What is a green economy in the Canadian context?

The term ‘green economy’ has become increasingly common but is, as with many such terms, without a common definition. Some assume that ‘green economy’ refers only to the environmental good and services sectors, i.e. sectors that produce products or provide services that have obvious environmental benefits, such as renewable energy or water filtration technology. Given that these sectors are only a subset of the entire economy, this narrow definition not only neglects most economic activity, but ignores the scale of the environmental challenges we face.

A broader definition of the green economy can refer to an economy that minimizes environmental impacts while not sacrificing economic growth and prosperity. This definition tends to favour a service and knowledge-based economy. This type of economy’s actual demand on the environment is much higher than it appears, because it exports the production, and therefore the environmental impact, of the goods it consumes.

What does this mean for a resource-based economy such as that of Canada? Canada’s natural resource sectors represent about one-fifth of Canada’s GDP, with the finance, trade, business services and transportation sectors also tied to resource industries. Natural resources comprise the majority of Canadian exports, though only about 7% of jobs, because these sectors tend to be capital intensive. Canada’s abundance of natural resources has arguably contributed (along with its cold climate and large geographic area, among other factors) to the high resource-intensity of Canadian lifestyles and production. For example, every Canadian emitted about 22 tonnes of greenhouse gases (GHGs) per capita in 2008, three times higher than per capita emissions in Sweden.

These statistics demonstrate that even as the Canadian economy has evolved and expanded, its base remains firmly rooted in its natural resource riches. The natural resource dependence of the Canadian economy is a major challenge in its transition to a green economy.

In an increasingly resource-constrained world, there is high demand for Canada’s natural resources. Canada’s current Federal government clearly sees Canada’s role as supplying its energy, mineral and other resources to rapidly growing countries such as China. Not every Canadian shares this vision, as reflected in the controversy over the public hearings for the Northern Gateway Pipeline project, which, if approved and built, would link Canada’s energy resources to Asian markets.

Canada’s natural resource sectors, particularly the oil sands, have high environmental impacts. An expansion of production in the oil sands has already been put in motion. There are factors which could slow down the development of the oil sands, including environmental concerns causing a decrease in market demand, the economic viability of projects as oil prices fluctuate, and whether the increasingly obvious and severe impacts of climate change will spur a more profound global shift to a green economy. Reducing the environmental impact of high carbon-emitting and environmentally impactful sectors is part of the path towards greening the economy, but is it enough? Is a more profound shift in economic direction possible?

There are regions and sectors in Canada that are taking action to transition to a greener economy, such as the growing renewable energy and smart grid cluster in Ontario. Clearly Canada has a ways to go towards greening its economy, especially with regards to the environmental impact of its resource sectors and the resource intensity of the Canadian economy. There are no easy answers, but Sustainable Prosperity is currently exploring these and related topics in detail, with research to be released this year.