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Canada’s economy is heavily reliant on the oil industry business leaders see oil being less of a driver of economic activity over time. (TODD KOROL/REUTERS)
Canada’s economy is heavily reliant on the oil industry business leaders see oil being less of a driver of economic activity over time. (TODD KOROL/REUTERS)

Survey points to Canada’s growing need to invest outside natural resources Add to ...

It’s an axiom in almost any discussion about our economy that we cannot be overly reliant on resource extraction in Canada, despite the fact that business sees natural resources as the primary strength of the Canadian economy.

Countless government plans have sought diversification over the years. Reading between the lines of this quarter’s C-Suite Survey, we can see that the business community believes this is becoming both more necessary and more likely than ever because of the growing attempts to fight climate change.

Actions being taken at the provincial level are one barometer of this changing policy climate. But there are broader dynamics at work. Most executives told us six months ago the U.S.-China climate talks were going to push Canada to do more, faster.

Executives know that Canada’s economy is heavily reliant on the oil industry. Few see that changing in the near future. However, business leaders, especially those in the financial sector, see oil being less of a driver of economic activity over time.

Most of the C-Suite outside of the oil patch thinks oil has peaked in importance to the Canadian economy and will either remain the same or diminish in importance in the next 10 years. But what they see replacing it is what is most interesting.

There is an overwhelming consensus in the C-Suite that in 10 years time, both renewable energy and natural gas are going be more important to our economy than they are today.

Business leaders see an energy transformation coming. The fight against climate change is upon us as governments, domestically and globally, increasingly put in place policies that push toward a less carbon-intensive economy. Executives see natural gas as a major part of the answer to that, but they recognize renewables are even more important.

One key illustration of this is the role they see for government in developing the clean technology sector. Generally not fans of industrial policy, the C-Suite tends to offer muted enthusiasm for government support of industries. However, almost 80 per cent of the C-Suite supports government subsidies to develop clean energy technology. They are not just saying it will be a bigger part of our economy in the future, but that it must be, and we must do what is required to make it happen.

Believing in the need to fight climate change or not is becoming irrelevant. Policy and politics are pushing us toward less carbon, and business wants Canada to understand and prepare for the economic implications and opportunities that result.

David Herle is principal and Alex Swann is vice-president of Gandalf Group.

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