Guest content by Christine Bergeron, President and CEO of Vancity.
As British Columbians begin to rebuild from the wreckage of the latest extreme weather event, it’s clear that the climate emergency is here. To prevent further warming that will result in even more catastrophic consequences for people and the planet, we need to focus our efforts and ingenuity on the transition to a net-zero economy. This transition was the focus of the most recent global climate summit, COP26, and will continue to be front and center in the decades leading up to 2050. There are tremendous economic upsides to getting it right: a trillion-dollar economic opportunity, new jobs, and a boon for innovative solutions and products.
It’s clear that the climate crisis, and the actions we take to address it, affect every one of us. But not everyone is affected equally. As we build our net-zero future, it is critical to consider what human shape this economic transition will take. We’ve seen this movie before. Following the 2008 recession, the economy rebounded quite strongly. People? Not so much. Many were left jobless or in worse jobs than before the recession. Wages eroded and debt levels skyrocketed while housing became increasingly unaffordable for many.
We can’t allow this to happen again, especially since the reverberations of this transition are going to last longer than any recession. We won’t be successful if people are alienated from the climate fight because they pay a hefty price for the transition – for example, those who are already economically disadvantaged, or people and communities whose livelihood depends on emissions-heavy industries that we must now turn away from.
Canada, in particular, must be mindful of addressing the human costs of a net-zero transition. A recent study found that sectors vulnerable to the impact of this transition account for 70% of Canada’s exports, and more than $300bn in export revenues and investments. In human terms, that translates to 800,000 Canadian jobs located in every province and territory.
Those are just the employment impacts. Not everyone has the same ability to withstand the impacts and adapt to the new net-zero “normal.” We can’t successfully transition to a net-zero economy if only those who can afford to adapt make it through the transition intact.
A People-First Approach to Net Zero
We have to approach the net-zero transition through a people-first lens. What does this mean? It means identifying how the climate emergency, and our responses to it, are impacting people – for example, workers and communities relying on high-emissions sectors. It means understanding how existing systemic barriers and inequities make those impacts worse for some people, or limit their ability to mitigate and adapt – for example, lower-income people living in higher-risk neighborhoods because those same climate risks are making homes there more affordable. And it means having a plan of action for governments, businesses, unions, and communities to work together to address this head-on.
In Canada, a people-first approach is especially critical in the energy sector, traditionally a key driver of Canada’s economy. It’s clear we must transition most of our energy production to clean-energy sources. Prime Minister Trudeau announced at COP26 that “Canada has set a goal of selling only zero-emission cars and establishing a net-zero emissions electricity grid by 2035.” Arguably this is not soon enough based on global warming projections, and yet is also very aggressive based on how long it has taken to make major industry shifts in the past.
Converting Energy Risks to Opportunities in Canada
Renewables currently provide only about 16% of Canada’s total supply of energy for electricity, heating and transportation. While that’s a higher proportion than what we see globally (13.4%) or in OECD countries (10.5%), it demonstrates just how much change needs to occur in order to meet our international commitments and to truly shift to a net-zero economy.
There’s a similar mix of room for change and potential for growth in clean-energy exports. The global renewable energy market had total revenues of $692.8bn (USD) in 2020, representing a compound annual growth rate (CAGR) of 8.9% between 2016 and 2020. Canada’s clean-energy exports totaled only $21bn in 2019. This represents an annual growth rate of 9.7% since 2014, three times faster than all Canadian product exports over the same period. But clean-energy exports still totaled only 5.5% of Canada’s product exports in 2019.
There is a clear opportunity for the Canadian economy as it begins to wean itself off oil and gas. Industry advocates expect that by 2030, Canada’s clean-energy sector will grow its GDP by 58% and its workforce by nearly 50%, adding more than 200,000 jobs. This growth will help offset the effects of oil-and-gas contraction at the macro level.
The question is, can Canada translate this growth into real opportunities for those people and communities who are no longer able to rely on oil and gas for their livelihoods, such as oil-and-gas workers, equipment suppliers and other local service providers? How do we reskill these individuals to capitalize on the new job opportunities? And how do we ensure that groups that were historically left out of the oil-and-gas boom, such as First Nations members and women, are included in the new energy growth opportunity?
There needs to be a deliberate effort on the part of governments, the private sector, workers and communities to make this transition fair – and successful. Re-skilling initiatives and building worker awareness of their transferable skills have been developed by both unions and non-union organizations, such as Iron & Earth. Scaling up and fully resourcing such initiatives will require collaboration between governments and employers.
Ensuring that Canada’s clean-energy future proceeds through true partnership with Indigenous peoples is also critical to advancing both the just transition and Reconciliation. The clean-energy sector is increasingly recognizing this. As of Nov 11, 2021, Indigenous Clean Energy (ICE) – a pan-Canadian social enterprise working to advance Indigenous inclusion in Canada’s energy futures economy – has mapped 197 clean-energy projects across Canada that have significant Indigenous involvement. ICE notes that these projects are generating jobs and training opportunities for Indigenous people, and providing a more consistent flow of revenue to meet community needs.
The Role of Financial Institutions in the Net-Zero Transition
It is imperative that financial institutions change what they fund. This means transitioning from emissions-heavy industries to cleaner jobs and industries, as well as factoring climate risks and social benefits into the assessment of loan requests and investment decisions. Financial institutions can also do more to support businesses in identifying and disclosing climate-related risks.
The climate crisis also requires that financial institutions put people first. This means helping people access and manage their finances when forced from their communities by severe climate events, such as the recent flooding in Merritt and Princeton or the forest fire at Lytton. Financial institutions can also use the tools at their disposal to encourage just-transition initiatives and lead systemic change.
For example, we introduced Canada’s first Responsible Investment (RI) mutual fund 35 years ago, and we became the first financial institution in North America to be carbon neutral in our operations nearly 15 years ago. Today, RI is an entrenched component of the investment world, and significant reductions in operational emissions are part of most large Canadian banks’ climate-action plans. We continue to finance changemakers in areas such as affordable housing, green technology, equity, and financial inclusion.
These examples highlight how the private sector can show leadership in support of a just transition. But more support is required. Systemic challenges need system-wide solutions, and such solutions require governments to also step up and lead, putting people first. That is the next key step for the just transition.
