Environment Minister Jonathan Wilkinson faces the tough task of finding a way to meet Canada\u2019s 2030 greenhouse gas emissions reduction targets. With few policy mechanisms at his disposal, he has plenty of work to do.<\/p>\n
Those of us who work in the energy field know just how big his challenge is. The energy industry is the largest and most complex industry the world has ever seen. No one technology, no matter how powerful, can be the \u201csilver bullet\u201d that reduces emissions enough to help the energy industry and the broader industrial sector hit Canada\u2019s target.<\/p>\n
Carbon taxes are generally accepted as the most effective way to change consumer behaviour. Lost in the discussion is their effect on Canada\u2019s energy and industrial sectors. Our taxation system takes a \u201ctail wagging the dog\u201d approach, betting big that consumers will react to higher energy prices and subsequently drive industry to change its behaviour. This is a long-shot proposition, at best. Even if we were to triple the tax, it wouldn\u2019t be enough<\/a> to meet our goals, the International Monetary Fund said recently. That\u2019s because relying on consumers alone to carry the load won\u2019t work.<\/p>\n Canada\u2019s carbon tax revenues are directly refunded to households<\/a>. But where is industry\u2019s immediate \u201crefund\u201d that would be equivalent to motivate immediate change on its part? It\u2019s a vital question, and one that\u2019s missing from the national discussion. Ottawa must also play a role in helping Canada\u2019s energy industry overcome enormous obstacles to deliver badly needed innovation that will ultimately deliver the significant emissions reductions we need.<\/p>\n When we think of innovation, we naturally focus on the information technology sector \u2013 and for good reason. Canadian businesses have been very successful in this area, especially when it comes to artificial intelligence<\/a>. Toronto is now home to the AI labs of Uber, Google and Samsung, some of AI\u2019s most prominent pioneers. These tech companies have a built-in advantage when it comes to investment. Pure-tech startups require relatively small amounts of capital to build their initial products, and often can quickly earn revenue with customers across global markets.<\/p>\n Energy technologies differ from those<\/a> in other industries. \u00a0Any energy innovations must account for a \u201cbricks and mortar\u201d infrastructure. It\u2019s like the building of condos in any downtown area: it rarely happens quickly or exactly according to plan. Energy companies are large, sophisticated operations. Commercialization of any serious new innovation is bound to be far slower to bring capital return, and it is often more capital-intense. In addition, there were some early failures in energy technology investments<\/a> that have scarred many venture-stage investors, making them wary of trying again.<\/p>\n Despite these challenges, there have been successes. Canada\u2019s Oil Sands Innovation Alliance<\/a> (COSIA) has delivered more than 1,000 technologies<\/a> valued at over $1.4 billion since 2012, reducing oil-sands impact on water, air and land. During the Stephen Harper years, the Canadian government invested \u00a0$1 billion in energy industry research and development<\/a> \u2013 with subsequent commercialization \u2013 in the oil sands. The result: a substantial decrease in the industry\u2019s energy intensity and a reduction in greenhouse gas emissions. It also helped make Canadian oil more competitive.<\/p>\n That\u2019s impressive momentum, but more is needed. Unfortunately, at a time when we need to double down on energy innovation, we\u2019re doing very little to encourage it. The carbon tax in its current form needs to be balanced with short-term financial incentives that will make it appealing for industrial companies and investors to explore and unleash potential advances in energy and emissions technology.<\/p>\n We need carbon tax credits that encourage all facets of Canadian industry to invest in and kick start its energy, efficiency, and carbon reduction initiatives, or that leads to investments in complementary third-party research and development.<\/p>\n This kind of homegrown tax credit structure is being used successfully in our Defence Procurement Strategy, which is designed to reform the Canadian defence procurement system. The strategy\u2019s embedded tax credit policy is known as the Industrial and Technological Benefits (ITB) Strategy<\/a>.<\/p>\n Here\u2019s how it works: under the ITB strategy, any contractor that sells military equipment to Canada must invest the value of the contract awarded in Canadian business activities. This condition doesn\u2019t pose much difficulty for local contractors, but can be harder for foreign-based contractors to fulfill. So, to make this proposition as attractive as possible, the ITB credits<\/a> qualified R&D-related investments in small- and medium-sized Canadian businesses at 4 to 9 times their face value. In other words, a $10 million qualified investment can be credited at up to $90 million toward the value of the contract\u2019s local investment obligation.<\/p>\n The ITB model is an ideal platform for a more effective carbon tax credit policy. Such an approach would help weigh\u00a0each proposed technology\u2019s stage of commercialization, assess its regional and total market potential, and maximize its potential to reduce GHG emissions. Even in a modest scenario, an eligible business investing $5 million could count on an attractive credit of $25 million against its carbon tax obligations, ensuring that finances don\u2019t interfere with badly needed innovation.<\/p>\n Those in the industry know there have been many attempts to ignite innovation in the energy sector, and far too many have fallen short. But it is possible to spur targeted innovation in emissions reduction technologies, and the ITB shows us how.<\/p>\n Canadians know how high the stakes are for global warming, and we need to use every tool at our disposal to reduce GHG emissions and meet our 2030 targets. We\u2019ve made the initial strides with the consumer carbon tax. Now Ottawa and industry need only to look at the ITB policy to unlock industry innovation that will benefit all Canadians \u2013 including business owners and environmentalists.<\/p>\n Photo:\u00a0Shutterstock\u00a0by\u00a0Oil and Gas Photographer.<\/span><\/span> Do you have something to say about the article you just read? Be part of the\u00a0<\/em>Policy Options\u00a0discussion, and send in your own submission.\u00a0Here is a\u00a0<\/em>link<\/em><\/a>\u00a0on how to do it. |\u00a0Souhaitez-vous r\u00e9agir \u00e0 cet article ? Joignez-vous aux d\u00e9bats d\u2019<\/em>Options politiques\u00a0et soumettez-nous votre texte en suivant ces\u00a0<\/em>directives<\/em><\/a>.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":" Environment Minister Jonathan Wilkinson faces the tough task of finding a way to meet Canada\u2019s 2030 greenhouse gas emissions reduction targets. With few policy mechanisms at his disposal, he has plenty of work to do. Those of us who work in the energy field know just how big his challenge is. The energy industry is […]<\/p>\n","protected":false},"featured_media":276965,"template":"","meta":{"_acf_changed":false,"content-type":"","ep_exclude_from_search":false,"apple_news_api_created_at":"2025-10-08T02:50:53Z","apple_news_api_id":"e8fbe5d3-71de-45b2-b656-2657a06ea726","apple_news_api_modified_at":"2025-10-08T02:50:54Z","apple_news_api_revision":"AAAAAAAAAAD\/\/\/\/\/\/\/\/\/\/w==","apple_news_api_share_url":"https:\/\/apple.news\/A6Pvl03HeRbK2ViZXoG6nJg","apple_news_cover_media_provider":"image","apple_news_coverimage":0,"apple_news_coverimage_caption":"","apple_news_cover_video_id":0,"apple_news_cover_video_url":"","apple_news_cover_embedwebvideo_url":"","apple_news_is_hidden":"","apple_news_is_paid":"","apple_news_is_preview":"","apple_news_is_sponsored":"","apple_news_maturity_rating":"","apple_news_metadata":"\"\"","apple_news_pullquote":"","apple_news_pullquote_position":"","apple_news_slug":"","apple_news_sections":[],"apple_news_suppress_video_url":false,"apple_news_use_image_component":false},"categories":[9361,9372,9383],"tags":[8365,8409],"article-status":[],"irpp-category":[4326,4261,4675,4337],"section":[],"irpp-tag":[7090],"class_list":["post-267937","issues","type-issues","status-publish","has-post-thumbnail","hentry","category-environnement","category-recent-stories-fr","category-sciences-et-technologies","tag-innovation","tag-carbon-fr","irpp-category-changements-climatiques","irpp-category-environnement","irpp-category-innovation","irpp-category-science-et-technologie","irpp-tag-prix-du-carbone"],"acf":[],"apple_news_notices":[],"yoast_head":"\n
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