In early 2020, COVID-19 swept the world, halting economies and bringing life to a standstill. Many were quick to notice the environmental benefits this brought – fish were returning to the Venice Canal and greenhouse gas emissions had dropped to record lows. However, beneath these silver linings was the realization that these environmental gains were only temporary, with many citing the emissions decline during the 2008/09 financial crisis as evidence. The recovery following this recession resulted in a spike in emissions that more than compensated for the drop. If the recovery from the COVID-19 pandemic is to follow a similar path, the damages to the environment may be irreversible. For this reason, the calls to “build back better” are being echoed in countries everywhere, Canada included. A green recovery for Canada can bring economic gains as well as environmental, and provides the opportunity for Canada to become a leading supplier in key green markets. Canada is already set to invest billions in the economic recovery following COVID-19. Putting this money into carbon-intensive industries is akin to investing in an obsolete product – the future is green, and the economic benefits that will come from leading the charge will be substantial.
Benefits and Costs of a Green Recovery
Since Canada will be borrowing from the future to rebuild its economy, it should rebuild in a way that works for future generations. A green recovery is beneficial in the short-term as well – according to an analysis of COVID-19 recovery packages, a green recovery will “create more jobs [and] deliver higher short-term economic returns per dollar spent” compared to a traditional recovery.
Investments in key markets where Canada has a competitive advantage can help it become a market leader and create millions of jobs. Some of these markets are zero-carbon emissions vehicles and low-carbon natural resource commodities. This last market includes bitumen, a commodity that can be used to create strong and light material, perfect for the production of electric vehicles. Additionally, Canada is a top exporter and producer of minerals for electric vehicle battery production. Combined, these advantages could make Canada a “North American hub” for battery-powered vehicles. Because Canada is the second largest generator of renewable electricity, after China, it can create a green electricity grid to complement its growing share of electric vehicles. This renewable electricity production could also make Canada a leading supplier in the green hydrogen market. By investing in all of these areas and meeting Canada’s potential to become a global leader, the Canadian economy will expand and thrive in the post-pandemic world.
A green recovery will reap enormous economic benefits, but there will also be significant costs. In the United Kingdom, the ambitious green recovery package has led to concerns about the impact on consumers. According to the professor of energy policy and technology at Imperial College London, “the easy part of decarbonizing the power system is already over.” The ‘easy part’ is emissions reductions that are not felt by the consumer, such as the phase out of coal-fired power plants and the rise in renewable energy production. Further emission reductions will entail costs to the consumer, either in the form of investments in new zero-emission vehicles or in the replacement of gas boilers with electric heat pumps or “hydrogen-ready” boilers, as will soon be the case in Britain. Consumers will also bear personal costs from necessary behavioural changes such as reducing meat consumption, flying less, and driving less. Despite these costs, McKinsey research shows that “a low-carbon recovery could not only initiate the significant emissions reductions needed to tackle climate change, but also create more jobs and economic growth.” Therefore, the benefits of a green recovery far outweighs the costs.
Benefits and Costs of a Traditional Recovery
Since the pandemic began, along with the environmental gains, there have been setbacks that threaten the progress made before COVID-19. Around the world, environmental legislation has been relaxed, creating lasting consequences for the environment as well as the economy. In Canada, fisheries monitoring was suspended and Alberta has eliminated critical monitoring requirements for oil companies, including ground water and wildlife. The reasons given to explain these monitoring relaxations are economic challenges and public health, although no further information is offered regarding how these activities benefit public health or the economy. In reality, these rollbacks are harmful to both areas.
Reduced monitoring for oil companies increases the likelihood of spills and environmental disasters – a public relations nightmare that is damaging to any company’s bottom line, as well as a tremendous blow to the health of ecosystems and society as groundwater is at higher risk of contamination. Within fisheries, a lack of monitoring increases the chance of overfishing and depletion of this natural resource. If fishing is not done sustainably, a vital food source risks elimination. Any potential gains from a relaxation of monitoring legislations will be very short-lived while the damages could last for generations.
The use of single-use plastic has also been increasing rapidly amidst the COVID-19 pandemic – from plastic grocery bags, to latex gloves and other personal protective equipment. Along with the impacts to our environment and health from plastics containing toxic chemicals, the economy suffers as well. In Canada, a federal report revealed that there are billions of dollars lost from the trashing of single-use plastics. By investing in reuse and recycle systems to create a more circular economy, Canada can save more than $500 million a year in waste management, while providing over 40 000 jobs.
The benefits of a traditional recovery are strictly in the short-term. By pursuing this route, the Canadian government can avoid the high investment costs and instead focus exclusively on rebuilding the economy. This approach sees Canada continue to rollback environmental protections with the goal of raising the profits of oil companies and fishermen. In a traditional recovery, the cost is also taken off of the consumers – this is a significant benefit, particularly as many consumers are already facing an economic burden from the pandemic-induced recession.
During the pandemic, low gasoline prices have made electric vehicles less attractive. Many consumers are altering their behaviour to reflect this more cost-effective option – electric vehicle sales have declined since the pandemic began and without cost incentives, this trend is likely to continue. A traditional recovery is simpler. It requires funnelling money into fossil fuel industries which are already established and have relatively low costs compared to greener energy sources, which will require a shift in our economy’s foundations. However, the costs of a zero-carbon recovery are lowering every year, and locking into brown infrastructure will be the least cost-effective course of action in the long-term.
In rebuilding from the COVID-19 pandemic, Canada should expand and invest in the areas in which it has a competitive advantage. These areas are electric vehicles and low-carbon natural resources. A report by Corporate Knights synthesizing various white papers produced by Canada outlines seven recommendations that play to these, and other, strengths. Some of these recommendations see Canada become a leader in electric vehicles by increasing their use in Canada and ramping up production to enable Canada to become a global supplier. Additionally, to ensure that this new fleet of electric vehicles effectively reduces greenhouse gas emissions, it is recommended that Canada transform its electricity grid to one that is powered predominantly by renewable sources. This expansion of Canada’s renewable capacity will require a divestment away from carbon-intensive industries to low-carbon industries. Lastly, Canada should invest in moving towards a circular economy – with better systems of recycling, Canada can save money while providing more jobs and a boost for public health. Taken together, these recommendations can provide short-term gains while preparing Canada to take a leading role in a greener future.
According to Corporate Knights, transportation is responsible for approximately one quarter of Canada’s greenhouse gas emissions, so incentivizing the production and use of electric vehicles should be a priority. The creation of charging infrastructure, both for long-haul and personal vehicles, can provide construction and manufacturing work. However, incentivizing the construction of urban charging stations and the purchase of electric vehicles will require government funding. Corporate Knights suggests the current rebate of $5000 per vehicle; additional financial incentives to encourage more electric vehicles in “transportation as a service” companies; and $1000 provided to consumers who exchange their standard vehicle with an electric vehicle. This latter exchange incentive should also be applied to truck owners, with amounts up to $2500 for medium-sized trucks and $15000 for heavier trucks. Overall, this would require a five year investment of $12 billion from the Canadian government.
Greening the grid is critical in ensuring that the rising fleet of electric vehicles contribute to better air quality. Investing in renewable energy can additionally mitigate many of the job losses that will occur as the fossil fuel industry contracts. According to the OECD, renewable energy production can actually provide more jobs than fossil fuel production, per unit of energy. Since Canada has an advantage in renewable energy production, the job gains here can be significant if Canada becomes a world supplier. In this area, Corporate Knights recommends building transmission links between the provinces to support the transportation of renewable energy as it is scaled up across the country. The expansion of renewable energy will require an investment from the Canadian government, but since costs of solar and wind power have declined by 80% and 70% respectively, they are rapidly becoming competitive with traditional fossil fuels. An increased capacity for renewable energy production will require an increased storage capacity. A scale-up of hydro reservoir storage plus an investment in carbon capture and storage technologies will help to meet this need in the short- and long-term.
Investing in a circular economy will provide jobs in the new development of recycling facilities and waste management technology. According to Corporate Knights, reduce, reuse, and recycle technology jobs have grown exponentially faster in the last 20 years than the rest of Canada’s economy. Additionally, a transition to a zero-waste economy will reduce Canada’s reliance on raw materials, thus helping to insulate it from future global market shocks. Along with these economic benefits, an economy with no plastic waste will lead to improvements in the health of people as well as livestock and fish.
All of these recommendations will require the use of technology. Throughout the COVID-19 pandemic, technology is what has allowed some to continue working and learning effectively. The economic importance of technology will only continue to increase and it will play a crucial role in Canada’s recovery. From the training of workers in the areas of renewable energy and electric vehicles, to its implementation as a tool to safely monitor fisheries, groundwater and wildlife levels, technology must be built into Canada’s new green infrastructure in a way that ensures inclusivity and equitable growth for all.