A Leaner, Green Canada?

As the worst economic slump in almost a century takes hold, Canada faces huge challenges. Whether the country can take advantage of potential opportunities in the financial meltdown remains to be seen. And the debate about how Canada should fit into what many envision as a leaner, greener world is just getting underway.

“We are entering an era of incredible competition in the global economic environment, and I think there is a real risk that we are going to be left behind in the transition to a green economy,” says Roger Gibbins, president and CEO of the Canada West Foundation. “Canada has tried to bill itself as a clean energy superpower, but this is still an aspiration and not a statement of reality. If that’s what we want to be, we still need a plan to get there.”

The crisis is spurring countries, especially the United States, to reevaluate their economic drivers, including food, transportation and energy production. As governments begin spending trillions of dollars to reinvigorate the entire system, some are using it as a chance to prepare for a future dominated by concerns about climate change and disappearing security in traditional fossil fuel supplies. Indeed, calls for economic stimulus plans to be tied to a “green industrial revolution” are being made around the world.

“While the global economic downturn could distract us from the bigger task of tackling climate change, it is also an opportunity to bring forward investments in low-carbon technologies while costs are lower,” British economic and climate advisor Nicholas Stern wrote in a January essay in New Scientist magazine. “In the long term, investments in low-carbon technologies could provide sustainable and well-founded economic growth, in contrast to the recent booms, and eventual busts, driven by flaky dotcom ventures or inflated house prices.”

The benefits of such a shift to Canada could be dramatic, according to green economy advocates. The Alberta-based Pembina Institute estimates the national economy could grow by 20 per cent while meeting greenhouse gas reduction targets and creating more than 50,000 new jobs through government-backed investments in public transit, energy-efficient buildings and homes, and renewable energies. Similarly, the David Suzuki Foundation released a proposal to stimulate the economy through spending on such projects as improved municipal infrastructure, a national environmental health tracking system and sustainable fisheries. The University of Ottawa think tank Sustainable Prosperity says at least $15 billion in federal stimulus should be allocated to such measures, thus helping create more than 160,000 green jobs.

Source: ECO Canada

The federal government’s efforts to encourage a green economy have so far met with lukewarm response. In January 2007, Prime Minister Stephen Harper unveiled the $1.5-billion ecoENERGY fund to support renewable sources of electricity and heat. That was soon followed by $1.5 billion over nine years to promote biofuels, such as ethanol and biodiesel – complementing Ottawa’s 2006 renewable fuel standard, which requires five per cent renewable fuel in gasoline and two per cent in diesel fuel in the 2010-2012 timeframe.

The government’s response to the 2008 economic collapse has been measured, with its $40-billion Economic Action Plan focused on personal income and business tax cuts, home construction, infrastructure projects and improved access to credit. The plan’s website contains few references to promoting renewable energy, green jobs or a shift to a less carbon-intensive economy. The plan states that a five-year, $1-billion Clean Energy Fund will support research on projects such as carbon capture and storage. As well, $351 million will be spent on enhancing nuclear power.

“I think we’re heading in the wrong direction and I’m concerned the drop in world oil prices is taking the interest away from renewable energy in Canada,” said Perry Sadorsky, associate professor of economics at York University's Schulich School of Business. With the exception of large-scale hydro projects, Sadorsky says, Canada has gradually fallen behind other countries in developing renewable energies such as wind, solar, biomass and geothermal.

“Canada, as a whole, had more renewable energy per capita 20 years ago than we do now and federal research money for renewable energy has gone from $3 per person to $1,” Sadorsky explains, adding that Canada’s venture capital spending on renewables decreased 58 per cent between 2007 and 2008, compared to a 38 per cent increase globally. “Clearly, we’re going in the wrong direction.”

Alberta's economic stimulus measures are largely focused on the fossil fuel sector, including $2 billion for carbon capture and storage and $1.8 billion in reduced royalties to encourage drilling for oil and gas. Critics including University of Alberta's Parkland Institute, Pembina Institute and Sierra Club Canada believe pumping stimulus money into green, renewable sectors would create more jobs and have a greater impact on gross domestic product.

Canada West Foundation’s Roger Gibbins says that while expanding renewable energy and green technology should be part of the solution, a major shift towards green economy will be difficult for Canada’s and Alberta’s resource-based economies.

“I think it would be a big mistake for us to try and shift our focus to an area where we have no comparative advantage at all and are already far behind others in terms of developing technology,” Gibbins says. “Canada has to build on its strengths, and our strengths lie in hydrocarbons. Where we can make a big global contribution is by developing cleaner production methods for oil, coal and natural gas. We can green the existing pillars of our economy and spin that into valuable technological innovations for others to use, and then we could have some real impact on society at large.”