How does Canada participate in the low-carbon economy?

Following the U.S., Canada has the second largest carbon emissions per capita in the world. The footprint is largely driven by energy demands from buildings, transport and industry. While emissions from many developed countries have stopped growing, Canadian carbon emissions have risen 24% since 1990, the baseline for Kyoto protocol compliance, leaving it 30% short of its 6% Kyoto reduction goal.

As I am writing this, I am attending the Carbon Market Insights Americas conference. The first conference day is dedicated to global climate change policy advancements. Speaker after speaker reviewed carbon reduction policies (e.g. cap and trade, technology transfer and efficiency standards) being implemented in the U.S., Europe, Australia and China. There are even good news coming out of India, Brazil, Indonesia and South Africa. There was not one word said about Canadian progress.

Also noteworthy, are the positive economic developments that carbon emissions reduction policy is driving across the world. The low carbon economy is a fundamental engine behind value-added industry change. It is creating innovation, “green” jobs and new export industries. It is putting a focus on resource efficiency and supply chain transformation. China is now the largest manufacturer of wind turbines in the world after Denmark, a small European country with long-standing green energy incentive programs, which has held this position for the past 10 years. Large, multinational companies are revealing cost savings obtained from carbon management strategies and supply chain partnerships. Progressive power utilities and oil and gas producers are investing in future energy solutions, recognizing that their traditional business model may not be viable 20 years from now. Consumers are starting to ask questions about the environmental impact of the products and services they are buying and are rewarding the early movers.

Canada can choose to participate in the low-carbon economy. Two factors drive change – regulation or market demand. The benefits of regulation are that there is one rule book, less risk around potential scenarios and that transformation happens quicker. If the market is driving change, change may take longer.

In either case, losers will surely be separated from winners through the market mechanisms. A good illustration of this is what happened to the North American auto industry 2008-2009. The U.S. had many opportunities to change vehicle fuel efficiency standards as Europe and Japan tightened their standards during the 1990’s. Responding to the auto industry lobby, the U.S. chose not to. As a consequence of improved fuel standards in Europe and Japan, their manufacturers focused on high-efficiency motors, smaller/lighter models and alternative fuels sources. These companies had the product the American customer desired when the gasoline price rocketed in 2007-2008. Regulation is not always a “bad thing”.

While the Canadian government chooses not to participate, Canadian businesses need to take action themselves. As they are competing on a global basis, Canadian business leaders need to prepare to compete in a low carbon economy. This requires integrating carbon and energy risk management into their business processes, supply chains and investment decisions. It will involve setting voluntary product efficiency standards compatible with leading international best practice. Energy intensive companies may even want to participate in the carbon markets on a voluntary basis to prepare for carbon trading. As companies undertake internal efforts, they should collaborate with peers and jointly engage with government to inform decision makers about desired policy instruments. Canadian industry cannot afford to wait. They need to get on the bus today. Otherwise, the bus will run them over tomorrow.

Francisca Quinn
Business Manager & Sustainability Practice Leader
Loop Initiatives