Report urges accelerating Canada’s move to clean tech, as war in Ukraine disrupts energy markets

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The energy crisis sparked by Russia’s invasion of Ukraine should prompt Canada to accelerate its development of industrial strategies to be a leader in clean technology, not delay efforts, say the authors of a new report urging specialization in key low-carbon initiatives.

Global oil and gas prices have soared since Russian President Vladimir Putin’s forces rolled into Ukraine, and countries including the United States sanctioned imports of Russian oil. That has raised questions about whether Canada should stick to its target to shift to a low-carbon economy while there is now an immediate global need for replacement fossil fuel – and whether the country can pursue both objectives.

Today, Canada is limited in its ability to boost oil and gas output to fill the gap left by Russia, given the time and capital it takes to ramp up oil sands and liquefied natural gas (LNG) production, experts say.

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“My take would be that we need to double down on investments into the transition for the exact reason that it’s unlikely that we’ll be able to make a short-term difference in Europe,” said Bentley Allan, resident fellow at the Transition Accelerator, one of three research organizations set to issue a report on Tuesday about Canada’s role in the global green economy.

The group, which also includes the Smart Prosperity Institute and the Pacific Institute for Climate Solutions, calls for a co-ordinated industrial strategy, involving the public and private sectors, that focuses on key areas in which Canada has natural advantages, such as agriculture, metals refining and carbon capture, utilization and storage (CCUS).

The crisis in Ukraine has exposed global weaknesses in the supply of materials required for green energy, such as the nickel mined in Russia and refined for use in batteries for electric vehicles. Russian nickel has yet to be hit with Western sanctions, but prices for the metal have skyrocketed amid the crisis.

“We have all this undeveloped nickel here in Canada that we should have developed a couple of years ago,” said Mr. Allan, who co-authored the report. “We need an accelerated program to build up that supply chain because it’s also going to get hit by this decoupling. To me it shows the need to be aggressive on net zero and be aggressive on constructing transatlantic supply chains.”

Canada’s scattershot approach to clean tech has put us behind competitors such as Europe and Australia, which have been more strategic, says the report, called Canada’s Future in a Net-Zero World. It does not address the Ukraine crisis, but the longer-term opportunities in dealing with the fight against climate change. To date, investments have been spread too thin over numerous areas, when they should be concentrated where Canada has advantages, the authors say.

The study, which surveys top experts in climate and market analysis, acknowledges Canada has made important investments. But the assistance has tended to be in the form of individual grants to companies, many of them headquartered outside the country.

The researchers highlight seven categories of clean tech and green energy in which Canada should focus skills, capital and government policy: medium and heavy-duty zero-emission vehicles, alternative proteins for the agricultural sector, green aluminum, mass timber for sustainable buildings, green chemistry, hydrogen and CCUS.

The country already has advantages it can use in its favour, including minerals used in net-zero technology, carbon accounting expertise and a relatively clean electricity grid.

The report proposes Canadians shed their tendency to risk aversion, with global demand for clean tech growing. “Industry and government need to work together to develop a portfolio of priority initiatives that establish Canada’s position in the net-zero future,” the report says. “These initiatives must be treated as experiments and all stakeholders must be willing to learn and change course as the global situation evolves.”

One example is hydrogen, Mr. Allan said. Since the start of the Ukraine crisis, discussion has picked up on developing LNG terminals on Canada’s East Coast to make up for the loss of Russian gas supplies. This could be an opportunity to go beyond LNG to become a supplier of hydrogen made from methane, he said.

“If Europe is already making huge investments in the supply chain for hydrogen, they’re going to have that infrastructure up and running in a couple of years, so we can meet that demand. We should have a crash course on that, regardless of Ukraine,” he said.

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