What does a Liberal government mean for clean energy in Canada?

With the election of Justin Trudeau’s Liberal government on Monday, the clean energy landscape in Canada is certain to change.

Trudeau – who campaigned under the slogan of "Real Change" – takes the reigns promising an economy where energy and the environment go together “like paddles and canoes”.

Trudeau is set to attend the upcoming Paris climate change negotiations at the end of November, and has pledged to convene provincial premiers within 90 days to create national emissions targets.  His campaign platform also includes specific clean energy commitments- we’ve highlighted the top 3:

  1. Green Bonds: The Liberal platform mentions the creation of a new Canada Infrastructure Bank that would issue Green Bonds to support large and community scale clean energy projects.
  2. Investing in innovation: Continue supporting Sustainable Development Technology Canada up to $100M a year. SDTC helps fund demonstration projects for emerging technology companies. The Liberals also mention setting up a $2 billion Low Carbon Economy Trust for projects designed to “materially” reduce emissions. 
  3. Clean energy friendly policies: The new government pledges to eliminate fossil fuel subsidies, while also introducing regulations that support new financial instrument that stimulate efficiency retrofits and distributed energy systems.

Canada has healthy, $12B clean tech industry, with companies ready to deploy and exports their products. About $10B was invested in Canada for new clean energy generation projects in 2014. But we have also lost 71% of our global market share in clean technology since 2005, according to reporting from Analytica Advisors.  And we have been ranked as having the worst performance on climate change of any industrialized nation. The Liberal government now has an opportunity to turn this around, and in my opinion, the most meaningful policies will be those that catalyzing private sector investment towards a clean energy future.

Providing an enabling regulatory environment is critical to spurring investment and innovation. This can include direct market corrections, like a carbon tax. Equally important (if slightly more boring) are regulatory changes to allow new financing structures, such as Property Assessed Clean Energy (PACE).  The PACE instrument allows homeowners and businesses to finance renewables and efficiency via an assessment added to the property’s tax bill and has led to massive new investments in clean energy in the US.  

I’m also glad to see that the Liberals are thinking about how to engage investors via green bonds - at CoPower we believe that Canadians want to align their portfolios with their environmental values, and applaud efforts to enable greater participation in the clean energy economy.

Another mechanism at the government’s disposal – one which has proven successful in impact investing – is the use of credit enhancements to attract broader participation in investments that deliver blended (social & financial) returns. These include loan loss reserves, first-loss capital and guarantees, which can mitigate the perceived risk to private investors entering newer markets. We would urge the Liberals to consider how they could use catalytic capital to stimulate investment as we move toward a low carbon economy. 


Tags : clean energy Canada politics, green bonds, ethical funds, social impact investing opportunities