Opinion

Canada doesn’t need to abandon climate efforts in the name of growth or unity

As elected representatives take their seats on Parliament Hill this month, they return to a political environment where, in many cases, it’s become unfashionable to talk about climate policy in Ottawa. In the face of a trade crisis, persistently slow productivity growth, and global uncertainty, the federal government has filtered many of its priorities through a lens of economic growth.

That strategy is both right and wrong. The federal government is right about economic growth as a priority in the face of trade risks from the United States, and Canada’s longstanding productivity weakness. That’s the path to growing wealth and opportunities for Canadians. But it’s wrong in framing climate as a trade-off, or as a policy area where action can wait. Long-term economic growth cannot be secured for Canada without taking the energy transition seriously and having a serious plan to capitalize on it.

Former federal public servant Don Drummond is an adviser to the Canadian Climate Institute. Photograph courtesy of Don Drummond

As Finance Minister François-Philippe Champagne’s team begins finalizing details for the upcoming federal budget, resolving these tensions will be critical for Canada’s future growth.

Investments need to withstand the test of time for their economic viability. Major infrastructure operates for 40 years or more, so every large public investment should answer two questions about the financial return for Canadians: does it still pay off in a decarbonizing world? Could those scarce resources create more value elsewhere?

The market is now trending in one direction. The combined global market value for clean energy technologies has grown about 20 per cent a year over the past decade, reaching nearly US$1.2-trillion in 2025. Ironically, two of the world's largest emitters lead in several dimensions of clean growth. China tops the world in clean energy infrastructure, and the U.S. invested over US$278-billion in clean energy and transportation in 2025 alone.

Canada doesn’t have to match their scale to capture a portion of the prize; it just has to work out where to focus and lean into its existing competitive advantages.

Peter WB Phillips is the distinguished university professor emeritus of public policy at the University of Saskatchewan. Photograph courtesy of Peter WB Phillips

Canada’s natural endowments point to growth sectors—such as critical minerals and clean electricity—while circumstances point to others. The country’s harsh geography, long distances, and climate extremes force engineering rigour. As Canada solves these challenges, it could turn such capability towards clean solutions that others need.

Investing in bigger, cleaner, smarter electricity systems passes the durability test and leverages investment in other sectors. The Churchill Falls and Gull Island framework agreement shows that it is possible to work across governments and be ambitious. But one deal needs to be followed by others, and a more systemic shift to cleaner and more interconnected electricity grids.

The Canadian Climate Institute has documented how expanding clean electricity can raise economic growth, lower energy bills, and reduce greenhouse gas emissions.

The proposed National Electricity Strategy, out for consultation since last May, recognizes the opportunity that comes with doubling the grid by using clean electricity. With that consultation window closing and the 2026 budget taking shape, the government has a rare chance to fund what it has already proposed. This fall's budget should be where the strategy translates into action, and not consist of a vague promise of future effort.

In that respect, a clean innovation strategy would advance both economic and climate goals. Every new project of national interest, every major infrastructure investment, and as much industrial production as possible should use best-in-class clean, efficient technologies, and direct capital towards scaling homegrown innovation.

Kate Harland is research director for clean growth at the Canadian Climate Institute. Photograph courtesy of the Canadian Climate Institute

Canada can’t afford to slow-walk its pursuit of clean growth. The costs of climate-related damage are mounting faster than the costs of implementing solutions. We’re already spending billions of dollars a year on infrastructure repairs, health costs, and rising insurance premiums in response to flooding, wildfires, and extreme weather. The Canadian Climate Institute estimates that Canada’s long-term annual economic growth rate will be reduced by almost half due to climate change, compounding to a loss of hundreds of billions or more by the end of the century.

Clean growth won’t wait for Canada. The accelerating transition to clean energy offers countries previously reliant on fossil fuel imports more energy security and control over their input costs. Canada’s longer-term prosperity requires a sustained public and private-sector focus on clean growth, at a scale and ambition comparable to the recent support for conventional energy projects. It’s especially critical when some of your largest customers are engineering their way out of dependence on your product.

The next federal budget should clearly lay out a clean growth and innovation plan as part of its economic strategy. Otherwise, this government risks betting against the global energy transition—or worse, betting against Canadians being competitive players in the growing global clean market.

Don Drummond is the Stauffer-Dunning Fellow at Queen’s University and an adviser to the Canadian Climate Institute, and is a former senior official at Finance Canada. Peter WB Phillips is the distinguished university professor emeritus of public policy at the University of Saskatchewan, and chair of the Canadian Climate Institute’s expert panel on clean growth. Kate Harland is research director for clean growth at the Canadian Climate Institute.

The Hill Times