2021 Federal Budget analysis: Power & Utilities

Aligning post-pandemic recovery with Canada’s net-zero journey

What does the 2021 Canadian federal budget mean for power and utilities companies?

A number of themes underpinned Canada’s 2021 federal budget announced Monday, including recovery, growth and transformation. It’s obvious the government believes recovery and long-term growth will require new business strategies and increased commitment to innovation and energy transformation.

In connecting these themes, the government has made a clear attempt to support a greener, more sustainable direction for Canada in line with its previously announced climate plan and hydrogen strategy. This commitment was spelled out in no uncertain terms: a 36% reduction in GHG emissions from 2005 levels by 2030 and achieving net-zero emissions by 2050.

Canadian power and utilities companies have the opportunity to take the lead in helping Canada achieve this vision, while also setting themselves up for sustainable, long-term profitable growth. But to do so, companies will need to quickly prepare themselves for this accelerated transition.

Green budget focus recognizes global change imperative

The green economy-focused spending, commitments and priorities outlined in Canada’s 2021 federal budget weren’t a surprise. Jurisdictions around the world have been increasing their focus on building greener economies, businesses and supply chains. While Europe is a clear leader in this regard—and one to be watched closely, as Canada will likely continue to look to it for ideas—others are following in its footsteps. For example, the new US administration highlighted ESG initiatives in its recently announced American Jobs Plan.

The Canadian federal government clearly believes economic recovery initiatives need to be aligned with Canada’s net-zero journey to generate the most beneficial long-term outcomes for Canadians. As a result, it has put a significant amount of funding in the budget to make Canada more competitive within the global green economy.

A call to action for Canadian power and utilities

For the Canadian power and utilities sector in particular—and for companies across the energy, mining and industrial sectors more broadly—the federal budget is an attempt at a call to action. Regardless of whether every initiative outlined is implemented, the budget further emphasizes the change happening globally and the need for this change in a post-pandemic world.

Those who want to be leaders in the future need to take advantage of these opportunities now. They need to better position themselves to retain and attract the future talent they’ll need to be successful, identify cost-effective ways to meet their GHG emissions reductions targets, drive innovation within their organizations, create new revenue streams and increase their relevance in a more interconnected, greener and circular economy.

The federal government is investing a significant amount to help drive a faster post-COVID-19 recovery—but that spending won’t be sustainable long-term. Companies need to act now.

Forging a path forward: Questions for power and utilities companies to consider

What do we need to think about?

• Are our business strategy, organizational structure and operating model aligned with the federal government objectives?

• What role can we play in the green economy and how can we use that role to foster fast but sustainable business growth?

• How will we stay relevant in a world where lines are blurring across sectors and competition could come from anywhere?

• How can we use innovative technologies to support our strategic direction and transformation efforts?

Where do we start?

• What is our strategy for achieving net zero?

• Do we understand the government’s budget initiatives and how to take advantage of them to support investments and create new revenue?

• How can we incentivize investment into critical areas like grid modernization, digital transformation, Internet of Things (IoT) and the customer experience?

• What will our workforce of the future need to look like, and how can we make sure our people have the skills they’ll need to succeed in the green economy?

Interested in how the federal budget will affect your organization and how to prepare for a post-pandemic recovery? Contact us to learn more.