The world is undergoing an energy transformation. It is the start of a necessary shift away from the fossil fuels we depend upon today for mobility, heat, and other services, and towards clean, safe, renewable, and locally available sources that will meet the majority of our energy needs indefinitely. This clean energy transition won’t happen overnight, but it is also closer than many of us believe. In the coming few decades it will unleash profound changes in how citizens live, work, and move. Compared to many European countries and communities, we do not see a great deal of evidence of the energy transition in Canada.
Coal and oil still keep the lights on across much of the Maritimes, while in the western provinces petroleum resources dominate the economy, enabling mobility, home comfort, and hot water for millions both in Canada and abroad.But look beyond our borders and the signals are clear that a change is underway––one that could have profound implications for our nation:
In 2010, worldwide private capital investments in renewable energy ($187 billion) surpassed electricity investments using natural gas, oil, and coal ($157 billion).
Last year, the global market for clean technologies reached $1 trillion.
All told, more than 3.5 million people are now employed in the global renewables sector. China already counts over half a million renewable energy jobs, while in Germany the sector employs more than 370,000. The U.S. solar industry now employs more than 100,000 people.
Though China’s energy demand is growing, it is steadily working to reduce its petroleum dependence. According to one recent Chinese government estimate, the nation will spend $313 billion in the oming five years to grow a low-carbon economy. The nation expects to spend $27 billion this year alone to promote energy conservation, emission reductions and renewable energy.
Demand for gasoline remains flat and data suggests younger Americans appear to be losing interest in driving. From 2001 to 2009, the average annual number of vehicle-miles travelled by young Americans dropped 23 percent. The country is even questioning its interest in further reliance on heavy crude oils.
In the third quarter of 2011, U.S. companies secured 599 patents for technologies in solar, wind, hybrid/electric vehicles, fuel cells, hydroelectric, tidal/wave, geothermal, biomass/biofuels and other clean and renewable energy technologies––the highest total since 2002. (In the same period, Canadian companies secured 10 patents.)
In spite of the debt crisis troubling parts of the European economy, Europe continues to invest in clean energy. The region met its 2010 renewable energy targets, and is on track to exceed its 2020 targets by 20 percent. Almost 70 percent of new electricity generation installed in Europe last year was renewable
Australia, South Korea, Mexico, California, and a variety of other jurisdictions and regions have either implemented or are poised to introduce economy-wide carbon pricing regimens or comprehensive climate laws.
According to Bloomberg New Energy Finance, annual global investment in renewable energy projects is expected to reach $395 billion by 2020, and $460 billion by 2030.Looking beyond renewable energy technology and infrastructure, and considering the broader opportunities of sustainable transportation, efficiency, resource recovery and more—a market for low-carbon goods and services known collectively as the “clean tech sector”—the opportunity grows much larger.According to the Canadian Clean Technology Coalition, Canada’s current share of the global clean tech market is $9 billion, or just under one percent of the market, while Canada’s share of global GDP is closer to 2 percent. Canada is failing to keep pace with the new global shift to clean technology. Meanwhile, the global clean-technology market could reach $3 trillion by 2020.A recent National Round Table on the Environment and the Economy (NRT) discussion paper, Planning for Prosperity: Building Canada’s Low- Carbon Growth Plan,17 identifies a range of upstream and downstream sectors in the low-carbon goods and services market. This includes wind, solar, hydro, geothermal, sustainable biomass, advanced biofuels, industrial processes, buildings, efficient vehicles, and more. In particular, the NRT research highlighted the efficient vehicles sector as the one with the greatest growth potential. With focussed policy support targeting this sector, Canadian manufacturing could once again be a high-tech industrial success story.
The preliminary NRT research identifies a global market for low-carbon goods and services in the range of $2 trillion, and estimates Canada’s present share of this market at $10 billion–in the same range as the Canadian Clean Technology Coalition estimate. This portion represents only 0.5 percent of the global total market and is significantly below Canada’s relative share of the world economy of 1.8 percent.
The NRT analysis also estimates that even under a business-as-usual scenario, significant growth will occur in Canada’s low-carbon goods and services market between today and 2050, with the sector’s growth rate roughly doubling that of the overall economy.
The question is: How will we respond?
We suggest that Canada can and must secure a larger share of the global market for low-carbon goods and services. We can and must leverage the economy Canada has today to create the clean energy economy that citizens and customers want and will need tomorrow. Canada has a strong entrepreneurial spirit, a history of innovation, a wealth of renewable resources including wind, solar, hydropower, and geothermal, a stable financial system, an established clean-tech sector, and excellent research orientated universities. Canada also has a number of established clean-tech hubs and renewable-energy manufacturing capacity in several provinces, enabled by supportive policy environments.
Canada also has globally significant oil and gas reserves. Today, the fossil fuel sector employs hundreds of thousands, and helps fund schools, hospitals, and more, across the country.
Fossil fuels will likely remain at the centre of our energy system for some years to come. However, we suggest that the traditional energy sector has an unbeatable opportunity to help ensure the nation competes and prospers in a world that, through innovation and regulation, will have sharply reduced its appetite for carbon-based energy commodities. Canada needs to
invest in policies and programs to move these low- carbon new energy opportunities forward.
The fossil fuel sector is currently drawing resource workers from every province and territory–generating financial stability for many Canadians and their families. However, a growing body of evidence underscores that the renewable energy and clean technology sectors can create abundant jobs that are less vulnerable to the boom-and-bust cycle typical to commodity-based economies. Strong potential also exists to boost employment within the near term by creating more value-added opportunities with our existing energy systems.
According to research undertaken by the Brookings Institution, jobs in the clean sectors of the economy tend to be more manufacturing- and export-intensive. The study concluded that such jobs pay better wages, and offer more opportunities for low- and medium-skilled workers.
Further, a 2009 BlueGreen Alliance study examined the U.S. market and found that 70 to 75 percent of total labour for a typical wind turbine or solar panel stems from manufacturing the component parts.
With the right policies in place, this supply chain could be built up domestically within Canadian provinces–as we are now witnessing in Ontario. Since the 2009 passage of that province’s Green Energy and Economy Act, more than 20 clean energy manufacturers have announced plans to set up or to expand operations. In part due to that legislation’s domestic-content requirements, Canadian Solar, one of the 10 largest solar panel manufacturers in the world, opened up a large solar panel manufacturing plant in Guelph, Ontario, employing 500 workers. Germany, an early leader in clean energy, already employs more than 380,000 workers in the renewable energy sector.
The evidence basis for clean technology and strong jobs growth stretches back many years. In 2006, a benchmark University of California at Berkeley survey found that renewable energy technologies created more jobs per average megawatt of power generated and per dollar invested than did natural gas and coal.
We must find ways to support Canadians–for example, by providing training and retraining opportunities––so they can thrive
in the new jobs associated with the new energy future. With the right provincial leadership and policies today, Canada could one day prove a global success story for how a resource-based economy largely transitioned its workforce to embrace a 21st century energy model.
These recommendations embrace both near- and long-term thinking. Though the low-carbon transition will unfold over the course of decades–renewable energy and emissions targets frequently extend to 2050–our call to leadership focusses on short-term actions intended to move the nation more quickly down the path to a clean energy economy.
The risks of delaying these investments and policies are greater than simply missing an opportunity. We could find ourselves not only sidelined in the clean energy economy of tomorrow, but also scrambling to find a way to replace and pay for the jobs and social services that fossil fuels presently provide and fund.
We will also threaten Canadian livelihoods by largely ignoring the well-documented impacts of climate change. Recent economic modeling by the NRT concludes that climate change could cost the country $5 billion per year by 2020, and $21 to $43 billion by 2050. Impacts will be felt on timber supply in B.C., increased coastal flooding in Atlantic Canada, and spiralling public health costs in Toronto, Montréal, Vancouver and Calgary as the result of heat waves.
In its annual report released in April 2012, the deputy executive director of the normally conservative International Energy Agency
lauded the increased deployment of renewables, but also cautioned that the change is not coming fast enough:
“Energy-related CO2 emissions are at historic highs; under current policies, we estimate that energy use and CO2 emissions would increase by a third by 2020, and almost double by 2050. This would likely send global temperatures at least 6°C higher. Such an outcome would confront future generations with significant economic, environmental and energy security hardships––a legacy that I know none of us wishes to leave behind.”
The agency affirmed that, in the absence of major investments and policy decisions, the opportunity to limit global warming to 2°C would slip away by 2017.Canada is amongst the top ten absolute contributors to greenhouse gas emissions, responsible for 1.8 percent of direct global emissions. Unless we diversify our economy, we could be deeply impacted by a dramatic shift in global climate and energy policy. As outlined above, a myriad of indicators suggest the rest of the world is aggressively pushing forward energy policies to define and lead in the next energy era–policies that cultivate local, clean, and unlimited sources. In Canada, we need to do the same, reduce our risk exposure, and immediately begin to focus on policies that move Canada more swiftly along the path of the clean energy transition.
Some observers consider Canada a unique situation, because we happen to have an enormous geologic endowment of fossil fuel resources that today are critical to the global economy. However, other nations with significant carbon assets are making substantial investments to diversify their energy system and prepare for the low-carbon future.
Saudi Arabia, for example, will be investing up to $100 billion in renewables over the next two decades––with the goal of generating 53 gigawatts––one third of its electricity needs––with clean power by 2032. The kingdom primarily intends to use the energy to reduce dependence on oil- powered desalination plants. These investments are part of a larger strategy to place a greater focus on renewable energy generation, to promote job creation and technological innovation.
Norway offers another example. In 1990, following the discovery of extensive offshore petroleum reserves, Norway created The Norwegian Government Pension Fund Global to manage revenues from the resource. The Ministry of Finance regularly transfers petroleum revenue to the fund and determines its investment strategy. The fund presently has a market value of approximately $590 billion.
Further, China, the world’s largest coal consumer, is currently creating a series of Low Carbon Development Zones. The zones will be based on the nation’s past success with special economic zones––geographic regions with more liberal economic laws than the rest of the country. The model is credited with jump-starting China’s high-growth economy. The new zones are intended to act as testing grounds for the large scale economic transformation required for a low-carbon future. China’s transition is expected to be a net job creator. For example, a recent report concluded that 800,000 workers in small coal power plants in China will likely lose their jobs due to climate mitigation actions. However, some 2.5 million jobs could be created by 2020 in the wind energy sector alone.