A Just Transition to a Canadian Green Economy

by | Dec 11, 2019 | Alumni, Environment, Governance | 0 comments

Jeremy Rifkin, an American economic and social theorist, shared a compelling vision of the future in the green digital economy at the University of Toronto on November 19th. He is the main architect of Smart Europe, the European Union’s long-term economic vision and development plan, which offers a model on how to build smarter and more sustainable cities and regions. These latter are stepping up to fill in the void left by national governments’ inaction on climate change.

In this vein, the Canadian federal government’s position on addressing climate change has been contradictory and a clear national direction is imperative. There is a need for a new Green New Deal in Canada starting with a plan to grow the clean technology economic and labour market. As Jeremy Rifkin outlines, a Green New Deal offers economic transformation including positive labour market impacts.1 However, how well prepared is the Canadian workforce to access decent work during the transition to a green economy? How can the federal government ensure this transition is a just one?

Sustainable development concerns people and natural resources

Redefining its path to sustainable development concerns not only Canada’s relationship to its natural resources, but also its people. As such, the Expert Panel on Sustainable Finance called for increased capital to support clean technology in Canada.2 With increased capital flows, new employment opportunities will arise.

This is a less discussed scenario than the one where jobs are lost in the fight against climate change, especially in petroleum producing and exporting countries. The International Labour Organization (ILO) forecasts “the transition to a green economy entails changes in the production system on a scale equivalent to an industrial revolution” and a net increase of 18 million jobs globally under a 2 degree Celsius scenario.3 Understanding that the transition involves a significant reallocation of job opportunities highlights the necessity of proper planning to realise the economic potential of the green economy.  

People, regions and industries: different impact

The transition to a green economy will impact industries, regions and people differently. Human capital is considered Canada’s most important asset, yet it has not grown in real per capita terms from 1980-2015.4 In the oil & gas industry, high-risk groups are young (ages 15-24) and aging men (ages 55+) in addition to Indigenous Peoples, especially in Alberta. The oil & gas industry accounts for 30% of Alberta’s GDP and 17.4% of employment.5 In contrast, Ontario has a greater investment in clean technology in 2015 than any other province in the country.6   

In high-growth green economy industries, women experience workforce participation rates as low as 12% (compared to their overall representation in the Canadian workforce of 48%).7 With employment growth in construction, manufacturing and renewables, the share of women is forecasted to come down slightly as these are historically male dominated industries.3

Indigenous Peoples are also under-represented in industries such as manufacturing.7 Given these inequities, achieving inclusive growth requires adopting a just transition lens to policy development.

Federal Policy Options

1. Create a Just Transition Fund

Funding is required for social protection assistance and to support passive labour market policies for Canadians who need it during the transition. This can be achieved through building a just transition fund (similar to the Norwegian sovereign wealth fund). If federal fossil fuel subsidies for exploration and production are phased out over a period of time, the amount generated could be up to $1.6 billion per year.8 Additional revenue could come from re-directing the proceeds of the federal carbon tax that is applied in provinces without their own pricing mechanism.

2. Grow the Clean Technology Industry and Labour Market

Export Development Canada’s (EDC) financial support for the oil & gas industry should be re-directed over a defined period of time to clean technology companies. The amount of money available for re-deployment could be as high as $10 billion a year.9 A condition of receiving this support would be the maintenance of labour management plans. These plans support active labour market policies, resulting in a supply of qualified workers for the industry. As financial stimulus alone is not sufficient to ensure access to decent work, labour management plans are a key tool for companies. They can be used to assess the impacts of the transition and prepare their workforce, especially for workers in high-risk groups.

3. Federal Legislation on the Green Economy, Skills & Employment

In order to help the provinces and companies prepare their workforce for the transition, the federal government can introduce green economy legislation. Some countries have started using national legislation to address issues relevant to green economy employment: The Philippines, France and The Republic of Korea. The legislation would:

  • Define jobs and skills
  • Identify tax incentives for companies investing in training/skill development/credentialisation of workers
  • Allocate budget to the provinces
  • Outline a data collection and reporting strategy
     

The Benefits of Investing in Clean Technology

Growing the clean technology industry and labour market should be the preferred way forward.  This policy option:

  • Distributes benefits across high-risk groups using a combination of active labour market and economic policies
  • De-risks taxpayers from the potential negative consequences of fossil fuel stranded assets
  • Encourages oil & gas companies in addition to their investors to assume greater accountability for transition risks and invest in clean technology solutions
  • Reduces the amount of money needed by the federal government for passive income to workers (e.g. social assistance)
  • Allows Canada to remain competitive in its ability to attract foreign talent

RANI POORAN, ENV’19
Senior Advisor on Social Sustainability Issues at Bank of Montreal (BMO) Financial Group
rani.pooran@gmail.com

***

1 Janie Matthews, ‘Banks give € 1 billion to build ‘Smart Europe’, EURACTIV, Last accessed December 4, 2019

2 Tiff Macklem, Andy Chisholm, Kim Thomassin, & Barbara Zvan, Final Report of the Expert Panel on Sustainable Finance: Mobilizing Finance for Sustainable Growth, Government of Canada, June 2019

3 International Labour Organization, ‘Greening with Jobs: World Employment Social Outlook’, 2018, Last accessed August 13, 2019

4 International Institute for Sustainable Development, ‘Comprehensive Wealth in Canada 2018 – Measuring What Matters in the Long Term’, October 2018, Last accessed August 13, 2019

5 Fraser Institute, ‘Investment in the Canadian Oil & Gas Industries: A Tale of Diverging Fortunes’, May 7, 2019, Last accessed August 1, 2019
Natural Resources Canada, ‘Energy and the Economy’, Last accessed July 26, 2019

6 Jordan Thirgood, Scott McFatridge, Mercedes Marcano, & Jamie Van Ymeren, ‘Decent Work in the Green Economy ’, Mowat Centre and Smart Prosperity Institute, October 2017, Last accessed August 13, 2019

7 PetroLMI, ‘Diversifying Canada’s Oil & Gas Workforce: A Decade in Review’, June 2018, Last accessed August 10, 2019

8 Yanick Touchette and Philip Glass, ‘Public Cash for Oil & Gas: Mapping Federal Fiscal Support for Fossil Fuels’, International Institute of Sustainable Development, September 2018, Last accessed August 13, 2019

9 Alex Doukas, Adam Scott and Oil Change International, ‘Risking it All: How Export Development Canada’s Support for Fossil Fuels Drives Climate Change’, Oil Change International, Above Ground, International Institute of Sustainable Development, Environmental Defence Canada, Equiterre, and Climate Action Network Canada, November 2018

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