Thank you for the introduction, and thanks to the committee for the invitation.
Every year, the Canadian Centre for Policy Alternatives produces an alternative federal budget, which we do in collaboration with dozens of organizations and experts across the country. Our 2024 edition was released in August, and I'm excited to be able to share some of our recommendations with you.
In particular, I'm going to focus my remarks on my own areas of expertise, which are climate policy and green industrial policy, but I'm happy to address questions about the federal budget more broadly.
For context, green industrial policy is something our biggest allies and competitors are already engaged in. The U.S., the EU, China and others are putting the weight of government behind a cleaner economy, and that means that the playing field in growth industries is not level. If we want to compete in a global economy that is moving away from fossil fuels, we need government to play a larger role in the market.
To be clear, this transition is not optional. The Canada Energy Regulator forecasts an 83% decline in oil sands production in its global net-zero scenario. The International Energy Agency recently forecast a 76% decline in global oil demand under a similar scenario, so we need to start planning now for what our post-oil economy will look like in the coming decades, whether we like it or not.
The federal government has started to experiment with green industrial policy. Budget 2023, as you know, included investment tax credits worth tens of billions of dollars, but this approach of trying to incentivize the private sector to do the heavy lifting of transitioning Canada to a greener economy has limits.
First, there's no guarantee that the market will buy in. That was made very clear by the Canada Infrastructure Bank's inability, under its original mandate, to attract private capital. For projects of vital national importance—for example, things like tripling the capacity of our national electricity grid, which underpins basically everything else we do on climate—we can't afford to wait and hope that the private sector steps up.
Second, if the credits turn out to be too generous, they will effectively pad the profits of private investors without leading to any actual increase in green investment, and that's just a waste of money that could be better spent on public goods.
Third and perhaps most importantly, this market-led approach to green investment will not resolve the regional dimensions of transition. Much of the public money that's been allocated to clean industry is going to flow into corporate headquarters in Toronto and Calgary and not into the often rural communities that really need investment and economic diversification.
Those are the problems. What are the alternatives?
In the alternative federal budget, we call first of all for a comprehensive national green industrial strategy. This government has published a lot of strategies for critical minerals, emissions reductions and so on, but they don't all share a single, coherent vision for the economy. We cannot be a climate leader that meets its emission goals while also being an exporter of oil and gas, either practically or morally. We need a whole-of-economy strategy that starts from the end point, which is an economy free of fossil fuels by 2050, and works backwards to what that means for policy today in every sector.
When it comes to spending, we call for direct public funding—not financing and not corporate incentives—in a number of key sectors, including $5 billion per year to decarbonize and expand the electricity grid, as I mentioned, and $15 billion per year for energy efficiency retrofits of homes and buildings. The federal government is already spending in these and other strategic areas, and that's good. The issue is that we simply need more capital, given the urgency of the climate crisis.
We call for new public interest mandates for both the Canada Infrastructure Bank and the Canada growth fund. Instead of trying to de-risk private investment, these institutions should be offering funding and low-cost loans to governments and to communities, especially those most affected by the transition to net zero. In other words, we'd like these institutions to function more like public banks that can support community-led, public-interest initiatives.
We also call for $1 billion per year for more aggressive workforce development policies. It's no secret that we're already facing large skills shortages in key sectors in the clean economy, and that problem is only going to get worse in the coming years. Training and retraining workers for these jobs will not only enable us to build the green economy we want but also help to ease the transition away from fossil fuels for affected workers in an equitable way.
These are just a handful of recommendations from our alternative federal budget. As I mentioned, the full document includes hundreds of recommendations across 26 chapters in every area of federal policy, so I strongly encourage you to take a look. We've provided copies in English and French to the clerk.
Thank you again for your time, and I look forward to your questions.