| Governments Agree on Green Technology Investment Len Coad, Director, Energy Environment and Technology Policy June 7, 2010 |
Canada faces an enormous challenge: reducing greenhouse gas (GHG) emissions while accommodating economic and population growth, and while taking our diverse geography and regional economies into account. So far, Canada has struggled to coordinate federal and provincial policies, and provinces are undertaking their own climate programs. There is, however, one policy measure that federal and provincial governments agree on: investing in technology to reduce emissions. Each of Canada’s governments recognizes the role that technology can play in reducing emissions and includes a range of technology investments in its action plans. Billions of Dollars in Investment Planned A Conference Board of Canada report—The Economic and Employment Impacts of Climate-Related Technology Investments—examines federal and provincial government technology funds intended to help reduce GHG emissions. It reveals a broad range of policy initiatives and programs to reduce emissions, and some strong similarities among the plans. The Conference Board estimates that Canadian governments and companies will invest $11.75 billion in climate-related technologies between 2010 and 2014. This includes federal and provincial spending, as well as private sector investments made under government matching programs. These estimates are conservative, since they include only investments made through the publicly funded programs identified in the study; governments and companies are making additional investment in emissions-reducing technologies. Alberta ($6.1 billion), Ontario ($2 billion), Saskatchewan ($1.3 billion), and Quebec ($1.1 billion)—the provinces with the highest emission levels—have the largest government programs in terms of investment. The Conference Board estimates that Canadian governments and companies will invest $11.75 billion in climate-related technologies between 2010 and 2014. The study, however, does not quantify the impact of this spending on the environment. Very few programs include targets and time frames for reducing GHG emissions in their investment criteria. Consumer Behaviour Targeted To reduce emissions, governments are using technology investments in combination with program spending, emissions regulation, carbon taxes, public education, and other initiatives. Many initiatives encourage consumers to reduce energy consumption and related emissions, or to switch from high carbon-emitting sources to renewable energy. Energy conservation and efficiency programs are particularly important because they reduce emissions directly, while also resulting in indirect or “upstream” reductions. Working With the Private Sector In addition, governments are partnering with the private sector to fund and develop new technologies. These technologies are intended to help separate economic growth from energy consumption, and energy consumption from GHG emissions. Different Decision-Making Approaches Governments use a broad range of financing and decision-making approaches to support these technology investments. Some programs rely on government revenues for their funds, and public service employees often administer them. Some provinces invest a specific amount with venture capital firms, which then gather funding from other partners and make investment decisions. The Climate Change and Emissions Management Corporation in Alberta is unique in that a board of directors comprising both government and industry representatives makes the investment decisions. Polluter Pays Technology funds in British Columbia, Alberta, Saskatchewan, Manitoba, and Quebec use the “polluter pays” principle. In each of these provinces, at least one fund receives revenue from taxes, levies, or fees on activities that produce emissions. Alberta’s Climate Change and Emissions Management Fund—the largest technology-specific fund in Canada—makes the most direct link: its revenues are generated through intensity regulations imposed on large final emitters. Rewarding the Polluters? Or Reorienting Them? Critics of climate-related technology investments argue that the approach is inappropriate. They contend one of two things: that the technology investments would have happened anyway (non-additionality), or that the funds simply recycle money to the same large emitters that paid the penalty for being unable to meet their intensity targets. The Conference Board’s view, however, is that public-private technology partnerships can help reduce emissions while minimizing adverse economic effects on the firms themselves. Many of the technologies under consideration are high-risk investments, making them too uncertain for individual companies or governments to assume alone; sharing the risk helps ensure that both sectors can make a broader range of investments. Recycling money into projects proposed by companies that paid into the fund alleviates some of the economic burden on those firms when they qualify for funding to pursue emissions-reduction technologies. The challenge is not to avoid recycling funds, but to ensure that the recycled investments benefit the environment. A partnership approach to investment funds also gives governments a say in decisions on climate-related technologies within their jurisdictions.
Related Publications
Global Climate-Friendly Trade: Canada’s Chance to Clean Up
Canadian Outlook Long-Term Economic Forecast: 2010
Carbon Disclosure Project Report 2009: Canada 200
Freight Trucks and Climate Change Policy: Mitigating CO2 Emissions
Getting the Balance Right: The Oil Sands, Exporting and Sustainability Related Executive Networks
Leaders' Roundtable on Climate Change Adaptation
Centre for Clean Energy
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