That story goes far beyond the realm of turbo-powered supercars. California’s recent decision to ban the sale of all diesel trucks and vans by 2045 laid down the latest marker about the diminished role that fossil fuels are going to play in the future. And while hydrogen will be competing with electric vehicles for that market share, it’s clear that hydrogen is ready to take on a much bigger role than it has in the past as it expands into energy storage, heavy industry and transportation.

“I think we’re just in the first few months of a fundamental retooling of energy systems that could very well dominate for generations to come,” says Dan Wicklum, CEO of The Transition Accelerator, a pan-Canadian non-profit dedicated to maximizing Canadian opportunities in the ongoing energy transition.

By most accounts, Germany has taken an early lead in the race to dominate this new market. Its recently announced National Hydrogen Council will oversee a plan that includes €9 billion worth of investment in both research and companies that can help it meet its goal of five gigawatts (GW) of hydrogen capacity (the equivalent of five nuclear power stations) by 2030 and 10 GW by 2040. “The time has come for hydrogen and the technologies enabling its use,” said Peter Altmaier, Germany’s minister for economic affairs and energy, in July. “We must therefore harness the potential for economic output, employment, and the climate, and do this now.”

Germany isn’t alone in its belief that hydrogen needs to play a much bigger role in the economy of the near future. Last week, France rolled out €7 billion for the development of a hydrogen industry and other green technologies as part of its €100 billion green recovery package, aiming for 6.5 GW of installed capacity by 2030.

Europe’s broader hydrogen strategy calls specifically for 40 GW of green hydrogen-production capacity – that is, hydrogen produced from renewable energy like wind and solar – to be installed by 2030, with an additional 40 GW “in Europe’s neighbourhood with export to the EU.” That isn’t going to be easy. Next year, Spain’s Iberdrola is expected to finish building Europe’s largest dedicated green hydrogen-production facility, one whose hydrogen fuel will be used to help make fertilizers. But as Sebastian Kennedy noted in the Energy Flux newsletter, “To achieve only the within-EU 2030 target [for hydrogen development], Europe would need to build around 200 such facilities every year for the next decade.”

That’s where Canada can play an important role. Europe will try to get some of that hydrogen from North Africa, but the mismatch between the desired supply and the available capacity of hydrogen – and Europe’s obvious need to avoid depending too heavily on Russian imports – creates a perfect opening to build a new export-driven energy economy here. Wicklum says that opening is a function of the cost advantage Canada has in creating both blue hydrogen – that is, hydrogen derived from natural gas that, unlike so-called grey hydrogen, uses carbon capture technology to sequester emissions – and green hydrogen, which is the product of combining renewable energy with inputs like water and biomass.

And while Europe has indicated that it wants to rely entirely on the latter, it may need both blue and green hydrogen to meet its targets. The natural gas sector is hopeful. As James Watson, the secretary general of Eurogas, told Greentech Media, “They know that they won’t get to carbon-neutrality without it. It’s just I think that it’s difficult for them to openly say that.” That would be good news for Canada, which can provide both at very competitive costs. “Independent analysis has shown that Canada is about the cheapest producer of both green and blue hydrogen on the planet,” Wicklum says.

Maggie Hanna, the president of Common Ground Energy and a fellow with Alberta’s Energy Futures Lab, says that while hydrogen is currently being sold for as much as $30 per kilogram, it will soon settle at so-called diesel parity, or around $4 to $5 per kilogram. That bodes well for Alberta, which can produce blue hydrogen at much lower prices. “In Alberta, we can make hydrogen for $1.35 a kilogram, with sequestration, which will go to less than a buck when we have the proper carbon pricing regime in place,” Hanna says. That would require a $50 per tonne carbon price which isn’t much of a stretch from its current level of $30 per tonne. And while green hydrogen would cost more in Alberta, the province has plenty of wind and solar potential that could be tapped to make it.

Quebec’s enormous stores of hydroelectric capacity, combined with its proximity to global export markets, makes it a perfect place to produce green hydrogen – and that’s exactly what’s happening. In January, Quebec’s H2V Energies announced that it was opening its order book on a new plant that can turn residual residential biomass materials (such as waste wood and paper) into green hydrogen, one with an annual capacity of approximately 49,000 tonnes. And at an expected cost of $3.50 per kilogram (or US$2.68/€2.41), the company says that its hydrogen will be “less expensive than diesel fuel and defying all competition.”

Unlike proposed oil pipelines to the east and west coasts that have divided Canadians and sparked conflict and protest, a hydrogen pipeline could be a unifying force. “If you’re repurposing infrastructure to move a fuel that is not just compatible with, but required and necessary to have a net-zero future, then I think there’s the potential for common ground between these groups and regions,” Wicklum says.

So what will it take for Canada to seize this opportunity to reduce emissions, diversify its energy exports and unify an increasingly fractured country? The fact that Natural Resources Canada is in the process of designing a national hydrogen strategy is an important – and necessary – first step. But advocates like Hanna say we also need to align our regulations and standards with Europe – pronto. “In the same way that oil is traded around the world using the US dollar as its currency, hydrogen’s going to be traded on the euro because they were the first movers.”

The recently signed Comprehensive Economic and Trade Agreement between Europe and Canada will help with that integration process. But Canada still has important work to do if it wants to meet Europe’s growing appetite for zero-carbon energy. Getting there will require the kind of government support that is increasingly common in other emerging hydrogen economies such as Germany and France. For example, of the €9 billion Germany is allocating to green hydrogen development, €2 billion will be dedicated to creating partnerships with countries where green hydrogen can be efficiently produced.

Canada’s federal government seems inclined to make some aggressive bets right now. With Prime Minister Justin Trudeau promising that September’s throne speech will lay out an “ambitious green agenda,” it’s safe to assume that some of those bets will be made in the area of clean technology and energy. Natural Resources Minister Seamus O’Regan told the CBC, “Things are happening quickly…trends we saw before the pandemic have accelerated. We want to be ahead of it.” The Canadian Hydrogen and Fuel Cell Association has said it hopes to see the feds earmark $3 billion for hydrogen. The Corporate Knights Building Back Better report recommended that the feds create a multiyear $40.5 billion natural resources and EV fund, with $5 billion set aside to close research gaps, and crowd in an additional $105 billion in private sector investment.

But if that money doesn’t materialize, Canada may miss out on far more of it being generated down the road. “This is a competitiveness play over decades, where we need to be able to position ourselves to win economically and environmentally,” Wicklum says. “If we don’t, we just won’t be relevant.”

Max Fawcett is a freelance writer and the former editor of Alberta Oil magazine.

With the support of the Embassy of the Federal Republic of Germany in Canada.

The post Hydrogen’s big moment appeared first on Corporate Knights.

We are in the early stages of a boom in energy-efficiency building retrofits that should be worth several hundred billion dollars globally, made possible by new cost-effective building technologies and faster, cheaper wireless communications, against a backdrop of escalating grid energy costs. The result is an economic business case for green building retrofits that deliver payback in just one or two years.
The magical potential in installing thousands of connected sensors, known as the Internet of Things (IoT), and other smart building technology is that, beyond the energy savings generated by synchronizing building functions with real-time needs, we can now capture meaningful data about the building and its spaces. This data can then be mined to identify trends and failure rates or to predict events or economic outcomes. Although a strong business case can be based on energy savings alone, there is an opportunity to now use data to manage your business differently – to increase productivity, enhance customer experience, reduce operating expenses, reduce risk and increase the reliability of your operating environment.

Here’s an example: Imagine a convenience store owner able to implement a smart control system using IoT sensors that will communicate over a dedicated wireless modem, remotely monitoring and controlling the HVAC, lighting and refrigeration equipment to achieve a 30% reduction in energy consumption. This will pay for the system’s implementation in less than two years and will provide more traffic-pattern data than ever before; it will also serve as a means to dispatch cleaning staff and doormat-replacement services, say, after a set number of patrons visit the location. Temperature sensors in the coolers would set off an alarm if temperatures drop below a specified level, preventing spoiled product – and unhappy customers.

The opportunities for leveraging data to improve the effectiveness of your business and, ultimately, its competitiveness, are endless. Today’s energy-efficiency solutions don’t just cut operating costs; they’re a data-gathering platform that can spur innovation.

Corporate Knights researchers and economists recently developed a model to calculate the market opportunity for energy retrofitting in Canada. In addition to the energy-saving and business-innovation opportunities, there are significant societal benefits that would accrue, in the form of GDP growth and job creation.

We are in the early stages of a boom in energy efficiency- retrofits that could be worth several hundred billion globally.

 

Based on Statistics Canada data, in a business-as-usual scenario, Corporate Knights projects investment in new residential ($419 billion) and commercial building ($376 billion) construction to total $795 billion from 2020 through 2025. In an ambitious policy scenario – more stringent green building codes leading to 50% of new construction built to a zero-carbon-ready standard, financing facilities for basic flood-protection measures, energy retrofitting 3% of the building stock, and electrifying 1.5% of the building stock annually – an additional investment of $44.7 billion in the residential sector and $33.7 billion in the commercial building sector would be required for a total incremental investment of $78.4 billion.
At these levels, we could retrofit 1.67 million houses, roughly 700,000 multiunit residential buildings (MURBs) and 96,000 commercial buildings (for a total incremental investment of $23.4 billion). We could also electrify 831,500 houses, 353,000 MURBs and 48,000 commercial buildings (for a total incremental investment of $22.5 billion) over six years.
In addition to the retrofitting and electrification, the $78 billion would cover flood-proofing for more than 200,000 homes, energy-efficiency audits for commercial and residential buildings, and incremental costs associated with “greening” the new buildings.

GDP Impact

Over the six-year period, this green building stimulus plan would boost GDP by between $46.4 and $179.0 billion for residential and $34.9 and $134.8 billion for the commercial sector.

Job Impact

Using the range of GDP computed, there is potential to create between 155,000 and 183,000 jobs in the green-building, retrofit and renovation sector over the six-year period.

Savings

By Corporate Knights’ calculations, direct savings primarily from retrofitting commercial and residential buildings would add up to nearly $21.5 billion in the residential and $14.3 billion in the commercial sector over the six-year period.

Incentives and Funding Mechanisms

The economic benefits from building owners and landlords investing in energy efficiency are impressive. For this reason, the Building Energy Innovators Council, a Canadian not-for-profit advocacy group, has been encouraging governments to offer incentives for improving energy efficiency and reducing carbon emissions, along with low-interest retrofit loans repaid through a property tax regime. The low-interest, long-term financing model of property assessed clean energy (PACE) loans is a good model for Canada. The first PACE program was started in the U.S. in 2008 to fund improvements that create environmentally sustainable and resilient properties. Now owners and developers are using PACE loans to create more energy-efficient buildings, meet tougher environmental standards, enhance the value of their assets, and attract environmentally conscious tenants to buildings with lower carbon footprints.

The PACE model was used to finance $660 million of sustainable building improvements from 2016 through 2018. One $205 million mixed-use entertainment development project in Omaha tapped a PACE program to pay for LED lighting, heat pumps, low-flow water fixtures, and other materials and equipment to enhance energy and water efficiency.

Promoters say a PACE loan is better than conventional debt used for similar upgrades because it is typically cheaper, it has a fixed interest rate, and terms are 20 to 30 years instead of three to five. Shamrock Development’s $24.9 million PACE loan, for example, is a 22-year term at just below 6%. Unlike conventional loans, a PACE loan becomes an assessment on the property. It’s paid as a component of the real estate tax bill, and it transfers with the sale of the asset to the new owner.

Here’s how PACE can work: A local government raises money by selling a green bond to investors and then uses that money to provide loans to building owners to fund retrofits that meet the energy efficiency criteria, with the necessary certification provided on the application. The local government is repaid via a charge on the property tax bill (generally less than the energy savings), which is then used to cover administrative costs and to pay bond holders their return.

In his new book, The Green New Deal, Jeremy Rifkin writes that there is more than $41 trillion of capital in pension funds around the world, giving the people whose deferred wages sit in those funds tremendous power. Their fund managers understand that international oil companies are at risk of being devalued over the next few years and are keen to shift to cleaner and more efficient sources of energy. This large pool of capital could finance the building-energy-efficiency boom through PACE bond purchases, and ultimately the transformation to a low-carbon economy.

During the last federal election, it became clear that many Canadians are serious about the climate crisis and want to see meaningful progress on reducing carbon emissions. It was also clear that Canadians want responsible government to create a prosperous economic environment that will create sustainable job growth across the country. The “building energy efficiency sector” provides a unique opportunity to accomplish both of these objectives while offering a stable investment for pension funds and other potential lenders and creating a market to promote and showcase Canadian clean-building technologies.

Gord Hicks is the CEO of BGIS real estate management services.
Andrew Hicks is the sustainability manager at BGIS.

The post Financing our future with a green building bonanza appeared first on Corporate Knights.

Nearly all of us consider ourselves to be ethical people, but few of us like paying taxes because it requires us to part with our own money. Rather than resolve the tension between affirming our own ethicality and loss aversion, we resist seeing taxes as an issue of ethics or sustainability.

The problem isn’t just a personal one, it’s permeated corporate culture around the globe. According to a report released last month by the Canadian Parliamentary Budget Office, Canadian corporations likely avoided $25 billion in taxes in 2016 (in line with previous Corporate Knights/Toronto Star analysis which found $62.9 billion in corporate avoidance over six years). In the U.S., 60 profitable Fortune 500 companies (including Amazon,Chevron, General Motors, Delta, Halliburton, and IBM) earned over US$79 billion collectively in 2018 and yet they paid $0 in taxes. Many received tax refunds.

Robert Bird, a University of Connecticut business law professor, and I argue in the Journal of Business Ethics that the problem of tax avoidance is similar to that of overfishing, air pollution, and other so-called “collective action problems.” These are problems for which everyone is better off by cooperating in the solution. If increasingly more of us avoid taxes, the impact will compound to impair the health, safety, and productivity of a nation. Obviously, tax avoidance diminishes the total resources available in public coffers to fund critically important education, infrastructure, and even defense spending.

It also inflicts harm on the regulatory system and all those who participate in it, including you, me, and our employers. Tax regulators and legislators have to expend more resources to police compliance and shore up textual weaknesses in the law, making compliance more challenging and costly for all of us.

Healthy firm culture is built through ethical leadership and trust. Tax avoidance necessarily requires hiding or clouding information from regulators, stakeholders, and the public. That kind of conduct indicates to others that hiding information or engaging in self-interested behavior is permissible. This signaling can erode a firm’s ethical culture and governance.

How do we fix this? We can begin by adding taxes to the long list of important sustainability issues. This doesn’t mean asking whether the firm can get tax credits for adding solar panels.  Rather, it means asking if you or your firm are fairly and adequately contributing taxes in the communities affected by your operations, products, services, and employees.

For many firms, a starting point could be including tax analysis in sustainability reporting for the Global Reporting Initiative or the Dow Jones Sustainability Index. For firms that already include taxes in sustainability reporting, most report only superficial or aggregated numbers that obscure the answers to whether a firm is contributing appropriate amounts, for appropriate activities, at appropriate times, to the appropriate sovereign. It’s these questions that should drive a sustainable tax policy.

–

Author note: In addition to the article in the Journal of Business Ethics, a research brief is available for sustainability practitioners in a new series published by the Ray C. Anderson Center for Sustainable Business at Georgia Tech’s Scheller College of Business.

Karie Davis-Nozemack is an associate professor of business law and ethics at Georgia Tech’s Scheller College of Business and a faculty affiliate of the Ray C. Anderson Center for Sustainable Business. Her research examines legal and ethical mechanisms for constraining opportunistic managerial behavior, including tax whistleblowers, tax compliance strategies, and fiduciary duty.

The post It’s time we see paying taxes as a sustainability issue appeared first on Corporate Knights.

The amendment to the CBCA was characterized as a “codification” of the Supreme Court of Canada’s 2008 decision in BCE Inc. v. 1976 Debentureholders regarding directors’ duties to act in the best interests of the corporation. The BCE decision helped to shred the notion that a corporation only exists to serve shareholders. It was a watershed moment for the stakeholder capitalism model making clear that a broader array of employee, consumer, environmental interests could be properly considered.

The Supreme Court in BCE was clear that directors owe their statutory duty of loyalty to the corporation itself and that, in considering the best interests of the corporation, the board may consider the impact of corporate decisions on “shareholders or particular groups of stakeholders,” including “the interests of shareholders, employees, suppliers, creditors, consumers, governments and the environment” to ensure that they are treated fairly.

The Supreme Court also stated in BCE that: “The duty of the directors to the corporation is a broad, contextual concept. It is not confined to short-term profit or share value. Where the corporation is an ongoing concern, it looks to the long-term interests of the corporation.” While the Court viewed the long-term interests of the corporation as an essential element of directors’ duties, the proposed amendment lumps it in with stakeholders and the environment, making the consideration permissive.

In addition, by specifying certain types of stakeholders, the proposed amendments may relegate others to a lesser status.  Both would almost certainly be unintended outcomes.  It is unlikely that the government was trying to relieve directors of an obligation to consider long-term interests or limit those stakeholders whose interests a board may choose to consider.

In his 2018 annual letter to shareholders, BlackRock CEO Larry Fink contended that, in the absence of “a sense of purpose,” corporations will “succumb to short-term pressures to distribute earnings and, in the process, sacrifice investments in employee development, innovation and capital expenditures that are necessary for long-term growth.”  As the world’s largest asset manager, Fink argued that this will ultimately result in subpar returns to investors who depend on their investments to fund their retirement, home purchases or higher education. Just as global expectations are converging around an understanding of corporate purpose that focuses on long-term interests, the federal government’s proposed amendment would take a step in the opposite direction. At best, this can only serve to create uncertainty.

There is another logical statutory amendment that should be made to “codify” the BCE decision. The Supreme Court, in BCE, was focused on the fair resolution of conflicting interests in the context of the oppression remedy. That remedy has been widely recognized as one of the broadest and most open-ended in the common law world – allowing certain corporate stakeholders to seek relief for breaches that amount to “oppression,” “unfair prejudice” or “unfair disregard” of their interests.

That said, the statutory language describing which stakeholders can access the remedy is somewhat muddled. While the definition of “complainant” (those who can bring a claim) is open-ended, “in the discretion of the court,” the wording of the statute suggests that the harm complained of must be suffered by a “security holder, creditor, director or officer” of the corporation. The reason for this difference (if it was considered) was not addressed when the remedy was added to the statute in 1975 and is not apparent. Nor is it consistent with the Supreme Court’s discussion in BCE of the remedy as a means of protecting stakeholder interests. A simple fix would be to replace the words “security holder, creditor, director or officer” with “stakeholder” – an open-ended concept that has been judicially defined in the BCE decision.

Rather than potentially creating new problems, hopefully the government will reconsider the proposed amendment and use the opportunity to solve an old one, providing an effective remedial discipline if directors don’t mediate stakeholder interests having regard for the unique circumstances faced by a corporation. This should better enable our court’s understanding of corporate purpose to continue to adapt over time to reflect evolving social norms and expectations as to the proper role of the corporation in society.

Ed Waitzer is a Professor and holds the Jarislowsky Dimma Mooney Chair in Corporate Governance at Osgoode Hall Law School and the Schulich School of Business, York University.

The post Feds’ corporate law reform may create more problems than it solves appeared first on Corporate Knights.

Good evening, everyone. I am honoured to stand before all of you today to receive this recognition on behalf of The Co-operators and our stakeholders. I am joined tonight by many people who work hard everyday to contribute to this achievement.

In a room surrounded by peers and business leaders who are all contributing to a common goal of building a more sustainable and resilient Canadian and global society, this moment feels particularly poignant.

I’d like to begin by giving you some insight into the history of our co-operative organization, because today’s achievement finds its origins in our roots.

In 1945, a group of farmers, credit union leaders and social pioneers pooled their resources and ingenuity to build a co-operative that would meet the ill met and unmet insurance needs of their members, families, and communities.

Today, although the world around us has changed significantly, and our co-operative has expanded, the same co-operative purpose guides us.

We still exist to provide financial security for Canadians and their communities.

The complex issues we face compel us to take a longer-term view of success – not just for our own organizations, but for our clients, communities and the planet.

This purpose is perhaps even more relevant today than it was almost 75 years ago. The embedment of sustainability into our strategy, decision-making and day-to-day operations is simply the manifestation of our cooperative purpose.

If we are to succeed in our mission to provide financial security for Canadians and Canadian communities, then we must account for the interconnected economic, social and environmental issues that put their security at risk. Doing so is not just the right thing to do … it is also good business. And it’s good business for all of us, since their risks are our risks.

The challenges of the future will be greater than the challenges of the past. The complex issues we face require holistic, collaborative and imaginative solutions. They compel us to take a longer-term view of success – not just for our own organizations, but for our clients, communities and the planet.

We have all been recognized for our leadership in environmental, social and financial responsibility. The sobering truth is that our clients and our communities need us to do much, much more.

And this is my call to action. Let’s challenge each other. I think all of us here are fans of some healthy competition.

Climate change is the defining issue of our times and it poises key intergenerational challenges. It requires an “all hands on deck” mentality. And yet, here in Canada, we have a polarized environment with regards to climate change. This polarization makes it difficult for healthy dialogue and action.

As business leaders, we have an opportunity to transcend this and pull our collective weight.

In this room, are companies with great influence. Imagine if we coordinated to help implement a robust and low-carbon economy. Initiatives like the Expert Panel on Sustainable Finance rely on Canadian Financial Institutions to lead the way in a smart transition to a low-carbon economy. I hope you’ll join us in these discussions, and adopt the recommendations of the Expert Panel’s report.

In this room, are companies with great influence. Imagine if we coordinated to help implement a robust and low-carbon economy.

In this room, are companies that collectively manage hundreds of billions of dollars in assets. Imagine the positive change we could drive if each of our organizations committed to impact investments. Today, The Co-operators has invested 13% of our assets in externally verified impact investments — over $1.2 billion. We are committed to reaching 20% by 2022. And 20% is not enough. It is simply a marker along the way, and I challenge us to work toward an aspirational goal of 100% in the long term. The financial returns are market competitive, and these investments are having a measurable environmental or social impact. In essence, the positive externalities are free.

In this room, are organizations who collectively serve tens of millions of Canadians. Imagine the impact we could have if our products and services were designed to help build more resilient and sustainable communities, to inform and equip Canadians to live more sustainable lives. Currently 11% of The Co-operators products have sustainability or resiliency in mind. Again, 11% is not enough and we are committed to doing better.

Together, we can catalyze the transition to a low-carbon economy. We can invest for positive impact. We can design our products and services to enable sustainable, resilient choices, and shift behaviours.

Along the way, we can partner across sectors and stay coordinated, working towards a shared goal of a sustainable future.

Thank you.

The post Co-operators CEO challenges corporate Canada to ramp up coordinated response to climate crisis appeared first on Corporate Knights.

It’s time for a new story, one where Indigenous people assume their rightful place at the economic table of this country.

Why Indigenomics? The truths of this country lie in the experience of Indigenous communities in poverty without access to clean water, warm housing, clean power or good jobs. The root of this can be traced to centuries of being excluded economically.

Dara Kelly notes in her paper Indigenous Development, Wealth, Freedom and Capabilities: “Situating Indigenous economic freedom within a framework of humanism affirms not only the rights of Indigenous peoples to define our own economic futures, but in exchange for economic autonomy, contracts a mutual responsibility to care for, and not violate the rights of others to economic freedom.” This is the next-level Canada. This is Indigenomics.

Through the formation of Canada, Indigenous peoples have gone through four economic stages:

1. Disruption: The first is characterized by the systemic disruption of existing Indigenous economic systems, ways of being and removal from the land while severing inherent authority and responsibility to place.

2. Entanglement: This second stage is characterized by the complexity of the entanglement of the Indigenous relationship firmly embedded within conflict stemming from the disruption.

3. Emergence: The third is characterized by the emergence of the Indigenous legal environment. With over 250 cases won to date, these cases have shaped the economic space for the growth of Indigenous business.

4. Empowerment: Today, Canada is in the fourth stage, characterized by the rise of Indigenous economic empowerment. As an effect of the shifting Indigenous Aboriginal rights and title legal environment, economic equality and inclusion now shape the rise of Indigenous economic empowerment today.

A fundamental question that shaped this country was, how do we eliminate the Indian problem? It is a question that has penetrated the consciousness of generations of Canadians allowing the perception of Indigenous peoples as a problem or a burden. This question begs for relevance as the Canadian courts continuously validate Indigenous rights through the acknowledgement of our place in modernity and the requirement for economic inclusion today.

Questions are the architecture for tomorrow; the quality of questions we ask drives the results. The question of today is, how do we collectively facilitate the development of Canada’s $100 billion Indigenous economy? In the words of Canada’s greatest hockey player, Wayne Gretzky: “Skate to where the puck is going, not where it has been.” This is how the Indigenomics Institute is working to develop the emerging Indigenous economy.

This new story of Indigenous peoples can be seen through the joint work of the Canadian Council for Aboriginal Business and TD Economics, which estimated the annual contribution of the Indigenous economy at over $30 billion in 2016. This figure acts as an initial metric of the growing strength of the Indigenous economy.

The benchmark numbers that frame the growth of the Indigenous economy can be drawn from recent reports:

• An Atlantic region report identified the size of the Indigenous economic impact in that region as $1.2 billion annually.

• A recent Manitoba report puts the Indigenous economic impact in the province at over $9 billion annually.

• An Indigenous Works report based on a research study found that up to 85% of Canadian businesses currently do not engage with Indigenous peoples in any way.

• A National Indigenous Economic Development Board report highlights the potential of an annual $27.7 billion boost to the Canadian economy through better mobilization of the Indigenous workforce.

Framing the future of Canada and the Indigenous relationship can be understood within the concept that we as a country have reached the intersection where the risk of doing nothing outweighs the cost of doing nothing.

Setting the stage for a next-level Canada today means actualizing this growing story of Indigenous economic potential. It must be based on a new understanding that the growth of the Indigenous economy cannot be advanced within existing Indigenous and Northern Affairs Canada program and funding approaches. Modern Indigenous economic design is required today, with a strong Indigenous equity ownership, governance, environmental planning and procurement at the heart of any approach.

While Canada was founded on the economic legacy of systemic economic segregation of Indigenous peoples, the pathway forward must be inclusive and purposeful. Indigenous resilience is now expressing out from the margins to the centre of this country’s economic lifeblood.

Indigenomics is a platform for economic reconciliation. Indigenous peoples have existed on the margins of the balance sheet, viewed as a liability. Reconciliation must now occur in the balance sheet of this country. To achieve a $100 billion Indigenous economy requires a shift in how we relate to Indigenous peoples – to see Indigenous peoples as economic powerhouses in our own right.

The $100 billion Indigenous economy is a modern stake in the ground, the marker of a new economic reality on which Canada’s larger economic future now depends.

Carol Anne Hilton is the CEO and founder of the Indigenomics Institute

Also by Carol Anne Hilton: ‘Investing in reconciliation: the role for institutional investors.’

The post Indigenomics in action appeared first on Corporate Knights.

We won’t know until the votes are counted one day after Earth Day, on April 23^rd, but the fact that it’s possible for a Green Party to come close to forming a government in North America is being celebrated by ecologically-guided Canadians across the country. It’s especially encouraging given the string of victories in other parts of Canada by parties that are outright hostile to ecological values, as was the case in this month’s Alberta election.

Peter Bevan-Baker, leader of the Green Party of Prince Edward Island, has described his party’s popularity as “the local expression of a global phenomenon.” The former dentist and nine-time Green Party candidate believes that people around the world are realizing that the political and economic ideas that dominated the last century are not making people’s lives better. After decades of these policies in action, a growing number of voters now believe that their governments have not held up their end of the social contract.

People are desperately looking for something different in their politics. As economist Milton Friedman said, “Only a crisis – actual or perceived – produces real change. When that crisis occurs, the actions that are taken depend on the ideas that are lying around.”

In Prince Edward Island, “change” has always meant going back to the party that you just kicked out of office a few years prior. Never before has a third party been considered a viable option to break the two-party dominance. Then a poll published in 2017 showed Bevan-Baker was the most popular politician on the island, and the Green Party of PEI suddenly became a contender. The number of voters who said that they planned to support the party in the next election ramped up quickly.

After three terms of Liberal government, PEI’s Green Party has positioned itself to be the “something new” that people are looking for. Around the globe, this desire for change has led to the election of political outsiders from every shade of the political spectrum. Last fall, the CAQ party rode that wave to victory in Quebec. In Prince Edward Island, the Greens have been able to capture that energy.

The PEI Green platform emphasizes revitalizing local-scale economies and communities by redirecting government funds towards smaller local businesses and promoting locally grown food and locally produced goods. It plans on expanding healthcare to go beyond prescribing reactive treatments and include “social prescribing” to connect patients to community activities that support wellbeing. The Green belief is that strengthening community programs and the non-profit sector can have some of the biggest effects on a person’s health and security.

The Green worldview is undeniably different than that of Liberal, Conservative, or Social Democrat parties. It’s built on a different set of assumptions about how society, the economy, and the natural world fit together. Instead of seeing “the environment” as a single component within an all-encompassing economy, the Greens see the natural world as the core of everything. Economic activity that degrades the ability of the natural world to sustain humanity is not progress.

All around the world economic growth marches forward and yet indicators of wellbeing don’t improve. Despite this, economic growth at all costs remains the singular focus of much of our economic activity, and politicians tout it as a solution to nearly every problem that we encounter. This is especially relevant in Prince Edward Island. PEI is currently experiencing the highest GDP (gross domestic product) growth rate in Canada, and yet this isn’t translating into a higher quality of life for islanders.

The PEI Green platform calls for a new way of rating the wellbeing of islanders, as well as the performance of the government. One of the possible options could be the Genuine Progress Indicator or GPI. It’s an idea that’s popular in the field of ecological economics and measures over two dozen environmental, social and financial indicators, subtracting any economic activity that has a negative social impact. The GPI has been a lifelong project for Bevan-Baker, who worked with his local Liberal MP in 1997 to develop legislation that would replace the GDP with a GPI. The bill was presented in Parliament­­ but was not pursued by the government at the time.

Green Party of PEI leader Peter Bevan-Baker

Bevan-Baker and his party also plan to introduce a new carbon pricing framework “that can actually achieve the goal of reducing greenhouse gas emissions.” The party is promising a low-interest loan program to promote small-scale solar energy, as well as free transit for those on social assistance and major support for electric vehicles.

A recent Ipsos-Reid survey found that three–quarters of Canadians believe that the government needs to do more to address climate change. Likewise, recent polling has reported that over a third of Canadians “would consider voting for the Green Party of Canada.” Despite this high level of accessible voters, the Green Party of Canada has never garnered more than 8% of the vote in an election.

Canadians have consistently elected governments that are terrified of taking the actions that are necessary to avert catastrophic climate change. They’re afraid because embracing those actions would mean acknowledging that our beliefs about how the economy should work were wrong all along. In the words of American writer Upton Sinclair, “It is difficult to get a man to understand something, when his salary depends upon his not understanding it.”

Greens don’t have this fear, because they’ve been saying we were wrong for decades. Many of the Green Party’s ideas and solutions have strong theoretical backing, developed through the transdisciplinary field of ecological economics, but they’ve rarely had an opportunity to be tested in practice. As people realize that the old solutions aren’t working, Greens may finally be able to convince a large chunk of PEI voters that a different approach is possible.

Prince Edward Island is small. It holds less than one percent of Canada’s population and is the size of a medium-sized city in most other provinces. The effect of the island’s economy on the greater economy of Canada is equally small. But the effect of an elected Green government on the public consciousness of the country could be huge. A win in PEI will show that Green ideas are viable, that Green politicians are electable, and that there’s never been a better time to embrace these ideas and the people who are championing them.

James Marshall is the author of What Does Green Mean?, an upcoming book on the history and ideas of the Green Party in Canada and around the world. He’s a former BC Greens candidate and is currently seeking the Green Party of Canada nomination for Vancouver Centre. James’s father, William, was one of the founders of the federal Green party.

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Enjoying the spectacle of Jody Wilson-Raybould cleaning the floor with the Prime Minister? Guess what corporate Canada: you’re next. Anybody doubting this needn’t look further than the 275 straight court cases Indigenous peoples have won, stopping many resource projects in their tracks.

The new rule of business in Canada’s resource economy is: No Indigenous buy-in, no dice. Buy-in doesn’t come cheap. It means a radical departure from business as usual practices. That means more than just a few token jobs. The table stakes are meaningful equity ownership, control through executive and governance bodies, employment, involvement in environmental planning and, critically, sourcing. Canadian businesses and governments need to be much better partners and customers of Indigenous businesses.

While there are some inspiring examples of this already at play across the nation, it is a cold reality check that of the 25 largest infrastructure projects under way in Canada with significant Indigenous impact, 22 of them have 0% Indigenous ownership, according to a review by Corporate Knights and ReNew Canada. A major barrier to getting Indigenous equity buy-in is lack of access to financing. One wonders how much further ahead our country would be had our bankers spent as much time finding solutions to the lack of Indigenous access to capital as they have chiding the government over pipeline delays.

Cold reality check is that of the 25 largest infrastructure projects under way in Canada with significant Indigenous impact, 22 of them have 0% Indigenous ownership.

The good news is we are not starting from zero. Indigenous groups already have equity ownership in power projects that provide one-fifth of Canada’s electricity generation. And TD has pegged the Indigenous economy at over $30 billion, or about 1.4% of Canada’s$2 trillion economy. But given that Indigenous people represent 4.9% of the Canadian population and have significant property rights, it is a national scandal that they are sharing in less than one-third of Canada’s economic bounty.

We will know we have made progress when the Indigenous economy is at least in proportion to the Indigenous population, which would be about $100 billion in today’s dollars.

This should be Canada’s number one economic objective, as there is probably nothing else that would boost the broader economy as profoundly. It is heartening to see companies in sectors with traditionally fraught relations with Indigenous peoples now pioneering promising new models of commercial partnership including significant Indigenous equity ownership and procurement. Governments can take note, especially on Indigenous procurement. Total federal procurement spend with Indigenous businesses is just $63 million per year (0.3% of the total $20 billion federal procurement budget) as compared to $1 billion of procurement from Indigenous businesses by just three energy companies.

It will not be easy and it will take time to rebuild the trust, so we cannot afford to rush. But we must begin with the fierce urgency of now.

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The World Energy Outlook is the flagship report issued annually by the International Energy Agency, which coordinates the energy policies of industrial nations. The IEA boasts that the WEO represents “the gold standard of energy analysis.” Industry investors and policy-makers, from government ministers to the Intergovernmental Panel on Climate Change, use WEO’s future-looking scenarios as a guide to allocate capital, influence national energy policy and plan global climate strategy.

But the WEO is a poor guide. The latest Outlook continues a quarter of a century of drastically, persistently and stubbornly underestimating the potential of renewable energy sources. Even as renewables consistently defy the IEA’s figures and develop into an increasingly important part of the global energy mix, the agency shows few signs of change. This should be a cause for concern for everyone affected by misguided energy or climate policy – in other words, all of us. Key decision makers may be relying on inaccurate data at a time of volatility and uncertainty, when clarity and facts matter more than ever.

So unnervingly consistent is the IEA’s underprediction of renewables, it can itself be predicted. And so, before WEO 2018 was launched in Vienna last November, with speeches by former UN Secretary General Ban Ki Moon and IEA executive director Fatih Birol, I scribbled down a prediction for what they would say.

My hypothesis: Dozens of analysts on the World Energy Model team at the IEA would have mined their databases, run every module, run every assumption and number with their 200-strong peer reviewer team, and then … moved their renewables forecasts up by 10%. Again. This turned out to be pretty much on the mark.

Why is this happening?

The IEA takes issue with any characterization of its figures as “forecasts.” It prefers the term “scenario” and points out that the flagship scenario from which the figures are taken, “New Policies,” is predicated on global energy policy remaining as currently announced. As policy develops, so should the scenario, it suggests; as a result, we should expect such evolution over time.

This sounds reassuring, but it is not the reason for its poor predictive performance. At a global level, policy on renewables has not changed dramatically, and certainly not by 10% per year, every year. And it is not the capital-intensive and policy-sensitive renewable technologies such as geothermal, wave or tidal that are driving the delta to the WEO predictions, but just two: solar and wind. In the pithy formulation of Jim Barry, BlackRock’s global head of infrastructure, what has changed is not government policy, but the fact that “the renewables have gotten so cheap.”

The IEA refuses to recognize the extent of the cost changes in solar and wind, and this is the driver of its underpredictions. This is not a new problem for the agency. Already in 2012, industry watchers were pointing out that the levellized costs of solar assumed by the IEA were several multiples above current market prices. And its future cost reduction assumptions were modest – well below the steep “learning curves” of the more than 20% per unit cost reduction that the solar industry was achieving with every doubling of capacity. The hope back then was that the IEA would join forces with its partner agency, the International Renewable Energy Agency (IRENA), which was proving able to track these patterns much more accurately.

This hope has not been borne out. The IEA is now partnering with IRENA to gain historical data on renewable energy costs, but when it comes to future projections, the IEA still refuses to adopt IRENA’s numbers, and continues to substitute costs 20-30% higher.

What can we do about this?

Three pleas to the IEA:

1 – Perform a full model review. More than 20 years of persistent under-calling should indicate that something is wrong.

2 – Listen to your colleagues. Renewables projections are sensitive to the positive feedback effects of learning curves, and specialist agencies have spent decades proving themselves more able to deal with them.

3 – Open-source everything. The World Energy Outlook is too important to global policy to remain closed. Steps such as releasing top-line cost assumptions are welcome, but a model that drives so much public policy should be open to public examination.

There are also steps the rest of us can take while we wait for the IEA to act. In the near term, we should assume that solar and wind costs will stubbornly follow their steep learning curves, while the IEA’s numbers will – equally stubbornly – lag far behind. One can seek alternative sources; organizations like IRENA or Bloomberg New Energy Finance offer less relentlessly conservative views on renewables than does the IEA.

But there’s a more creative path. We can take advantage of the consistency of the IEA’s wrongness on renewables and correct for it, making the assumption that the IEA is currently neglecting future cost reductions to the same extent it has for the last two decades. That is, we take its record of a 10% undercall per year and project it forwards.

Figure 2 shows the result: a surprisingly optimistic, clean, low-carbon path to the future – with more than 50% of global electricity coming from renewable sources by 2030. Such (over) extrapolations must be treated with care, of course. But I look forward to comparing this forecast – sorry, scenario – to those laid out in World Energy Outlook 2030.

If the future is indeed much greener than the conventional crystal balls say, it means that large chunks of the hundreds of billions of dollars being invested in boosting fossil fuel supply (US$715 billion in 2017) face grave risks of being stranded assets, as they are displaced by the quickening march of renewables and electrification.

Paul Mainwood is a former consultant for McKinsey & Company

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It refers to the stalled Trans Mountain pipeline expansion, which Ottawa had already approved but which now was in big trouble as a result of the proponent’s inability to access its terminal on account of protests.

There it was in black and white. Formal, high-level political recognition (by Finance Minister Bill Morneau) that resource projects in modern day Canada needed to be de-risked through direct federal government intervention. And as we were about to learn, this pipeline needed more than de-risking: It needed outright rescuing. Ottawa paid billions to assume Kinder Morgan’s ownership position, as the latter headed for the exits.

Such is the fraught social-licence atmosphere playing out throughout the country, where eco-activism has teamed up with native empowerment to take on projects they don’t like.

Yet, it is the rise of native empowerment that is the primary driver in derailing resource projects. That’s because Indigenous peoples have racked up the greatest winning streak in our legal history – ringing in at 275 rulings and impacting resource projects coast to coast.

Viewed in its totality, it’s our national dream that is at risk, more so than any particular project.
No longer can we assume that we are able to rebuild or revitalize the nation’s infrastructure. Nor can we guarantee an investment climate that will induce others to invest in our future.

The notion that Canada has unlimited resource potential simply no longer bears credence. So instead of resource bounty greatness, we’ve fallen into the rut of project mismanagement. We’re forced to wonder what went wrong, while looking at events through the lens of gridlock.

Really, it’s poetic justice that Ottawa ended up owning this embattled pipeline, having paid through the nose for a project that immediately thereafter went down in flames as a result of a court ruling that focused on Ottawa’s regulatory shortcomings: namely, the lack of assessment of whale habitat and impacts (an environmental win) and the Crown’s failure to adequately conduct its duty to consult (an Indigenous peoples win). Ottawa now gets to take the heat and squirm in frustration like all those other project proponents – wondering what ever became of regulatory certainty, and whether Canada was even open for business in the resources sector.

Indigenous peoples have racked up the greatest winning streak in our legal history – ringing in at 275 rulings and impacting resource projects coast to coast.

No sooner was the Trans Mountain pipeline project slated to be sold off in order to recoup Ottawa’s de-risking costs than the next batter-up, Coastal GasLink pipeline, announced that it too wanted to sell off a majority ownership position in that project. This meant that two new proposed pipelines crossing British Columbia were now for sale. Bottom line: Ottawa has competition in the pipeline divestiture sweepstakes, portending weak returns on a future sale.

Here we see the downward spiral happening in real time. Proponents of major infrastructure projects want out. Ottawa steps up. Taxpayers end up holding the bag. All on account of no overarching strategic plan on our road to resources. This is why a national reset is imperative.

While the focus on energy industry woes is important, it does not nearly tell the whole story. Indigenous peoples are deciding the fate of other industries that don’t have the financial heft to fight back. West coast natives have brought the curtain down on the farmed salmon (open pens) industry, which is starting to phase itself out under NDP provincial government direction.

And on the east coast, a major pulp mill is waging a losing battle over rampant pollution, where Nova Scotia’s Liberal government is siding with impacted natives wanting to shutter the mill – meaning it’s not just legal wins that are deciding a project’s future. Indigenous peoples likewise excel in political negotiations and (if need be) on-the-ground pushback. The fact they have amassed such a powerful legal winning streak enables them to come at proponents with a real head of steam.

All the major industries have lost key rulings to natives at the appellate level.

Mining, forestry, fishing, hydropower, transmission lines, pipelines, oil sands, fracking, transportation, regulatory reviews, orders in council, even legislation – not to mention prominent politicians – all have been rendered roadkill on the road to resources as a result of the rise of native empowerment. One of the common denominators from this tale of woe and grief is quite telling for our resources future: Once a project flames out, it’s not likely to be remounted. Ontario’s Ring of Fire is a case in point. Most proponents, once burned, tend to move on. We’ve lost many foreign investments during the rise of native empowerment and our resources sector has suffered mightily as a direct result.

The other major manifestation arising from the native empowerment movement and their legal wins is the hardening of their environmental prerogatives. They’ve won so many rulings in that sphere that their agenda and the environmental agenda have now merged as the primary issue. As a result, any proponent today who is not prepared to share power in a meaningful way in sorting through a project’s environmental impacts will likely draw serious native opposition in tandem with eco-activist opposition. This explains why we so often hear the Mother Earth drumbeat – because now it’s stronger than ever, and doubly so when eco-activists join in.

Thus, a reset is required in our national thinking in order to take into account these dynamics: massive native legal empowerment and their ramped-up environmental priorities. No project has a chance of succeeding until we factor this new reality into the power-sharing equation.

If we hope to develop our resources and thereby cultivate a conducive investment climate to support new players and projects, here are the hard facts that we simply have to embrace:

1 – Recognition that a low carbon future is a necessity and that climate change is a reality,

2 – Equity participation (independently financed) by Indigenous peoples in major projects,

3 – Serious representation in senior management, especially on environmental impacts, and

4 – Recognition that jobs, training, and Impact Benefit Agreements are now a given.

This reset list will not likely find favour in those resource jurisdictions that are flailing about by continuing to do business the hard way. Since provinces own the bulk of resources in Canada, they tend to resort to status-quo strategies on their road to resources. Some are veering hard right with little heed for reconciliation and how that might well benefit their resources sector.

If anything, they’re now moving away from reconciliation into a darker place: retrenchment. Canada’s heartland is already deep into this unproductive dynamic, with premiers ripping up signed impact and benefit agreements and appealing their losing court rulings.

Parliament is in the final stages of passing a new environmental assessment template (Bill C-69) now before the Senate. It’s drawing heavy criticism from the heartland on account of its long lead times and native engagement priorities. Less talked about is the fact that Indigenous peoples during the past few years have conducted their own scientific regulatory review panels. Three, in fact. Two have nixed a proposed mine near Kamloops and the Trans Mountain pipeline near Burnaby. The third issued a Squamish Environmental Assessment Certificate to Woodfibre LNG (with some 20 conditions). Lest this be seen as natives usurping the regulatory review process, legislators have been forced to respond by adapting the federal process to be more inclusive in an attempt to induce Indigenous peoples to engage in and rely on the federal process. This explains the lengthy lead times, which is a regulatory reset in its own right. Ottawa is simply acknowledging the role that Indigenous peoples are playing in regulating projects that impact their traditional lands. Bill C-69 is an important environmental reset.

No project has a chance of succeeding until we factor this new reality into the power-sharing equation.

In any event, a national reset is overdue since so many of those native legal wins upended various provincial and federal review processes. Indeed, both the Harper and Trudeau governments saw their approved pipeline permits voided as a result of botched regulatory and bureaucratic processes: Northern Gateway and Trans Mountain, respectively. As a result of Ottawa now having to de-risk projects, a much bigger reset is required – on account of the sweep of native empowerment nationally and its merger with the eco-activist agenda.

A more fulsome reset will require Ottawa to develop a First Nations National Energy Strategy that recognizes their legal empowerment and attendant land rights to their traditional lands, and that implements a national resource revenue sharing scheme, whereby funds are redirected to Indigenous peoples equitably across the country, right off the bottom line – akin to equalization.

All future resource projects, if they are to succeed, have to have Indigenous peoples on-board.
Bankers who lend to proponents, who haven’t earned the native good housekeeping seal of approval, are being reckless in the current environment. Governments will not always be there to de-risk a poorly executed project. Moreover, the number of projects today that either don’t make it out of the gate, or across the finish line, verges on a national crisis. Moreover, a reset is required to reignite our national imagination. Great swathes of the country are now mired in resource gridlock. Once the envy of the world, Canada has foregone greatness – for gridlock. The remedy lies in extending the hand of reconciliation on our road to resources.

We can still regain our resource legacy, but we have to recognize what’s possible within the strictures of social licence. Acknowledging climate change and a lower carbon footprint are two prerequisites for success. That, along with a major reset respecting Indigenous peoples’ role as resource rulers by recognizing their political and legal clout in determining the fate of projects. It also helps if we adopt the attitude that their legal wins are entirely legitimate. Because, they’re playing and winning by our rules. We have to embrace this new reality as progress, long overdue progress.

That new reality: There’s no doubt future resource projects are going to look a lot more green and a lot more Indigenous.

Bill Gallagher is a strategist, lawyer and author, most recently of Resource Reckoning: A Strategist’s Guide from A to Z.

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