I have a few slides that I will pass around in case anyone wants to see them. There are some pretty slides. I apologize; they're only in English.
I'm going to speak in English today.
I am a professor of law and economics at the University of Ottawa and also a member of the federal government's economic strategy table for the resource sectors.
Today I am here as the chair of Smart Prosperity Institute, wearing two hats. It is Canada's largest environment economy research network, doing world-class research on clean innovation, resource efficiency and ways to drive both environmental performance and boost competitiveness at the same time. I am also the co-chair of a leaders initiative that has 28 CEOs from all sectors across the economy, including oil, mining and banking, who have put out a vision to make Canada a world leader in clean growth and innovation and a road map to get there.
The premise of my remarks today is that clean growth and innovation is a vital economic opportunity for Canada, but don't take my word for it. Radical environmentalists such as the Mackenzie Institute, the OECD, the World Economic Forum and the Business Council of Canada have put out reports in the last few years saying that. Countries that are leaders in energy efficiency, low-carbon production and innovation will be the most competitive in the decades ahead. It's a $35-trillion global economic opportunity across all sectors of the economy that we can't afford to miss.
That was also a finding of Canada's economic strategy table. It found that clean growth is a major opportunity for all parts of the economy because markets and investors are demanding it and it's where profits will lie. This was not just for clean tech, which we hear a lot about. There is indeed a fast-growing market which will be $2.5 trillion soon, and Canada is well positioned for it if we can overcome barriers. Also for the resource sectors, Canada's core economic strength, clean growth is a $3.6-trillion opportunity for them.
Turning to the budget, how can it advance clean growth and capture these opportunities? I have three points.
The first is transportation. It accounts for 24% of our greenhouse gas emissions and is also a big part of our economy. The budget invests in electric vehicle adoption through a $5,000 consumer incentive, a 100% tax writeoff for businesses, and the building of charging stations. One should always question whether a subsidy is a smart economic investment. In this case I think there is a good argument that it is. The government has historically provided incentives to support promising new technologies as their cost curves come down. We did this with the oil sands, and investing in the vehicles of the future seems like an equally good investment.
I have included a couple of charts to show that experience in three different provinces shows that incentives are effective. In Ontario, B.C. and Quebec they have more than doubled demand for electric vehicles.
I have two cautions. One is, don't overspend. You can provide too much of an incentive and you get diminishing marginal returns. I think $5,000, which is lower than the one we've seen in Quebec and Ontario, is right, given that the technology costs are coming down and getting closer to cost-competitiveness. Update it to make sure that as battery costs come down, your incentive is appropriate.
My second point is reforming how we regulate to drive competitiveness and innovation. This was the number one recommendation of the Barton growth council and the economic strategy table.
Canada ranks middle of the pack for developed countries in both the efficiency of our regulations and our environmental performance. That's not good. This is the low-hanging fruit for driving clean growth and competitiveness, the economic strategy tables found. The fall economic statement and the budget announce some of the recommendations: the external advisory committee and a centre for regulatory innovation. Those are good, but it falls short of what the Barton committee and the economic strategy tables recommended.
They recommended that we need an independent council with its own expert capacity to drive Canada toward world-class regulation for competitiveness and innovation. I would encourage you to go further and create that kind of independent capacity, which is different from simply putting more capacity in government. We need both. Reforming regulations is vital, but it's hard.
Tax incentives for clean growth were also a key recommendation of the economic strategy table both to keep pace with the U.S. cuts and also to spur investment in clean technology, at two stages: early-stage growing firms and also with adoption of technology by mature, large firms.
The fall economic statement had 100% accelerated capital cost allowance for clean technologies, which builds on the carbon tax by adding a tax cut for the same firms that are investing in low-carbon technologies. That's good. It doubles the effect and helps competitiveness. The problem is it's limited to just 19 specific clean technologies. It misses most of Canada's clean technology firms.
What you should do is expand it to cover all low-carbon technologies. Firms like Nova Scotia's CarbonCure, which is reinjecting carbon back into cement, for example, isn't captured by these 19 specific technologies, so expand it to cover all low-carbon technologies and, indeed, all clean technologies. If you want our resource sectors to be leaders in water efficiency and air pollution reduction, let's roll the incentive out to all those things, as the U.K. and the Netherlands have done.
I would add that the part of the budget bill about fossil fuel subsidy reform, which is a G7 commitment and is good, needs to be careful to distinguish those incentives for the oil and gas industry that support cleaner production. We don't want to be phasing those out. You actually want incentives to support cleaner production. They tend to all get rolled together when people put these lists out. Don't eliminate incentives for the oil industry to support clean production.
Last, the one big gap in terms of tax credits is that the economic strategy tables also recommended an investor tax credit to support early stage clean-tech innovative firms. This is what's known as the valley of death in terms of technology investment start-up. New Brunswick, B.C. and Alberta all have 30% investor tax credits for small growing firms and they work really well. We recommended the same federally. It hasn't made it into the budget yet.
The other advantage is that we've put $2 billion to support public investment through BDC, EDC and SDTC in these firms. This will pull in the private capital to leverage those public dollars, which is the end game you want. I would recommend that as a priority for budget 2020.
Clean growth is an opportunity we can't afford to miss. The government has a key role to play, as we've done in other areas like free trade and deficit reduction.
Thank you for the efforts you're making, and keep going.