Climate Crunch

Issue #12

➔ On Carney’s to-do list: carbon capture project and transition bonds
➔ Warren Buffett’s successor built the company’s energy empire
➔ Struggling cleantech stars, and a Climate Fiction Prize

Hot takes

➔ Canada’s EV policies are hurting farmers. Ottawa’s tariffs on Chinese EVs has had the “unintended consequence” of Beijing slapping levies on Canadian canola, lobsters, and peas, etc., agriculture members of the Canadian Federation of Independent Businesses’ wrote in a letter to three federal ministers. Canada’s $62 billion in total subsidies to EV firms has also not triggered an investment boom as those firms have paused their plans in Canada, CFIB pointed out. The group wants some of those funds redirected to small businesses.

➔ Did green power trigger Iberian blackouts? Some suggest “non-controllable” resources—i.e. solar and wind that can’t be controlled or scheduled on demand—were to blame. But it’s not like fossil-fuels grids can’t break down (Italy in 2003, anyone?). But intermittent generation poses a different set of problems. While authorities remain in the dark for now, the Spanish grid operator REE had warned in February that reliance on renewables could lead to grid instability, especially if the government closes its nuclear power plants by 2027. Could the simple answer be: keep the energy mix diversified?

➔ Warren Buffett’s successor is an energy empire builder. The Oracle of Omaha handpicked Edmontonian Greg Abel to succeed him at Berkshire Hathaway. As chairman of the company’s energy and other non-insurance businesses, Abel runs a conglomerate that’s among the largest operators of wind and solar energy in the U.S., electric utilities, and natural gas pipelines. While Berkshire Hathaway runs some of the dirtiest coal plants in the U.S.—coal power now accounts for only 22% of Berkshire’s power generation, compared to 71% in 2005.

➔ Ontario is fast-tracking critical minerals development. The new proposed rules will boost investment in local supply chains and reducing reliance on foreign imports would drive job creation, stimulate economic growth, and position Ontario as a leader in the green economy. The new rules also give the province wide powers to shield its strategic assets against “hostile foreign actors and regimes.” The move comes as the U.S. is moving at a frenzied pace to lock in critical minerals, including a deal with Ukraine, fast-tracking of supply chains, and plans to accelerate deep-sea mining.

CLIMATE POLICY

Carney’s Climate Corridors

Economy and trade tops the new federal government’s priority list, but there’s room to push through climate policies—especially “energy corridors,” that are seen as the path to an investment-led growth spurt.

Here are some high-profile climate files on the new government’s to-do list:

➔ Building a major carbon capture project in Alberta. How can a CCS project backed by Pathways Alliance—a consortium of oilsands firms looking to build a carbon capture project—get off the ground? Prime Minister Mark Carney said last week in Edmonton he is keen to see it built.

➔ Strengthening industrial carbon policy. The Conservatives wanted to repeal the federal carbon pricing for industrial emissions, but it stays for now. Last year, Myha Truong-Regan, RBC Climate Action Institute’s Head of Climate Research, co-wrote on how industrial carbon markets can be central to Canada’s efforts to accelerate energy transition.

➔ A Carbon Border Adjustment Mechanism. It was in the Liberal platform and could be Canada’s version of a climate-tariff—if it proceeds—helping climate-compliant Canadian companies compete with high-emitting foreign rivals. The Europeans may nod approvingly, but a Canadian CBAM will likely face strong pushback—and retaliation—from the U.S. and other trade partners.

➔ Carbon Contracts for Difference (CCfD). Carney is supportive of expanding the initiative, but the federal government is already dealing with a laundry list of other financial priorities.

➔ Climate risk disclosure. The idea was floated on the platform just as Canada’s provincial securities commissions suspended their work on making climate-related disclosure mandatory for public companies.

➔ Transition bonds. The Liberal platform suggests financing clean industrial and agriculture projects with $10 billion in bonds issued annually.

➔ Oil and Gas Emissions Cap. There might be tweaks after Carney suggested he would work with industry and provinces “on specific ways to get those reductions, as opposed to … having preset caps or preset restrictions on preset timelines.”

➔ For more, read John Stackhouse’s blog on Carney’s energy options in the age of Trump.

Climate treads, tech & science

➔ Li-Cycle is running out of road. The Toronto-based company’s woes persist with its CEO departing after a takeover deal with Swiss miner Glencore collapsed.

➔ Quebec won’t save Lion Electric Co. No white knight yet for the electric bus and truck maker that has struggled amid delays in subsidy and incentive programs in Canada and the U.S., and supply-chain disruptions.

➔ Nova Scotia-based Planetary Technologies won US$1 million XPrize. The ocean-based CO2 removal tech firm beat 1,300 rivals to win a slice of the US$100-million competition backed by Elon Musk. Mati Carbon, an American-Indian-African company, won the $50-million grand prize for its carbon-removal tech.

➔ Listen to Mike Kelland of Planetary Technologies, Jim Mann of UNDO who won US$5 million from XPrize, Dr. David Keith, a pioneering climate scientist and co-founder of Carbon Engineering, speak to RBC Disruptors hosts John Stackhouse and Sonia Sennik, on the innovation race to scale carbon removal technologies.

➔ Nunavut welcome solar power. A tiny community on the Arctic Circle will be able to ditch diesel generators—in the summers at least—once 2,500 solar panels are switched on soon. 

➔ Climate Fiction Prize. Boy meets girl amid climate change, and love in the time of wildfires are among the themes explored in the five novels short-listed in the first-ever £10,000 Climate Fiction Prize . The winner will be picked at the Hay Festival later this month in Wales.

The Institute In Action

➔ Many of Canada’s top Indigenous leaders came together for the RBC-sponsored 8th annual First Nations Major Projects Coalition conference, to see how we can better mobilize capital for Indigenous-partnered projects. RBC also published a report, Building Together , and hosted a private roundtable with 30 Indigenous leaders and CEO’s around building Canada’s economic resilience, and the central role of Indigenous partnerships and inclusion.

➔ Grow Ontario Food Summit brought together agriculture and food leaders from across Ontario. RBC Thought Leadership’s John Stackhouse and Lisa Ashton delivered the keynote address on Canada-U.S. trade relations and its impacts on agriculture and food, and highlighted key insights from our latest research report, Food First. On the team’s reading list: Just Earth: How a Fairer World Will Save the Planet by Tony Juniper; What’s Left: Three Paths Through the Planetary Crisis, by Malcolm Harris; Values: Building a Better World for All, by Mark Carney; Abundance, by Ezra Klein and Derek Thompson.