The Royal Bank of Canada has thrown its considerable weight behind the adoption of stringent and rising carbon prices that would be high enough to drive this country's transition to a low-carbon economy.
"In our view at RBC, carbon should be priced at a level to create long-term behavioural change and to ensure polluters pay, as we all move toward low-carbon targets," John Stackhouse, a senior vice-president at the bank, told a climate conference in Ottawa on Wednesday.
But carbon levies alone will not be enough to drive the economic transformation that is needed to keep pace in a carbon-constrained world, he said. "We also need smart and targeted complementary approaches, including flexible regulations and public investment."
Mr. Stackhouse said Canadian companies and governments need to fully engage in the clean-energy transition, which represents a more massive global economic project than even post-Second World War reconstruction.
"This is our Apollo mission, if we seize the moment. It could be our Titanic if we don't," he said.
A former editor of The Globe and Mail, Mr. Stackhouse is now vice-president at Canada's largest bank, advising its top executives on strategic issues. He was speaking at the North American Climate Forum, which brought together experts from Canada, the United States and Mexico on continental climate co-operation.
U.S. President Barack Obama and Mexican President Enrique Pena Nieto will visit Ottawa next week for a leaders' summit, with climate change high on the agenda.
While speakers in Ottawa laid out visions for trilateral co-operation on Wednesday, the federal government is still working with provinces and territories to fashion a pan-Canadian approach that would include minimum carbon prices in all provinces, and joint efforts to cut emissions and promote the development of clean technology.
Carbon pricing has emerged as a key sticking point. Saskatchewan and Nova Scotia have resisted Ottawa's proposal for a minimum price, while Ontario and Quebec – which have adopted cap-and-trade plans – are worried the federal government will layer on another tier of taxes and distort the market they will share with California.
Supporters of the cap-and-trade approach argue it delivers greater certainty concerning future emissions reductions, while those advocating a carbon tax point to its relative simplicity. Mr. Stackhouse said RBC would prefer a tax because the revenue is more predictable and can more directly affect behaviour.
Canada is not on track to meet its 2020 targets of reducing greenhouse gas emissions by 17 per cent below 2005 levels by 2020, and will require greater effort – even with ambitious policies announced in Ontario and Quebec over the past year – to hit the 2030 goal of a 30-per-cent reduction.
Mr. Stackhouse rejected the view espoused by many environmentalists that Canada's climate commitments are incompatible with the ongoing development of oil and natural gas assets. He added, however, that the resources should be produced with as low an environmental footprint as possible and that some portion of the revenues should be reinvested to accelerate the transition to a clean-energy economy.
More broadly, there is "an urgent need" for innovation in how Canadians produce and consume energy, both to ensure the economy's long-term competitiveness and to take advantage of the vast global opportunities that emerge in the transition, he said.
Governments need to find ways to encourage more equity financing for clean-tech companies – perhaps through tax credits – to drive more mainstream companies to adopt clean-tech technologies, and to allow the sector to attract and retain global talent, he added.