Power shift

Research and innovation

By Leah Geller

Writer, Freelance

Stewart Elgie
Photo: Andrea Campbell
Canada is in the midst of a historic move to a cleaner, greener economy, says Stewart Elgie.

For years, Stewart Elgie and the Smart Prosperity Institute, the think tank he founded as Sustainable Prosperity, argued that a robust economy could go hand in hand with a cleaner, greener Canada. He believed the best way to do that was to put a price on pollution, which in turn would fuel green innovation and clean economic growth. But he was mostly swimming upstream.

“Until recently, the general consensus was that we had to pick between a healthy environment and a strong economy. And frankly, in that either/or scenario, the environment lost,” explains the professor of law and economics and director of the Institute of the Environment at the University of Ottawa. “We now know that you can have a growing, improving economy that reduces environmental harm at the same time, but it isn’t easy—it takes smart public policies that incent cleaner growth.”

Indeed, that school of thought is gathering momentum. “I think we’ve hit a tipping point where the move to a low-carbon economy is gaining speed,” he says.

Elgie points to Ontario, which reduced its greenhouse gas emissions by 19 percent from 2005 to 2013 by phasing out coal-fired plants while increasing its gross domestic product (GDP) by 11 percent. On the international front, Sweden’s GDP has grown by 58 percent since 1990, while its greenhouse gas emissions have plummeted by 23 percent.

“People now understand that reducing greenhouse gas emissions and protecting the environment can be done in a way that can support the economy, because we’ve seen it happen. And the fear that carbon pricing will kill our economy has been proven wrong, over and over again.”

In British Columbia, where the country’s first carbon tax was implemented in 2008, emissions have dropped by more than 6 percent compared to the rest of Canada, while the province’s GDP growth has slightly outpaced that of the rest of the country.

“We had a divisive period when political parties wanted to make the environment a wedge issue,” Elgie adds. “But now even some Conservative leaders see that low-carbon growth is an economic opportunity.”

Manitoba, led by a Conservative government, is moving forward on carbon pricing. Alberta recently became the first major oil-producing jurisdiction in the world to bring in a carbon tax and to cap the industry’s emissions, and has pledged to phase out coal power. Meanwhile, Ontario and Quebec have committed to even more aggressive emissions targets than those agreed on by Canada at the Paris Climate Change Conference in late 2015.

“If you look across Canada, our four biggest provinces—British Columbia, Alberta, Quebec and Ontario, which make up over 80 percent of our economy—now have a price on carbon,” says Elgie. “Things are really starting to roll. We’re at an exciting moment in our history.”

Last fall, a few weeks before the prime minister and the premiers met to sign a pan-Canadian clean growth and climate change plan, Elgie organized a high-profile letter signed by more than 100 Canadian corporate CEOs and civil society leaders, urging the politicians to take strong collective action on climate change.

The fact that business leaders are starting to jump on board is particularly significant, notes the researcher. “Most of the Alberta oil industry now understands that driving clean innovation is vital to its future and it needs a carbon price to do this. The president of General Motors recently said that electric vehicles are the future of transportation, and they’re putting more and more of their resources into that technology.”

Still, there are challenges. “We have to prepare to take risks and fail a bit,” explains Elgie. “Every time the government invests in a clean technology that doesn’t work, it can’t be hung out to dry.” He is especially concerned about the federal government’s once-in-a-generation infrastructure spending, which he says will require smart forward thinking and some risk-taking to invest now in systems built for the future.

He adds that Canada will need to drive innovation to position the country as a leader in clean technologies. Opportunities are especially ripe in areas in which we already have a lot of know-how, such as large public utilities, electric grids, resources and auto parts. “Can we, for example, be a leader in creating the cars of tomorrow?” he asks.

Overall, Elgie is optimistic.

“It’s not just the prime minister, but more and more premiers, mayors and business CEOs in places like Calgary, Vancouver, Edmonton, Toronto and Montreal, who now fundamentally believe in a low-carbon, clean economic future for us. That’s a reflection of the fact that Canadians are ready to move on this,” he says. “They’ve seen with their own eyes this change is happening—solar panels on roofs and electric vehicles on roads. That you can phase out coal, put a price on carbon and the sun will still rise.”