Ahead of the upcoming unveiling of Prime Minister Mark Carney’s climate competitiveness plan, Energy Minister Tim Hodgson provided some insights into what will be included in the budget set to be announced on Tuesday. Hodgson spoke on Wednesday before meetings with officials and fellow G7 environment and energy ministers.
Expectations were high among stakeholders in the environmental and clean technology sectors for Ottawa to release the strategy before the start of the two-day G7 meeting, scheduled to commence on Thursday in Toronto. While not directly referencing the climate strategy, Hodgson discussed three key approaches guiding the government’s actions.
One strategy involves strategically utilizing public funding and tax incentives to reduce risks and encourage investments in innovative projects, Hodgson explained. The objective, according to the minister, is to ensure the Canadian economy remains competitive and Canadian goods succeed in a low-carbon global environment.
Hodgson suggested that government funding could help de-risk and expand Canada’s growing carbon capture, storage, and removal sector. He highlighted the example of Arca, a Canadian company that recently secured a deal with Microsoft to extract carbon dioxide from the atmosphere, with support from NorthX Climate Tech, a Canadian organization backed by Natural Resources Canada.
Additionally, Hodgson emphasized Ottawa’s commitment to establishing a regulatory framework that offers industry certainty through consistent policies, expedited approval processes, and reliable permitting. The government is already moving forward with legislation to accelerate major resource projects.
The third aspect mentioned by the minister is the integration of artificial intelligence (AI) to enhance energy systems’ efficiency, speed, and resilience. Hodgson noted that AI is already reshaping energy production, distribution, and consumption by enabling real-time grid demand predictions, facilitating materials research for improved batteries, and optimizing renewable energy sources like wind farms.
Regarding the proposed emissions cap for industrial sectors, a senior government source indicated that the first two strategies – incentivizing clean technology investments and providing industry certainty – are pertinent to the upcoming climate competitiveness plan. However, Hodgson did not address the future of the emissions cap proposal in his remarks.
The budget announcement on November 4 coincides with a year since the government introduced draft regulations to impose emission limits on the oil and gas industry, a significant emitter in Canada. According to Louise Comeau, a former federal climate policy advisor, Hodgson’s statements suggest a preference for investing in carbon capture and storage over implementing an emissions cap.
In addition to promoting carbon capture technologies, Hodgson highlighted Ottawa’s initiatives in low-carbon electricity generation, such as nuclear plant extensions, small modular reactors, natural gas projects with carbon capture, and grid-scale battery storage integration. The Canadian Climate Institute’s analysis has indicated that Canada is unlikely to achieve its 2030 emission reduction targets, posing a challenge for the country’s climate goals.
Since assuming office, Prime Minister Carney has made decisions like cancelling the consumer carbon pricing scheme and postponing the electric vehicle mandate, leading to concerns about achieving emissions reductions targets. The government’s own projections show that Canada is falling short of its climate goals, highlighting the need for effective measures to address emissions challenges.
To address emission reductions in challenging sectors like heavy transportation, Hodgson mentioned the importance of clean hydrogen and sustainable biofuels. The Canadian Climate Institute’s analysis underscores the urgency for Canada to step up its efforts to meet its emission reduction targets and transition to a more sustainable future.