As Canada strives towards a net-zero future by 2050, the importance of investing in carbon removal has become increasingly evident. Achieving this ambitious goal hinges not only on reducing emissions but also on actively removing CO2 from the atmosphere. Although Canada’s current leadership in the sector is promising, swift and decisive action is essential to maintain momentum. With the United States (U.S.) and the European Union (EU) aggressively pursuing their own carbon removal strategies, Canada must act quickly to avoid falling behind.
Thriving Innovation Ecosystem
Developing a robust carbon removal industry presents a significant opportunity for Canada to assert global climate leadership, enhance economic competitiveness, and foster job creation across urban and rural areas. Major corporations like Shopify and BMO Financial Group have already committed to purchasing large volumes of carbon removal from project developers, providing a crucial boost to the market.
As of October 2024, Canada is home to more than 70 carbon removal companies and supply chain partners, varying in commercial readiness and project types across several provinces.
A Burgeoning Policy Environment
Canada’s climate goals include a 40-45 percent reduction in greenhouse gas (GHG) emissions by 2030 (compared to 2005) and achieving net-zero GHG emissions by 2050 under the Canadian Net-Zero Emissions Accountability Act of 2021. However, Canada has only reduced emissions by about 8 percent from 2005 levels so far.
To advance, Canada must accelerate policy development to support carbon removal. Observing the progress of policy in the U.S. and the EU reveals the necessity for a similar proactive approach in Canada.
Policy Progress in the United States
The U.S. has made historic commitments to fund the carbon removal industry with USD$3.7 billion. This funding supports various strategic initiatives, including:
- A pre-commercial prize competition for Direct Air Capture (DAC) technologies.
- Development of four regional DAC hubs.
- Grants for CO2 utilization applications.
Additionally, the U.S. Department of Energy has allocated USD$35 million for the direct procurement of credits from projects through a purchasing pilot program.
Policy Progress in the European Union
The European Union is setting the benchmark for standards development with its Carbon Removals and Carbon Farming Regulation, designed to validate carbon removal project outcomes. The European Commission is also expected to propose a 2040 climate target in 2024, outlining how carbon removal efforts will be integrated into the broader net-zero strategy.
How can Canada stay competitive?
To harness the power of carbon removal, federal, provincial and territorial governments must act swiftly to create a supportive policy and regulatory environment for the sector or risk Canadian innovators establishing operations and deploying projects outside of Canada.
Policies should foster an inclusive environment – engaging various stakeholders such as governments, the private sector, academia, non-governmental organizations, cleantech accelerators, philanthropies, Indigenous communities, labour groups and the skilled Canadian workforce.
Canada possesses a solid foundation for building carbon removal capacity, but policymakers must take bold, decisive actions to unlock the full potential of this industry. By fostering a supportive policy environment and capitalizing on the growing market, Canada can become a global leader in carbon removal and contribute significantly to the fight against climate change.
