TORONTO (CU)_The largest bank in Canada recently published a report which pegged the cost of transitioning the country’s economy to net-zero emissions at $2 trillion, which is to be spent over the next three decades. Although, this figure is roughly equivalent to Canada’s annual GDP last year, the multinational financial services company claims that the required funds are available to finance the transition.
“In total, it seems like a daunting number, but when you break it down, it’s manageable for an economy like Canada,” John Stackhouse, senior vice-president, office of the CEO at Royal Bank of Canada, and co-author of the study said. “We’re looking at $60 to $80 billion per year, that’s much less than we spend on health care, for example. It’s in line with what we aspire to spend on child care.”
The report, titled ‘The $2 Trillion Transition: Planning for Canada’s place in a Net Zero world’, was released on Wednesday (27 October). It sets out a possible course for Canada to reach its net zero target by mid-century and budgets the cost of this transition. According to the study, the Toronto-based bank believes that the government and the private sector must spent a total of $56.4 billion each year, across six sectors which make major contributions to the country’s greenhouse gas emissions.
Breaking down its analysis, the RBC pins $25 billion per year to build infrastructure for the transportation sector to transition to electric vehicles, while a cost of $13.7 billion on must be incurred on emissions reductions in the oil and gas sector. Meanwhile, $5.4 billion each was allocated to the electricity sector and the retrofitting of old buildings. The financial service provider also pegged a price tag at $4.4 billion for heavy industries and $2.5 billion for the agricultural sector annually.
According to Stackhouse, while the cost of achieving carbon neutrality is gargantuan, it is not beyond reach.
“Capital is not a problem. We at RBC have committed $500 billion to sustainable finance. For good projects, good opportunities, there is plenty of capital. The world is looking for these types of opportunities,” he said. “What we really struggle with is making collective decisions on how to go about solving these challenges, even on what needs to be done.”
