projects. Things have changed since the big hydro projects of the 1970s, says Fred Vicaire, CEO of Mi’gmawei Mawiomi Business Corporation, Innergex’s Indigenous partner in Mesgi’g Ugju’s’n wind farm, in Gaspésie. “For many decades, we were just a box to check for companies to say, ‘We can do the project, we consulted with First Nations, and we will give them some royalties.’ We don’t want royalties from companies installing infrastructure in our territory. We want to own the projects 50/50 and get operating revenue from them.” 

The Mesgi’g Ugju’s’n (MU) wind farm, located on public land in the regional county municipality of Avignon in Quebec’s Gaspé Peninsula, is indeed a 50/50 partnership between the three Mi’gmaq communities (Gesgapegiag, Gespeg and Listuguj) and Innergex. The first phase of MU is a 150 MW project. The second phase will add 102 MW.

Innergex has signed agreements with 31 Indigenous communities. “They go beyond financial terms,” says Vicaire. “These agreements take into account our way of life, including respect for hunting territories and lands used for traditional medicinal plants, for example.” 

There are agreements, and there are agreements, cautions the Innergex CEO. “Unfortunately, over the years, too many renewable-energy companies have lacked transparency, negotiating with two different financial models: one designed for First Nations, showing no profitability, and one for the board and shareholders, which was profitable. An unequal relationship dating back to the fur trade era.” 

“Since the early days, Innergex has believed in the three Ps: people, planet, profit,” he adds. “Every company aims for a return, but we’ve always believed it should be reasonable and never at the expense of the other two Ps.” 

Partnerships can be challenging, especially when the partners don’t have access to the same equity. For the first phase of the MU wind farm, Innergex brought in more equity, says Vicaire. But the second phase “is different,” he says. “We have access to the First Nations Finance Authority. It finances projects at rates below prime, as municipalities would for large infrastructure projects.” 

The green and the greening

Innergex’s relationships with Indigenous communities contribute to a strong “S” in the company’s ESG ratings. They also helped secure its spot at the top of the Best 50 ranking. As a pure-play renewable-energy business, the company scored top marks on sustainable revenue and sustainable investment, which were both at 100%. It also scored in the top quartile on energy productivity and carbon productivity.

Like Premier Legault, Letellier sees batteries in his future. He says that the next frontier for renewables is energy storage – keeping electricity flowing when the wind doesn’t blow and the sun doesn’t shine. Becoming an expert in deploying energy-storage technologies is part of Innergex’s strategic plan for 2020 to 2025. One battery project is already operational near the Yonne wind farm in France. Two others are under development in the Atacama Desert in northern Chile. 

“We need all the help we can get to manage consumption,” Letellier says. “And it is clear that one day not so far away, every house will have its battery.”

Diane Bérard is an independent-solutions journalist based in Quebec. 

The post Canada’s top corporate citizen for 2023 bets big on wind appeared first on Corporate Knights.

That’s almost a fifth of the province’s total budget for this year.

Ruby River Capital LLC, the U.S.-based owner of GNL Québec Inc., filed a claim against Canada under the North American Free Trade Agreement (NAFTA) after its Énergie Saguenay project failed to pass a federal environmental impact assessment.

The proposed LNG terminal had already been rejected by the Québec government over concerns that it would increase greenhouse gas emissions and negatively impact First Nations and marine mammals.

Canada faces a no-win situation — a catch-22. If the government does not rapidly phase out fossil fuels, it will fail to meet its commitments under the Paris Agreement to address the climate crisis. But when it takes steps to do so, foreign investors invoke international trade and investment agreements like NAFTA and threaten to drain public coffers.

Unlike environmental treaties, trade and investment agreements have teeth. They are enforceable through a system known as Investor-State Dispute Settlement (ISDS) that allows foreign investors to bypass local courts and bring claims for monetary compensation to a panel of three arbitrators. More than 1,200 ISDS cases have been launched against governments around the world in the last 25 years.

Between 1996 and 2018, Canada was sued more than 40 times by American investors through the investment chapter in NAFTA. To date, Canada has lost or settled (with compensation) 10 claims. Canadian governments have paid out more than $263 million in damages and settlements.

When NAFTA was replaced in 2018 with the U.S.-Mexico-Canada Agreement (USMCA), it did not include an ISDS mechanism between Canada and the U.S. Chrystia Freeland, the then-deputy prime minister of Canada, noted at the time that the removal of ISDS “strengthened our government’s right to regulate in the public interest, to protect public health and the environment.”

Ruby River was only able to launch its case because USMCA allowed firms that had made investments before NAFTA’s termination – on July 1, 2020, – to continue to bring ISDS claims for three years — until June 30, 2023.

Importantly, Ruby River spent only about CDN$165 million on the Énergie Saguenay project proposal. However, the firm is permitted within the ISDS system to seek “lost future profits” based on speculation about the performance of notoriously volatile oil and gas markets.

Other jurisdictions need to follow Québec’s lead. The global carbon budget has no room for new coal, oil or gas developments.

 

Québec is a member of the global Beyond Oil and Gas Alliance and is the first jurisdiction in the world to ban all oil and gas production. The province is being sued over this ban by several fossil fuel firms — seeking more compensation than was offered — in Québec’s Superior Court.

Had these companies been foreign, and thereby qualified for the protection of an investment treaty, they likely would have chosen ISDS instead. This is because ISDS generally provides broader scope for claims — and larger awards — than domestic courts.

Other jurisdictions need to follow Québec’s lead. The global carbon budget has no room for new coal, oil or gas developments. Construction of new fossil fuel infrastructure also needs to be limited, as it would lock in continued extraction long into the future.

Despite clear messages to this effect from the Intergovernmental Panel on Climate Change and the International Energy Agency, investors continue to propose new fossil fuel projects. They do so in full knowledge that governments need to act to curb emissions in line with their international commitments and that future climate policies may negatively impact their investments.

Allowing these companies to demand billions in compensation creates moral hazard and could dampen necessary policy action.

Governments are increasingly aware of this risk and many are taking action. The European Union is seeking to withdraw from the Energy Charter Treaty, the largest investment treaty in the world, because it “is not aligned with the Paris Agreement, the EU Climate Law or the objectives of the European Green Deal.”

The Biden administration is committed to not signing up to new agreements with ISDS and a number of Democrats are calling for the removal of the mechanism from existing deals. Other countries such as Australia and New Zealand have worked to exclude ISDS from some of their trade agreements.

It is communities impacted by climate change that should be compensated by fossil fuel firms, not the other way around.

 

Canada will soon escape from the legacy of NAFTA. However, the government remains exposed to the threat of ISDS through other trade agreements such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), as well as dozens of bilateral investment treaties.

When the U.K. officially joins the CPTPP, the risk of ISDS claims from fossil fuel firms will increase dramatically.

The idea that public finance, desperately needed for the energy transition and climate adaptation, will be redirected to compensate fossil fuel firms currently making record profits is offensive.

In light of the increasing body of evidence that documents how the industry has actively obstructed climate action and helped to spread disinformation about climate science, it is communities impacted by climate change that should be compensated by fossil fuel firms, not the other way around.

The Canadian government should adopt a consistent approach to ISDS. The exclusion of ISDS from USMCA should be emulated in any future agreements, and Canada should work with treaty partners to remove access to the system in all current ones.

Kyla Tienhaara is the Canada Research Chair in Economy and Environment at Queen’s University.

This article is republished from The Conversation under a Creative Commons license. Read the original article.

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In Ontario and Alberta, significant policy reversals in recent years have weakened the business case for emerging clean-tech firms, which need major local customers to commercialize and scale up their technology. 

Ontario has supported investments in electric vehicle manufacturing by auto manufacturers and in lower-carbon processes by steel companies. But the government plans to rely more heavily on natural-gas-fired power for electricity over the next decade.

“The absence of a net zero emissions strategy for Ontario’s electricity grid could result in missed growth opportunities in promising new markets,” said the report, Net Zero Opportunities, pointing to renewables, smart grids and battery storage.

The report, which includes individual provincial assessments, is a follow-up to Sink or Swim, a study released in October 2021 that analyzes Canada’s net-zero opportunities and challenges on a national scale. In the new report, the Climate Institute assesses individual provinces’ records on whether they are nurturing “transition-opportunity companies” that can become the key employers of the future.

Ontario, for example, has the highest number of workers in industries threatened by the energy transition but lacks a “consistent, comprehensive, and long-term approach” to climate policy that would support high-growth clean technology companies.

Policies that create domestic demand for low-carbon goods and services in government and the private sector are a critical part of the effort to grow companies that can take advantage of the energy transition and support provincial economies, the report concludes.

Using data from PitchBook, the Climate Institute report found that four provinces – Quebec, British Columbia, Ontario and Alberta – have all seen some success in the growth of companies that could anchor a new economy. 

However, B.C. and Quebec are leading the pack with a comprehensive approach that fosters growth in emerging companies as well as decarbonization investments by incumbent firms that can become important customers for the high-impact start-ups.

The absence of a net zero emissions strategy for Ontario’s electricity grid could result in missed growth opportunities in promising new markets.

Ontario has a high number of cleantech start-ups relative to Quebec and B.C. but falls behind its rivals when it comes to company track records in attracting growth capital and in scaling them to be globally competitive.

Alberta’s ability to capitalize on emerging sectors such as carbon capture and hydrogen “is hampered by mixed policy signals and dominance of the oil and gas sector,” the report says. Despite strong investment in renewable power, Alberta trails B.C. and Quebec in nurturing emerging companies that will seize opportunities from the transition.

In an interview, report author Jonathan Arnold noted that the pace of a climate-driven transition remains uncertain, especially as Russia’s invasion of Ukraine has increased demand for non-Russian oil and gas.

However, countries representing 90% of global demand have committed to achieving net-zero status this century, while the disastrous impacts of climate change are becoming increasingly clear and present. 

“We see this transition as inevitable,” Arnold said. “Certainly, there is short-term uncertainty . . . but if the world is serious about making progress on climate targets and reducing the long-term impacts of climate change, then this really is an inevitable transition. And we will get to a place where we have to act.”

At the Davos summit in Switzerland this week, European Commission Vice-President Frans Timmermans, U.S. climate envoy John Kerry and Fatih Birol, executive director of the International Energy Agency, addressed the challenges of current energy needs while maintaining a focus on climate concerns. 

“There was clear consensus that the right policies for addressing the global energy crisis can also bring us closer to our climate goals,” Birol said on Twitter.

The Climate Institute report argues that, despite the current surge in demand for oil, we should expect lower demand for fossil fuels and carbon-intensive products in the future and a greater need for low- or zero-carbon alternatives. “Provinces that get ahead of those changes will thrive while those that fall behind could face significant upheaval,” the report says.

Support for emerging clean-economy companies is a necessary but far from sufficient strategy for achieving clean growth and a just transition that ensures that vulnerable workers and marginalized communities are not left behind. Provinces need to embrace future-oriented sectors such as biotech and artificial intelligence while addressing education, training, social safety nets and Indigenous empowerment. If they don’t, they risk being left behind. 

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Environment Minister Jonathan Wilkinson released Ottawa’s bulked-up plan in December, highlighted by a proposal to increase the federal price on carbon to $170 a tonne by 2030 from $50 a tonne in 2022. After the Supreme Court of Canada upheld the constitutionality of the federal carbon price in a March decision, the fate of the Liberals’ plan now hangs on whether they can return to power in the next election, which could come this year.

However, the plan’s success depends as well on the GHG mitigation efforts of provinces, municipalities, the corporate sector and even individual Canadians.
The new Liberal plan projects that the additional measures it has announced would result in Canada reducing its GHG emissions by 32% in 2030 from 2005 levels. That’s just slightly better than the 30% target the government adopted under the Paris Agreement. The United Nations has said we need global reductions of 55% by 2030 to have a reasonable chance of holding the increase in average global temperatures to 1.5°C.

With additional efforts from provinces and the private sector, the federal government said, Canada could achieve a 40% reduction from 2005 levels by 2030. The Liberal government is now working on a new 2030 target, to be announced in the run-up to the UN’s COP26 climate summit in Glasgow in November.

The target of net-zero carbon emissions by 2050 is widely shared by governments and corporations around the world. Federal Conservative Party Leader Erin O’Toole has endorsed it, as have provincial governments in British Columbia, Nova Scotia, Prince Edward Island and Newfoundland and Labrador. Quebec is reviewing its goal of at least an 80% reduction by 2050 and has indicated it will adopt the net-zero target.

However, three of the country’s largest provincial emitters – Alberta, Ontario and Saskatchewan – have not endorsed that long-term goal.

“There’s clearly a big role for provincial and territorial governments on the path to net-zero,” says Dale Beugin, research director for the Canadian Institute for Climate Choices, which in February released a report called Canada’s Net Zero Future. Meeting Canada’s climate goal will require “increasingly stringent, economy-wide policies such as carbon pricing in every province, complemented by provincial policies like stringent building codes and infrastructure investments,” Beugin says.

Provinces and territories also have a role in commercializing and deploying technologies like carbon-capture and green hydrogen that could play a major role in emissions-reduction strategies a decade from now.

Given that imperative, here is how the provincial governments are responding. It should be noted, however, that emissions trajectories reflect the combined efforts of federal, provincial and municipal governments, as well as publicly owned utilities and corporations.

Rubric: A letter grade was assigned to each province and territory based on the ambition of their GHG targets, the measures they’ve implemented to meet them and their overall support for climate change action.

The net-zero provincial report card was prepared with financial support from the Ivey Foundation.

Source: Based on 2018 figures from Environment and Climate Change Canada.  2019 GHG emissions figures were released at press time showing little change.

British Columbia

British Columbia is the fifth-largest emitter among the provinces and was headed in the wrong direction under the previous Liberal government. After winning a minority government with support from the Green Party in 2017, NDP Premier John Horgan committed the province to an aggressive climate agenda, which he began to implement. He won a strong majority after a fall 2020 snap election and has promised to increase B.C.’s climate efforts.

Current Emissions: 66 Mt in 2018, 5.6% higher than in 2005. Since hitting a low point in 2015, B.C.’s annual GHG emissions rose by nearly 12% – or 7 Mt annually – by 2018.

Emissions Per Capita: 13.2 tonnes

Climate Strategy: B.C. has a legislated target to reduce emissions by 40% below 2007 levels by 2030, and by 80% by 2050. During the 2020 election campaign, Horgan endorsed a net-zero target for 2050. The provincial government has tightened its clean fuel standard and building codes to ensure that all new buildings be net-zero ready by 2032 (see story on p. 53). It’s providing $6,000 rebates for EV purchasers and mandating that 30% of new vehicles sold in the province be zero-emission by 2030, and 100% ZEV by 2040.

Best Attempt at Curbing Carbon: B.C. was the first province to introduce an economy-wide carbon tax in 2008, and studies have concluded the levy succeeded in keeping a lid on emissions as the provincial economy grew. The B.C. tax was originally designed to be revenue-neutral, with offsetting reductions in other taxes when it was adopted in 2008. That is no longer the case. The rate of the B.C. levy will rise to match any federal increase in its carbon price.
Long Shot: B.C. is proceeding with the controversial Site C dam, which is substantially over-budget and plagued with geotechnical problems. The government argues that power from Site C can be used to electrify energy-intensive natural-gas processing plants in northeastern B.C. and reduce emissions from the gas fields.

Blind Spot: The measures outlined in B.C’s 2018 climate plan will achieve only 75% of the reductions the province has committed to by 2030. Horgan had promised to outline how it would achieve the other 25% but has not yet done so. The government will have to account for rising GHGs from the natural gas fields of northeastern B.C. and from the Shell-led liquified natural gas (LNG) export facility being built in Kitimat, which will be one of Canada’s largest single sources of carbon emissions.

Projected Emissions: Based on measures in place in 2019, the federal government projects B.C. emissions will fall by 6.3% between 2005 and 2030.

Grade: B+

Alberta

After two decades of aggressive growth in oil sands production, Alberta has widened its lead as the country’s largest emitter of greenhouse gases. In 2018, its GHG emissions accounted for 37% of Canada’s total, while its population represented 11% of the national total.

Current Emissions: 273 Mt in 2018, 18% higher than 2005

Emissions Per Capita: 63.4 tonnes

Climate Strategy: Premier Jason Kenney’s United Conservative Party (UCP) government has put forward few measures that would lower Alberta’s emissions. The province has no 2030 target or long-term goal for GHG emissions.

Best Attempt at Curbing Carbon: The UCP government has maintained the coal-power phase-out policy for the province’s power utilities that was put forward by previous federal and provincial governments. Armed with a $1.8-billion compensation plan put in place by the former NDP government, Alberta’s utilities are rapidly shedding their dependence on coal. GHGs from the province’s electricity fell from 50 Mt in 2015 to 33 Mt in 2018 and could hit 20 Mt by 2023. Kenney has replaced the NDP’s pricing system on large industrial polluters with a UCP version that will cost large emitters less than they would have paid under the NDP plan but was nonetheless approved by Ottawa.

Long Shot: The Kenney government is also working on strategies to deploy potentially game-changing “wild card” technologies identified by the Institute for Climate Choices. Provincially funded Emissions Reduction Alberta and Alberta Innovates finance the development and deployment of technology that would lower GHGs and make industry more competitive. Alberta is urging the feds to commit $30 billion over the next decade in subsidies and tax incentives for carbon-capture projects. However, there are no guarantees that carbon-capture, hydrogen, carbon fibres or geothermal energy will ever be competitive on the massive scale needed to impact Alberta’s and Canada’s emissions challenge.

Blind Spot: Since taking office in 2019, Kenney has rejected pressure for a comprehensive climate strategy, seeing it as an attack on the province’s oil industry. He has fought the federal government over consumer carbon levies, scrapped provincial energy-conservation programs, and gone to war with environmental groups over the opposition to new pipelines and oil sands expansion. Fuelled by strong growth in the oil sands, industrial emissions increased by a staggering 82% since 1990.

While leading oil sands producers have announced targets to reduce GHGs, dramatic changes in Alberta’s emissions will occur only with large-scale investment in new technology (though that won’t negate Scope 3 emissions in whichever province/country consumes that oil in a combustion scenario). Weak crude prices, limits to market access and an increasing climate focus among investors will make it tough for companies to attract the capital needed to deploy that technology. The press secretary for Alberta Environment Minister Jason Nixon did not respond to several requests for comment.

Projected Emissions: In the biennial report submitted to the UN last year, the federal government projected Alberta’s emissions would grow by nearly 12% between 2005 and 2030.

Grade: D-

Saskatchewan

With its small population and heavy economic reliance on coal and oil, Saskatchewan has the highest GHG emissions per capita among Canadian provinces and is the fourth-largest emitter of all the provinces.

Current Emissions: 76 Mt in 2018, 12% higher than in 2005

Emissions Per Capita: 65.4 tonnes

Climate Strategy: The government hasn’t set out a 2030 target for emissions reductions, but it has adopted a climate plan that focuses on reducing dependence on coal-fired electricity, encouraging energy efficiency and supporting emerging technologies like small modular nuclear reactors (SMRs), which the province is hoping could eventually displace fossil-fired power on the grid and in industry.

Best Attempt at Curbing Carbon: While challenging the federal carbon tax to the Supreme Court, Saskatchewan introduced its own levy that covers all industrial emitters, with the exception of power producers and natural gas pipelines – roughly equivalent to Ottawa’s plan. The federal system applies where the province exempted industries.

Long Shot: Saskatchewan has been a leader in development of carbon capture and sequestration (CCS) and has been banking on it to reduce its fossil-fuel footprint. It supported a CCS project at one unit of its Boundary Dam coal-fired power station, as well as the Weyburn project that uses carbon dioxide to stimulate oil production but then sequesters the CO2 underground. Saskatchewan, which has large reserves of uranium to fuel nuclear power, has also joined Ontario and New Brunswick in an agreement to support the development of controversial SMRs, which have some major hurdles to clear if they are going to be widely commercialized.

Blind Spot: The province relies on coal for 30% of its electricity and is considering replacing coal with natural gas. The publicly owned utility SaskPower hopes doing so will help cut its emissions by 40% from 2005 levels by 2030. However, a reliance on gas will make it difficult to move beyond that 40% target.

Projected Emissions: Saskatchewan’s emissions are projected to decline by 14% from a 2015 peak by 2030, falling back to 2005 levels.

Grade: D+

Manitoba

Manitoba is the largest emitter of the smaller provinces, despite having a major advantage with its massive hydroelectric resources.

Current Emissions: 22 Mt in 2018, 8.3% higher than in 2005

Emissions Per Capita: 16.3 tonnes

Climate Strategy: Manitoba’s Progressive Conservative Premier Brian Pallister announced last March that he would implement a $25-per-tonne carbon tax in his province on July 1, 2020, but delayed that for a year because of the COVID-19 pandemic. The province has established what it calls a carbon savings account, a series of three five-year periods, each of which will have its own GHG reduction target. The goal for the current 2018 through 2022 period is a cumulative 1 Mt of emissions.
Best Attempt at Curbing Carbon: Manitoba’s biggest contribution could come by supporting interprovincial transmission with Saskatchewan, Ontario and even Alberta in order to move low-carbon hydroelectricity into those provinces.

Long Shot: Manitoba proposed a carbon tax plan that would have established a flat $25-per-year levy, unlike the federal tax that now applies, which sits at $30 per tonne and is due to rise to $50 in 2022. The federal Liberal government did not endorse Pallister’s plan.

Blind Spot: Agricultural emissions have increased since 1990, largely because of expansion of Manitoba’s hog and cattle industries. The province has the highest proportion of agriculture emissions in the country, at 30%, compared to only 8% for Canada as a whole.

Projected Emissions: The federal government projects Manitoba will reduce its emissions by 10% between 2005 and 2030, well short of the 30% national target.

Grade: C-

Ontario

With the country’s largest population, Ontario remains Canada’s second-largest GHG emitter. Climate change has been on the back burner since the Progressive Conservative government came to power determined to dial back the ambition of the previous Liberal government.

Current Emissions: 165 Mt of GHGs in 2018, down 19% from 2005 levels

Emissions Per Capita: 11.5 tonnes

Climate Strategy: After the 2018 election, Premier Doug Ford’s government killed the existing cap-and-trade plan and slashed the energy-efficiency efforts that it financed. In 2020, Ontario replaced the federal carbon price on industrial emitters with a provincial one that will be somewhat less costly to industry than Ottawa’s version. Ford remains a vocal critic of the Liberal carbon tax and rebate plan. The PC government released a review of its plans, but that focused on the carbon levy on industry as well as a marginal increase in the amount of biofuels mixed with gasoline or diesel. The March budget bolstered the province’s significant budget for transit and noted that the Ontario Securities Commission would be consulting on a recommendation to set a mandatory disclosure regime for climate-related financial risks.

Best Attempt at Curbing Carbon: Ontario’s big declines came between 2005 and 2014, when the province retired its coal-fired power stations, a policy that caused one of the largest declines in GHGs in North America. There’s been virtually no improvement since 2014, according to figures released by Environment and Climate Change Canada (ECCC).

Long Shot: The government has offered support for technologies like the new-breed SMRs and hydrogen fuel cells that could play an important role in transitioning the economy to zero-carbon. However, it’s uncertain if or when either of those technologies will be commercially competitive and scaled up. It’s unlikely either will have much impact before 2030. In a more certain bet, Ontario is subsidizing North American carmakers’ plans to build electric vehicles in Ontario.

Blind Spot: Ford’s government cancelled renewable energy projects that had been approved but not built, a move that will eventually require the province to rely more heavily on natural gas, which means higher emissions. In a review of the province’s climate strategy, the Toronto-based advocacy group Environmental Defence said the Ford government had failed to take meaningful action to reduce GHG emissions. A spokesman for Environment Minister Jeff Yurek did not respond to several requests for comment.

Projected Emissions: ECCC projects that, given current trends, Ontario will still be emitting 160 Mt in 2030, for a decline of only 22% versus the Conservatives’ own target of 30%.

Grade: C-

Note: Numbers may not sum to the total due to rounding. Source: Environment and Climate Change Canada Report 2020. Historical emissions data comes from National Inventory Report 2020.

Quebec

Quebec is Canada’s third-largest emitter, though decisive climate-action plans contributed to a significant GHG decline between 2005 and 2016. Emissions have since rebounded as a result of the strong economic growth the province experienced between 2016 and 2018.

Current Emissions: By 2018, GHG emissions were just 4.1% lower than they were in 2005.

Emissions Per Capita: 9.4 tonnes

Climate Strategy: Quebec Premier François Legault boasts that his province has the most ambitious climate plan in North America, with a target of reducing emissions by 37.5% below 1990 levels by 2030. The most recent plan released by the Coalition Avénir Quebec (CAQ) government would get the province only 42% of the way to its 2030 goal. However, the government will introduce additional measures and is expecting more ambitious action from Ottawa and municipalities to help close the gap, says Geneviève Richard, a spokesperson for Environment Minister Benoit Charette.
“Quebec’s plan is ambitious because it aims to initiate a real transformation of its economy towards a greener and more resilient economy, which is a necessary condition for achieving its climate objectives,” Richard says.

Best Attempt at Curbing Carbon: The province has one of the most aggressive climate plans in North America, especially in the area of electrifying transportation, with rebates for EVs and an aggressive program for building charging stations. Quebec administers its own cap-and-trade program and trades emission credits with California in the Western Climate Initiative, which Ontario had joined but pulled out of under the Ford government.

Long Shot: It remains to be seen how Quebec’s cap-and-trade plan – which is essentially a carbon-pricing measure – is affected by the Liberals’ proposed increase in the carbon tax to $170 a tonne. The issue is whether the increase in the federal price would require greater stringency from the province’s cap-and-trade system.

Blind Spot: The CAQ government tends to rely on incentives and subsidies for industries rather than regulations that would provide a more certain outcome.

Projected Emissions: Based on measures in place in 2019, ECCC projected Quebec’s emissions would be 16.3% lower than 2005 levels in 2030, though Richard says Quebec’s plans should reduce emissions by 37.5% below 1990 levels. That’s more than enough to meet the current federal target of 30% below 2005 levels. However, should the Liberals adopt a more aggressive target of 40% below 2005 levels, Quebec will be asked to do more.

Grade: A-

New Brunswick

New Brunswick saw the largest percentage decline in GHGs among all provinces between 2005 and 2018. The drop resulted from a combination of policy choices and a stagnant economy that saw major restructuring in the forestry industry.

Current Emissions: 13 Mt in 2018, down 34% since 2005

Emissions Per Capita: 16.9 tonnes

Climate Strategy: New Brunswick is working with the federal government and other provinces to decarbonize its electricity sector. It has funded energy-efficiency programs that have saved energy costs and emissions. The province’s 2016 climate plan calls for the province to reduce emissions to 10.7 Mt by 2030 from 20 Mt in 2005.
Best Attempt at Curbing Carbon: New Brunswick introduced its own carbon tax that was approved by the federal government in 2020, even though its system covering industrial emitters is far weaker than Ottawa’s own backstop approach. The federal government must approve provincial levies on a regular basis and will have to revisit the New Brunswick approval as federal prices rise.

Long Shot: The province is in discussions with Ottawa and other provinces about a proposed “Atlantic loop” that would connect the four eastern provinces – and possibly Quebec – in a single power market. The additional transmission capacity could help New Brunswick reduce its dependence on the Belledune coal-fired station, though the government worries about the loss of jobs and revenue at provincially owned New Brunswick Power.

Blind Spot: On the consumer side, the province introduced a carbon levy but reduced the sales tax on gasoline and other fuels, meaning the pump price rose by only two cents a litre. Given that a quarter of its emissions come from transport, they’ll have to try other ways of curbing carbon in a heavily rural province where people rely on their vehicles.

Projected Emissions: New Brunswick is on a path to see its emissions fall by 50% between 2005 and 2030, according to ECCC.

Grade: B-

Nova Scotia

Nova Scotia has been a leader in climate action in Atlantic Canada. Recently elected Liberal Premier Iain Rankin promises to put in place new measures to drive a clean-energy transformation.

Current Emissions: 17 Mt in 2018, down 26%
since 2005

Emissions Per Capita: 17.7 tonnes

Climate Strategy: The province implemented its own cap-and-trade system, which the federal government accepted as equivalent in ambition to its own backstop.

Best Attempt at Curbing Carbon: The province has adopted aggressive energy-efficiency programs, expanded renewable power and slashed its dependence on coal for electricity from 76% in 2007 to 53% in 2018. Rankin initiated a program to provide up to $3,000 in rebates for buyers of electric vehicles.

Long Shot: The province has been touting the potential of tidal power for years without much result, in terms of actual electricity flowing. It now has a goal of generating 300 MW from Bay of Fundy tides.

Blind Spot: Nova Scotia still relies on coal-fired electricity and plans to phase it out well after 2030, when more hydroelectric power from Newfoundland and Labrador becomes available. Rankin, who became premier in February, vowed during the leadership campaign to end coal use by 2030. Despite that promise, Nova Scotia Power plans to spend $30 million on improvements to its coal-fired generating units to keep them running smoothly.

Projected Emissions: Nova Scotia is on track to reduce its emissions by 56% between 2005 and 2030, according to projections from ECCC.

Grade: A

Newfoundland and Labrador

Newfoundland and Labrador’s economy remains tied to its offshore oil industry and the much-troubled Muskrat Falls hydroelectric power project.

Current Emissions: 11 Mt in 2005, up 5.6%
since 2005

Emissions Per Capita: 20.9 tonnes

Climate Strategy: The Liberal government in Newfoundland and Labrador has committed to achieving net-zero carbon emissions by 2050.The Liberals, under Premier Andrew Furey, won a slim majority in the general election that was disrupted by the COVID-19 pandemic and concluded in late March.

Best Attempt at Curbing Carbon: The provincial government is counting on low-emitting power from the Muskrat Falls project, which began flowing electricity last fall after delays and massive cost overruns. Newfoundland and Labrador will reclaim ownership in 2040 of the Upper Churchill hydro development, which has been owned by Hydro-Québec under a deal that Newfoundland has sought to reopen for years.

Long Shot: The offshore oil industry association endorsed the government’s commitment to a net-zero target. However, it said producers will not be able to completely eliminate GHG emissions and will have to purchase credits to offset what they can’t avoid.

Blind Spot: Transportation remains the largest source of emissions on the Rock, at more than one-third of the total. With a commitment to increased hydroelectric supplies, the financially strapped province could find innovative ways to encourage a move to electric vehicles.

Projected Emissions: Newfoundland and Labrador is on pace to reduce emissions by 10% between 2005 and 2030, compared to a 30% national target.

Grade: C

Prince Edward Island

Prince Edward Island has relatively low emissions given the lack of large industrial sources, but its household emissions per capita are the highest in the country.

Current Emissions: 1.7 Mt in 2018, down 19%
since 2005

Emissions Per Capita: 11.4 tonnes

Climate Strategy: P.E.I. has adopted a plan to become net-zero by 2040, with a vision to become the country’s first province to essentially eliminate GHG emissions, though that includes the use of offsets. The province has invested significantly in renewable power.

Best Attempt at Curbing Carbon: In December, the legislature unanimously approved the Net Zero Carbon Act, which enshrines the target in law and requires yearly accounting to track progress.

Long Shot: Much of P.E.I.’s emissions come from the transportation sector. Policies like gas-guzzler taxes and preferential parking and rebates for EVs could help reduce that figure.

Blind Spot: To meet its lofty goal, it will need more aggressive programs to decarbonize transportation, agriculture and buildings. As an island province particularly vulnerable to rising water levels, P.E.I. has to accelerate its efforts to prepare for the impacts of climate change.

Projected Emissions: P.E.I. had GHG emissions of
2 Mt in 2005 and is projected to reduce them by less than 1 Mt by 2030, according to the federal government.

Grade: B+

Yukon

Yukon has seen a big increase in emissions from transportation in the last decade, with GHGs in the transportation sector up 14%
between 2009 and 2017. Overall emissions in the territory remained flat over that period.
Current Emissions: 0.6 Mt in 2018, a 14% increase since 2005

Emissions Per Capita: 14.8 tonnes

Climate Strategy: Yukon has set a target to reduce emissions from key sectors – including transportation, heating and electricity generation – by 30% below 2010 levels by 2030.

Best Attempt at Curbing Carbon: The territory is working with the federal government to support energy efficiency and renewable-energy projects in remote communities to lessen their dependence on diesel by 30% by 2030, including meeting 50% of heating needs from renewable sources.

Long Shot: Yukon is investing in transmission and micrograms with the aim of decarbonizing its grid to become 97% fossil-free by 2030.

Blind Spot: Thawing permafrost could release huge amounts of methane into the atmosphere. Mining is a major driver of Yukon’s energy demand, and, as the Canada Energy Regulator notes, the opening and closing of mines can dramatically affect electricity consumption.

Projected Emissions: The federal government projected Yukon could reduce its emissions
by more than half between 2005 and 2030.

Grade: B

Northwest Territories

The Northwest Territories relies heavily on GHG-emitting diesel for heating, power and transportation. It will have to cope with the impacts of a climate that is warming faster than the global average.

Current Emissions: 1.2 Mt in 2018, a 22% decline since 2005
Emissions Per Capita: 26.9 tonnes

Climate Strategy: The N.W.T has a target to reduce its carbon emissions by 30% from 2005 levels by 2030. Many communities rely heavily on diesel and are investing in renewable-power projects to lessen that dependency.

Long Shot: Some nuclear industry advocates argue that remote communities will benefit from the commercialization of small modular reactors.

Blind Spot: Thawing permafrost could release huge amounts of the powerful GHG methane into the atmosphere.

Projected Emissions: The federal government projects N.W.T. emissions could fall by nearly half between 2005 and 2030.

Grade: B

Nunavut

Inuit hunters and community leaders say they are already seeing changes in the Arctic climate that will disrupt traditional land-use practices. The territory’s household and land-based emissions are also rising.
Current Emissions: 0.7 Mt in 2018, a 24% increase since 2005

Emissions Per Capita: 18.2 tonnes

Climate Strategy: Nunavut aims to displace some of that reliance on diesel, in particular with community-led renewable-energy projects.

Long Shot: With rapid population growth, Nunavut has seen its use of fossil fuels climb, with every community dependent on diesel for electricity, heat and transport. In the 2019 election, the Liberal Party promised to end the territory’s dependence on diesel by 2030.

Blind Spot: Thawing permafrost could release huge amounts of methane into the atmosphere.

Projected Emissions: ECCC projects Nunavut emissions, which were 0.7 Mt in 2018, will grow to 1 Mt by 2030.

Grade: B-

Shawn McCarthy is an Ottawa-based writer who focuses on climate change and the low-carbon energy economy.

From Corporate Knights Spring Issue, available April 21, 2021.

The post Net-zero report card: How future-friendly are Canadian provinces? appeared first on Corporate Knights.

Sabia, who recently announced he’s stepping down from the Caisse de dépôt et placement du Québec (CDPQ) in early 2020, ushered in a fundamental change in how the $326 billion Quebec pension fund treats the climate-related risks and opportunities that are embedded in the 21st-century global economy.

In doing so, CDPQ is challenging the traditional view of pension managers and other institutional investors.

Despite the looming impacts of climate change, many fund managers operate with a view that their fiduciary obligation limits their ability to consider environmental, social and governance factors in investment decisions to those that are clearly quantifiable as short-term, material risks.

In contrast, CDPQ is part of an international movement to put the climate crisis at the centre of the investment process.

That effort got a boost this week when the United Nations named outgoing Bank of England Governor Mark Carney as special envoy on climate action and finance, and Carney noted that “investing for a net zero world must go mainstream.”

Carney’s appointment comes amid new warnings about the urgency of climate actions, as the United Nations Environment Programme indicates that the costs of averting climate disaster are mounting exponentially due to widespread foot-dragging.

CDPQ made its big stand two years ago. In 2017, Sabia and his team set ambitious targets to ratchet up investment in low-carbon assets by 50 per cent by the end of 2020. They have since raised that goal to 80 per cent – for an increase of $15 billion. CDPQ also aims to reduce the greenhouse-gas intensity of its portfolio by 25 per cent by 2025.

More importantly perhaps, it adopted a clear strategy for achieving those targets, including a strict carbon budget for investment managers with bonuses tied to their success in staying within those limits.

In an interview, Sabia said taking action on low-carbon investing is not a political act, though it is supported by the Quebec government. Rather, it reflects CDPQ’s belief that it has a fiduciary duty to its beneficiaries – Quebec’s present and future pensioners – to account fully in its decisions for the risks and opportunities posed by the climate crisis.

“This comes from us, and it comes from our strong belief about the upside potential in investment in measures to address climate change,” he said.

“We think being aggressive about this is an essential element of being a good fiduciary now. We think it is an integral part of a well-managed investment fund. Because this is not going away. This is not some passing fad; this is going to be with us for 10, 20, 30 years and more.”

“We think being aggressive about this is an essential element of being a good fiduciary.”

– Michael Sabia, Caisse de dépôt et placement du Québec

In making the transition, CDPQ has played a leadership role among institutional investors who are grappling with how to manage those pools of saving to ensure they can meet their long-term obligations, in the face of the anticipated massive disruptions that will result from climate change.

Financial players are responding by re-assessing risk. Earlier this week, Moody’s credit-rating service reduced Alberta’s credit rating, citing among other things its reliance on carbon-intensive crude production.

Premier Jason Kenney fired back, saying Moody’s is “buying into the political agenda emanating from Europe, which is trying to stigmatize development of hydrocarbon energy.”

But European institutions are not alone. The Bank of Canada has said climate change poses risk to the financial system, while Canadian securities regulators are urging companies to provide better disclosure as to the climate-related risks they face.

The Net-Zero Asset Owner Alliance

At the United Nations climate summit this fall, the Quebec pension fund helped launch the Net-Zero Asset Owner Alliance, a group of investors who manage $2.4 trillion (U.S.) in assets.

The group committed to having carbon-neutral investment portfolios by 2050. (During the fall election, Prime Minister Justin Trudeau announced a similar goal of having Canada achieve a net-zero carbon economy by that same year.)

Other than the CDPQ, the Net-Zero Asset Owner Alliance is largely a European effort, with major institutional investors such as Germany’s Allianz, France’s Caisse des dépôts and insurance giant Swiss Re in the forefront. The California Public Employees’ Retirement System (CalPERS) is also a member.

Fiona Reynolds, CEO of the UN-backed Principles for Responsible Investment which is a co-convenor of the Net-Zero Asset Owner Alliance, said at the time, “[Pension funds and insurers] have the ability more than any other investors to move this agenda forward by outlining the material risks of climate change to those managing their assets.”

In an interview, she said there will be three complementary approaches: engaging with companies to encourage them reduce emissions; divesting from holdings that have a high carbon footprint, and investing in emerging technologies and low-carbon assets.

That effort will pave the way for other institutional investors to take more ambitious action, said Sean Cleary, professor of finance at Queen’s University and executive director of the newly established Institute for Sustainable Finance.

“It’s an important signal to other players that this is happening as part of the long-run changes to the global economy,” Cleary said. “This isn’t about sacrificing returns; it’s about seizing opportunities by being ahead of the curve.”

Ignoring climate risks undermines Canadian pensions

Other institutional investors are not standing on the sidelines. The Canada Pension Plan Investment Board (CPPIB) and the Ontario Teachers’ Pension Plan (OTPP), for example, say they are taking a more systematic approach to assessing climate-related impacts in their portfolios and are advocating for more robust corporate disclosure of the risks and opportunities.

Still, many institutional investors, including CPPIB, remain wary of acting too aggressively lest they fall afoul of fiduciary regulations that require them to act in the best interests of their plan members – or premium payers, in the case of insurance companies.

In a report released last June, the federal Expert Panel on Sustainable Finance recommended the federal government clarify the rules on fiduciary responsibility.

“This isn’t about sacrificing returns; it’s about seizing opportunities by being ahead of the curve.”

The panel was led by Tiff Macklem, former deputy governor of the Bank of Canada and current dean at the University of Toronto’s Rotman School of Management, and included representatives from CDPQ, OTPP and the Royal Bank of Canada. In their report, the expert quartet also recommended that corporations, lenders and investors disclose their climate-related financial risks and opportunities, in line with the Taskforce on Climate-related Financial Disclosures, which was spawned by Michael Bloomberg and Mark Carney.

The panel said widely used interpretations of fiduciary duty and materiality are out-of-step with the reality of climate change and its financial implications.

“The Canadian government has a clear opportunity and imperative to clarify that fiduciary duty today does not preclude the consideration of relevant climate change factors. In fact, evolving sustainability principles and international best practice increasingly require such considerations.”

Sabia echoed that view, arguing that a failure to properly assess climate risk and opportunity will undermine long-term returns that Canadians will depend upon for their retirement.

“There is a generally held belief in the investment business that addressing the issue of climate change involves compromising returns, and therefore some investors argue that it is not consistent with honouring an investor’s fiduciary obligation,” he said.

“We think that’s wrong. We think with the measures needed to address climate change, there are some significant investment opportunities.”

Investing in the long-term health of Canada’s economy pays off

Sabia argued that fiduciary responsibility requires an institutional investor to invest in order to enhance the long-term health of the economy, and to align its values with that of its plan members.

CDPQ’s assets now include renewable energy projects and public transit systems such as the $6.3 billion “carbon neutral” light rail system in Montreal. They also include the CIBC Square development in Toronto – which incorporates leading-edge energy efficiency and solar technology – and the massive Peter Cooper Village–Stuyvesant Town residential complex in Manhattan, which has been equipped with new HVAC systems and energy-efficient windows along with some 10,000 solar panels on the roofs.

While CDPQ doesn’t break out its returns on that basis, Sabia said the low-carbon assets are performing as well as or better than high-carbon ones.

Over the past five years, CDPQ earned an 8.3 per cent annualized rate of net return, beating the benchmark portfolio against which it measures itself, which posted a 7.2 per cent result.

The embedding of climate change issues into investment decisions involved a significant disruption at CDPQ. Dealmakers were previously required to screen for environmental, social and governance (ESG) factors but had no limits imposed by senior management.

“The biggest challenge was getting the organization to focus on cultural change,” the departing CEO said.

The targets that were adopted were the result of a lengthy analysis of what the pension fund could achieve without sacrificing returns, with some stretch goals that challenged those assumptions.

“The biggest challenge was getting the organization to focus on cultural change.”

Each investment team is given a carbon budget, the sum of which would result in a steady reduction to the 2025 target. The investment managers’ year-end incentive bonuses are adjusted according to whether they fell short, met or beat their target. If you meet the target, your bonus is a little bigger; if you miss it, your bonus is a lot smaller.

“In an investment business like ours, compensation is an important signalling device around priorities,” Sabia said.

CDPQ’s chief stewardship officer, Bertrand Millot, was added to an investment and risk committee that reviews all major financing decisions.

Sabia said it was important that senior management did not direct the fund managers to target specific industries, technologies or companies, either for investment or avoidance. “We gave them the carbon budgets, but we didn’t want to take the decision-making out of their hands.”

In addition to loading up on low-carbon assets, CDPQ will reduce the overall carbon intensity of its portfolio by 25 per cent by 2025. It has not, however, declared a divestment or ban on new acquisitions in the fossil fuel sector, unlike some European and American asset owners.

However, there is little likelihood of new investment in coal or oil companies given the investment teams’ declining carbon budgets, said Millot. He added the risk assessment for crude producers will depend considerably on their operating costs. CDPQ has scrubbed coal from its holdings, but still retains major stakes in oil and gas companies, with 7.41 per cent of its equities invested in the sector compared to 1 per cent at OTPP, according to S&P Capital IQ.

Instead, CDPQ will work with companies in which it has invested to improve their carbon footprint while retooling its portfolio over time to become net-zero for carbon by 2050. (“Net-zero” suggests it may still hold some assets that emit greenhouse gases, but it will balance those with companies that remove carbon from the air.)

In the new year, Sabia will take up a new position as head of the University of Toronto’s Munk School of Global Affairs & Public Policy. He will bring his climate-change focus with him.

“You can’t think about the state of the world or how the global system works without having climate change be a part of that perspective,” he said.

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