Winners and Losers: Canadian Businesses, Carbon Pricing, Procurement and Conservative Game-Playing

(originally posted at www.greenparty.ca)

I was at the downtown farmer’s market this past Saturday, where my wife and I bought a Christmas present for my mother from a local merchant who makes her own jewellery. It was exciting, and not just because we can strike a hard-to-buy-for person from our Christmas list in August. It was exciting because in making our purchase, we were supporting a local business. Something to feel good about.

On Tuesday morning, after enjoying a long weekend of not thinking too much about the world outside of my own family, I read an article about this week’s Premiers Conference in the morning paper by Rick Smith of Environmental Defence: "Clean energy, not photo-op, should be premiers priority", Toronto Star, August 5 2009). Mr. Smith’s concerns quickly returned my thoughts to what’s going on in the larger world around me. Looked like it would be "one of those" weeks, I thought at the time. With Friday’s hindsight as my perspective today, looks like I was right.

Smith was writing about winners and losers as they relate to upcoming discussions about carbon pricing. By way of background, it seems to me that carbon pricing through the implementation of a North American cap and trade system is now all but inevitable, as President Obama has tasked Congress with building such a system. Even Stephen Harper and the Conservatives have been discussing it. And as Harper and Obama both want to be seen to be doing something in advance of Copenhagen, and possibly a Federal election, I think carbon pricing through cap and trade is going to happen.

Heck, even Sun Media pundit and climate change-denier Lorrie Goldstein thinks a cap and trade system is inevitable: "Cap and trade or charade?", Sudbury Star, July 13, 2009. So there’s got to be something there.

Both Rick Smith and Lorrie Goldstein are concerned about how the Obama cap and trade system is shaping up, as Canada is sure to join in, rather than build our own system. Concerns relate to the sorts of breaks that might be given to certain industries, specifically the coal and oil industries. The justification will be that both of these industries are hard at work developing "clean coal" and "clean oil" technologies, and just need a little more time before they will be able to fully join the cap and trade system. Arguments will be made that forcing coal and oil to come all the way in now would irreparably damage our economies.

So, the Obama-designed Harper-joined system will likely allow the heaviest polluting industries in North America to continue doing "business as usual" for a while longer yet.

The proposed U.S. system, though, calls for real reductions to greenhouse gas emissions by certain targets. The 2020 target is for a 17% reduction in emissions (from a 2005 base line). So, if the coal industry in the U.S. and the tar sands industry in Canada are to be given large exemptions from being forced to participate in the cap and trade system, how are we going to achieve these even very modest targets?

Looks like other industries are going to be tasked with making up the lion’s share of emission reductions. Those are the winners and losers Rick Smith identifies. The winners will be oil-rich Alberta and Saskatchewan (and Newfoundland to a lesser extent), and U.S. coal-producing States, at the expense of Canada’s manufacturing industry, of which a big chunk is located in Central Canada, specifically in the Greater Toronto Area.

To me, all of this looks to be a politically-motivated manoeuver to reward Conservative friends and punish Conservative foes. That’s what it has to be, because with such a woeful target it sure as heck doesn’t look like it’s going to accomplish anything much on the climate change file.
Now, the Conservatives have already written off Quebec ridings as those to woo in an upcoming election. The Greater Toronto Area, where those manufacturing jobs are located, has always been difficult ground for the Cons and Reform Party before them to make inroads in. In Ontario, the Cons have been successful with wooing rural voters, but the suburban and urban ridings remain largely the bastion of the Liberals and the NDP.

From his perspective, it makes political sense now for Harper to play to his own strengths, particularly since many of those in his camp have been griping about yanking their support because they perceive his $50 billion deficit as a betrayal of his Reform Party roots. If Western ultra-Cons were stay at home on E Day, there could be more than a few chinks in the blue-coloured coat of armour. So he needs to throw them a bone and exempt the oil industry from meaningful participation in the cap and trade system.

At the same time, Harper clearly needs to be perceived as taking action on climate change. Joining in with President Obama’s climate change initiative will give Harper a lot of positive press in the uncritical mainstream media. It’s just too bad that Obama’s plan looks like it’s going to be such a wash out, a big nothing, full of sound and fury but ultimately just a squeak; in short, what politicos like to call "spin".

Greens, you know there must be a problem with Obama’s plan when Saskatchewan Party Leader and Premier Brad Wall, an instrument of the oil interests if there ever was one, comes out in support of it! Wall has been on the record as a virulent opponent of a cap and trade system, claiming such a system will damage his province. Yet, in today’s Globe & Mail, Wall is reported as saying that since cap and trade seems inevitable, Obama’s plan isn’t that bad because it will put less onus on reducing greenhouse gases than even Stephen Harper’s own plan: (Brian Laghi, "Saskatchewan warms to Obama climate plan", Globe & Mail, August 7, 2009).

Wow. Stephen Harper is starting to look like a crusading tree-hugger alongside Michael Ignatieff and Barack Obama, at least in the eyes of Wall and Alberta Premier Ed Stelmach!

So, it looks like that there will be winners and losers in the coming years, as "action" is seen to be taken in reducing ghg emissions.

Here in Sudbury, we’re very familiar already with being on the losing end of the Conservative’s stick. As you may know, approximately 3,500 employees from Vale Inco are now into their second month of what is sure to be a lengthy strike. United Steelworkers Local 6500 has been expressing some very real concerns about their new employer, Brazillian-based Vale SA, which acquired Inco with the permission of the Canadian government in 2006. At that time, Vale entered into a secret agreement with the government; an agreement which a revolving door of Conservative Ministers keep telling us would lead to job creation and a better economic situation for Inco communities in Labrador, Greater Sudbury and Port Colborne.

Here in Sudbury, we’ve not really seen those results. Vale’s acquisition of Inco is turning out to be a bit of a disaster for our community, and not just because of the current strike. Sudbury’s once-vibrant mining supply sector, once touted in this community by economic developers as the cornerstone for an evolving "centre of excellence", has been devastated in the past year, losing over 1,500 jobs, many of which were held by well-paid mining professionals. Sudbury’s mining supply sector has been a leader in mining innovation and the development of sustainable mining practices. These jobs lost are the sort of jobs a community needs to thrive.

Sure, in part, job loss has been a result of the recent economic downturn and falling nickel prices. But, also in part, the mining supply sector has been a victim of Vale’s business practices. In today’s Sudbury Star, editor Brian MacLeod expresses concern that Vale Inco will increasingly shut local industries out of competitive bidding process as Vale "rationalizes" its service delivery by looking for ways of maximizing "global synergies". Given that Vale’s head office is in Brazil, and that Vale operates in 35 countries world-wide, it stands to reason that local mining suppliers will continue to be left behind in the name of "centralized procurement" (see "The new boss isn’t quite like the old boss", The Sudbury Star, August 7 2009)

USW Local 6500 would have us believe that Vale and the Conservatives sold out Inco communities, along with the rest of Canada. Canada’s natural resource sector is certainly no stranger to the international auction block, but if there was a deal made to protect Canada’s interests, as Industry Minister Tony Clement says there was, it doesn’t appear to have been much of a deal, given the situation here in Sudbury. Maybe it was a great deal in contrast to the "Valley of Death" Clement insists Sudbury was facing at the time, but that reality really only ever existed in dark spaces of Clement’s own mind (see: "Sudbury According to Tony Clement")

I believe the Union is onto something here, given that Sudbury and Labrador are never going to elect a Conservative MP. Could it have been that the Conservatives just didn’t really care about Inco and the health of the Canadian mineral resource sector?

Or maybe it was something more insidious than just apathy. Maybe the mining industry, already perceived as an axis of evil by many voters, was being set up as a straw-man. Think about it.
In the next election, Stephen Harper gets up and tells Canadians that he’s taking action on climate change by agreeing to work with Obama by joining a North American cap and trade system. Sure, there will be exemptions for the tar sands, as the Canadian economy would be in dire straits if there weren’t. Even Michael Ignatieff and the Liberals recognize the importance of the tar sands, Harper will say, so really it’s a non-issue. Plus, the tar sands is getting its act together, and the Conservative government is investing billions of dollars in carbon capture and storage technology. What more could Canadians want? Oh yeah...Canadians would want to make sure that other "dirty" industries are doing their fair share. Well, look no further than Sudbury and at the mining industry in general. They’re being forced to reduce emissions under the cap and trade system, while simultaneously investing in local communities.

Nevermind that these local investments are actually just dollars being spent on out-sourcing, which have the effect of devastating local economies built to service the mining sector (and which could actually lead to a reduction in Canadian ghg emissions, as a defunct Canadian business spews no CO2), the story itself will play well in the media. Harper Takes Real Action on Climate Change! Read All About It!

One of the upcoming battles against climate change will be fought on the grounds of PROCUREMENT. With talk in the media about increasing Canadian opposition to "Buy American" policies in the U.S., it’s interesting that International Trade Minister Stockwell Day has been lobbying the provinces to bind themselves and their "creatures", the municipalities, to NAFTA rules for procurement. Day says that this would create a fair and level playing field for these levels of government, in keeping with NAFTA, to procure goods at the lowest prices.

Nevermind that municipal and provincial governments would have to kiss goodbye any "buy local" policies they may have put in place on their own at the demand of their local citizens. Nevermind that local jobs could be lost to lower bids emerging from wage-challenged businesses in the U.S. and Mexico who have little understanding of local realities in our own communities. (see: Stuart Trew and Blair Redlin, "No payoff for premiers in ‘Buy American’ fix", Toronto Star, August 7, 2009)

But, boy, wouldn’t such provincial and municipal procurement policies be in keeping with the sort of globalization that the Conservatives clearly believe in? Wouldn’t it also play well with core Conservative voters? "Look at what we’ve done," they’ll say. "We’ve led the way by requiring provincial and municipal governments to obtain the best deals that they can for spending your hard-earned tax dollars on local infrastructure and service delivery." No matter that local jobs disappear and tax revenues collected from local properties decrease as local businesses are undercut by international firms which play by different rules when it comes to wages and benefits and dealing with environmental concerns.

Sort of like what Vale Inco is doing by favouring low-priced anti-environmental mining sector suppliers over more eco-conscious Canadian businesses who pay their employees decent wages.
Now, I’m not suggesting that Canadian businesses aren’t competitive, only that there need to be other considerations made when we’re talking about building healthy communities. Clearly, outsourcing to international firms instead of investing in Canadian jobs is problematic at the best of times, but if there is a greater value in doing so, yes, we should consider it. Problem is, what is "value" here based on? More often than not, it’s a simple matter of looking at financial costs only: a company in Sao Paulo can provide a service at a lower price than a company in Sudbury can, and the procurement decision is made on that basis alone. Nevermind that the company in Sao Paulo pays its employees $1 an hour in wages and dumps all sorts of carbon into the air as part of their manufacturing processes.

Fair and reasonable compensation for work provided is a Canadian value which is often absent in outsourcing situations. Increasingly, Canadians are coming to value the purchasing of products and services which contribute less pollution to our air and water. In part, the Buy Local initiatives which are growing throughout Canada, as manifested in Sudbury’s downtown Farmer’s Market, are at the leading edge of this trend. With the Wal-Mart-ization of our communities with a heavy dependency on carbon, it’s fair to say that eco-friendly local businesses are on their way to becoming a Canadian value as well.

In the face of this reality, however, the Conservative government of Canada is ready to sell-out Canadian businesses and industries in favour of their oilpatch buddies, and so that they can be seen to be taking action on climate change. Canada’s natural resource sector industries are becoming increasingly internationalized in the name of cost-savings, when the reality is that their business practices are more damaging to the environment and the Canadian economy, which is a bit of a stretch to the definition of "cost savings" in my opinion.

Why is this happening? Well, it’s happening because Conservatives have never really bought into the notion that climate change is real, or that we need to do something about it. Lip-service needs to be paid to it, but no real action is required. Current business practices and economic growth are the centrepiece of any Conservative conversation on conservation.

And it’s happening because too many Canadians remain disengaged. For many, it’s enough to believe that action is being taken, because government officials say it’s going on. Who wouldn’t want to believe President Obama when he refers to "bold steps being taken". Surely something is being done, or else the media wouldn’t print it, right? Oh well, climate change isn’t the sort of sexy issue which lends itself to a sound-bite anyway.

Greens, we need to continue getting the message out there that Conservative and Liberal inaction on climate change can no longer be tolerated, because the crisis is now upon us; we’ve overshot 350 ppm of CO2 in our atmosphere where global temperatures will remain stable, and we’re on track to overshooting the anticipated 2 degree rise in global temperature at 450 ppm. With Obama’s 17% plan or even Harper’s plan of 20% reduction of ghg emissions by 2020 using a 2005 baseline, we’ll be in for a world of hurt, and far above 450 ppm.

See? Not sound-bite friendly. But important, important, important.

I’m growing so very weary of all of this Conservative game-playing.