Green energy’s marginal and largely meaningless existence will be expensive for both taxpayers and electricity customers, writes Philip Cross.
By Philip Cross, December 19, 2018
The vocal and well-financed green lobby regularly lectures Canadians that there is no contradiction between a strict environmental agenda and economic growth. In fact, green advocates trumpet that the two are positively related, since clean energy is supposed to be the foundation of our economy in the future. So Statistics Canada’s release this week of the first estimates of its Environmental and Clean Technology Accounts will make for sober reading for low-carbon lobbyists and their supporters.
StatCan’s green-economy accounts include everything from hydro and nuclear power to services such as waste management to manufacturing clean-energy goods such as wind turbines. StatCan does not yet document the subsidies supporting these various activities. Environmental and clean-technology industries accounted for a puny 3.1 per cent of Canada’s GDP in 2017. More importantly, StatCan noted that this ratio has remained relatively stable since 2007 when the data began. The green economy’s share of GDP stagnated for 10 of the biggest years for pro-green policies and hefty government support, and against historically slow growth in the rest of the economy. If the green economy cannot flourish in these circumstances, it is doubtful it ever will.
The green economy is even less important for jobs, contributing only 1.6 per cent of total employment. If clean-tech and green-tech are the jobs of tomorrow, as their boosters tirelessly claim, then our job prospects are bleak indeed. This reflects that green energy, like all energy sources, uses more capital than labour.
Moreover, these tabulations ignore job losses from the higher cost of renewable energy, such as wind and solar. Rising electricity rates across Canada show that the environment and the economy often work in opposite directions, no matter how often Environment Minister Catherine McKenna keeps repeating that they don’t. Critics call the process by which clean-energy projects raise energy prices that kill jobs “renewable destruction” (unlike capitalism’s famous “creative destruction,” which shifts resources from maturing sectors to new, higher-growth sectors).
It has always been a green fantasy that green-energy projects were important enough to power overall economic growth. When Dalton McGuinty was the Liberal premier of Ontario, his government followed the Obama administration in believing it could cushion the 2009 recession by heavily subsidizing green projects under the Green Energy Act. All that did was sharply raise the price of electricity, damaging growth. It was no more successful or wise than when Bob Rae, as Ontario premier, laughably proposed responding to the 1991 recession by manufacturing bike helmets in Ontario and then passing laws to force every cyclist to own one.
StatCan’s accounting scheme is generous to the green-economy concept in accepting the definition provided by the International Panel on Climate Change (IPCC) that clean energy should include hydro-electricity. Mysteriously the IPCC decided that large dam reservoirs that flood millions of acres of trees and fauna are “green,” because they do not affect greenhouse gas emissions. Many countries around the world have decided that large hydro projects are damaging for the environment. Even B.C.’s NDP/Green government provided only grudging support for proceeding with the controversial Site C dam, implying it would not have kept it alive if construction were not already so far advanced.
Canada is actually unique in the world in proceeding to develop more large hydro projects on the shaky rationale that they represent “clean” energy. Even ignoring the environmental damage, the resulting high cost of electricity to pay for these mega-projects is passed on to ratepayers.
After Ontario’s disastrous experiment with green energy feeding into its electricity bills, Newfoundland now faces ruinous rate hikes due to the runaway cost of its Muskrat Falls project. Also on the chopping block are ratepayers in B.C., who must pay the cost of Site C even as the province enjoys a surplus of hydro power (it cannot find an export market in neighbouring Alberta, where electricity from natural gas costs half as much). Manitoba Hydro, meanwhile, is suppressing rate hikes for consumers by rapidly increasing the debt load to pay for new projects, an unsustainable process.
There are two lessons to be drawn from the tepid growth of Canada’s green sector. It will be a long time, if ever, before it makes a significant contribution to jobs and income in Canada. And in the meantime, even its marginal and largely meaningless existence will be expensive for both taxpayers and electricity customers — a reflection that putting the environment before the economy comes at a cost that many will object to paying. The green economy will not flourish until it makes economic as well as environmental sense.
Philip Cross is a Munk Senior Fellow at the Macdonald-Laurier Institute.