That’s what we witnessed this week, when the leaders of the United States and China altered the climate playing field literally overnight.
Analysis of the new agreement has been pouring in, and the full impact of the announcement will take months, even years, to play out. But whatever else it means for the Paris climate talks, global emissions, the Keystone XL pipeline proposal, or Canada’s climate policy, there’s no question it’s big news for clean energy.
Here are three of the deal’s implications for Canada and clean energy
1. Even taken in isolation, the agreement creates huge new clean energy opportunities
In addition to China’s pledge to halt the growth in its emissions by 2030, President Xi announced a specific target of increasing “the share of non-fossil fuels in its primary energy consumption to around 20 per cent by 2030”—roughly double today’s share of non-fossil energy in China’s energy mix. As the White House explained in its commentary on the deal, meeting that goal would see China add nearly as much non-fossil power (both clean energy and nuclear) by 2030 as the total capacity of the U.S. energy sector today.
Meanwhile, if the United States is to hit its new 2025 target—again, according to White House analysis—our neighbors will need to cut emissions twice as fast each year after 2020 as they are doing so today. That will mean carbon pollution reductions across the board—but with power plants making up a big slice of the U.S. emissions picture, America’s appetite for clean energy is clearly poised to grow.
China and the U.S. were already the globe’s Number 1 and 2 investors in clean energy in 2013. This week, they effectively told the world that their demand for clean power is headed in only one direction: up.
That’s great news for Canada’s 100+ clean-energy companies. The United States is, of course, our natural market for exports of clean power—but China’s commitments also mean a growing global market for Canadian purveyors of clean energy goods, services and expertise. If China moves aggressively to meet its new targets, Ontario Premier Kathleen Wynne’s recent success in promoting clean technology on a trade mission to China could be just the tip of the iceberg.
The agreement the two countries signed is not binding in any way, so it’s fair to ask whether they can deliver. U.S. Secretary of State John Kerry wrote this week that his country’s new target “is grounded in an extensive analysis of the potential to reduce emissions in all sectors of our economy”—an analysis that has been underway for more than a year inside the U.S. government, according to reports.
Similarly, China’s track record at international climate talks has been to commit to less than the country’s leaders actually think they can deliver; John Kerry, for one, says he’s confident China “can and will reach peak emissions before 2030,” thanks to its ongoing economic restructuring, efforts to reduce air pollution, and commitment to “stimulate an energy revolution.”
2. The bilateral agreement boosts the prospects for a global climate deal—which would lead to even more clean energy demand
There’s nothing subtle about the agenda here. With this agreement, the United States and China said they are seeking to “inject momentum into the global climate negotiations and inspire other countries to join in coming forward with ambitious actions as soon as possible.”
Climate watchers agree that this partnership between the world’s top two carbon polluters will have exactly that effect. China and the U.S. have indeed ratcheted up the pressure on other major economies, especially when the world’s third-largest emitting jurisdiction, the European Union, has put its own targets on the table as well.
Of course this week’s deal doesn’t guarantee success at the 2015 Paris climate talks, but it does increase the odds. Importantly, the text of the agreements says the two countries’ targets are “mindful of the global temperature goal of 2C,” a key international commitment, and that both sides “intend to continue to work to increase ambition over time”—which leaves some room for negotiation in the run-up to Paris.
If it works—that is, if we do see more and more countries take action to tackle carbon pollution—the resulting energy shift would have direct consequences for our economy.
3. Canada needs to make sure it’s ready to succeed in a clean energy economy
Tackling carbon pollution means using fewer fossil fuels. So over time, strong global climate action means less demand for our high-carbon, high-cost oil sands, while clean energy—already a fast-growing sector today—would truly take flight.
Canada has yet to rise to the challenge presented by presidents Obama and Xi: Our federal government’s statements thus far have welcomed the agreement in vague terms without promising any new action of our own.
U.S. climate policy is particularly important for Canada, of course—not only because our neighbour is our largest trading partner but because our government has said for years that it is “fully aligned” with the U.S. on climate policy. (The reality is far more “out of tune” than harmonized: the U.S. is on track to hit its 2020 target, while Environment Canada’s projections show that we’re on track to miss the same goal by a massive margin.) Federal government ministers have also pointed fingers at China as a barrier to climate progress. As numerous Canadian experts have made clear, Canada is now officially out of excuses on both counts.
So the short term impact on Canada is more pressure for climate action on our federal government. Since climate action is nowhere near the top of Ottawa’s priority list, that’s great news.
Longer term, this week’s agreement makes it even clearer that it’s too risky to pin all our economic hopes to growing oil and gas development. Instead, we need clear and consistent policies that support clean energy—policies like tax support for clean energy, infrastructure dollars to build it, and, yes, a price on carbon.
These policies would yield benefits—think jobs, innovation and costs savings, as well as lower pollution—from coast to coast to coast.
Canada has an abundance of the raw materials and ingenuity needed to succeed in the clean-energy economy, but it takes leadership to pull them together. That’s what we saw this week from the world’s biggest carbon polluters.
We’re still waiting for Canada to follow suit.