The recent climate talks in Paris concluded with accolades. Many commentators are optimistic about the international agreement reached by 195 nations, committing to limit temperature rises to below 2 degrees C and reach net zero emissions in the latter half of the century.

Now PM Trudeau is back in Canada to work with provincial leaders on implementation plans for Canada to reach its carbon goals. Manitoba announced it is signing onto a carbon market with Quebec and Ontario. Saskatchewan will source 50% of its energy from clean sources by 2030, and Alberta has a new climate plan (with a price on carbon).

Broadly there are two key areas where government leaders can focus:

 

i)  New technologies  

Maybe we are hardwired and new technology just appeals to the gadget nerds in us. What smart new inventor working tirelessly in her garage will come up with a brand new way of generating, storing, or savings energy that no-one has yet discovered?

 

To this end, Bill Gates is leading 30 other billionaires and 20 government to create the Breakthrough Energy Coalition to fund early stage research and commercialization in clean energy. Trudeau has committed Canada will invest $300M annually in research and development for clean energy technology. [This pledge re-affirms the $300M cleantech commitment the Liberal government made as part of their campaign].

 

Funding basic research is an important goal for the federal government. Their dollars keep us on the cutting edge of new advances in the labs of Universities and companies. It means that innovative clean energy companies can commercialize their technology. Innovative companies like Hydrostor (an underwater energy storage company that just cut the ribbon on a commercial plant with Toronto Hydro) can become tech leaders and continue to add to the  50,000 jobs in the cleantech sector today.

 

But we are dealing with energy infrastructure. There are decade long timelines from lab-bench to utility-scale deployments. So while crucial to continue investing in new technologies for the future, it is equally if not more important to focus efforts on:

 

ii)  Deploying current technologies

A new Goldman Sachs report identified 4 current low carbon technologies that investors should focus on to impact carbon in a 5-10 year horizon, (and make solid profits): solar photovoltaic; LED lighting retrofits; onshore wind energy; and electric cars. 

 

These infrastructure heavy investments are different than the more risky, longer term bets that Bill Gates and other want to make.

 

And again government can play a role in catalyzing this shift. Carbon pricing shifts the economics and lets the private market figure out the cheapest way to reduce carbon. The Infrastructure Bank and Green Trust announced as part of the Liberal platform can help de-risk projects, and bring other private debt and equity investors into these infrastructure assets.

 

These types of projects that generate (or reduce) energy, provide the steady annual yields that institutional investors like pension funds seek (and that CoPower is helping make more widely available to retail investors).

 

PM Trudeau is well placed to work with the Premiers to pursue both goals in tandem: cleantech R&D for the future, and clean energy deployments for today.

 

Tags : Paris accord, clean energy economy, capitalism 2.0, green investing