The global urgency to mitigate climate change impacts has intensified the exploration of substantial emission reduction strategies among researchers, policymakers, and various institutions. In support of these explorations are the recent studies “Pathways to Decarbonization” by the Independent Electricity System Operator (2022) and “Pathways to Net Zero Emissions for Ontario” by Guidehouse (2023). These studies converge on the necessity of substantial infrastructural investments to achieve a decarbonized electrical grid in Ontario by 2050, with a strong emphasis on the critical roles of hydrogen (H2) and carbon capture and storage (CCS) technologies, especially in industrial and transportation sectors.
Our report, “Economic Contribution of CCS and H2 Investments in Ontario 2024-2050,” builds on this foundation, specifically investigating the economic ramifications of these investments based on the diversified scenario that demands a capital investment of $681 billion by 2050.
Potential Economic Contribution is Significant
Investments in CCS and hydrogen gas systems, potentially totalling up to $95 billion by 2050, are projected to have a significant positive impact on Ontario’s economy. These investments are anticipated to stimulate more than $218.8 billion in economic activity and facilitate the creation of 1.2 million job-years from 2024 to 2050. Significant sectoral impacts are expected, particularly in hard-to-abate sectors such as cement, steel, and fertilizer manufacturing, with extensive gains also predicted for the Utilities and Retail Trade sectors. The economic influence of these investments is further substantiated by the projected contributions to direct, indirect, and induced economic activities, underscoring their centrality in driving Ontario’s economic growth.
The High Opportunity Costs of Delays
However, there are substantial opportunity costs associated with any delays in these strategic investments. Potential delays, whether rooted in legislative, financial, or supply constraints, could have significant economic repercussions. For instance, a 3-year delay is projected to result in a $52.7 billion decrease in total GDP contribution by 2050, and a 5-year delay could escalate this loss to $83.7 billion. These delays could also jeopardize between 23% and 36% of the potential job-years. Additionally, the efficiency of these investments is likely to be compromised over time, leading to diminishing returns, further underscoring the importance of timely implementation.
The pathway to a sustainable, net-zero future is critically dependent on timely and significant investments in technologies such as CCS and H2 systems. While these investments are poised to yield considerable economic benefits across various sectors in Ontario, the opportunity costs of delays are notably substantial. The findings of our report accentuate the necessity for prompt action and adherence to the proposed investment timelines. Both the economic objectives and the overarching environmental goals of a net-zero future hinge on the immediate mobilization of resources and strategic investments. Consequently, a proactive, committed approach is requisite to navigate potential challenges and capitalize on the substantial rewards that these investments present.
Luis Mazzali, David Stiff, Paul Smetanin