CALGARY – A $120-billion opportunity exists for companies that can help reduce Canada’s emissions, according to a new report, as the federal government plans its tax on carbon and as companies like TransAlta Corp. shift toward renewables more quickly than expected.

Boston-based Lux Research published a report Thursday that estimated Canada’s carbon tax plans could generate $120 billion in tax revenues by 2030 and that money “can be funnelled toward domestic technology innovators.”

“While it remains to be seen how Canada’s provinces will spend the billions in tax revenues, proper allocation of funding can eventually position Canada as a global hotspot for innovations,” Lux Research senior analyst Yuan-Sheng Yu said in a release.

Yu’s report predicts that Canada would become “a destination for global technology developers” and that clean-tech providers targeting the transportation and waste-management sectors are the best positioned to profit from the transition. Yu said there were also opportunities for power  companies to generate earnings from the country’s transition to lower its emissions.

It is released at a time when Ottawa is planning to directly invest $1.8 billion from its federal budget in clean-technology companies and as companies in multiple sectors have begun planning ahead for a Canada-wide $50-per-tonne carbon tax in 2022.

“Carbon is now an input, so like any other thing, as the cost of an input goes up, you want to minimize it,” TransAlta Corp. president and CEO Dawn Farrell said Thursday, adding that a $50 per tonne carbon price makes converting her company’s coal-fired power plants to natural gas more economic.

TransAlta, a major Alberta power company, announced Wednesday it would accelerate its planned retirement of coal-fired generating stations from 2029 to 2023, mothballing some power plants and converting others to burn natural gas.

Farrell also said she would have discussions with other power producers with which TransAlta co-owns coal power plants to discuss accelerating the phase-out of those plants.

The decision, Farrell said at her company’s annual meeting Thursday, would “support our transition to become Canada’s leading clean-power company.”

“We can see that those who invest in renewables and then also have competitive capacity to back them up will be among the most competitive electricity generators,” Farrell said.

The Lux report predicted that “Canada’s electricity sector will shift from (being the country’s) third-largest emitter to the second-lowest in less than 20 years.”

A number of TransAlta retail shareholders expressed their frustration with TransAlta’s decisions on shifting away from coal and toward renewables Thursday, saying the strategy would result in higher cost electricity for residential buyers.

One shareholder suggested TransAlta spend more of its capital outside of Alberta to avoid “bad governance” from Alberta’s NDP government.

“There are a lot of coal plants in the U.S. that are shutting down and converting to gas ahead of us,” Farrell said, adding the availability of cheap natural gas due to a lack of LNG export facilities should secure a long-term supply of low-cost gas.

Financial Post

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