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Pipeline to a green economy

Now that U.S. President Barack Obama has officially rejected TransCanada’s Keystone XL pipeline to ship tar sands crude to refineries on the Gulf Coast, where does that leave an oil-dependent Canada in a post-carbon-age?

TransCanada has vowed to fight the decision, but in the age of climate change, billion-dollar investments that carry tanker loads of carbon-intensive crude to “tidewater” constitute a bridge to nowhere. Indeed, the recent statement by G7 Leaders about the need to phase out fossil fuels means future jobs and economic growth won’t be coming from traditional investments in natural resources. 

And that reality is no more true than in the auto industry. David Paterson, leader of General Motors’ environmental division, has a 250-member team in Oshawa working on sustainable products, including self-driving cars, electric cars and e-bikes that you can fold up and take with you on train to work. He was part of a one-day conference on the Green Economy at the Daniels Spectrum on November 5.

Paterson points out that 90 per cent of the time, a car owner’s vehicle sits idle without being used, so GM is also turning its attention to car-sharing, looking to sell kilometres rather than vehicles. “GM intends to disrupt industry and to disrupt itself,” he says. 

Some are predicting a soft but brutal end to Canada’s position as a leader in economic growth as a consequence of the global shift to green.

But Jamison Steeve, a one-time aide to former Ontario premier Dalton McGuinty, argues that Ontario in particular has an advantage when it comes to manufacturing, transportation, water-related technologies, and Big Data. All of these will be key pieces we take with us into a green economy. 

Steeve used the 10-year boiled water advisory on Canadian native reserves as an example of a problem that could become an exportable solution with the newly-minted government of Justin Trudeau vowing to bring clean water to all reserves within five years. 

Some of that kind of talent was on display at the conference. Rahul Raj, a vice-president with Ecobee, talked about the smart thermostats his Toronto company manufactures that use room sensors to make decisions about when to turn down the heat. No more fiddling with the program, today’s version of the blinking VCR timer. 

Ecobee “doesn’t lead with a sustain message,” says Raj. “We lead with a comfort message, an economic message. Being green is simply a gift with purchase.” 

But despite the fact that a vast majority of Canadians support taking action on climate change, only a quarter of us are willing to make personal changes in our lives to improve the environment, according to recent data. 

Surveys conducted in 2015 by the research firm The Gandalf Group were presented to the conference. “The appetite to pay more money to help the environment is pretty low and won’t create a national consensus,” says Gandalf principle David Herle, who served as an advisor to the Trudeau campaign during the election. 

Business leaders are even more reticent. They’ll take whatever “off-ramp” they’re offered. The majority of business leaders, for example, may believe that renewable energy will be more important in the future, but they also oppose limits on the oil sands. 

What this conference made very clear is that the road to a greener economy requires one major change: a price on carbon. 

It doesn’t matter whether it’s a carbon tax or “cap and trade” in the long run. What’s important is to quantify the damage holding back investments in clean energy and green tech. 

Even GM gets that. “Accept that there’s going to be a value on carbon,” says Paterson. “Get over it.” 

Sure, get over it, but the fact is that putting the right price on carbon can’t happen soon enough. Until fossil fuels are priced right, they drive consumption and steer financing away from low carbon projects that need the investments. 

“Markets are not mechanisms that get to a particular point from an ecological or social standpoint,” says Martin Grosskopf, a vice-president with AGF’s sustainable investing group.

“A lot of people are asking for institutional investors to divest,” adds JP Brisson, a California-based environmental lawyer from Quebec. “But ultimately, if you set a long-term price, that price will start driving private capital in a more efficient way.” 

So yes, the oil sector is down, but unfortunately, the solar index on major stock markets is also down 40 per cent this year. Decisions to divest aren’t resulting in that money flowing to companies that are actually providing solutions. 

This lack of green momentum is the real reason why institutional investors like AGF and Sun Life aren’t leading the charge for divestment, even while the latter has signed on to the United Nations’ Six Principles for Responsible Investment to incorporate the environment into investment decisions. 

“The way we look at it is, what are the risks to our business, to our investments?” says Susan Jantzi, Sun Life’s director of corporate affairs and sustainability. 

The message from money managers: not necessarily divestment, but divestment if necessary. 

But there is an urgency to all of this. There is only a small window to avoid a global average rise in temperature of more than two degrees.

Hence the message from GM’s Paterson. “It’s important in a country like Canada that we have an activist government. If we don’t have an activist, collaborative approach, we’ll be left behind.” 

Dan Stein ran for the Green party in the most recent federal election.

news@nowtoronto.com | @nowtoronto 

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