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.

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By investing in the Climate Investment Funds (CIF), advanced economies have helped the developing world more fully participate in the global energy transition. More than 300 projects later, Mafalda Duarte, who heads up the funds, is now looking to keep the magic going.

A decade ago, 14 nations—led by the United Kingdom, the United States, Japan, and Canada — came together and opened their cheque books to create the Climate Investment Funds. The now-USD$8.3 billion fund is helping 72 emerging and developing economies worldwide prepare for and — bounce back from — the impacts of climate change. Under Mafalda Duarte’s leadership, CIF has since distributed the funds as direct grants, looking into new mechanisms that will mobilize climate finance from capital markets.

You oversee funds that have helped millions of people prepare for today’s challenges those that lie ahead. What’s that like?

I’ve been working with CIF for eight years now, and have been leading the funds for the last four. It’s been an honor to work with a number of climate champions out there in the developing world, as well as with large financial institutions who have been willing to make different investment choices than they would have in the past. The work we do to support and empower champions working in renewable energy, energy efficiency, sustainable transport, water management, and agriculture is humbling, and a privilege.

How exactly do you help those champions?

We support the markets and business models that will help clear the way for these countries to achieve a low-carbon future. Part of this process is providing concessional finance in the millions, sometimes hundreds of millions, of dollars. Another part is looking at institutional and regulatory frameworks they operate within, and figuring out what changes are needed — and what assistance and technical capacity might benefit them. We help bring all the key stakeholders together. From a technical and political economy standpoint, regulatory reform changes are far from straightforward. We also make a significant difference in that we de-risk and lower the cost of capital. We do this for well-known technologies, such as wind, that are proven but have not seen enough investment in a given country; and for renewable energy technologies that have less of a track record, such as concentrated solar power.

Where have you made the biggest mark?

We’ve tried to help first movers, with Mexico being one successful example. In 2008, when we started, there was very little renewable energy investment, and that was of course the year of the global financial crash. We were in there, helping with the first deals that led to growth in the wind sector. In other countries, like Kazakhstan, we have helped change their renewable energy laws. We had a stake in their first solar and wind projects to demonstrate their investment viability, and we also learned a lot about how to enhance their regulatory framework to better support renewable energy sources.

CIF has completed more than 300 projects. Which one or two stand out for you?

One of the projects we’re most proud of is our intervention in Morocco, which resulted in the 500 MW Noor Concentrated Solar Power complex—that country’s first utility-scale solar energy facility. To make that happen, we pioneered a different financial structure. By being there with other development finance institutions, we gave confidence to a number of investors. Our contribution helped reduce the project costs by 25 percent. Concentrated solar power is still a costly, early-stage technology, but it has a lot of potential. Our intervention significantly reduced the level of public subsidy that was needed to get it done.

What mistakes have you learned from?

Given how carefully we assess each prospective investment, the lessons we learn are more about how we adapt our practices to respond to a given nation’s specific needs. For example, we have a big program in Nigeria. We realized early on that we wanted to facilitate loans to help consumers develop small-scale renewables. To do that, we needed to rethink the way we approached the local commercial institutions in that country. This included considering the types of the conditions that would encourage those institutions to develop credit lines for these businesses. The lessons we are learning are more around our practices, and how we approach project design.

Your team has developed some serious expertise on renewables in the developing world. How do you share those findings?

From the beginning, we knew we would be a true learning laboratory. We wanted to gather insights and share them widely within developing countries, but also internationally. Both our geothermal and concentrated solar power experiences provide lessons that developed countries can learn from. The same is the case with credit lines that we have helped structure in Turkey and Tajikistan. We link the countries together with international experts around specific themes, such as microgrids and off-grid solutions, or the role of women in the energy transition. We’ve had Cambodia and Zambia exchange practices on water management, and Brazil and Mozambique in forest management—they have similar challenges and also of course both speak Portuguese!  We bring them together, we ask them what they want to learn, what they need, and we structure the learning around that. It’s fundamental to our mandate.

You are based in Washington, DC, the seat of a government that is, at least federally, not committed to climate action, energy efficiency and renewables. What do you tell the nations you work with about the missing leadership at home?

No matter who we are speaking with, we have to make sure that our message is being heard and absorbed. The way you message, and what you say, your narrative, and the people to whom you choose to deliver the message is very important. People may seem to be at opposite positions, very far apart, but in the end they aspire to meet similar objectives. Nobody disputes the idea that more jobs are a good thing. Nobody disputes that industry-driving climate action is good. Nobody disputed the health benefits of clean energy—a lot of cities are facing serious air pollution problems. Nobody disputes that climate variability is there. We have to find ways of bringing people into the conversation.

This is a special year for the CIF in that it marks a decade since the fund was first established. What are you doing to recapitalize?

Our anniversary this year gives us an opportunity to really demonstrate the value we’ve added. When you work at the scale that we do, it can take years before you start to see impacts and results; now we have this really large portfolio of more than 300 projects in developing countries. We are gathering all this evidence and will be able to demonstrate the value and the importance of flexible toolkits and mechanisms. Watch this space.

Some say climate action needs less talk and, as the name implies, more action. But since our founding ten years ago, action is all we’ve ever done. Now is finally the time to start talking about the gains we’ve made and the progress still to come.

There will be representatives from more than 55 nations on hand at GLOBE Forum 2018. What is the one thing you would like them to remember, to keep in mind, about the Climate Investment Funds?

CIF began life at the height of the global financial crisis in 2008, when public funding was in some ways scarcer than it is today. Key to our success then, as now, was conveying the message that climate action is not only a worthy investment, but also a crisis that threatens nearly every aspect of our lives. It pollutes the air we breathe, fuels the natural disasters that destroy lives and livelihoods, hastens the spread of disease, and disrupts ecosystems as well as natural resources. Think of water scarcity. The sooner we think of climate change as an all-encompassing challenge – and one that jeopardizes our way of life – the sooner, I hope, we will marshal the necessary resources to address it.

CIF is just one part of the solution. This is a responsibility we all share, whether you’re an elected official, an activist, or an everyday consumer. Because we all have a stake in a climate-smarter future.

Image: Morrocco’s Concentrated Solar Power Plant Noor-Ouarzazate, www.climateinvestmentfunds.org

GLOBE Capital returns to Toronto on February 27-28, 2019.

Join leaders in finance, infrastructure and cleantech to discuss how to capitalize on opportunities in the clean economy.

Learn more

By Gordon Feller, Consultant – Cisco Systems & Founder – Meeting of the Minds

Where and how are cities harnessing the power of new digital tools to transform how they organize their systems? Or how they deliver their services in new and better ways to residents and visitors? Can cities create a prosperous environment for small and larger enterprises?

In the mid-1990s, after Bill Clinton assumed his eight year Presidency, he appointed a new World Bank President. James Wolfensohn focused part of his term on helping cities to make big changes happen, especially in the Global South. He pulled a team together to work on finding ways that could accelerate the progress for cities and bring innovative solutions to bear on the full range of problems facing cities: urban energy, urban water, urban transport, urban education, urban health care. A group was formed inside the World Bank, with a focus on ‘The Urban Age’. In the year 2000, the Urban Age Institute became an independent non-profit organization. One of the best of Urban Age’s corporate partners was Cisco Systems.

Another early partner was Siemens, along with a variety of leading corporates and leading foundations. Working with Urban Age, they saw the world’s rapid urbanization and they sought out technologies which enabled a positive transition for cities around the globe.

In 2006, the Urban Age began working with the Canadian government, the German government, and many cities around the world. What was born was Meeting of the Minds to ensure that the leaders innovating with the very best emerging tools — urban technology, connected solutions, and sustainability – could jointly build a common platform.

In 2009 or thereabouts, Cisco’s executive team invited me to work on these problems, from a base inside the headquarters in Silicon Valley. I took on the assignment of helping Cisco, via teams around the world, address this challenge of getting cities aligned with the data generated by a myriad of assets (buses, taxis, street light, etc.) – so that the city leaders could fully utilize what was readily available to them. Over time, cities were provided with a new way to accelerate their transition to a more equitable, prosperous, environmentally sustainable future.

For many of the smartest and best-led cities the focus has been on infrastructure, which is a strong tie-in to what we’ll be talking about on April 4^th and 5^th at GLOBE Capital. GLOBE has always been focused on infrastructure problems facing cities and businesses, including the vital digital infrastructures like wireless networks that make so much else possible.

The 3 Stages of the Internet

Think about the transformation of technology in the last 10 years, especially the big changes in how we communicate. The Internet’s first age was all about basics like email, enabling better communication and changing some of the ways we do things. The second stage of the internet was e-commerce and buying things online instead of in person, and then, the third stage – which we’re in now – includes the immersive social media that we’re surrounding ourselves in 24/7/365 and it includes the Internet of Things.

We can now connect with people and project teams we’ve never actually met. Going beyond just better and more efficient communication, we’re surrounded by both e-commerce and by the commercial development of the Internet as a tool for transforming how we live. This 3^rd stage of the internet is being characterized by the Internet of Things where all of the objects in the world – city streets, parking meters, traffic lights, street lights, doors, windows, etc. – are all going to be emitting data about their conditions.

Data Is The New Oil

The priority is gathering data that helps generate insights that can make traffic flow more smoothly, and make the parking experience both better and more affordable. Embedding technology into infrastructure systems, like transit, means that technology is going to have an impact on the 99 percent of the world that hasn’t yet been connected to the Internet. New opportunities come with new insights; the data itself doesn’t provide those insights. The insights are derived by analyzing and interpreting the flow of data, and preferably doing so in real-time. This is precisely what allows a smart city to embrace smart infrastructure — receiving data inputs and/or transmitting data about the conditions in this very moment. For example, if you don’t have a way of using real-time data to generate insight on-the-fly, then it’s not very useful to the driver who’s looking for an open and affordable parking space.

Hundreds, maybe even thousands of companies, are busy building the analytical tools that enable big data to become little insights, each of which are (ideally) actionable. The cities in North America starting to make headway along these lines are early leaders. They are the cities investing in the big data analytics to make those little insights available to whoever inside the city needs to take an action.

The Road to Becoming a Smart City

On the road to this smart-city future there are many big challenges, however. Much of the US city infrastructure currently in place was built 30 or more years ago. How do you take digital intelligence and overlay it on top of a city’s aging physical system? A convergence of digital with physical is imperative, since this is what makes it possible to manage infrastructure in ways that reduce energy consumption and decrease overall energy demand.

Expensive physical assets, into which we’ve invested trillions of our treasure, do not change without a fight.  How do existing structures — buildings, roadways, pipes (water, sewage, gas, oil), bridges,  tunnels — become a hyper-intelligent, more responsive, sustainable infrastructure? One method is by using digital sensor networks placed on top of old existing systems. This seems to make more sense than ripping out these degraded physical systems.

Achieving important goals – such as reducing climate-changing gas emissions — means reducing energy consumption and softening the natural system impact of human activity. In essence, we must re-engineer our collective metabolism. This becomes a bit easier when connected things transmit data – and due to their connectivity these smart-objects have the potential to effect change. When data is analyzed in real time, it then becomes possible to change the business process, whatever it might be. It could be commuting from point A to point B; finding a parking space; lights turning on and off, as needed – all of these systems can be made more responsive to real world conditions.

Canadian-Style Public  + Private Sector Partnerships

There are an abundance of innovative solutions emerging from the private sector. Public sector agencies – often lacking technology backgrounds – do struggle to figure out which technologies are the best for their city. Unfortunately, this often results in a state of confusion, especially with such an abundance of choices.

Public/private partnerships, Canadian style, will inevitably become much more prevalent around the world. Canada’s certainly been a pioneer by developing innovative approaches to public-private partnership.

There are many companies who offer smart streetlights and many other companies providing smart parking meters. The question is, how best to help the decision makers in these cities make the most appropriate choices? Sometimes public agencies will have to partner with the private sector; sometimes they need to turn to their citizens; and sometimes they need look closely at what other cities are doing and learn from their lessons.

The good news is that we can and will transform the built environment. There are always going to be unknowns, and we’ll find some unintended consequences that we didn’t expect. Consider the situation facing my home city of San Francisco. One of the unintended consequences of the economy’s digital transformation is that living in this city has become much less affordable than it should be. A shift has occurred, rending any semblance of economic balance, accentuating big divides between the haves and the have-nots. Those who historically lived in the downtown are now in conflict with young, highly-paid technology workers who want to live downtown — even if it means crowding out the people who have historically been there. This is same situation in other cities, like Toronto and Vancouver. An unintended, negative consequence for all the people suffering through resultant dislocations.

The Bankers’ Lens

What’s holding us back from making all the changes as fast as they’re needed? How will these changes be financed? GLOBE Capital in Toronto on April 4^th and 5^th will address this head on. We’ll debate how to finance the innovation economy in ways that enable the deployment of transformational digital tools — and in ways that make all lives better.

In this domain the visionary bankers are key. Bankers will always look at new opportunities through a banker’s lens. They do want to know the risks, and to understand the impacts: What will generate new revenue? What will reduce existing costs? Offering solutions that reduce costs or increase revenue or create new revenue models – this is key. Without these, the banks won’t step up and participate in financing smarter urban infrastructure.

I spend much of my time advising investors, and the very first priority is to find the inefficiencies. Consider Uber, as an example: take on the highly inefficient taxi industry, build a platform that allows the car owner to provide their own asset, thus making it possible for Uber to not own a single vehicle while being the largest provider of taxi services in the world. The same with Airbnb – as the largest hotelier in the world they sell a million room nights every day, but don’t own any hotel. These companies have created ways to engage asset owner who are willing to make their asset available for a fee. Technology enabled these transactions between asset owners and short-term buyers who had a need. Look first to the inefficient systems that the economy has slowly built, over decades or centuries, and change those systems very fast.

Can digital innovation disrupt those businesses in a ways that don’t create economic dislocation for those who depend on incomes built on the older models? Uber creates a lot of disruption, and not all of it is ethical or sustainable. Impact-minded investors increasingly want to see responsible investment opportunities created by emerging technologies.

The challenges ahead are fourfold: keeping the new economy people-centered; minimizing potential negative impacts; bringing wealth-generation opportunities to all classes of people; and, reducing the environmental impacts of human activity.

We are in the middle of an historic time as we experience a big, fundamental transition to a new technology-based economy.