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The key to a low-carbon economy might be under our noses – and under the ground – The Globe and Mail

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JT Steenkamp is a project manager for low-carbon energy projects at Shell and a Fellow of the Energy Futures Lab.

Erin Romanchuk is director of partnerships with the Energy Futures Lab, a coalition of over 60 diverse organizations collaborating to create the future energy system.

COVID-19 has wreaked havoc on global energy markets and thrown long-held beliefs about how and why we use energy into question. But it’s also given us the opportunity to form new beliefs – and one that’s gaining traction is the idea that any Canadian rebuilding effort must focus on accelerating the transition toward lower-carbon emission sources of energy.

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The International Energy Agency (IEA), for one, has come out strongly in favour of a recovery plan powered by clean energy. “Large-scale investment to boost the development, deployment and integration of clean energy technologies should be a central part of governments’ plans because it will bring the twin benefits of stimulating economies and accelerating clean energy transitions,” IEA director Fatih Birol wrote on the organization’s website in March.

But while the kinds of investments in clean energy being urged by the IEA will help support a range of newer technologies and processes, there’s a much older one whose moment may have finally arrived: carbon capture and storage (CCS), which traps carbon dioxide and transports it to a storage location, usually deep underground.

The technology has already been operating safely in Canada for decades. The Weyburn-Midale Carbon Dioxide Project, which takes CO2 from the Dakota Gasification Company and injects it into depleted oil fields in southern Saskatchewan, has been around since 2000; for a time, it was the largest such project in the world. The Shell-operated Quest facility, which started up in 2015, has already captured and stored more than 5 million tonnes of CO2, more than any onshore CCS facility in the world with dedicated geological storage.

Unfortunately, while the technology has advanced, the economics can be more challenging. Government funding and Alberta’s decade-old industrial carbon tax has made those economics more attractive, but it hasn’t been enough to trigger any major new investments since Quest and the Alberta Carbon Trunk Line were built. For Canada to meet the 2050 net-zero emissions target it has set, it will need many new carbon capture projects to do a lot of the heavy lifting. The good news is, the technology currently used to capture CO2 can be applied to existing industrial sources and growing sectors such as hydrogen production and mineral mining for clean energy battery storage to lower CO2 emissions. As ARC Energy Research Institute analyst Jackie Forrest told The Globe and Mail recently, “There’s no way you’re going to get to net-zero without injecting CO2 and storing it.”

That’s where a new tax credit could come into play. In 2018, the United States enacted a rule called 45Q, which gives industrial manufacturers who capture carbon from their operations up to US$50 per metric tonne if they store it permanently, and up to US$35 if the CO2 is put to use. If we want to advance CCS technology here, we’ll need to use ’carrots’ such as a 45Q measure adapted for Canada.

The province of Alberta can further encourage carbon capture by building out the northern leg of the Alberta Carbon Trunk Line, which is at present a 240-kilometre pipeline that can transport up to 14.6 million tonnes of the CO2 emitted per year by facilities operating in Alberta’s industrial heartland. By connecting the CO2 generated by fertilizer, chemicals, refined fuels and oil sands production to end-users to the south, it would deliver two wins: reducing the energy intensity of fuels and other goods and creating an opportunity to make value-added products from the CO2 they emit.

There’s a potential third win here, and it might be the biggest of all: By creating a more hospitable environment for carbon capture technology, the governments of Alberta and Canada could also help shift the perception of carbon itself. Rather than simply being seen as a cost both in economic and environmental terms, it could be transformed into a potential asset. That asset could seed an entire new economic ecosystem that could create both new jobs and a new source of shared prosperity.

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We have a lot of work ahead of us if we’re going to get there, though. First, more carbon capture facilities are needed to drive down costs for future projects through learning, replication, and modularization of equipment. But without the right framework in place, it’s going to be tough for anyone to make that kind of investment decision. And if Canada is serious about achieving its net-zero target in three decades’ time, it’s time for a new priority around CCS and the policies needed to make it happen.

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Economy

Canada’s unemployment rate holds steady at 6.5% in October, economy adds 15,000 jobs

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OTTAWA – Canada’s unemployment rate held steady at 6.5 per cent last month as hiring remained weak across the economy.

Statistics Canada’s labour force survey on Friday said employment rose by a modest 15,000 jobs in October.

Business, building and support services saw the largest gain in employment.

Meanwhile, finance, insurance, real estate, rental and leasing experienced the largest decline.

Many economists see weakness in the job market continuing in the short term, before the Bank of Canada’s interest rate cuts spark a rebound in economic growth next year.

Despite ongoing softness in the labour market, however, strong wage growth has raged on in Canada. Average hourly wages in October grew 4.9 per cent from a year ago, reaching $35.76.

Friday’s report also shed some light on the financial health of households.

According to the agency, 28.8 per cent of Canadians aged 15 or older were living in a household that had difficulty meeting financial needs – like food and housing – in the previous four weeks.

That was down from 33.1 per cent in October 2023 and 35.5 per cent in October 2022, but still above the 20.4 per cent figure recorded in October 2020.

People living in a rented home were more likely to report difficulty meeting financial needs, with nearly four in 10 reporting that was the case.

That compares with just under a quarter of those living in an owned home by a household member.

Immigrants were also more likely to report facing financial strain last month, with about four out of 10 immigrants who landed in the last year doing so.

That compares with about three in 10 more established immigrants and one in four of people born in Canada.

This report by The Canadian Press was first published Nov. 8, 2024.

The Canadian Press. All rights reserved.

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Health-care spending expected to outpace economy and reach $372 billion in 2024: CIHI

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The Canadian Institute for Health Information says health-care spending in Canada is projected to reach a new high in 2024.

The annual report released Thursday says total health spending is expected to hit $372 billion, or $9,054 per Canadian.

CIHI’s national analysis predicts expenditures will rise by 5.7 per cent in 2024, compared to 4.5 per cent in 2023 and 1.7 per cent in 2022.

This year’s health spending is estimated to represent 12.4 per cent of Canada’s gross domestic product. Excluding two years of the pandemic, it would be the highest ratio in the country’s history.

While it’s not unusual for health expenditures to outpace economic growth, the report says this could be the case for the next several years due to Canada’s growing population and its aging demographic.

Canada’s per capita spending on health care in 2022 was among the highest in the world, but still less than countries such as the United States and Sweden.

The report notes that the Canadian dental and pharmacare plans could push health-care spending even further as more people who previously couldn’t afford these services start using them.

This report by The Canadian Press was first published Nov. 7, 2024.

Canadian Press health coverage receives support through a partnership with the Canadian Medical Association. CP is solely responsible for this content.

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Trump’s victory sparks concerns over ripple effect on Canadian economy

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As Canadians wake up to news that Donald Trump will return to the White House, the president-elect’s protectionist stance is casting a spotlight on what effect his second term will have on Canada-U.S. economic ties.

Some Canadian business leaders have expressed worry over Trump’s promise to introduce a universal 10 per cent tariff on all American imports.

A Canadian Chamber of Commerce report released last month suggested those tariffs would shrink the Canadian economy, resulting in around $30 billion per year in economic costs.

More than 77 per cent of Canadian exports go to the U.S.

Canada’s manufacturing sector faces the biggest risk should Trump push forward on imposing broad tariffs, said Canadian Manufacturers and Exporters president and CEO Dennis Darby. He said the sector is the “most trade-exposed” within Canada.

“It’s in the U.S.’s best interest, it’s in our best interest, but most importantly for consumers across North America, that we’re able to trade goods, materials, ingredients, as we have under the trade agreements,” Darby said in an interview.

“It’s a more complex or complicated outcome than it would have been with the Democrats, but we’ve had to deal with this before and we’re going to do our best to deal with it again.”

American economists have also warned Trump’s plan could cause inflation and possibly a recession, which could have ripple effects in Canada.

It’s consumers who will ultimately feel the burden of any inflationary effect caused by broad tariffs, said Darby.

“A tariff tends to raise costs, and it ultimately raises prices, so that’s something that we have to be prepared for,” he said.

“It could tilt production mandates. A tariff makes goods more expensive, but on the same token, it also will make inputs for the U.S. more expensive.”

A report last month by TD economist Marc Ercolao said research shows a full-scale implementation of Trump’s tariff plan could lead to a near-five per cent reduction in Canadian export volumes to the U.S. by early-2027, relative to current baseline forecasts.

Retaliation by Canada would also increase costs for domestic producers, and push import volumes lower in the process.

“Slowing import activity mitigates some of the negative net trade impact on total GDP enough to avoid a technical recession, but still produces a period of extended stagnation through 2025 and 2026,” Ercolao said.

Since the Canada-United States-Mexico Agreement came into effect in 2020, trade between Canada and the U.S. has surged by 46 per cent, according to the Toronto Region Board of Trade.

With that deal is up for review in 2026, Canadian Chamber of Commerce president and CEO Candace Laing said the Canadian government “must collaborate effectively with the Trump administration to preserve and strengthen our bilateral economic partnership.”

“With an impressive $3.6 billion in daily trade, Canada and the United States are each other’s closest international partners. The secure and efficient flow of goods and people across our border … remains essential for the economies of both countries,” she said in a statement.

“By resisting tariffs and trade barriers that will only raise prices and hurt consumers in both countries, Canada and the United States can strengthen resilient cross-border supply chains that enhance our shared economic security.”

This report by The Canadian Press was first published Nov. 6, 2024.

The Canadian Press. All rights reserved.

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