Redefining Canada’s path to sustainable development concerns not only the country’s relationship to its natural resources, but also to its people. Understanding the Canadian economy from a comprehensive wealth perspective tells us this. As such, the government’s Expert Panel on Sustainable Finance is calling for increased capital to support clean technology in Canada. With increased capital flows, new employment opportunities will arise. This is a less discussed scenario than the one where jobs are lost in the fight against climate change, especially in petroleum producing and exporting countries.
The transition to a green economy entails changes in the production system on a scale equivalent to an industrial revolution, and a net increase of 18 million jobs globally under a 2°C scenario, says the International Labour Organization (ILO). Understanding the transition involves a significant reallocation of job opportunities and highlights the necessity of proper planning to realize the economic potential of the green economy.
But how well-prepared is the Canadian workforce to access decent work in the green economy? And how can the incoming federal government enable a just transition to a green economy where everyone has opportunities for decent work?
The transition to a green economy will impact industries, regions and people differently. In the oil & gas industry, high-risk groups are young (ages 15-24) and aging men (ages 55+) in addition to Indigenous Peoples, especially in Alberta. The oil & gas industry accounts for 30% of Alberta’s GDP and 17.4% of employment. Contrast this with Ontario, a province with a head start with greater investment in clean technology in 2015 than any other province. In high-growth green economy industries (e.g. manufacturing, renewables, construction), women experience workforce participation rates as low as 12% (compared to their overall representation in the Canadian workforce of 48%). With employment growth in construction, manufacturing and renewables, the share of women is forecasted to come down slightly as these are historically male dominated industries. Indigenous Peoples are also under-represented in industries such as manufacturing. Given these inequities, achieving inclusive growth requires adopting a just transition lens to policy development.
Create a just transition fund
Funding is required for social protection assistance and to support passive labour market policies for Canadians who need it during the transition. This can be achieved through building a just transition fund, similar to the Norwegian sovereign wealth fund. If federal fossil fuel subsidies for exploration and production are phased out over a period of time, the amount generated could be up to $1.6 billion per year. Additional revenue could come from redirecting the proceeds of the federal carbon tax that is applied in provinces without their own pricing mechanism.
Grow the clean technology industry and labour market
Export Development Canada’s (EDC) financial support for the oil and gas industry should be redirected over a defined period of time to clean technology companies. The amount of money available for redeployment could be as high as $10 billion a year. A condition of receiving this support would be the maintenance of labour management plans. These plans support active labour market policies, resulting in a supply of qualified workers for the industry. As financial stimulus alone is not sufficient to ensure access to decent work, labour management plans are a key tool for companies. They can be used to assess the impacts of the transition and prepare their workforce, especially for workers in high risk groups.
Introduce green economy, skills and employment legislation
To help the provinces and companies prepare their workforce for the transition, the federal government can introduce green economy legislation. Some countries have already started using national legislation to address issues relevant to green economy employment, including the Philippines, France and the Republic of Korea. The legislation would define jobs and skills, identify tax incentives for companies investing in training/skill development/credentialization of workers, allocate budget to the provinces, and outline a data collection and reporting strategy.
Redefining Canada’s path to sustainable development requires a comprehensive and strategic plan – a just transition to a green economy. One of the four pillars of Canada’s national climate plan is clean technology, innovation and jobs. My recommendation for the way forward is to grow the clean technology industry and labour market which:
- Distributes benefits across high-risk groups in the population using a combination of active labour market and economic policies
- De-risks taxpayers from the potential negative consequences of fossil fuel stranded assets
- Encourages oil and gas companies in addition to their investors to assume greater accountability for transition risks and invest in clean technology solutions
- Reduces the amount of money needed by the federal government for passive income to workers
- Allows Canada to remain competitive in its ability to attract foreign talent
Inter-ministerial planning and implementation are critical for success as many governmental departments are impacted, including the departments of Finance, Economic and Social Development, Environment and Climate Change, Women and Gender Equality, Indigenous and Northern Affairs, and Immigration and Citizenship. There should also be representation from the Canadian Labour Congress and the provinces.