Blog - Sink or Swim: Transforming Canada’s economy for a global low-carbon future

The Canadian Institute for Climate Choices today launched an in-depth analysis of the transition risks and opportunities facing Canada in a low carbon future. The study considers the economic impacts and the challenges for people and places associated with the transition.

According to the Institute’s study, transition risks for Canada and Canadian firms are material, since Canada is a trade-intensive country with around 70% of goods exports from transition-vulnerable sectors. The study finds that Canada is particularly exposed to changes in demand for fossil fuel commodities and transportation equipment. The report also highlights the Institute’s conclusion that the way in which the economy and individual firms prepare for the transition, by reducing emissions and increasing revenues from low carbon product lines, will ultimately determine if companies experience declining profits as the economy transitions away emissions intensive activities or whether these companies will thrive in a global low carbon economy. As the report puts it, will these transition-vulnerable companies sink or swim?

 

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Climate risk drivers for industry sectors in Canada, showing the contribution of impacts from demand creation and demand decline, carbon costs, abatement and pass through of costs to consumers. (Taken from the report, Figure 9)

 

The Canadian Institute for Climate Choices used the Planetrics model to inform some of the analysis in the report. This included scenario-based insights into companies’ transition risk exposures from destruction of demand for emissions-intensive products such as oil and gas; additional costs due to carbon pricing; and competition impacts. Planetrics modelling also quantified the opportunities associated with new forms of demand for low carbon products such as electric vehicles and batteries as well as associated minerals.

Note: While Institute drew on insights from the Planetrics model, the analysis and conclusions of the report are entirely those of the Canadian Institute for Climate Choices.

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