Green Economy - A Tipping PointgregA decade from now, we may well look back at 2009 as the year when the so-called green economy finally took off. At the moment, it’s still an amorphous concept – vaguely defined, poorly understood and operating on the margins of the global economy. Yet, it is quietly but steadily making inroads, just awaiting a breakthrough to propel it into the economic mainstream.
In the past few months alone, bullish reports on the green economy’s prospects have been published by large, credible organizations like the United Nations, Deutsche Bank and the University of California. These rosy forecasts have been bolstered by governments around the world announcing substantial new investments in green infrastructure, renewable energies and energy-efficiency initiatives. Even the floundering U.S. auto sector is tying much of its future to the introduction of more hybrid and even electric vehicles.
So what exactly is the green economy? It has been broadly defined as economic activity that is environmentally sustainable and socially responsible. This includes goods and services that protect and restore ecosystems and biodiversity, reduce energy consumption, promote low-carbon energy production and minimize waste and pollution. It embraces both cutting-edge jobs and technologies – a software engineer, say, working on smart electric grids – and traditional tasks applied in new ways – a carpenter working on a super-insulated house. If there is one common theme to this smorgasbord of activities it is this: They all endeavour to reduce or avoid environmental impacts, not add to them.
Many of these activities have been underway for well over a decade, making steady gains in investment and technology development. For example, global investment in renewable electric and heating technologies jumped from $20 billion in 2002 to $71 billion in 2007. Yet such things as wind and solar power still represent only a fraction of energy consumption worldwide.
Governments leading the waySo what has changed in the past year to, potentially, thrust the green economy into the mainstream? Perhaps above all, it is the growing realization among policy makers that the window for taking effective action on climate change is closing fast, especially if emissions targets agreed to in international treaties are to be met. The Worldwatch Institute, for example, is a fairly typical voice in noting that carbon dioxide emissions need to peak within the next decade and decline by at least 50 to 80 per cent by 2050 to avoid long-lasting environmental impacts and the huge economic costs that will accompany them. In other words, decisive actions need to be taken in the next year or two – a message that governments around the world are now taking seriously.
“We need to effectively reduce our carbon emissions from energy sources to near zero by mid-century. It’s an incredible challenge, but I think it’s doable,” says David Layzell, executive director of the Institute for Sustainable Energy, Environment and Economy at the University of Calgary. “The decisions we make in the next five to 10 years are pretty critical.”
Since last summer, governments in the United States, Europe and Asia have committed more than $200 billion toward cutting dependence on fossil fuels and introduced some 250 policies supporting alternative energies and climate change mitigation. New U.S. President Barack Obama is certainly a convert to the green economy movement. Motivated by concerns over both climate change and U.S. reliance on imported fossil fuels, his administration recently announced $106 billion in stimulus funding for green energy measures such as tax breaks, loan guarantees and incentives. His budget also earmarked $15 billion a year over 10 years to help develop wind and solar power and build energy-efficient vehicles. As well, funding was promised to weatherize one million homes a year, modernize the electric grid (including installing smart meters in homes) and capture and sequester carbon dioxide from coal-fired power plants.
“From new, highly fuel-efficient cars to renewable sources of power, there are a host of energy technologies that can spur the growth of new business, while creating millions of new jobs,” President Obama said in making the budget announcement. “If we take the time now to start transforming our economy, we will enjoy the benefits of a lower-cost and more efficient energy supply for years to come.”
At the same time, European Union nations have promised stimulus funding of more than $17 billion for energy efficiency and nearly $19 billion for clean cars. In Canada, the Ontario government’s proposed Green Energy Act – which, among other things, promotes renewable energy development – is projected to help create 50,000 jobs in three years. The Alberta government’s $2-billion commitment to carbon capture and sequestration (CCS) – accompanied by several hundred million dollars in federal funding – is similarly predicted to help create many specialized jobs and business opportunities, along with valuable expertise in an emerging field of environmental mitigation.
“CCS technologies have never been implemented on the scale we’re talking about here,” says Layzell. “Western Canada is poised to become a world leader in this area if we can develop more cost-effective technologies for carbon capture plus necessary protocols around measurement, monitoring and verification of carbon storage on a large scale.”
Green stimulus packages provide a boostCertainly, the ongoing global economic crisis is making it very difficult for fledgling green businesses to get bank financing or venture capital. But the recession has prompted many governments to tie billions of dollars in their stimulus spending packages to environmental initiatives – including tax credits and loan guarantees – that could help kick start the transition to a greener economy. At the same time, President Obama’s commitment to a greenhouse gas cap-and-trade system adds a powerful incentive for industries in both the United States and Canada to invest in green activities.
“When the economy begins to turn around, I think you’re probably going to see growth in the green sector as soon as any other. In fact, we think the green economy is going to be a big factor in the recovery of the overall economy,” says Michael Barrett, a member of law firm Bennett Jones’ climate change and emissions trading group in Toronto. “When you add carbon trading to the mix, we see the potential for great growth,” says the group’s chair, Gray Taylor, adding that over the long term, the “return on capital is looking spectacular” for some clean technologies.
So what will it cost to jumpstart the green economy? According to a recent study by McKinsey & Company, the estimated total cost of tackling climate change will be about one per cent of GDP. “Shifting to a low-carbon economy requires a major, temporary boost in infrastructure investment spending,” says the study, similar to previous major investments in railways, highways, the electrical grid and the Internet.
Renewable energies have greatest potentialBecause of the need to reduce emissions from fossil fuels, the green sector with perhaps the greatest growth potential is renewable energies such as solar, wind and biofuels. A recent United Nations report forecast that worldwide jobs in renewable energies could soar from some 2.3 million today to 20 million by 2030 – with some 12 million of those in biofuels, primarily in agricultural areas. According to some studies, clean energy and energy-efficiency projects could create at least twice as many jobs, per dollar invested, as conventional energy projects.
“The world is now in the early stages of an energy revolution that over the next few decades could be as momentous as the emergence of oil- and electricity-based economies a century ago,” says a 2008 Worldwatch report on the de-carbonization of the global energy economy. “Around the world, new energy systems could become a huge engine of industrial development and job creation, opening vast new economic opportunities. Concern about climate change and rising energy prices have sparked a nascent transformation of the energy business, with engineers, entrepreneurs and investors who would have been focused on the Internet and biotechnology a decade ago now focused on energy.”
More efficient recovery and processing of fossil fuels could also play a large role in the greening of Alberta’s petroleum and coal-fired power sectors. “There are an incredible number of exciting technologies that can be developed to reduce the amount of carbon dioxide that’s produced in the first place,” says Layzell. “It’s a huge area of growth.”
Green job growthAlready, the environmental sector’s employment rate is growing 60 per cent faster than the overall Canadian workforce, according to the Environmental Careers Organization of Canada (ECO Canada) 2007 Labour Market Study. ECO Canada estimates there are some 530,000 people already working in the field in Canada. “Areas with the greatest amounts of growth are going to be very technical, because of the more stringent regulations that will be introduced,” says Chris Stewart, senior marketing manager with Calgary-based ECO Canada. “Technicians, technologists and engineers will be among the most sought after workers because of the level of scientific expertise that will be needed.”
 Source: ECO Canada Still, the green economy will cast a wide job-hiring net. Alongside air quality specialists, emissions verifiers, carbon traders and designers of smart grids and plug-in vehicles, there will be demand for communications advisers, farmers and carpenters – all traditional fields with added green expertise. For example, the growth of wind power will require a diverse portfolio of jobs, including environmental engineers, iron and steel workers, truck drivers and machinists. “The environmental field is unique in that a lot of people with a wealth of experience in other areas can find a role to play,” says Stewart. Existing environmental careers such as wastewater treatment specialists and wildlife biologists are also expected to continue to do well in a greener economy.
Layzell, who works at the University of Calgary, says student interest in the green economy is “huge”. “They’re very aware of the environmental impacts of our energy decisions and are very keen to work to find solutions. I think we’ll see even more students flooding into this area.” |
