Accelerating our Transition to a Green Economy

The COVID-19 pandemic has laid waste to the Canadian economy. 2020 is expected to be the largest and most abrupt economic contraction since the Great Depression:

  • Unemployment rose to 13.7% in May, its highest level on record
  • In March and April, 5.5 million Canadians either lost their jobs or saw their hours significantly scaled back
  • Gross Domestic Product (GDP) is expected to contract by 6.8% [1]

While the COVID-19 curve has continued to flatten, we are still in the grips of a pandemic with no vaccine or effective treatment. At this time, the government is still in emergency mode, and the COVID-19 Economic Response Plan is pumping more than $212 billion in direct support, and nearly 14% of GDP in total support into the economy.[2]

The cautious expectation is that, once an effective treatment or a vaccine for COVID-19 becomes available, the economy can enter a quick re-building and recovery phase. In the months to come, various levels of government will be seeking to kick-start Canada’s economic recovery and create jobs. To do so, Canada will need a major stimulus plan - with levels of government investment in the economy not seen since WWII - to help repair the economic and social damage caused by the COVID-19 pandemic.

Whenever Canada is ready to begin to invest in economic recovery, that recovery needs to be Green. That is to say, government stimulus investments need to support and accelerate Canada’s green transition to a net-zero economy.


As we remain in the emergency phase of the COVID-19 pandemic, various business sectors have been calling upon the government for a bailout to counteract financial losses provoked by the crisis. Bailouts of carbon-intensive sectors such as fossil fuel, as well as airlines, are on the table or have already begun. As such, it is crucial for the government to remember that its focus must be on protecting Canadians, both in respect of their emergency needs and their future stake in the eventual recovery. Any public funds utilised to bail out a sector or a private corporation must be justified and conditioned on that basis.

Any bailout to carbon-intensive industries such as oil and gas and the airline industry should also be conditioned upon these industries agreeing to contribute their fair share to meeting national targets of cutting climate-changing emissions by 60% from 2005 levels by 2030 and reaching net-zero by 2050. It should also be conditioned on publishing a detailed implementation plan prior to the release of funds, with clear sanctions for non-compliance.


Climate change remains an existential threat to human life. The planet’s average surface temperature has risen about 1.0°C since the late 19th century. That increase alone has already had a major impact on our environment, including warming oceans, shrinking ice sheets, rising sea levels, extreme weather events (hurricanes, intense rainfall) and ocean acidification. [3] 

This global warming of the earth’s temperature is the result of human expansion of the greenhouse effect through the emission of greenhouse gases (GHGs)[4]. And while the global economic slowdown caused by the COVID-19 pandemic has resulted in temporary reductions in GHG emissions - globally, GHG emissions might fall by 8% in 2020[5] - emissions had previously shown no signs of peaking, and carbon dioxide levels in the atmosphere have risen strongly to a new high this year.[6] 

Without additional efforts, growth in GHG emissions is expected to persist. In the absence of policies, global warming could reach 4.1°C – 4.8°C above pre-industrial by the end of the century.[7] 

The United Nations International Panel on Climate Change (IPCC) has said: 

  • We must limit global warming to 1.5°C above pre-industrial levels to avoid the worst impacts 
  • Global GHG emissions needed to begin to decrease by 2020 
  • Global GHG emissions must be 55 % lower than 2017 by 2030 

The UN Environment Programme estimates that that global GHG emissions must fall by 7.6% every year from 2020 to 2030 to keep temperature increases to less than 1.5°C.[8] Even if every country meets its current commitment, the planet will still be on track for a 3.2°C temperature increase by 2100. Nationally Determined Contributions were supposed to have been increased in 2020 at COP26 to hold global warming to 1.5°C. However, COP26 has been postponed to 2021, and Canada has retained its plan is to cut GHGs by 30% below 2005 emission levels by 2030.[9] That is simply not good enough. 

Canadians have consistently said that 1) we do not want to go back to the way things were, and 2) we must set and meet our agreed international contributions to fight the climate emergency. The Post-Pandemic Green Recovery Plan, proposed below, offers the chance of a lifetime for Canada to be a global leader: fulfilling our GHG emission reduction responsibilities while building a strong economy and a just and sustainable future.


The Green Party of Canada has called for a 60% reduction in emissions by 2030 as compared to 2005 levels. [10] The Green Party has also committed to ensuring we reduce Canadian emissions in a way that is consistent with the global carbon budget remaining to avoid warming beyond 1.5°C. Canada can do this through a Green Recovery Plan that:

Each of these is examined in more detail below.

1. Carbon Tax and Rebate 

A carbon tax is the most effective way to reduce GHG emissions.

The jury is in and the consensus is clear: carbon taxes are the most affordable and effective way to reduce GHG emissions within the timeframe set out by the IPCC[11] and should be a central part of any climate plan.

Carbon taxes are taxes 1) levied on coal, oil products, and natural gas in proportion to their carbon content and 2) collected from fuel suppliers. In Canada, this carbon tax applies on 21 types of fuel delivered, transferred, used, produced, imported or brought into certain provinces which have not implemented their own carbon pollution pricing system that meets the federal benchmark. It also applies on combustible waste that is burned in a listed province for the purpose of producing heat or energy. [12]

Some of the key benefits of a carbon tax are that it is:

The most cost-effective – Flexibility is what makes a carbon tax the lowest cost way to reduce emissions. A price on carbon lets people choose how to respond. Other policies would require the government to regulate or subsidize economic activity resulting in inefficiency and higher costs.[13]

Simple - Carbon taxes can be added onto existing fuel taxes and royalty systems, which most countries already collect. The administrative complexity of other systems makes them less desirable to developing nations that lack the government structures needed to support them.[14]

Transparent - A complicated program leads to unintended consequences, often in the form of effective lobbying for exemptions by special interest groups.[15] 

Catalytic - A carbon tax creates long-term incentives for the innovation of low-emissions technologies. 

Flexible – Carbon taxes avoid regulations that require specific actions or outcomes from specific firms or groups, which can be harmful because they may fail to take into account different abilities to achieve these outcomes.[16] 

Affordable – Carbon pricing generates revenues that can be returned to Canadians, ensuring they can afford the policy and any actions to reduce emissions. Under the current federal carbon tax and rebate, a family of 4 in Ontario, for example, receives a rebate of $448 in 2020, a figure that will rise as the carbon tax increases.[17] 

A price on carbon will cut carbon pollution across Canada by 50 to 60 million tonnes in 2022,[18] once all provinces and territories have systems that meet the federal standard,[19] the largest reduction of any climate policy applied. The Green Party of Canada has committed to increasing the carbon tax at increments of $10 per tonne annual increments. 

The Carbon Tax is Working

British Colombia: BC’s provincial carbon tax was implemented in 2008. Even with a carbon price of $30/tonne, emissions have declined by 5% to 15% on average, relative to what they otherwise would have been without carbon pricing.[20] Rather than slowing down economic growth, these emissions reductions coincided with a period in which BC was the fastest growing economy in Canada. 

Sweden: Sweden has a carbon tax of $163/tonne on a sub-segment of their economy i.e. transport. Analysis suggests the tax reduced emissions by 25% relative to not having a tax,[21], while the Swedish economy has also grown by 75% during that period.[22]. 

Other Examples: There are 14 other countries with carbon tax systems. The World Bank has a useful dashboard that includes details on national and international carbon pricing schemes around the world.[23]. 

2. Carbon Border Mechanisms: A Powerful New Tool to Reduce GHGs


In the fight against the climate emergency, no country is an island unto itself, and the best homegrown strategies can be undermined by the inaction of other states. So, while each country is responsible for setting its own strategies for reducing its GHG emissions, efforts of certain countries to go climate-neutral risk being undermined by carbon leakage: when companies transfer production to countries that are less strict about emissions. [24] In such a case, global emissions would not be reduced. A Carbon Border Adjustment (CBA) is a smart and very important part of the solution to this problem and could replace the current output-based pricing system. 

CBA puts a carbon price on the imports of certain goods from countries that have weak emission reduction policies and practices, or that have policies below acceptable baselines. 

A CBA would have several advantages: 

  • Protects Canadian workers and businesses from competition from foreign competitors that are producing in a less clean way that we are in Canada 
  • Incentivises other countries to effectively price their own carbon. It encourages foreign countries to adopt their own carbon fee as they would prefer to keep those revenues than allow Canada to collect them 
  • Enhances the competitiveness of firms that are more energy-efficient than their global competitors and, conversely, prevents the carbon fee from putting Canadian businesses at a competitive disadvantage in global markets. 
  • Helps prevent the relocation of industrial production – and thus GHG emissions – to where climate policies are weaker [25] 

The implementation of a CBA is under serious consideration internationally, most notably by the European Union. The EU Commission has already completed two consultations on its Carbon Border Adjustment Mechanism (CBAM) with the intention of presenting a proposal for a CBAM by the summer of 2021.[26]  The EU is the world’s second largest economy and the implementation of a CBAM would have major implications on world trade and GHG reduction. Given the EU’s ambition of carbon-neutrality by 2050, an EU CBAM will place significant pressure on its trading partners to implement their own adequate carbon pricing policies. 

Canada should plan to implement its own CBA as soon as possible. Given the relative size of our economy, a Carbon Border Adjustment could well be the single most impactful action Canada could take to incentivise other countries to adopt strong emissions reduction policies. [27] In the fight against the climate emergency, Canada should always be seeking to punch above its weight and show leadership in international efforts to reduce global GHG emissions. Not only would a CBA allow us to access the financial benefits that come with a CBA, but it would also signal a strong intention to assume a leadership role in the global fight against the climate emergency. 

3. Major Green Investments

Retrofitting Buildings: A Perfect fit for the Climate and the Economy 

Buildings account for up to 14% of GHG emissions in Canada[28]. The Government of Canada Expert Panel on Sustainable Finance noted that Canadian buildings are more energy-intensive than those of other developed countries with similar climates. In fact, there is consensus that Canada’s Nationally Determined Contributions can only be reached through deep retrofits that reduce the emissions of the millions of square feet of existing institutional, commercial, and residential buildings across the country.[29] 

Deep retrofits, as compared to less intensive ones, involve an extensive overhaul of building systems that save up to 60 percent in energy costs. They generally include such measures as reconfiguring interiors, replacing roofs, adding or rearranging windows, and replacing heating, ventilation and air-conditioning systems with a renewable technology.[30] 

Deep retrofit activities are one of the most economical means to improve Canada’s carbon footprint and climate resiliency. There are few activities that hold so much potential for reducing Canada’s GHG emissions, while creating jobs and boosting our economy, as building retrofits. Despite the compelling environmental and economic business case for deep retrofits, the Canadian retrofit market is not robust. Industry reports underinvestment in the retrofit of Canada’s existing building stock to drive energy and GHG reductions.[31] 

For Canada’s private retrofit market to develop more rapidly, there are calls for the federal government to create an ambitious and clear framework for increasing energy and emissions performance. [32] The Canada Green Building Council has produced a series of recommendations that would see the development of a strong retrofit economy where the market also becomes a key partner in transforming Canada’s built environment. [33] 

Canada has a chance to leap ahead in this area and to reap the environmental advantages and the gains in international competitiveness a retrofit economy will bring. 

Sparking our Economy through a National Electricity Grid 

As we transition out of the pandemic and towards recovery, various levels of government will be seeking to make investments in the economy capable of reviving it as quickly and sustainably as possible. At the same time, Canada has set the goal to have 90 percent of Canada’s electricity coming from non-emitting sources by 2030. In Reimagining our Future, the Green Party of Canada has gone further and called for ensuring 100 percent of Canadian electricity is from renewable sources by 2030. [34] Significantly expanding Canada’s non-emitting electricity grid presents an opportunity to meet both goals. 

A national non-emitting electricity grid would: 

  • Be a productivity-enhancing infrastructure project 
  • Provide much-needed stimulus to help Canada’s economy recover from the COVID-19 pandemic 
  • Help Canada to meet its target of net-zero GHG emissions by 2050 
  • Support increased use of electricity in transportation, buildings, and industry in a carbon-neutral way 

Federal, provincial, and territorial governments have committed to work together to help build new and enhanced transmission lines between and within provinces and territories.[35] As we seek to jumpstart the economy, there may be no better opportunity than the coming months for provincial, territorial and federal governments to invest in a national electrical grid strategy that would see the creation of interprovincial power lines to optimise our electricity system. This would include building connections between BC and Alberta, eastern Manitoba, Saskatchewan and western Ontario, upgrading connections between New Brunswick and Nova Scotia, and enabling renewable electricity to flow across provincial and territorial boundaries. [36] 

A national non-emitting electricity grid, is an infrastructure investment that would boost long-run economic growth, enhance social wellbeing, and increase resilience, particularly in response to risks from climate change. [37] 

Renewing our Economy with Investments in Cleantech 

Cleantech is the sector of the economy focused on developing green innovations such as renewable energy systems, biochemicals, or emission-free vehicles. Clean energy has been described as the biggest economic opportunity of our lifetime.[38] 

In the Cleantech sector, clean energy investment is attractive in both the short and the long run: 

  • Clean energy will create more jobs than those lost in fossil fuels. 
  • Clean energy jobs are widely available to workers without college degrees. In the U.S. a clean energy job can equal an 8%-19% increase in income, and 45% of all workers in clean energy production have only a high school diploma, while still receiving higher wages than similarly educated peers in other industries.[39] 
  • Renewable energy generates more jobs in the short run, when jobs are scarce, such as in a recession.[40] Every $1m in spending in renewables infrastructure generates 7.49 full-time jobs vs. the 2.65 jobs from investment in fossil fuels. [41] 

Canada still has the opportunity to take a substantial share of the Cleantech sector, which is estimated to be more than US$3-trillion/year globally by 2030.[42] We have some important advantages, as Canada is home to one of the world’s cleanest electricity grids, has 12 of the 2019 Cleantech 100 companies[43] and has a highly-skilled engineering and IT workforce – including the skilled workers in our traditional energy sector - that can fully leverage the promise of the Cleantech economy. There is no better time to ramp up our investments in R & D in this sector. 

The renewable energy sector holds tremendous promise in helping to facilitate a just transition for workers in the fossil-fuel sector in Canada. We must be particularly sensitive to the needs of workers in regions that are still highly dependent on extractive industries for a significant percentage of their budget. Western Canadian Select crude oil has been selling for historic lows since demand plummeted during the pandemic, and only a gradual increase in crude oil prices is expected through all of 2020.[44] Provinces like Alberta, Saskatchewan and Newfoundland have been left dangerously exposed the volatility of global energy markets which they are unable to control, and are in desperate need of economic diversification. If we invest wisely, Alberta and Saskatchewan can leverage their energy sector expertise to capitalize on a variety of new opportunities in markets like geothermal, lithium and hydrogen among many others.[45] 

Our commitment must be to leave communities and livelihoods whole as we move away from fossil-fuels. Investing public funds in a sector that holds the possibility of high-paying jobs that can quickly be taken up by oil and gas workers, using their existing skills, could be key to avoiding mass displacement. 

Capturing the Promise of Carbon Capture 

Carbon Pricing creates powerful long-term incentives for the innovation of low-emissions technologies. One of the areas of low-emissions technology that is demonstrating a great deal of promise is Carbon Capture. 

Carbon Capture includes two forms of technologies [46]: 

  • Carbon Capture and Storage (CCS): CCS stops carbon dioxide from entering the atmosphere, often by "filtering out" the carbon dioxide en route to the smokestack of a facility such as a power plant or factory.  
  • Direct Air Capture (DAC): DAC removes carbon dioxide that is already in the air. 

To date, carbon capture is not cost-effective when compared to other climate solutions available to help us reach our GHG targets, such as wind and solar energy. While onshore wind and utility-scale solar projects cost under US$30/ tonne of carbon, CCS is US$20-150/tonne (depending on the end-use) and DAC is still at US$250/tonne. However, CCS and DAC will be essential tools in addressing hard-to-abate emissions like those from heavy industry and aviation. They could also help us achieve net-negative emissions that will become increasingly important to ensure we stay within our carbon budget. These carbon removal tools are also very complimentary to carbon tax policy. As the cost per tonne of CCS and DAC continues to drop, and the cost of the carbon tax rises, CCS and DAC become more attractive. CCS and DAC prices will continue to decline as the technologies mature.[49] Both CCS and DAC technology could see a massive expansion if the cost of capturing/storing carbon drops below the carbon price.[50] 

IPCC scientists have notably endorsed CCS as a means to reduce emissions in three of its four pathways to keep global temperatures down.[51] 


[a]ny recovery package, including climate-friendly recovery, is unlikely to be implemented unless it also addresses existing societal and political concerns – such as poverty alleviation, inequality, and social inclusion [52]

- Nobel prize winner Joseph Stiglitz and former Chancellor of the Exchequer Sir Nicholas Stern

There can be no climate justice without social justice. The COVID-19 crisis has laid bare important gaps in our social safety system, with all levels of government scrambling to plug the holes to avert the most catastrophic outcomes for people in Canada. Now, more than ever, we see why a strong social safety net benefits us all. 

A Green Recovery Plan offers a critical opportunity to lay the foundations for better future policy and social care. If we are to be better prepared the next time a crisis strikes, we cannot let this chance slip through our fingers. For all our sakes, we must continue the work towards a more complete social safety net. This includes implementing longstanding Green policies, such as improvements to long-term care, a Guaranteed Livable Income, creation of new universal programs such as universal pharmacare and universal post-secondary education, among others.[53] 


The world’s resources are not infinite. We must move as quickly as possible towards a sustainable Green economy; one that permits us to tackle the climate emergency, live within the finite resources of our planet, create the jobs of the future, and ensures a just society. 

There is a broad consensus and recognition that the transition to a Green economy holds tremendous potential. Investments that will yield the strongest results in restarting the economy are those in renewable energy and energy efficiency retrofits that move us toward a carbon neutral economy.[54] The impending fiscal stimulus package is nothing short of the chance of a lifetime to move away from carbon-intensive industries and activities and towards a climate-neutral economy. We will need political leadership to make the most of this moment. 



[2] Ibid 












[14] Ibid 








[22] Ibid 














[36] Ibid 



















1 comment

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  • Don Myers
    Good plan. We all know what the climate problem is and how we got here. Things have to change or there will be increasingly bad consequences for everybody. No value in pointing fingers. We’re all in this together, and working together is the only way to make the big changes we need in real time. A sustainable physical environment is essential for people across the economic spectrum. We also need to advance our moral behaviors as well as our technical capabilities. In fact the two are complimentary. Everyone needs to live with hope and the opportunity for improvement. That’s the only way to get the best out of human capacity.