Foundations for a Greener Future: Anchoring a Robust Recovery on Sustainable and Carbon-Neutral Processes

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The following is an excerpt (edited for length) from ICTC's white paper, Economic Resiliency in the Face of Adversity.

As a robust economic recovery becomes a priority for Canadian policymakers, it is essential to think about policy goals in the long term. An environmentally friendly recovery is not only essential for our long-term future, but many thought leaders have already begun to link a more sustainable economy to improved resilience during this health crisis and future pandemics. The current economic shutdown is a prime opportunity for us to begin thinking about diversification, planning for sustainable futures, and developing policies and opportunities that benefit Canadians, businesses, and the planet.

Policies to Support Private Investment in Clean Energy

In addition to making direct investments in cleantech, green infrastructure, and Canadian ecosystems, governments have an opportunity to create policies that incentivize private investor and citizen support for a clean energy transition.

Support consumers and homeowners to make climate-friendly choices. Many Canadians will be financially stretched in the coming months, and although many people desire to make greener consumption choices, they may not feel able to invest money to do so. Accordingly, consumer support may be needed in the form of education, transparency about the carbon impacts of various products, and targeted financial programs. Some of the choices facing Canadians will involve up-front spending for long-term payoffs: for example, the Canada Energy Regulator found that installing solar panels and a smart metre would allow the average household to pay less for electricity than the current average in all but four Canadian provinces and territories (BC, MB, QC, and NB). Providing interest-free loans for Canadians wishing to install clean energy projects and similar policies would comprise an important step toward helping consumers manage the up-front costs of achieving long-term goals.

Incentivize private investment in clean innovation. Canada’s cleantech sector requires additional support to scale up and commercialize many products. Several Canadian organizations have identified key opportunities to incentivize investment. The first of these is investor tax credits for the cleantech sector, much like existing incentives for investing in SMEs in British Columbia and Alberta. A second policy option is the use of flow-through shares, a unique initiative that has traditionally been applied to the resource exploration sector in Canada. A flow-through share allows an individual taxpayer and equity investor to receive tax deductions from a company for costs incurred via exploration and development. Canadian organizations such as the Smart Prosperity Institute have contended that the scope of eligible flow-through share expenses should be expanded to include additional renewable energy research and development activities, as the current criteria are better designed for extractives than for cleantech.

Incentivize FDI in Canada’s Cleantech Sector. ICTC’s recent investigation of Canada’s attractiveness as an FDI destination for cleantech investors found that there was still significant work to be done. Existing efforts from Invest in Canada and other national organizations to promote the clean technology sector should be monitored and expanded along with the international investor-friendly strategies discussed in this report’s section on FDI, targeting the renewable energy and cleantech sector.

Read the full white paper here 📖

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