Canadian Manufacturing

RBC report says $2 trillion needed to reach 2050 target of net zero economy

The report from RBC Economics estimates governments, businesses and communities would have to spend at least $60 billion annually to cut emissions by 75 per cent of current levels.

October 20, 2021  The Canadian Press

A new report says the country will need roughly $2 trillion to put the economy on a path to net-zero emissions in 30 years, including government spending on things like skills training and backstops to prod the necessary investments.

The report from RBC Economics estimates governments, businesses and communities would have to spend at least $60 billion annually to cut emissions by 75 per cent of current levels and reach the 2050 target of net zero.

Money will be needed to build out the electricity system to handle the expected rise in electric vehicles, which will also need some subsidies to get them off assembly lines and onto Canadian roads, the report says.

There will also have to be investment in retrofitting old buildings faster than current federal plans predict, retraining 100,000 workers with new skills for fast-growing green sectors, and skills training programs to add 200,000 more into the labour force by 2030.

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The numbers add up to a massive effort to meet the Trudeau Liberals’ short-term and long-term promises on climate change, but one the Royal Bank report estimates is possible if the government eyes a few key areas.

“It’s not about ideology, it’s about math. And we’ve done the math and said, ‘OK, here is how we can get those numbers down towards zero, and this is what it is going to cost,'” said John Stackhouse, senior vice-president in the office of the CEO at Royal Bank.

“We think that it’s doable. So let’s focus in a very kind of business-minded way on the key drivers of emissions change.”

Parliament approved legislation last spring that required the country to eliminate as many greenhouse gas emissions as possible, and capture whatever is left to get to net zero by 2050.

The Liberals haven’t outlined the course to the long-term goal, and won’t before a United Nations climate change conference, known as COP26, looming at the end of the month in Glasgow, Scotland.

The government has increased its emissions-reduction targets for 2030 as required by the climate agreement.

Internal government documents suggest the Liberals are acutely aware of the cost to shift the country to net zero and have looked to push banks and other private sector investors to help with funding and financing.

But the report also warns of moving too fast, too soon. If there was a sudden and severe decline in oil and gas production, government revenues would fall by about $8 billion annually, which the report says could hamper, not help, the transition.