Three Big Energy Shifts that Can Transform and Modernize Canada’s Economy

An effective, all-in response to the global climate emergency can revitalize local economies across Canada while strengthening national sovereignty and economic security, an extensive new analysis by Corporate Knights’ Climate Dollars project concludes.

The analysis identifies the investments in our buildings, vehicles and power grids that are needed to shift our energy use to electricity and set a path to a zero-emission economy by 2050.

Climate Dollars charts a practical path over the next 25 years that builds on Canada’s unique strengths and reinforces our sovereignty in a time of deep national anxiety.

Climate Dollars shows how Canada can embrace and succeed at an ambitious, achievable national building project that dramatically accelerates the shift to heat pumps for space heating and cooling and heralds a massive buildout of new renewable energy and energy storage. With rapid, widespread electrification at the heart of the plan, the modelling calls for a fundamental shift from the balkanized provincial electricity systems that grew up around the hydropower dams and enormous but inefficient fossil and nuclear plants – the last century’s glorified steam engines – that distribute centralized power via brittle, hub-and-spoke grids.

The grid of the future is something we’ve never imagined before, and we have to build it at a speed that we never imagined possible – until now. Across much of the world, the rising efficiency and plummeting cost of renewable energy and energy storage is driving investment and national strategy toward an energy future that boosts local economies and increases our resilience in the face of climate disruption, while accelerating emission reductions that can still avert the worst of the global climate emergency.

Canada’s next energy system will be built on tens of thousands of wind turbines and millions of solar panels on rooftops and in solar farms, all interconnected to a grid that enables multi-directional flows of energy and information – a Trans-Canada Transmission Link as central to our future as the Trans-Canada Railway and Highway were to our past.

This economic, technological and cultural transformation is about opportunity and gain, not loss and pain, a chance to build the Canada we want while leaving no one behind. Ending the emissions that are warming and disrupting our planet can be an essential side benefit of building a future where life is more comfortable and affordable, our communities are more livable and welcoming, and our jobs and businesses contribute to building the future we want.

But we know that this shift will take place against a backdrop of deep urgency – because the climate crisis is gaining momentum. Every new building or renovation that includes fossil fuels commits us to years of additional climate pollution. The average car or light truck stays on the road for 15 years or more, and the majority of today’s new-vehicle purchases are still fossil-fuelled. So while it will take 25 years to complete this work, we won’t get it done without a massive response over the next decade.

The in-depth modelling presents an emergency plan that can renew local and provincial economies and strengthen the Canadian federation while delivering reliable, affordable energy, hour of every day of the year. Climate Dollars shows that the cost of an effective, comprehensive energy transition is far less than what we stand to pay (in fact, what we’re already beginning to pay) for the impacts of climate change, across Canada and around the world. And there’s every reason to believe that taking action at the pace and scale we need will drive down the cost of the energy transition itself, in some cases very dramatically, as solutions scale up, efficiencies accumulate and unit costs are reduced.

Three Cornerstones of the Climate Dollars Energy Transition

• Shifting Canada’s economy almost completely from fuels to electricity, except for a small volume of petrochemicals produced from fossil fuels, by electrifying buildings, transport and industry and leaning heavily on heat pumps to drastically reduce the energy consumption of buildings

• Relying on the batteries in many millions of electric vehicles across the country to store renewable electricity when it’s least expensive and release it for distribution during times of day when demand is highest, while positioning Canada to become a world leader in emerging vehicle-to-grid (V2G) technology

• Saving $100 billion on the overall plan by completing the Trans-Canada Transmission Link, a strategy that makes it easier for provinces to share electricity, builds a new sense of connection and shared purpose between west and east, and asserts strong, confident Canadian leadership in areas of business, technology and trade that are already seen as essential in most of the world

At a time when Canada’s prosperity is threatened by volatile oil and gas markets, and its very existence is being questioned by an even more volatile trading partner, Climate Dollars envisions a more hopeful future.

It presents a set of realistic scenarios to phase the country’s precarious fossil fuel economy down and out and replace it with a far more efficient, electrified system. The scenarios require no new commitments to large hydropower installations. And the analysis shows conclusively that by adding more nuclear generation to our future electricity mix, beyond refits of existing reactors that are already under way, ratepayers would shell out $55 billion more than necessary to decarbonize the Ontario economy.

But the promising future that Climate Dollars envisions depends on fast, strategic decisions in these key sectors:

• In the power sector, Corporate Knights modelled the transition that each provincial grid will have to go through to accommodate the electrification of buildings, transportation and industry by 2050. Our Canadian-owned electricity system will be transformed by average investments of $34 billion per year. For each province, the modelling looked at the unique factors that will shape electricity supply and demand, including climatic conditions, current and future sources of renewable electricity supply, and available electricity savings. The Trans-Canada Transmission Link reduces the cost of decarbonizing the grid by about $100 billion and emerges as the key ingredient that balances the costs, benefits, jobs and business development opportunities across provinces and regions. Clean energy already employs more Canadians than fossil fuels, and in contrast to the flat job creation projected for oil and gas, clean energy employment is set to soar for both domestic and export markets.

• In buildings, the shift to heat pumps will unlock the affordable, reliable heating and cooling Canadians need while helping to limit the remaining demand to be met by an expanding electricity grid. National homebuilding strategies can also boost affordability and limit new energy demand by factoring in demographic trends that strongly favour apartments and condominiums, not single-family homes, for new dwelling units. While heat pumps will do the heavy lifting in decarbonizing the buildings sector, energy retrofits could save additional tens of billions in investment in the electricity supply system – and the cost of an accelerated national retrofit program could be cut by as much as 50% with a more systematic, integrated approach to the work. Capital investments in the transition to carbon-free energy stimulate local economies and job creation, and nowhere is this more true than in the buildings sector, where the jobs are created everywhere there are buildings.

• In transportation, for Canada’s growing fleet of 23 million personal vehicles and 7 million commercial trucks, electrification is the key to decarbonization, given that a typical gas-powered internal combustion engine emits more than twice the weight of the vehicle in annual greenhouse gas emissions. Measures to reduce the number and length of vehicle trips will help moderate the growth in demand for carbon-free electricity, but the Climate Dollars scenario focuses primarily on electric vehicles and the charging infrastructure they will need. With the price premium on EVs set to fall sharply through 2035, Canadian drivers are on track to reap a $1.2 trillion clean energy dividend on fuel through 2050, after subtracting the cost of the electricity to run the vehicles. But fulfilling that potential will mean quadrupling capital investment over the next crucial decade.

The Climate Dollars analysis lays out an ambitious path to decarbonization at a moment when Canadians are being encouraged to think big about the future we want to build. The cost of reconfiguring the country’s electricity systems over the next quarter-century is consistent with other projections of the cost of a national energy and climate transition that is already under way. The capital expenditures this transformation will require are just a small percentage of what Canadians and their governments invest in buildings, vehicles and equipment each year. And they’re far less than the annual spending that built out our present-day hydropower dams, electricity grids and early nuclear power stations in the 1950s, ’60s, and early ’70s.

Corporate Knights will release the full Climate Dollars analysis April 24, two days after Earth Day 2025.

Cover photo:  Montage by Mike Hager/The Energy Mix