As Canada advances toward its 2050 net-zero emissions target, it’s facing a fundamental challenge: ensuring all parts of the country can participate in and benefit from the transition to a clean economy.

Canada’s regional economies are diverse, spanning Alberta’s oilsands, Québec’s hydroelectric systems, northern mining operations and urban tech hubs. These differences mean that net-zero transitions will manifest differently, creating opportunities for some regions and vulnerabilities for others.

Rural and remote regions accounted for 52 per cent of Canada’s total greenhouse gas emissions in 2022 alone, and these regions in particular face complex transition dynamics. These regions host oil, gas, coal and mining industries that power Canada’s economic development.

An equitable net-zero transition requires promoting regional competitiveness while ensuring no place is left behind; in other words, cohesion. Successful sustainability transitions demand both innovation-driven growth strategies and support for regions facing economic disruption.

Canada needs to ensure a net-zero transition translates into broadly shared prosperity rather than exacerbated regional inequalities. Doing so can help rectify the historical pattern of resource extraction that has not always benefited local communities.

Challenges faced by rural and remote regions

Rural and remote communities are typically less economically diverse than urban centres. They are often built around one or more dominant industries and have smaller labour markets with fewer specialists. They also have limited access to the financial and human capital necessary for transitioning to net-zero.

Energy transitions can create new industries and transform existing ones to be cleaner. They can replace old industries with new ones and diversify the economy. However, they can also phase out industries in areas where there aren’t enough replacement options. Communities that depend on a single industry are often hit the hardest by these changes.

Canada’s transition policies are rightly focused on regional competitiveness and innovation through, for example, the Regional Economic Growth through Innovation and the Global Innovation Clusters programs. However, they often fail to proactively support the rural, remote and resource-dependent regions and communities most vulnerable to the disruptions of transitions.

This results in reactive policies and programs that are often deployed only after economic shocks. They rarely target the most at-risk groups and governance frameworks lack clear mechanisms for co-ordinated action, accountability and consideration of Indigenous rights and local well-being.

European precedents

The European Union’s 55 billion euro Just Transition Mechanism provides valuable insights for Canadian policymakers. The EU initiative combines both competitiveness and compensation strategies within a comprehensive development model.

The mechanism integrates investment schemes that promote innovation in clean technologies with targeted support for the regions most vulnerable to job losses and economic downturns. Each EU member state develops just transition plans identifying specific regions and industries requiring support, alongside dedicated investment programs tailored to local economic conditions.

This approach recognizes that effective sustainability transitions require incentives for innovation and protections for disrupted communities.

In addition, the EU’s Just Transition Fund specifically targets regions that are socially, economically and environmentally most vulnerable to transition impacts, while simultaneously encouraging investments in emerging sectors critical for reaching net-zero.

Canadian regional development approaches have historically emphasized competitiveness and innovation, with transition management remaining largely reactive rather than proactive.

An exception is the Canada Coal Transition Initiative, which provided flexible, locally tailored approaches and co-ordinated support across federal, provincial and local levels. That approach is essential for sustainable and equitable transition outcomes in diverse regions.

But Canada has generally been reluctant to explicitly identify and designate regions most at-risk from net-zero transitions. This hesitancy may leave vulnerable communities without targeted support.

Institutional capacity and governance challenges

The effectiveness of both competitiveness and cohesion strategies depends on a region’s institutional capacity and governance. On this point, rural and remote regions are often at a disadvantage. They have smaller administrations, fewer resources and limited capacity to manage complex transitions.

The Canadian government’s Regional Energy and Resource Tables offer a new collaborative approach to help bridge these gaps by bringing federal, provincial, territorial and Indigenous partners together.

The tables aim to co-ordinate expertise, resources and partnerships to identify economic priorities and build the capacity to pursue low-carbon growth opportunities. Ten tables are presently underway. This will be an important initiative to watch and evaluate.

Other collaborations can also facilitate peer learning and shared problem-solving. For example, Yukon University’s Northern Energy Innovation group partners with First Nations and utility companies to provide place-based solutions and facilitate knowledge networks. The challenge here lies in connecting these local strengths with external resources and expertise and to expand them as needed.

Sustainable transitions

As Canada encourages new economic activities essential for net-zero transitions, such as critical minerals development, it’s crucial that past inequalities are not reproduced, particularly regarding Indigenous rights holders on territories where these projects are operating.

Canadian governments have substantial room for improvement in this regard, as a lot of rural policy in Cananda continues to treat these regions as sites of resource extraction detached from broader development strategies.

The stakes of this transition are considerable. Managed effectively, net-zero transitions can put Canada on a path to sustainable and inclusive growth. Managed poorly, they risk deepening territorial divisions and creating new patterns of regional disadvantage.

The policies adopted today will determine which of these futures emerge, making the integration of competitiveness and cohesion approaches not merely desirable but essential for Canadian prosperity and social cohesion in the decades ahead.

This article is republished from The Conversation, a nonprofit, independent news organization bringing you facts and trustworthy analysis to help you make sense of our complex world. It was written by: Tamara Krawchenko, University of Victoria

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Tamara Krawchenko received funding for this research from the Centre for Net-Zero Industrial Policy. She is an expert panelist with the Canadian Climate Institute, a Visiting Scholar with the Institute for Research on Public Policy, and a Board member for Ecotrust Canada.