It’s not the environment versus the economy

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Executive Pulse seeks input from Canadian leaders on vital issues that affect our business and economy.

As the Paris COP21 climate-change conference comes to a close, two Canadian leaders reflect on the potential effects of climate change, as well as efforts to reverse carbon emissions, on our country's economy and businesses. David Miller is president and chief executive officer of environmental organization World Wildlife Fund-Canada and Ilse Treurnicht is the CEO of the innovation centre MaRS Discovery District in Toronto.

According to a recent Ipsos Reid poll, Canadians listed climate change tenth, beneath other concerns such as health care, unemployment and jobs, taxes and poverty. How big a concern is this (and why does it rank below other issues for Canadians)?

David Miller: All these polls depend on how questions are asked, but the one thing I do know is Canadians are environmentalists, they really are. People of whatever political belief really understand and appreciate the beauty of our natural areas. It's part of our natural identity and, flowing from that (and the polls do confirm this) Canadians believe in supporting, conserving and protecting the environment. They also believe at the same time that it's possible to do that in a way that's economically sustainable.

What are climate-change related concerns specific to Canada?

Ilse Treurnicht: There is huge pressure on long-term investment in high-carbon infrastructure. In addition, adaptation presents a big challenge in many industries, including agriculture and insurance. Most major utilities are being forced to rethink how they do business, as their business models are being disrupted by new technologies and new financing mechanisms.

DM: There are three areas of direct negative impact from climate change, and then an economic challenge. The three areas of direct negative impact are in the Arctic, where the sea ice season is getting shorter and shorter and that has huge impacts for ice-dependent species and also for people whose livelihoods depend on hunting those species. Second is the increasing severity and frequency of storms: huge costs to people, to government and to the economy – Calgary floods, Toronto ice storm, those kinds of problems. It is very expensive and when you speak to the insurance industry, they're very worried. The third is subtle changes in nature. For example, the Prairie climate is going to change quite dramatically – what then happens to nature, what then happens to where we can plant arable crops? And then, of course, because part of our economy is based on the extraction of fossil fuels, as those are required to be used less and less to reach the world's goals, that will have an impact on people who depend on those industries.

Is it a black-and-white issue pitting the environment against jobs and the economy?

DM: I think it has always been miscast as the environment versus the economy. I actually think it's the other way around. It's: How do we build an economy that's going to succeed in the future? And a big part of that answer is doing things in harmony with the environment. So, for example, in order to use fewer fossil fuels to heat and cool buildings, one of the solutions might be energy retrofits. You create huge numbers of jobs because that's a very manual thing to do. For example, to retrofit all of the multi-unit apartment buildings that were built in the seventies and earlier would create about 30,000 jobs. So you create far more than you would be losing by slowing down the exploitation of oil because it's not needed as much if you're using less. I think the challenge for government is the jobs that are created need to support the communities that aren't creating as many jobs any more.

IT: The world is heading toward de-carbonizing its economy. Those who develop relevant solutions will see a very significant long-term economic upside. In addition, lower emissions and lower energy usage means increased global competitiveness. Big companies are beginning to figure this out. For example, MaRS works with renewable generation, energy storage, and energy efficiency companies that, when deployed together, will enable a jurisdiction to reach a 100-per-cent renewable model.

Will policy seeking to curb carbon emissions (such as carbon pricing) risk hurting the Canadian economy, especially if other jurisdictions are not adding similar costs to industries?

IT: We need to view this as an opportunity for Canada to be a global leader in energy exports, beyond oil and gas. Yes, these policies present a challenge for high-carbon users. Ontario is going cap and trade, not carbon tax, to support those industries. They want to protect carbon-intensive, export-exposed industries until the rest of the world catches up to us.

At the same time, can a prosperous economy or business climate function in the long term in the absence of a stable climate?

IT: No – over the long term, it will be very difficult to maintain existing economic output, let alone achieve growth, in the absence of a stable climate. Earlier this year, the Pentagon released a report arguing that global climate change will have wide-ranging implications for U.S. national security interests over the foreseeable future. If a significant rise in temperature begins to threaten domestic stability in a number of countries, then there can be no prosperous economy.

Is Canada too small to have a global effect, given the massive size of developing nations ramping up their economies and energy consumption?

DM: No. We have less of an effect than the United States or China, but we all have a role to play and all of us have an impact, whether it's individuals or the country, and we all morally must play a part or we can't criticize anybody else. But because Canada is an oil- and bitumen-producing country we perhaps have a special leadership role. And I think the positive for Canada is if we can take that leadership role and start using new technologies to solve some of these environmental problems, we're going to benefit economically from that. If we wait for others to lead, they'll benefit economically as they solve the problems and reap the rewards of that.

How many Canadian startups are focused on creating products that will impact climate change?

IT: Companies don't focus on climate change as a business per se, but because it's a big problem that needs to be solved, it offers a massive market opportunity and entrepreneurs are busy developing solutions. Low-carbon energy infrastructure will be the single largest global market in the 21st century; it is expected to reach $2-trillion in 2020. Entrepreneurs recognize this, and that's why they are engaged in the clean-energy sector. I am optimistic. We see very ambitious entrepreneurs developing truly breakthrough solutions in critical areas such as energy storage.

What is the single biggest challenge for these companies?

IT: Capital. Companies solving these problems require significant capital to get to market, and many are selling into a capital-intensive industry underwritten by conservative financial institutions. We need to figure out how to better support our emerging cleantech exporters. Currently, many of these young high-growth companies are not eligible for standard programs. They need targeted export support to grow. EDC has made it a strategic priority and is now working with the federal government to achieve this mandate.

What is happening elsewhere that you think Canada should emulate?

DM: I think Canada should take a very close look at the work being done by cities internationally. For instance, Seoul has a program called the City of Sunlight that is about solar energy. The insight there is that distributed energy can help solve lots of local problems, like resilience in the face of storms, as well as lower greenhouse gas emissions, so you get lots of reward for an investment. I think we should be looking to those examples because there are hundreds of proven projects that work.

IT: The World Bank's lead on the green bond file has been impressive. The global financial institution began issuing green bonds in 2008 to help combat climate change and has raised billions of dollars to support projects in reforestation, energy-efficient buildings and public transportation. Competitively priced, these debt tools help governments attract institutional investors.

How much does change start in Canadian homes, or is it such a huge, complex problem that solutions need to be carried out on a national, and even international, scale?

DM: Climate change is a large problem and the science behind it is complicated. I don't believe the solutions are, though. I think it's pretty clear what we need to do and I'll put it simply – most greenhouse gas emissions are from cities or the actions needed to support cities and most of those are from how we heat and cool our buildings, from our transportation and from how we generate electricity. So if we deal with those sectors, and we can – there are lots of things available today that both reduce emissions and create jobs in those three sectors – we can have a huge impact. People have a role in all three of those sectors, as well. People can make different transportation choices, if alternatives exist. But even people walking to work one day a week or taking a bike if they're in a place that's safe or buying a lower-emission vehicle or taking transit once a week can help. The same with buildings: If you make your home more energy efficient, you're going to save money over the long term and have lower emissions. And even with generating power: Ground-source heat pumps or rooftop solar or hot water, all can be done economically or with an investment that pays off eventually. If you aggregate all those individual actions, it can add up to a very significant impact.

IT: Climate change poses a huge system-level innovation challenge: How to rethink, redesign and deliver well-being and prosperity to people everywhere in a way that does not harm the planet – when the system that got us here is threatening both people and planet. This challenge is now becoming a burning platform for governments, business and civil society. Smart innovators around the world are rising to the challenge – with growing financial and other support from the public, private and philanthropic sector. They are looking at every aspect of this challenge – and the solutions that emerge will reshape the way we live, work and play. So the challenge for Canada is also our opportunity: We need to be on the innovation team, bringing climate-change solutions to Canadians and to others around the world. By creating solutions, rather than having the solutions of others imposed on us, we will be much better positioned to control our destiny through this period of transformation – economically and as a society.

Responses have been edited and condensed.