Canada’s Economy Could Shrink by 6.9% Annually by 2050 Without More Ambitious Climate Action

Climate change loss and damages expected in Canada between now and 2050 are measurable. Most recently, a Queen’s University/Institute for Sustainable Finance report (April 2022) stated capital output lost due to physical damages under different warming scenarios by the end of the century (with 2030, 2050, and 2070 as inflection points) will grow dramatically. This ranges from $2.773 trillion under a 2°C warming scenario to almost double that at $5.520 trillion under 5°C (“Business As Usual”) by 2100.

Currently, Canada needs at least $100 billion more in annual investments from its $15-25 billion now budgeted to reach a net-zero economy by 2050. While multi-sector investment is expected, so are disruptions in the workforce and major economic challenges.  We can expect infrastructure damage by wildfires and floods, melting ice caps, and loss of biodiversity due to climate change.  The report reveals physical damages will cost up to $45.4 billion more than the cost to invest in a low-carbon economy. This is just the financial cost and doesn’t consider the suffering of those losing livelihoods, homes, and businesses, or even their lives, due to climate-related disasters.

Oxfam states Canada’s economy could also shrink by 6.9% annually by 2050 without more ambitious climate action according to research by the Swiss Re Institute.

The government is proposing a $15-billion “Canada Growth Fund” – a new arms-length “public investment vehicle” — and hopes to raise $3 in private sector buy-in for every $1 in public money to bolster ‘low-carbon industries and new technologies, and ‘support the restructuring of critical supply chains’ important to the future economy.

While the 2022 federal budget acknowledged that the federal government can’t hit its climate change goals without private sector buy-in, it has committed an additional $12.448 billion in public money to various climate-oriented initiatives – most notably in incentives and supports for Canadians buying zero-emission vehicles. The government is also designing a new investment tax credit for businesses investing in clean technology. A measure with more potential for controversy is a refundable investment tax credit for businesses buying carbon capture and storage technology as well as continued support for producing more fossil fuels for international markets.

Canada’s ongoing emphasis has been to reduce its economy-wide GGEs by 40%-45% below 2005 levels by 2030 and achieve net-zero emissions by 2050 alongside its Canadian Net-Zero Emissions Accountability Act (2021) reporting.  The first Emissions Reduction Plan for 2030 issued (2022) under the Accountability Act will generate progress reports in 2023, 2025, and 2027 followed by additional targets and plans from 2035 through to 2050. Actions consist of: reducing home and building energy costs in, empowering communities to take climate action, electric vehicles, driving down carbon pollution from the oil and gas sector, renewable electricity, clean technologies, natural solutions, and pollution pricing. These and historical trends will help provide a clearer picture of where Canada needs to be by 2030 and 2050. The gap in modeling ecosystem dynamics beyond 2030 is attributed to uncertainty given the potential for increased risks of natural disturbance and other climate feedback on mitigation potential.

Research needed to achieve Canada’s  2050 targets consists of: a better understanding of climate change’s influence on permafrost, glaciers, oceans, ice (sea, river, lake), and freshwater; climate-related health risks, intersections with action in other sectors (i.e. transportation, urban planning), energy decarbonization, nature-based solutions, resource risks (i.e.ii.e. extreme events, water availability, pests, disease, invasive species) to maximize the co-benefits of advancing carbon sequestration, health, energy, and food security simultaneously; building climate-resilient communities and infrastructure systems (i.e. energy, water, transportation). There is also a need to understand the climate impacts on governance, trade, global migration patterns, and development and international assistance.

The UN reports that we are not on pace to limit a global temperature increase to 1.5 °C. IPCC. Other estimates show that we are more on pace for a 3 °C warming world.  More countries committing to net-zero emissions goals by 2050 is a significant climate policy development. To remain feasible and credible, these commitments must be urgently translated into strong near-term action and reflected in all NDCs. David Suzuki reminds us of the good news in Canada is that municipalities throughout the country are taking matters into their own hands and acting on climate change. In Canada, municipalities can legislate plans that affect about 50% of our national emissions. And with about 80% of Canadians living in municipalities, it’s important — even crucial — that we focus on their potential to help stop climate change.

This Post was submitted by Climate Scorecard Canada Country Manager Diane Szoller


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