Business funding for climate action needs to “rise exponentially” for Canada to be on track for net-zero emissions by 2050, said a report out Tuesday from Royal Bank of Canada RY-T.
The RBC Climate Action Institute report said that while money coming from public and private sources has grown by almost 50 per cent since 2021 to $22-billion, funding needs to reach $60-billion a year for the rest of the decade to hit emission reduction targets.
“Public markets, private equity and venture capital will need to step up and channel more of their capital into green investments,” said the report, noting the segments made up only 8 per cent of the capital flows into climate efforts since 2021.
It says private markets are generating more than sufficient capital to finance more of the transition, with only 6 per cent of new capital financing going toward climate and cleantech efforts last year.
Provincial and municipal governments will have to ramp up efforts, the report said, and consumers will also have to change their spending patterns, as the federal government has so far supplied much of the funding and is reaching its fiscal limits.
The report estimates that supply side spending needs to double from recent levels of about $22-billion a year, while consumer spending needs to reach $13-billion a year.
While the report notes that the oil and gas industry needs to see the largest emission reductions, pointing out that its carbon intensity is around 37 per cent higher than producers such as Saudi Arabia and Russia, it said that consumers need to change their habits as well.
“We will need to see much more change in consumer demand, individual choice and community action.”
In terms of sectors, the report estimates it will take about $50-billion to reduce oil and gas emissions by 84 megatonnes, $50.8-billion to reduce transportation emissions by 11 megatonnes, and $15.9-billion to cut 39 megatonnes from buildings, among other sectors.
The inaugural report from RBC’s climate institute comes as environmental groups increasingly urge all of Canada’s big banks to direct more funding toward climate efforts, and away from fossil-fuel expansion projects.
Several climate advocacy groups said the report represented “greenwashing,” and a distraction from RBC’s roughly US$250-billion in fossil-fuel funding since 2016 and its relatively minor funding of clean energy.
“RBC is asking consumers to spend their thousands of dollars differently while it won’t change how it puts hundreds of billions into fossil fuels,” Keith Stewart, senior energy strategist with Greenpeace Canada, said in a statement.
RBC spokesman Kyle English said in a statement that the insights of the report are backed by data, evidence and rigorous analysis.
“The RBC Climate Action Institute maintains research independence and strives to advance ideas that can contribute to Canada’s climate progress.”