➔ Meet Coalie, the hard-hatted American mascot

➔ Ottawa’s auto strategy comes with a climate-action twist

➔ What should be the North Star for Canada’s proposed national electricity strategy?

Hot takes

➔ Canadian companies aren’t waiting for Ottawa’s signal to advance the U.S.’s mineral ambition. While the federal government is holding off signing any formal deals with Washington on critical minerals, Toronto-based Cyclic Material is investing a strategic US$82 million in a rare-earth recycling facility in South Carolina, after securing new funding from the Canada Growth Fund, among other investors. It’s a trend: Vancouver-based Lithium Americas is building a massive project in Nevada, while Trilogy Metals is developing a copper-zinc-gold district in Alaska—with the U.S. government taking the unprecedented step of buying small stakes in both recently. North America’s market and geographical gravitational pull would hopefully overcome political posturing.

➔ Climate Adaptation and Resilience (CA&R) could be the next frontier in climate investing. RBC Capital Markets’ report Private Markets Innovation in Climate Adaptation and Resilience highlights five areas where capital could make a difference: earth data, insurance solutions for businesses and society, wildfire and the grid, water, and the built environment. CA&R secured only US$65 billion in capital flows in 2023, compared to US$1.8 trillion in traditional mitigation investments such as renewables and energy storage. Climate Action Institute’s Clean Tech Lead Vivan Sorab believes while mitigation efforts’ address both current and long-term trends in emissions, their immediate impact tends to be muted; CA&R investment can potentially deliver more visible and quicker results in the form of less downtime and assets protected. The insurance costs are already mounting: 34 extreme-weather events triggered insured losses of US$1 billion or more in 2024—the second-highest number on record.

➔ “Coalie,” the hard-hatted American mascot, may struggle to revive coal This carbon-intensive lump is getting a makeover for the AI meme era as the U.S. government promotes coal as vital for the economy. Despite its critics, coal saw a resurgence last year: U.S. coal-fired electricity jumped 13% year-on-year in 2025, while natural gas—which is about 50% less emission-intensive than coal—fell 3.6%, according to the International Energy Agency’s latest electricity outlook. However, coal’s dominance is slipping elsewhere in what the IEA describes as an “uncharacteristic” shift: major consumers China and India saw a drop in coal power generation in 2025 for the first time in more than five decades. While coal is projected to remain the single largest source of global electricity through 2030, the IEA predicts declining consumption in China and the European Union. Even the U.S. is expected to see a drop in coal consumption by 2030, Coalie’s charms notwithstanding.

EV spring comes after winter

– By Farhad Panahov, Economist, RBC Climate Action Institute

Canada’s new strategy to boost EV sales has a twist: a cap of $50,000 for the total transaction value to be eligible for a subsidy. A more stringent rule—to boost mass market models—compared to a previous program that allowed purchases of more expensive trims.

Average price Canadians paid last year for a new vehicle was $55,000, and nearly $70,000 for an EV. And while each $1,000 could add 11% to the EV demand, based on Canadian Climate Institute’s analysis, only 13 of the 163 battery-electric models available in Canada are priced below that level, according to the Canadian Automobile Association. Another 10, priced at around $55,000, are potential candidates to be marked down to claim the subsidy.

Meanwhile, the 49,000-quota for Chinese EVs, should add further impetus to vehicle transition. Crucially, while these vehicles are excluded from the incentive program, they could enter the market at the lower end of the price range, as models like BYD and Geely made up about a quarter of global EV sales last year, are sold for $35,000 in China—roughly half of what Canadians paid for EVs in 2025.

But North America is notoriously in love with large cars, such as trucks and SUVs, a segment where Chinese EVs might not have the same price leverage. And don’t forget the 6.1% Canadian tariff that still applies on Chinese cars, plus shipping costs. Chinese EVs, facing less intense competition than at home, could also seek higher markups for their models in Canada.

The success of the Canadian strategy could rest as much on consumer trust as it does on the final price tag. Nearly half of Canadians are still not in the EV camp based on recent poll from Clean Energy Canada; and only one in 10 would buy a Chinese EV with another two in the “maybe” mindset.

The previous federal program of $2.7 billion helped put about half a million EVs on Canadian roads. The fresh round of subsidies, with a lower $2.3-billion allocation, could add 840,000 new EVs, the government projects.

The new auto strategy could help transport—a stalwart sector for emission cuts over the past five years (see our Climate Action report)—deliver the following in climate action:

• EV mandates out, standards in. Abolishing the much contested EV sales mandates in favour of emissions standards will aim to achieve 75% EV sales share by 2035.

• Emissions standards. Emissions standard are a common practice for automakers and allows for higher compliance flexibility compared to sales mandate while still incentivizing a pivot towards emissions-free vehicles. Since 2011 alone, emissions per mile from passenger cars and light trucks have declined 50% and 30%, respectively.

• U.S.-Canada policy is diverging. Historically, Canada aligned its emissions standards with the U.S. It’s different now as Canadian policy diverges from the U.S. Environmental Protection Agency (EPA) push to roll-back Biden-era standards (that would have halved emissions per mile by 2032).

• …As is Detroit 3’s strategy. The auto policy supports another $3 billion investment in the EV sector “positioning Canada as a place where the vehicles of the future are built.” However, the Detroit Three—Ford Motors, General Motors and Stellantis—are scaling back EV roll-out plans that has cost them around US$50 billion, amid tepid customer demand.

• Networks are getting a supercharge. Ottawa is committing $1.5 billion to expand the charging network, adding to the $1.1 billion in funding, which so far has helped add 7,000 installations. Canada’s public charging network is already sufficient for current levels of EV adoption, at ratio of ~21 EVs per charging port, but will need to significantly expand as adoption accelerates.

Also check out: RBC’s Electric Car Cost Calculator

Climate Conversations

A scan of notables and notable developments

• Lisa Ashton, Interim Head of the institute, is in Ottawa for Agriculture Day festivities, a timely opportunity to share insights from Seeding Scale, our new research on the growth capital pipeline in the agri-food sector. Lisa heard that the innovation pipeline needs focused improvements as well and universities and industry are working collaboratively to devise a clear vision for the sector ahead of the agriculture ministers meeting in July. 

• As the U.S. convened allies, including Canada, on critical minerals last week, John Stackhouse shared a few thoughts. His first point: even the U.S. knows it can’t go-it alone on mining.

• Canadian Climate Institute’s Rick Smith finds another climate angle on a recent Canadian court ruling that reinforced Ottawa’s right to list plastics as “toxic”: “…polluting industries and some provinces have been spinning a yarn that the federal government’s Clean Electricity Regulations, also enacted under CEPA, are an illegal over-reach. As of today, those arguments look like the thinnest of gruel.” Read the ruling.

• As Canada develops a national electricity strategy, Polaris Strategy’s Dan Woynillowicz has some thoughts on what the strategy should set as its North Star: Double energy productivity, double production, and double the share of final energy demand met by clean electricity.

• Nugget from a House of Commons report on climate change, from Janis Sarra of the Canada Climate Law Initiative, on the importance of Canadian taxonomy: “An estimated $115 billion annually is required for Canada’s low-carbon transition, and a  science-based taxonomy will create the market integrity, clarity and interoperability, globally, necessary to accelerate global capital to come and invest in Canada’s businesses.”

➔ Winter Olympics: running out of slope?

➔ Chinese EVs: low emissions, high drama

➔ Notes from Davos: The looming fight for grid power

Hot takes

➔ Only four locations would be able to host Winter Olympics by 2050 if current climate trajectory persists. The 2026 Winter Olympicorganizers are powering venues in Milan and Cortina d’Ampezzo with certified renewable electricity and sustainable sourcing, even as the February event is expected to emit around 930,000 tons of CO2. More crucially, snow management remain an issue as the Alpine region has seen a 25% drop in snowfall since 1980. It’s a problem that’s unlikely to go away: a new University of Waterloo study shows that of the 92 potential Winter Olympic host locations, only 52 would remain-climate reliable for the winter edition and 22 for the Paralympics in the future, if current climate policies persist. Without snowmaking technology—only four will reliably be able to host the event by 2050.

➔ China-made EVs could lower Canadian transport emissions—but at a political cost. The decision to allow Chinese EVs in return for Canadian agri-food access comes as Canadian federal and provincial governments have rolled back subsidies. EVs have done the heavy work of lowering Canda’s emissions over the past six years, with transport emissions down 6% compared to 2019, according to Climate Action 2026 report. Cheaper EVs could help maintain the momentum. But rumblings from Washington suggest the deal could complicate CUSMA negotiations.

➔ Canada’s agri-food processors are not waiting for policy perfection. In Atlantic Canada, processors are investing to extract more output from less energy and water, while farmers see emission cuts as a way to boost productivity, observed our Interim Head Lisa Ashton, during her trip to Prince Edward Island to share Climate Action 2026 report’s findings. PEI farmers are leading the way with their 2040 Pathways plan to reduce GHG emissions, accelerate on-farm climate adaptation actions, and boost economic outputs and trade by 2040. It’s an example of how farmers can organize and design a pragmatic plan to drive environmental and economic outcomes for their businesses.

Warming up to the north

Nowhere has climate change, resources and geopolitics collided more quickly. U.S. interest in the Arctic island of Greenland and Russian ships patrolling the region should compel Canada to cover—and bolster—its northern bases.

Climate change is the trigger for interest in the Arctic: Washington’s sudden interest in the “piece of ice” is sparked by a climate-change induced thaw that’s opening up the region to activity— benign or otherwise. The Arctic has just ended a year of record heat and shrunken sea ice as northern latitudes become rainier and less ice-bound due to the climate crisis, scientists say. That’s also accelerated a race for control by the U.S., Russia and “near-Arctic state” China. Canada needs to catch up.

While the Arctic’s location is strategic—so are its resources. The northern region contains significant fossil fuel reserves—an estimated 13% (90 billion barrels) of the world’s undiscovered conventional oil resources and 30% of its undiscovered conventional natural gas resources. In addition it also contains rare earths, nickel, cobalt, graphite and other elements that are vital for energy transition. While it’s unclear whether the region can meaningfully meet rising global energy demand at cost and at scale any time soon, the faster the region warms, the more attractive and accessible its resources would become.

Sovereignty and strategic competition: Canada’s Arctic sovereignty is shaped by competing interpretations under the United Nations Convention on the Law of the Sea, with Canada ratifying the treaty and defining extended continental shelf claims, while the United States has signed but not ratified it.

The North American Aerospace Defense Command (NORAD) detected and tracked Russian military aircraft operating in international airspace near Alaska in 2025, while China and Russia launched a joint patrol in 2024.

Canada’s calculus: Canada makes up 28% of the Arctic land area, second only to Russia’s 67% Arctic landmass. However, the Canadian Arctic accounts for just under 2% of the Arctic region’s economy, and negligible population.

The Major Project Office’s focus on developing Churchill Port at the mouth of Hudson Bay, the Red Chris Mine Expansion and the North Coast Transmissions Line and Ksi Lisim LNG, along with a separate $1-billion investment to strengthen the North’s trade and transportation infrastructure, suggests Canada is joining the Arctic race. Getting these proposals to completion would be the ultimate test. The projects—and more defence spending—will be vital to allay U.S. concerns about the vulnerability of the Canadian Arctic.  But they also need to be respectful of climate and Indigenous issues.

Notes from Davos: The looming fight for grid power

By John Stackhouse, Senior Vice President, Office of the CEO, RBC

John was at Davos last week to make sense of the new world order and a global economy that’s resembling more a bartering and babbling souk than a tightly wired marketplace. Among his observations, two directly impact energy and climate: the competing priorities for grid power, and the continued rise of renewable energy—against all odds. Read the excerpts:

A/C or AI: It’s gridlock
The next energy crisis won’t be fuelled by oil or gas; it will be strained by the world’s faltering electricity grids. Electricity demand globally is rising three times faster than total energy demand, driven by air conditioning and electric vehicles, as well as data centres.

While 90% of Americans have access to air conditioning, the number is 20% in India, 18% in Indonesia and 5% in Nigeria—each with some of the world’s fastest-growing cities. Add to that the growing demand for EVs, which now account for a quarter of global car sales, up from 5% in just five years.

Fatih Birol, head of the International Energy Agency, said the world will need 10,000 terra-watts of new electricity in the next decade, which is the equivalent of adding another U.S., Canada, Europe and Japan. Without any innovation breakthroughs, that would require 70% more copper, and a vast expansion of steel and critical minerals processing.

A renewable lease on energy: There were two vastly telling moments in Davos’s main Congress Hall, one speaking to scarcity, the other to abundance. Donald Trump went off script to lambaste renewable energy, especially wind which he said was for “losers.”

A day later, Elon Musk used the same stage to profess a glorious future for renewables, especially solar which he said could power all of America if he had his way. Just give him a parcel of land, 160×160 kilometres, and tariff-free solar panels! Away from North America, renewables are still the driver of energy growth and have shifted from a “transition” source to a default for new supply in many markets. Europe reached roughly 50% renewable generation in 2024.

In other fast-growing markets, renewables are increasingly seen as energy additions, not just replacements for fossil fuels. Falling battery costs (solar is down roughly 80% in India) and longer lifetimes (30–35 years) have helped shift economics from a simple cost per unit to a cost per lifecycle.

Read John’s full Davos commentary here.

The Institute in Action

• Interim Head Lisa Ashton recently hosted a roundtable in Edmonton with industry leaders and investors on growth capital in Canada’s agri-food sector to dive into the investment challenges that were highlighted in The Next Generation of Growth.

• Energy Lead Shaz Merwat moderated a panel at the BC Natural Resources Forum at Prince George, focused on Canada’s future gas and LNG competitiveness with senior executives from industry, Indigenous organizations.

➔ How’s Canada doing on fighting climate change? It’s complicated

➔ Is the world falling out of love with Teslas?

➔ Canada’s methane rules get pragmatic

Hot takes

➔ Can the IPCC survive its breakup with Washington? The UN-backed Intergovernmental Panel for Climate Change is in a “keep calm-and carry-on” mode after the U.S. decided to pull out, noting that it continues to work on its next cycle of reports, starting in 2027. The IPCC reports are extremely influential, and many countries benchmark themselves to its authoritative data. It’s critical for IPCC to persist, but one of the criticisms of the body is its focus on the science and the tech, that underplays the economics and politics of energy transition. While the White House labelled the IPCC (and the 65 other UN organizations the U.S. exited) as a “waste” of American taxpayer money, others argue that the IPCC has been instrumental in focusing global policymakers on one of the world’s most critical challenges. Science, they hope, will prevail.

➔ New methane rules mark a pragmatic evolution in Canadian climate policy. The new rules—covering onshore oil and gas operations and large landfills with requirements beginning in 2028—pair high ambition with greater regulatory flexibility. The most consequential change is optionality, says Vivan Sorab, our Clean Tech Lead. Government estimates suggest that the new rules could deliver cumulative reductions of 304 Mt CO2e from 2028 to 2040. Operators can follow a regulator-prescribed inspection pathway, subject to regulatory verification and enforcement, or demonstrate compliance through their own processes, backed by monitoring and verification. The removal of the five-year expiry on federal-provincial equivalency agreements further strengthens the framework by improving long-term certainty for provinces and the industry. The rules are reinforced by a $16-million federal investment in methane monitoring and verification tech. Given ongoing uncertainty on methane emission volumes, the focus on measurement could prove to be crucial.

➔ Is the world moving past Elon Musk’s Tesla? It’s hard to say whether the billionaire’s politics put off many, but it could certainly be a factor. Globally, EV cars sales hit a record 21.7 million last year, Bloomberg New Energy Finance estimates, even as Tesla sales contracted 9% to 1.64 million. BNEF forecast 24.3 million EV car sales in 2026—a slower pace of growth than previous years—as falling government incentives are offset by falling battery prices, a bump in commercial vehicle sales and the slow ramp up of robotaxis.

What it takes to write a climate action report

Behind the scenes, the Climate Action Institute team spent the past six months on what’s emerging as a benchmark of Canadian climate action: our Climate Action report, now in its third year.

While there’s been some retreat on climate policies, there’s plenty of action too, on climate. Our report title, Retreat, reset or renew?, suggests it’s all of the above.

The report is based on calculations, aggregations and estimates using a variety of measures from across the economy and society. We selected those metrics to help paint a picture of where we’re at, how far we’ve come and some of the distance ahead. The report, and its measurement tools, are not designed to be a precise diagnostic of any one sector, policy or technology—it’s more like a mirror in which we can see Canada’s successes and shortcomings.

The report was also informed by our team attending over 100 events, and visiting farms, facilities and offices, cross-country, where we listened, spoke and compared notes with peers, experts and skeptics. Over 2,000 Canadian consumers and 150 business executives participated in our two annual surveys. Peer groups dove into the methodologies and several external experts stress-tested our analysis. For our case studies, several companies agreed to heart-to-hearts on the challenges of putting their boardroom promises into action on their factory or office floor. The result is a snapshot of Canada’s climate journey: some milestones achieved, a few dead-ends, and strapping up for the next curve round the bend.

Read the full report here, but here’s a peek at a handful of findings:

• Emissions progress is mixed: National emissions are down 7% since 2019, with reductions in electricity (-27%), buildings (-19%), and oil/gas (-19%) sectors. However, new projects like the TMX pipeline expansion and LNG Canada Phase 1 are projected to increase oil/gas emissions.

• There’s a strong pipeline of climate funding. Climate capital flows of around $20 billion annually continue to support the low-carbon sector.

• …And there’s more on the way. Nearly $100 billion worth of incentives for clean-tech and climate programs and initiatives budgeted for deployment between now and 2035—although funding remains uncertain given policy shifts.

• Climate Action Barometer declined: the Institute’s flagship index fell for the first time in six years amid policy uncertainty.

• Canadians still care about climate: Cost of living issues, healthcare access and strengthening the economy were front and centre, but 33% still consider climate change as a top-three priority for policymakers.

Five insights from the frontlines of climate policy

Don’t fixate on 2030 Canada’s emissions targets. That’s the message from Environment and Climate Change Canada (ECCC) in its latest progress report on the country’s 2030 emissions reduction plan, released days before the Christmas break. Focusing on 2030 targets “at all costs” risks undermining the long-haul climate fight, the report notes. “Focusing narrowly on short‑term reductions could also divert attention from the deeper, systemic transformations needed to reach net‑zero by 2050.”

Pushing heavy industry and oil and gas—two sectors that are deeply tied to competitiveness, investment flows, and trade— could “trigger capital flight, carbon leakage, and a loss of international competitiveness, especially if compliance costs outpace those faced by peer economies.”

Economist Farhad Panahov pored through the data trove to glean 5 valuable insights:

• Emission declines are impressive, given population growth. By 2023, Canada’s emissions declined 8.5% from 2005 levels. More impressively, emissions intensity was down 35% based on the economic size and 29% based on population (which has been growing at a fast clip over the past two decades).

• We need four times the pandemic era emissions declines. Canada’s emissions would need to drop fourfold compared to the 2020-COVID-era magnitude to reach its 2030 targets.

• Most sectors are pulling their weight. Electricity, transportation, heavy industry and buildings sectors are projected to deliver a combined 68 MtCO2e emissions reductions by 2030, through several measures including electric vehicle and heat pump adoption, fuel switching and electrification in heavy industry, and renewable technology deployment.

• Fossil fuels are the outliers. Oil and gas sector, however, has a diverging projection, ranging from either flat to 33 MtCO2e emissions with enhanced methane regulations, hydrogen substitution, and deployment of solvent-based extraction technologies.

• What’s going to move the needle? The controversial, and now shelved, Oil and Gas Emissions Cap (excluded from the projections) would have only added 3MtCO2e in emissions reduction. Meanwhile, agriculture practices along with nitrogen management could contribute up to 12 MtCO2e in emissions reduction.

The Institute in Action

• John Stackhouse will be on the ground in Davos next week. Watch out for his analysis on what he saw, shared and heard at the world’s most influential forum for discussion and debate on the global economy.

• Lisa Ashton, the Institute’s Interim Head, was the keynote speaker on how agri-food can lead a new era of economic development at the Saskatchewan Crops Forum this week.

• Lisa also hosted a roundtable in Saskatoon with industry leaders and investors on growth capital in Canada’s agri-food sector to dive into the investment challenges that were highlighted in the Next Generation of Growth.

• Shaz Merwat, Director of Energy Policy, is moderating a panel on Canada and B.C.’s Competitive Edge as a Global Gas and LNG Producer on Jan. 21 at the B.C. Natural Resources Forum.

On our binge list

• The Elements of Power: A Story of War, Technology and the Dirtiest Supply Chain on Earth by Nicolas Niarchos, on what it takes to usher in the battery era.

• TV series Landman, starring Billy Bob Thornton, that shows wildcat drilling is alive and well in Texas—often powered by wind turbines.

• Disruptors podcast: Alberta’s Next Energy Mix. John Stackhouse speaks with Premier Danielle Smith about the future of power in Alberta.

• Things Are Never So Bad That They Can’t Get Worse (2022), by William Neuman, on the steady collapse of Venezuela over the years.