Let’s Talk Budget 2021

Blue Green Canada's submission to the Federal pre-budget consultation - February 19, 2021

Together our governments, communities, and workers have built big things, like our universal health care system, our public hydro-electric power system, and employment insurance and parental leave, even the national railway. Over time, some of these institutions have been derided, threatened, and taken out of the control of people. We cannot repeat a history where people were left out or exploited in economic transitions. We must learn from these experiences as we recover from the COVID 19 pandemic and build a future economy that is sustainable, with equity and fairness at the centre that meets the needs of workers and their communities.


In this submission, Blue Green Canada shares comments on and recommends action on three interconnected areas of focus for budget 2021. We call on the federal government to consider implementing the achievable actions below designed to capitalize on Canada’s domestic carbon advantage and support Canadian workers and communities.

1) Buy CleanHow public construction dollars can create jobs and cut pollution

We use them when building our roads and bridges, constructing our skyscraper office towers and condos, and they are the literal foundations of our housing stock, no matter what the size. Building materials— including aluminum, cement, steel, and wood— are in nearly everything we construct and a vital economic backbone for Canada in more ways than one.

The Government of Canada has put priority both on tackling climate change and investing in public infrastructure. The Investing in Canada Plan will spend a historic $180 billion over its lifespan on public transit, green and social infrastructure, trade and transportation, and rural and remote communities.

At the same time, building on the Pan-Canadian Framework for Clean Growth and Climate Change, Canada has committed to achieving net-zero carbon pollution by 2050. This means that, as governments across the country continue to invest in public infrastructure, they will have to increasingly do it in a way that reduces pollution. And yet, projects supported under the Investing in Canada Plan to-date have not prioritized lower-carbon materials and construction processes. This is a missed opportunity.

Canada is also facing economic challenges. The looming prospect of increased protectionism from the United States and other trade partners threatens Canada’s largely export-oriented economy, as tariffs and other economic measures are applied. In addition, the COVID-19 pandemic has laid bare the vulnerability of the systems Canadians rely on, systems that stand to be similarly disrupted by climate-related impacts in the future— without a sustained and accelerated effort to cut our carbon pollution and strengthen our economic resilience. The public investment needed to achieve these goals is an opportunity to position Canada to compete and prosper in the global clean economy.

The good news is there is a solution. Governments— federal, provincial, and municipal— have an opportunity to integrate climate considerations into public infrastructure spending and procurement policies in a way that rewards climate leaders and supports the low carbon transition of Canada’s industries and economy. When governments use their public infrastructure dollars to prioritize environmentally sustainable, low carbon construction materials, they’re participating in a growing movement called Buy Clean— and it’s a crucial component in our economic recovery.

Buy Clean makes sense in Canada. First, it leverages our carbon advantage. Materials sourced from within Canada are typically lower carbon than imported materials. Canada’s energy and electricity systems are amongst the cleanest in the world and our manufacturers are highly efficient. When materials are made here using Canadian energy and ingenuity, less carbon pollution is emitted than if they were produced in most foreign markets. Second, it requires less transportation. When materials produced in Canada are used, emissions associated with transportation are reduced by avoiding shipping from international suppliers. Buy Clean also makes sense from an economic perspective. Low-carbon, clean building materials are often produced domestically, which means support for Canadian manufacturing and workers.

Our governments have an obligation to integrate climate change considerations into public spending. Policies that direct public spending to lower carbon materials and fuels will in turn support industries, workers, and communities across Canada.  Blue Green Canada looks forward to supporting governments across the country to implement these achievable actions designed to capitalize on Canada’s domestic carbon advantage and support Canadian workers.

To capitalize on Canada’s domestic carbon advantage and support Canadian manufacturers, the following three actions are recommended:

 

  1. Use and expand government procurement to support Buy Clean policies— so that public infrastructure dollars prioritize the use of lower carbon materials, fuels, and processes.

At the national level, Canada already approaches this recommendation from a position of strength, including a recent proposal to use Portland Limestone Cement— a type of cement that produces 10% fewer emissions than regular cement— in all federal projects by 2021. There are also important ongoing efforts to develop a database and guidelines needed to measure, evaluate, and track the full life-cycle of carbon emissions in buildings and other forms of public infrastructure. On a provincial level, leadership is found in B.C.— through its promotion of low carbon and renewable building materials in the design and construction of public sector infrastructure.

Procurement policy is a powerful tool to both reduce emissions and spur innovation. The procurement of goods and services accounts for close to 33% of government expenditures, or slightly more than 13% of Canada’s GDP. Because of their economic heft, governments can use procurement to stimulate or lead markets where government demand is significant.

Governments across Canada should look to procurement tools to support the use of low-carbon building materials in all publicly funded infrastructure projects.

An additional potential policy measure could be to place project-specific carbon caps on infrastructure projects. Project teams would be responsible for estimating the total carbon impact of the infrastructure project (including from embodied sources like materials and construction processes), and to source low-carbon materials and construction equipment to stay below the project carbon cap. Successful projects that stay below the cap could receive an incremental percentage increase of cost-share funding based on how far below the cap they are. The cap could be linked to relevant government policies including the federal output-based pricing system and the net-zero by 2050 commitment.

2. Develop an Industrial Decarbonization Strategy— including for construction material manufacturing– to help demonstrate and commercialize technologies to further reduce the carbon footprint of Canadian manufacturers and help Canadian products become the lowest carbon in the world.

The following material-specific actions could be part of a pan-Canadian strategy to further drive down the emissions associated with domestic construction materials while also creating new markets and supporting local manufacturers:

Steel: promote new technologies to decarbonize the steelmaking process. Canadian made EAF steel (Electric Arc Furnace, produced with clean electricity) is already a global leader in low carbon steel. But, in order to reduce overall emissions from steel production, Canada needs to promote new technologies such as the use of clean fuels, such as (1) hydrogen created with clean electricity to replace fossil-fuels, (2) the electrification of fossil fuel-based processes such as reheat of furnaces, stoves, boilers and building heating, and (3) iron ore reduction by electrolysis.

Aluminum: capitalize on Canadian aluminum’s global leadership position. Canadian aluminum already has the lowest carbon intensity in the world, with roughly one tenth the carbon footprint of Chinese aluminum. It should be aggressively marketed around the world as the default option for purchasers who want to minimize the carbon associated with their aluminum-containing products and infrastructure. In addition to supporting Canadian aluminum manufacturers, this would also reduce the global demand for more carbon intensive foreign aluminum, reducing global emissions.

Cement: invest in the cement and concrete sector’s low-carbon transition pathway. Cement and concrete have a well-developed roadmap to zero-carbon, with multiple opportunities to accelerate a position of environment and economic strength for Canada. Government should: (1) expand investment in low carbon fuels; (2) secure its commitment to purchase low-carbon cements, including Portland-limestone Cement, and invest in expanding manufacturing and distribution infrastructure for low-carbon cements to all communities across Canada; and (3) make significant investments in carbon capture utilisation and storage (CCUS).

Timber: invest in mass-timber manufacturing including cross laminated timber (CLT) plants. There is a significant and growing demand for mass-timber buildings across Canada. Building codes are being revised to allow for taller mass timber structures as their safety and performance have been demonstrated in recent years. Manufacturing facilities have not yet caught up with demand and many projects are importing their mass-timber from European suppliers. Investing in Canadian mass-timber manufacturing would support local workers and could potentially create an export market using Canadian timber

3. Establish a Clean Infrastructure Challenge Fund— to encourage the use of low-carbon building materials in the construction of public infrastructure. The Fund would be similar in design to the Low Carbon Economy Challenge component of the Low Carbon Economy Fund. This one-time fund would be available to provinces, territories, municipalities, and Indigenous communities to support public infrastructure projects that reduce embodied carbon through the utilization of low-carbon building materials. Where it would differ is in its sole dedication to public projects— the Clean Infrastructure Challenge Fund would not be available to private companies. Acting as a demonstration fund, the challenge would assess proposals based on similar criteria to the Low Carbon Economy Challenge, including:

• Tonnes of greenhouse gas emissions reductions achieved through selection of materials, design innovation and construction method

• Project feasibility and risk

• Other benefits that contribute to clean growth and a clean environment

The challenge would also require a materials-specific approach— meaning that applicants must show how carbon is reduced in all the materials being used (i.e. by sourcing low-carbon versions of all materials used in a project). This would be in addition to considerations of optimized material interactions in a building’s design (e.g. how strategic use of each material can reduce overall carbon through material efficiency and other measures). This approach is beneficial to program design in a number of ways:

• Allowing for a declaration of a baseline for each material— and those baselines could be consistent with those established in the federal output-based pricing system

• Spurring innovations in sourcing across all materials

• Reducing challenges around data— specifically the need for directly comparable data amongst building materials (a necessary demand for building material substitution that is not currently possible)

• Allowing for accountability and verification, but using existing measurements Like the Low Carbon Economy Challenge, this fund would be in the range of $400-$500 million to ensure a diverse set of infrastructure projects across all regions of the country.

Blue Green Canada looks forward to engaging with governments and representatives across the country to promote the implementation of these achievable actions designed to capitalize on Canada’s domestic carbon advantage and support Canadian workers.

The Buy Clean report is available for downloadh:

 

2) Just TransitionWe must plan for well-managed and inclusive transitions to a low carbon economy.

Climate change remains the signature challenge of our time. Left unchecked, climate change threatens the very future of civilization. But we are facing this urgent threat at a moment in history when we also face other great challenges including: the COVID 19 pandemic, growing economic inequality; increasing precarious work; reconciliation with indigenous people; and continuing discrimination against women, racialized persons, and the LGBTQ community.

As we rise to meet the challenge of climate change, we must build an inclusive movement that addresses the needs of young people, indigenous people, workers, women, newcomers, and environmentalists. We can find solutions so our economy is just, green, inclusive and fair. We call on our leaders to:

1.    Commit to take the actions needed to keep the global average temperature increase to less than 2℃ aiming for a maximum global temperature increase of 1.5℃.

2.    Ensure that no one is left behind as we transition to a green economy.  

3.    Take advantage of the huge opportunities to create wealth and jobs in the transition to a green economy, with a plan to create a low carbon industrial strategy.

4.    Provide support to workers and communities directly and indirectly impacted by actions that reduce or eliminate processes that produce carbon pollution.

5.    Invest to decarbonize electricity generation, our buildings, and our transportation systems in Canada.

6.    Promise that all workers will be paid a living wage and have employment security protected in law. 

7.    Commit to massive long term investments in public infrastructure projects which are necessary part of a low carbon future and will create jobs across Canada.

8.    Correct the unfair and unaffordable economic imbalance between the ultra-wealthy and the rest of Canadian society with economic measures that will better share Canada’s wealth.

Transitions will happen, but justice must be demanded and fought for. There can be no one-size-fits-all definition of a just transition. The focus must be on identifying ways to work collectively toward shared goals of fairness, local control in decision-making, protecting the environment, and protecting a future for our families and generations to come.

 

3) Zero Emission Vehicles / Electric Vehicles (ZEV/EV)— Let’s design and build them in Canada!

For years, Canada has lacked a coherent, multi-jurisdictional industrial strategy to guide the development of its domestic auto and motor vehicle manufacturing industry. Once the world’s fourth largest auto-making nation (producing roughly 3 million vehicles per year), Canada has witnessed significant declines in production since 1999, due to a variety of factors including the accession of China to the WTO and the dismantling of the Canada-US Auto Pact and its investment reciprocity provisions. 

It gets worse. In addition to these economic struggles, the transportation sector represents 25% of Canada’s total GHG emissions. We are falling behind in the electric vehicle market as well: Canada is the 12th largest vehicle producer, but EV production, at 0.4%, is 80% lower than the global average. Other high vehicle-producing countries have much larger shares of ZEV/EV production than Canada.

Altogether, jobs in Canada’s motor vehicle manufacturing industry have declined by more than 20% between 2001 and 2019 (i.e. more than 35,000). The manufacturing sector, more broadly, has shed nearly half a million jobs. These are high-skill, high-wage, largely full-time jobs that helped build vibrant communities across Canada.

The declines in vehicle manufacturing capacity come at a bad time for Canada. Demand for next generation commercial and passenger ZEV/EV’s is on the rise. New supply chains are forming to produce critical component parts for these new vehicles alongside new research, development and skills training.  Auto-making nations are clamoring for this investment.   

The electrification of transportation is critical to Canada achieving our net-zero by 2050 commitment. Rebuilding Canada’s auto industry with a focus on electric vehicles is a big part of that.

The fact is, zero-emission vehicles are expected to claim more than half the market by 2040 – just 20 years from now. For Canada to be part of that, and to ensure those who might be hurt by this change get the help they need, we need to start putting the pieces in place now.

The federal and provincial governments have committed to supporting this industry with significant investments for companies getting into this emerging industry.

These public investments alone do not constitute an industrial strategy – something Canada sorely lacks. They do, however, signal an important starting point. Our success hinges on all stakeholders rowing in the same direction. Other industries will have to come on board, as they adapt to the low carbon economy as well.

We call on federal and provincial policy-makers to:

  1. Coordinate on a suite of industrial policies to develop Canada’s domestic ZEV/EV sector, across the supply chain (i.e. from component parts to consumer recycling). 
  2. Utilize a “life-cycle” approach to ZEV/EV development will meet the twin goals of economic development and environmental sustainability.
  3. Explore the creation of a national ICE to ZEV/EV industrial strategy / taskforce to advise the transition and identify the opportunities, that brings together different stakeholders 
  4. Increase financial contributions to the Net Zero Accelerator fund to provide the supports needed for the ZEV/EV assembly deals recently bargained for Canadian autoworkers.

After all the pain Canadians have suffered over the year, we must be sure that this country builds back better, with an economy that looks to the future and offers real opportunities for the next generation of workers.

 

For more information on Blue Green Canada, our members or our areas of focus, visit www.BlueGreenCanada.ca or contact Jamie Kirkpatrick, Program Manager at jkirkpatrick@bluegreencanada.ca.