Canada’s federal government has been working diligently behind the scenes on a piece of legislation known as the Clean Fuel Standard (CFS) with the goal of implementing it in 2022 with an aim to reduce carbon emissions by 2030 by 30 million tonnes.
Federal environment Minister Jonathan Wilkinson has excitedly endorsed this plan by saying that it will create new industries and bring with it the always-important, ever-elusive jobs (JOBS!!!). Whenever a new green initiative is rolled out, we hear the same pitch even though the promises often do not come to fruition. Therefore, I have to ask – what type of jobs and where are they going to be created?
Studies, including those conducted in Europe, have shown that for every one job created in the green energy sector, two to four jobs were lost in other sectors due to the increased price of electricity that results from green energy plans.
Consider the announcements made in the summer of 2020 by oil supermajor, multinationals Royal Dutch Shell and BP. The CNN headline announced, “Shell to cut up to 9,000 jobs in shift to low-carbon energy” and the article makes reference to BP’s June announcement that it would cut 10,000 jobs, or fifteen percent of its workforce, as it transitions its business. If a shift to a low-carbon, green economy results in job creation, why are large private corporations cutting jobs as they shift their business model away from fossil fuel production?
Canada’s Liberal government promotes the CFS as a way to diversity the economy, promote investment in clean energy, and increase renewable fuels demand, all of which will create jobs in the process. However, economically viable business models don’t require government subsidies or boosts from legislative changes. Surely, if these industries were lucrative, there would be more private, profitable investment in them already.
Unfortunately, business investment and the desire to do business in Canada has been lagging. We can see in the graph below that investment started to wane in 2014, when oil prices collapsed. Investment has continued to decline. More recently, the World Bank’s Ease of Doing Business report ranks Canada at 23rd in 2020; we were 4th in 2007. The latest World Economic Forum’s Global Competitiveness Report ranked Canada 14th compared to the United States, which ranks 2nd. We have competition.
Canadians must ask if Prime Mister Justin Trudeau’s promises of a brighter, more prosperous, diverse economy under the CFS are realistic.
Canada doesn’t produce enough low-carbon fuels to meet existing legislative requirements; therefore, we will have to import, mainly from the USA, even more fuels to comply with the higher demand created by the CFS. Canada already imports 40 percent of the ethanol, 45 percent of the biodiesel and 100 percent of the renewable diesel we currently use under existing legislation.
If domestic capacity cannot supply our needs, isn’t this putting the cart before the horse? Shouldn’t we have been growing this sector of the economy prior to implementing standards that increase demand of a product already in short supply?
On face value, it appears that the government is correct and there is a lot of room for growth in the low-carbon, biofuels space in Canada, which would ultimately lead to more jobs. However, some analysis predicts that it will be more cost-effective, faster, and preferable to expand existing facility capacities in the USA, Europe, and South America rather than build new in Canada. If this is true, the winners will be workers in the USA, Europe, and South America, not in Canada. Given Canada’s waning popularity for business investment, this scenario is entirely probable.
The feds are willing to kill jobs in Canada’s resource sector to create jobs in other countries.
Call to action
If you would like to learn more about the CFS and biofuels, please check out:
https://www.capp.ca/wp-content/uploads/2020/09/The-Federal-Clean-Fuel-Standard-Risks-to-Economic-Recovery-and-Barriers-to-Environmental-Innovation-375521.pdf
If you have concerns about this legislation, talk to your provincial and federal elected representatives and senators. Tell them you want regulations that enhance Canada’s competitiveness and that you don’t want more costs placed on your overburdened household.https://www.ourcommons.ca/members/en
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