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Home›Jurisdictions›Asia›As Morneau Walks ‘Tightrope’, Analysis Shows Canada’s COVID Recovery Favouring Fossils

As Morneau Walks ‘Tightrope’, Analysis Shows Canada’s COVID Recovery Favouring Fossils

July 5, 2020
July 5, 2020
 
Primary Author Mitchell Beer @mitchellbeer
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A weekend analysis piece on CBC News lays out the “tightrope” Finance Minister Bill Morneau is walking as he tries to manage the economic fallout from the COVID-19 crisis—and indirectly points toward the just, green recovery that is still the most realistic cornerstone for the post-pandemic economy.

The story could not be more timely, with a forthcoming international analysis listing Canada as one of nine G20 countries whose economic stimulus so far has favoured fossil industries over a green recovery.

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In recent weeks, the general consensus in Ottawa has been that the second-term Trudeau government’s original plans for more ambitious action on climate change and a green transition had been thrown into neutral by the pandemic response. Morneau told CBC he got his first, first-hand look at what might be required in February, during a G20 finance ministers’ meeting in Riyadh, Saudi Arabia. 

“I literally watched the Italian finance minister as he got a note to his desk telling him about the outbreak they had in northern Italy,” Morneau told CBC’s Aaron Wherry. “Within the next hour or so, he raised his hand to say, ‘This looks like it’s going to be much more significant than we could have imagined.'”

Fast forward a few months to a recent report to the Commons finance committee, where the Canadian government said its response to the pandemic has added up to C$174 billion so far, spread across 51 direct support programs for individuals or businesses.

Wherry’s report focuses on the balancing act Morneau will have to carry off as the economy begins to reopen. “I think the tightrope is getting people back to work, but in a safe way,” said Smart Prosperity Institute economist Mike Moffatt.

The other question is where the just, green recovery will fit in the even bigger, wider picture, as the economy slowly returns and many jobs and turn out to be gone forever.

“There will be demands to address both the vulnerabilities the pandemic exposed (long-term care, child care, precarious work, and income inequality) and to seize the moment to build for the future (with a focus on green investments),” Wherry writes. He adds Morneau “talks about investing in ‘the gaps that we’ve unearthed’ and paying attention to those in vulnerable positions (young people, women, and those in low-paid jobs), while looking ahead to where the Liberals think the economy needs to go.”

“You’ve heard us talk about investing for a green economy,” the Minister said. “We know that’ll be important.”

The minority Liberal government may still find itself caught between its pre-pandemic argument that it’s misguided to prioritize balanced budgets and the Conservative opposition’s likely call for a harder line on the deficit, Wherry writes. But despite the “huge shock” the economy has been through, Morneau said in his interview, “the only way to deal with that is if we get back to investing for growth and for employment and for the kind of economic opportunities that come from that. That’s the recipe.”

If a recipe is what’s needed, there’s a good one on offer.

“Compared to funding for fossil fuels, clean stimulus creates nearly three times as many jobs for every $10 million invested by governments,” write Clean Energy Canada Executive Director Merran Smith and Michel Letellier, president and CEO of Innergex Renewable Energy, citing research by McKinsey. “Another recent study from U.S. and UK economists found that clean stimulus policies have historically been the most cost-effective way to jumpstart economies—and would likely be so now.”

Closer to home, “Clean Energy Canada’s own research has estimated that, here in Canada, where 50,000 jobs could be lost in fossil fuels over the next decade, over 160,000 will be created in clean energy,” they add. “But despite these better returns, the International Energy Agency’s analysis also found that the clean energy sector has struggled to receive the significant investments the fossil fuel sector has benefited from.”

Days before Smith’s and Letellier’s op ed appeared on iPolitics, a group of business leaders convened by the Clean 50 listed low-carbon commodities in the natural resources sector, vehicles, buildings, and food as areas where Canada already has a competitive advantage as it moves toward a green recovery.

“We have the opportunity to emerge from this moment with a resilient economy that creates prosperity for more Canadians,” they wrote in an open letter to Morneau published by Maclean’s. “To get there, we must leverage our strengths and invest in our most promising assets that align with growing global markets.”

They add that “now is the time to be courageous and bold,” while recognizing that “building back better is an opportunity for all Canadians to work together. We need to engage broadly. This means forming meaningful partnerships with Indigenous communities in terms of equity ownership, employment, and procurement, and it also means breaking down systemic barriers that for too long have disproportionately held back women and people of colour.”

There’s continuing advocacy for a green recovery at the international level, as well, with Nobel economist Joseph Stiglitz making the case on The Guardian and the World Economic Forum amplifying the International Energy Agency’s call for targeted investment in renewable energy and energy efficiency.

But while those arguments and opportunities take shape, Climate Home News reports that “it’s not looking good” as analysts assess the initial coronavirus bailout packages introduced by G20 countries. Citing preliminary data from a forthcoming study by 14 expert organizations, including the Winnipeg-based International Institute for Sustainable Development, Climate Home lists Canada, Australia, France, Indonesia, Russia, Saudi Arabia, South Korea, Turkey, and the United States as countries that “are throwing more money at fossil fuels than clean energy”. Brazil, China, Germany, India, Japan, and the UK point the other way.

In Argentina, the EU, Italy, Mexico, and South Africa, the analysis was hampered by limited or confused data, Climate Home explains.

“The overall trend is that…there is more money going into fossil fuels than into clean energy,” Ivetta Gerasimchuk, IISD’s sustainable energy supplies lead, told a recent webinar hosted by the Stockholm Environment Institute (SEI). “What we see is pretty much what countries did before the COVID crisis, they keep doing. In this sense the crisis…has just exacerbated the trends we had before, unfortunately.”

Gerasimchuk “also said there were very many ‘shades of green’,” Climate Home writes. “Supporting battery-powered cars in a shift from petrol and diesel engines would be good for the climate, for instance, but not if the electricity used to recharge them came from coal rather than solar or wind power.”

More generally, “while much is on hold because of COVID, there is yet to be a sign of a reset in most countries,” said Michael Lazarus, director of the SEI’s U.S. Center, and lead author of last year’s Production Gap report, which showed world governments on track to produce more than twice as much oil, gas, and coal as would enable them to hold average global warming to 1.5°C.

Climate Home says the new study is expected to be live July 15 on energypolicytracker.org.

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