Thank you, Madam Chair, and committee members for the opportunity to provide comment today on the impacts of the Inflation Reduction Act on renewable energy in Canada.
CanREA, or the Canadian Renewable Energy Association, is the national industry association representing wind energy, solar energy and energy storage in Canada. Our members deliver low-cost, reliable and scalable solutions to meet Canada's net-zero commitments.
First, I will give a quick outlook on our sector. Currently, renewables meet about 7% of our electricity demand in Canada, with 15 gigawatts of wind and 4 gigawatts of solar capacity across the country, most of it deployed since 2005. The CER's 2021 energy future report projects that wind and solar capacity in Canada will grow by 83% by 2040 based on current policies, and by 239% in the evolving policies scenario.
Looking ahead at net zero—which is not included in any of these scenarios—we need to figure out ways to accelerate wind, solar and energy storage deployment in order to meet our net-zero goals.
CanREA's 2050 vision provides a three-step process to meet net-zero by 2050. First, is grid decarbonization by 2035. Second, is electrification of nearly all energy needs, powered by an expanded clean grid. The third is the use of green hydrogen to provide energy for hard-to-decarbonize sectors in our economy.
Low-cost solar and wind will be foundational for all three of these steps. They not only provide the lowest-cost electricity, but they are mature technologies. They can provide proven, effective emissions reductions today, without the need to wait for R and D or commercialization.
Our vision concludes that we need to increase wind and solar capacity by over tenfold in the next three decades. We need to attract $8 billion in investment annually in order to power this transition and create 800,000 direct and indirect person-years of employment.
The Inflation Reduction Act makes this more complicated than it was six months ago. It's really been a game-changer for our sector. Canada's response to the IRA will be critical for our ability to meet net zero.
The IRA sets out a framework for investment in grid decarbonization and has created an environment that our members say is like a gravitational pull attracting investments to the U.S. We're now facing a fierce competitive landscape. Absent an effective response, we may delay Canada's net-zero success.
This isn't just about the dollars spent in the IRA. There are also a number of policy issues that are impacted, creating a competitive destination in the U.S. That includes long-term certainty over 10 years. We know what the programs will look like over 10 years.
There is a strategic approach that links renewable generation investments to infrastructure that supports them. Transmission, supply chains and the like are also covered by the IRA.
There's also the well-timed distribution of incentive dollars, which pushes investments over the line rather than coming late in the process.
We really need to think about how we match the strategic ambition of the IRA to ensure that we get investments to support net zero in Canada. If we move rapidly enough on this, there is time to do so.
We want to acknowledge that Canada has shown strong leadership on net-zero emissions via regulations like carbon pricing, a commitment to a net-zero grid by 2035, as well as by investing almost $15 billion annually in net-zero spending.
These are really commendable efforts and we do want to celebrate them. But to succeed, we need to take even further steps to match the IRA. I get a lot of questions about what this looks like. We think that overall the steps that were announced in the fall economic statement are a really positive start to this conversation, both with the acknowledgement of the IRA and the commitment to refundable investment tax credits for wind, solar, energy storage as well as green hydrogen. Efforts that Mr. Scholz talked about regarding employment are also very important. We look forward to working to support all of these efforts.
Other steps that could be taken to match the IRA include stronger regulatory signals that provide long-term certainty with the development of a longer term carbon pricing so we know what carbon pricing will look like—at least in 2040 and in the net-zero era—and a strong and effective clean electricity regulation. As well, financial support for things like transmission and smart grids can help get clean electrons to market. We think federal participation will be crucial to ensure accelerated deployment and affordability across the country. As well, strategic focus on supply chain development will help relieve ongoing pressure and potential backlogs and ensure that they're not compounded by the impacts of the IRA.
We think that these steps will result in emissions reductions now and set Canada on an effective, affordable and achievable path to net zero.
Thank you to members and the chair for the opportunity to present today. I look forward to our conversation.
Thank you.