by Peter Nicholson – Canadian Climate Institute: Opening Remarks at 2026 Board Planning Retreat – January 13, 2026
When thinking about the world in which the Canadian Climate Institute will be operating between now and the end of the decade we need to acknowledge, at the outset, that today climate change is not top of the public mind in Canada, or in the United States or in fact in much of the world. Other concerns dominate—affordability, housing, inflation hangovers, geopolitical instability, democratic anxiety, and now the disruptive emergence of AI.
This should not surprise us because big public issues—and climate change is certainly one—almost always wax and wane in salience. We have seen this ebb and flow repeatedly and I am old enough to have witnessed several cycles.
Energy security dominated political thinking in the 1970s, then receded for decades as high oil prices brought forth vast new supplies, only to see crisis re-emerge as Russia’s invasion of Ukraine upended the gas market in Europe. Fiscal sustainability was an obsession in the 1990s, which I witnessed directly from the vantage of the federal Department of Finance in 1995. Calm was re-established, but then reversed abruptly with the great recession of 2008. National security surged as an issue after 9/11, declined in the 2010s, and has now re-emerged, albeit in a very different geopolitical form.
Climate change is following a broadly similar pattern. Attention spikes around disasters, international summits, or major policy announcements, and then recedes as other pressures intrude. But there is a crucial difference. Climate change is not cyclical; it is cumulative. The underlying physical drivers do not pause when attention shifts elsewhere. Emissions accumulate. Infrastructure locks in. Impacts compound.
That is why climate change, however often it slips down the public agenda, will inevitably reassert itself, but with even greater force and less room for adaptation. For we know, as the Institute’s path-breaking work on the economics of adaptation to climate change demonstrates, that delay is hugely costly. A dollar spent proactively today can save society some 15 times as much over time.
Today, the Climate Institute’s planning horizon sits squarely in one of these recurrent troughs of public attention (or inattention). That makes our role harder but also more important.
Decarbonizing the Global Energy System
Meeting the challenge to halt climate change comes down, essentially, to a single structural imperative: decarbonizing the global energy system. And decarbonizing the energy system boils down to replacing fossil combustion with cleanly generated electricity.
While this isn’t a fashionable framing in all circles, I’m convinced that it’s close to being both necessary and sufficient to stabilize the climate[1].
Electrification will define the energy future. Why? What’s changed fundamentally? The most compelling account I have seen is from a recent Substack post by Noah Smith, who I consider to be the best commentator out there on the intersection of technology, economics, and politics. I can do no better than quote his words directly:
“In the late 20th century, we invented three things that utterly changed the game—the lithium-ion battery, the rare-earth electric motor, and power electronics. Batteries make it possible to store and transport electrical energy very compactly and extract that energy very quickly. Rare-earth motors make it possible to use electrical energy to create very strong torques — for example, the torque that turns the axles of an EV. And power electronics make it possible to exert fine control over large amounts of electric power — stopping and starting it, rerouting it, repurposing it for different uses, and so on. With these three technologies, combustion’s main advantages vanish in many domains. Whether it’s cars, drones, robots, or household appliances, electric technology now has both the power and the portability that only combustion technology used to enjoy.”
The relevant corollary is this. The extent to which electricity itself is generated cleanly will determine whether, and when, the world achieves net zero. This simple truth is still not sufficiently recognized, and it cannot be over-emphasized. What is striking, and strategically important, is that the global push toward clean electricity is no longer driven primarily by climate concern. It’s being driven by the inherent advantages of cleanly generated electricity, particularly solar and wind which:
- are modular, flexible and efficient;
- are less exposed to geopolitical risk;
- dramatically reduce local air pollution, promising to save millions of lives; and
- are cheaper almost everywhere and becoming more so.
On top of all this, the climate benefit comes as a huge bonus, but we need to acknowledge that it’s not the main near-term motivator.
The Resistance of Fossil Energy Producers
There is a deep and persistent asymmetry in how countries experience and respond to the clean electricity transformation. Countries that are the major producers of fossil energy—Canada, the United States, Russia, and much of the Middle East—are understandably reluctant to embrace the transition with the urgency that the climate challenge demands. The obvious reasons are economic, and therefore also political. Fossil energy underpins export revenues—in Canada’s case some $190 billion in 2024. It contributes importantly to fiscal capacity, regional employment, and in some cases to regional identity.
As the great Canadian economic historian, Harold Innis, has documented, raw resource production has defined much of Canada’s wealth creation from the nation’s founding as “hewers of wood and drawers of water”, and now as pumpers of oil and gas. How little has changed! That’s why moving too quickly to embrace the transition out of oil and gas is seen to pose significant risks. At the same time, moving too slowly will guarantee significant and growing costs in terms both of Canada’s economic and our climate future.
This creates an uncertain transition period marked by tension—the tension between short-term economic and political interests and longer-term economic and climate realities. For Canada—and for our Institute—that tension will define much of the policy landscape between now and 2030.
Canada’s fossil fuels will continue to play a significant role—nationally and globally—through at least this decade. But equally, that role will sit uneasily alongside competitiveness concerns and our national climate objectives. I believe that managing that tension—honestly, analytically, and credibly—will be the single greatest challenge and opportunity for our Institute.
The Strategic Question for Canada
The question for Canada is obviously not whether the global clean energy transition will occur. It’s whether we navigate the transition period in a way that’s economically feasible, politically durable, and fast enough to avoid falling too far behind those countries that are already defining the next global energy system. Falling behind does not only mean missing emissions targets. The point I want to emphasize it that it also means losing industrial capability, technological leadership, and policy credibility in a world where clean electricity becomes the backbone of growth.
Take just one example. The number of gasoline-fuelled cars sold globally peaked in 2017 and has already fallen by a third since then, to be replaced by EVs (including hybrids). That’s what’s happening around the world, whereas for now in North America, we’re heading back, but not to the future!
So this is a national conversation that will intensify again—perhaps suddenly—before the end of the decade. And the Canadian Climate Institute will need to be an informed and trusted voice in shaping how that conversation unfolds.
The Trump Factor
I have yet to mention the elephant in the room—and in countless other rooms around the world. I refer of course to Donald Trump’s America. Regardless of one’s political views, Trump’s presence materially alters the climate policy landscape for Canada through several channels.
First, there is his general antipathy to climate-related policy, regulation, and particularly to international cooperation of any kind.
Second, there is the likelihood of intensified pressure in the context of the renegotiation, or not, of the free trade agreement (CUSMA)—particularly around industrial policy, tariffs and other border measures, and energy trade.
Third, there is the risk of direct or indirect interference in Canada’s internal energy and regional dynamics—whether pipelines, critical minerals, LNG exports or, most ominously, federal-provincial tensions.
And fourth, there is the question of how far Canada can or should engage with China on green technologies—EVs, batteries, grid equipment—under U.S. pressure to limit or reshape that relationship[2].
These dynamics will not be peripheral. They will determine what is politically and economically feasible for Canada over the next several years.
Reconciliation, National Unity, and Energy Infrastructure
Meanwhile, reconciliation and national unity—both together and separately—will loom large in the Canadian climate policy environment. Energy extraction, transmission infrastructure, and critical minerals development all intersect directly with Indigenous rights, provincial authority, and regional economic interests. First Nations will not speak with a single voice, nor should they be expected to. Provinces will pursue divergent strategies. Federal authority will be contested. This will create a highly contentious environment at the nexus of energy, climate and economic policy. For our Institute, that environment creates both opportunity and risk. There will be demand for credible analysis—on economic impacts, governance models, risk-sharing, and long-term outcomes. But there will also be less tolerance for nuance. In the highly polarized environment that we should expect, balanced positions will be harder to communicate and harder to sustain. But we must. Navigating that tension—between analytical integrity and political reception—will test us repeatedly.
The Broader Global Context
All of this unfolds within an even larger frame in which many of the assumptions that have shaped the West’s world-view throughout the post-World War era can no longer be relied on.
We witness daily the erosion of international norms and institutions while the geopolitical contest between the U.S. and China becomes more explicit and more structural. And in the background, AI is emerging as a powerfully disruptive economic and cultural force—in my view likely to become the most consequential technology ever developed. This isn’t the time to delve into this morass, but I would like to make just one observation that is particularly relevant in the climate context—specifically, the geopolitical implications of the clean electricity revolution, bearing in mind that this revolution is essentially both necessary and sufficient for climate stability. The point is that embracing the revolution is also necessary for future economic leadership. President Trump does not appear to understand this and has consequently allowed the United States to relinquish crucial technological leadership to China. Again, I would draw on the insight of Noah Smith:
America’s weakness in EVs, batteries, and rare earths threatens to become a weakness in everything — a weakness in AI, a weakness in drones, a weakness in robots, and so on. Throughout America’s history, we have been at or near the forefront of every single major technological revolution. This technological leadership enabled us to remain the world’s leading nation for over a century. But now we are missing the big one. We are missing the “Electric Tech Stack”. We treated it as a climate issue instead of an issue of raw national power and industrial might, and we allowed it to become a political football. As a result, China is mastering this crucial technological revolution, and America is forfeiting it. Our entire existence as a leading nation is under threat from this remarkable failure of vision and leadership.”
I don’t believe that Noah Smith is overstating it. But equally I don’t believe that it’s too late for the United States to recognize the unacceptable consequences of permanently ceding leadership of the clean electricity revolution to China. And once that recognition dawns in Washington, I am confident that the US will rejoin the global race to create a clean energy future and thus the climate stability that only this can bring.
Implications for Our Strategic Choices
Against this backdrop, and bringing it closer to home, our strategy discussions over the next two days need to grapple with some challenging questions. At this point I would highlight three.
First, do we need to rebalance our attention among target audiences—including across federal departments, political parties, and provincial governments?
Second, do we need to reconsider how we allocate resources across our theme areas—mitigation, adaptation, clean growth, Indigenous research, and 440 Megatonnes—in light of where policy leverage is likely to be greatest?
And third, do we need to rethink aspects of our communications approach—not just channels, but content emphasis and framing—in a period when climate change is no longer the dominant public concern, but remains structurally unavoidable?
These are not operational questions. They are strategic ones.
In Conclusion
Let me close with a simple observation. Climate change will not remain out of sight for long. The physics will not allow it. The economics will not allow it. And eventually, the politics will not allow it. When it re-emerges more forcefully, and with less room for error and adaptation, the quality of analysis available to decision-makers will matter enormously. Our task, over the next phase, will be to ensure that as Canadians come to better understand the profound interdependence of the economy, energy, and climate, our Institute will be regarded as the go-to resource of knowledge and advice that is analytically sharp, strategically relevant, and broadly trusted.
[1] In 2024 the production and use of fossil energy was responsible for about 78% of global greenhouse gas emissions (other than due to land use and land use change). If energy were decarbonized, resources could be focused on reducing other less significant sources—e.g. certain industrial and agricultural activities—most, if not all, of which could be sharply mitigated or offset with the application of enough (clean) energy.
[2] Prime Minister Carney’s state visit to China began to provide an answer regarding Canada’s preparedness to engage in “green trade” with China.
