Canada needs to address its productivity crisis, and the world needs to address climate change. Here is a common-sense solution: make it easier for climate innovators to do what they do, and we can work to tackle both problems.
Although the productivity crisis reached mainstream attention this year, analysts have been raising alarm bells for a while now. Experts have pointed to a lack of spending on research and development (R&D), a lack of investment in advanced industries (industries that rely heavily on STEM workers and R&D), and a lack of foresight in policymaking. All this leads to barriers to innovation.
Due to the urgency of climate change, Canadian climate innovators are persevering anyway. Already, for example, Canada is a global leader in the emerging carbon removal field. Permanent carbon removal is the act of removing existing carbon pollution out of the atmosphere and storing it away for thousands of years. There are many types of permanent carbon removal: the most popular is perhaps direct air capture, but there is also biochar, ocean alkalinity enhancement, and enhanced rock weathering, just to name a few.
The market is still deciding which pathways will become dominant in Canada but one thing is for certain: it will play a growing role in helping to solve climate change as the technology improves.
Companies are driven to innovate; they want to drive down their costs while increasing their reach and impact. Research, development, and demonstration projects are central to this process and critical to growing the carbon removal sector. Government can help to support these efforts.
There are a number of Canadian companies working on these different carbon removal methods today, and there is global interest in their work. To maintain Canada’s competitive edge in the global market, we need to do more to align government policies with private sector investments.
There’s the potential for real upside here: domestic companies want to expand and international companies are eyeing billions of dollars of investment on Canadian soil. The problem is that Canadian policies are not where they need to be.
For Canadian carbon removal to reach its full potential, we need policies that grow industries that are key to a low-carbon future and the next generation of good-paying jobs.
So what would it take? A tangible action that the Government of Canada could take is buying carbon removal credits from Canadian companies to deal with its own hard-to-abate emissions (emissions that cannot easily be reduced), such as from fighter jets or marine vessels. We can reduce military emissions without compromising operational readiness.
The federal government regularly makes purchases, and by deeming newer industries like carbon removal worthy of support, private companies are more likely to follow—unlocking new private financing options and enabling strong public-private partnerships to maximise impact.
Carbon Removal Canada, an independent think-tank that I lead, found that a well-designed procurement program could fund high-quality carbon removal projects and set the stage for both economic and environmental benefits. Here, procurement would benefit everyone: the government is investing tax dollars into Canadian companies while tackling its emissions, Canadian companies can then attract private capital to expand and create new jobs, and more money can be directed to further developing Canadian technology.
In addition to a strong procurement program, there are other economic incentives that would help not only the carbon removal industry but Canadian innovation more generally. The right combination of R&D funding, tax credits, and loans means that potential developers will be more willing to take risks and launch new projects in the country.
Canadians are coming up with climate change solutions. Now is the time to go all in—we need policy conditions that support this ingenuity and entrepreneurship, not hinder it. Let’s help the environment by making Canada a better business environment for carbon removal innovation and deployment.
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