FACING THE ELEMENTS: FRAMING BUILDING THE FUTURE: BUSINESS EMBRACING RESILIENCE THEINLOW-CARBON A CHANGING CLIMATE ECONOMY////0 61
Short-term trade measures are one thing, but long-term risks of a high-carbon economy are also apparent; a key one pertains to reputation. A country’s reputation is like its brand and is important to its ability to sell goods globally. The combination of a perceived image of Canada lagging on climate policy and promotion of labelling schemes that help consumers manage embodied emissions associated with their consumption is particularly powerful. Such an image may also leave Canadian products exposed to consumer actions like boycotts. Modern campaigners are sophisticated enough to try, for example, to track Canadian oil sands products through the supply chain to the retail level, and to urge consumers not to buy. In a sector with such homogeneous products as retail-level gasoline, such actions might be significant.e
A negative view of Canada also has implications for Canadian firms’ ability to invest abroad and for public acceptance of high-emitting activities here at home. Just as Canada seeks to screen foreign direct investment that it doesn’t want,f foreign policy makers could feel pressure to do the same to Canadian firms that bid on projects and concessions in foreign countries. An added dimension of this risk is the increasing challenges to development that Canada’s natural resource sectors are facing from local communities and interested parties across the country and abroad (e.g., the 2011 protests in New Brunswick concerning exploratory testing for shale gas, protests in Washington and elsewhere in 2012 concerning the Keystone XL pipeline in particular and Canadian oil sands development more broadly, the protests in 2012 concerning the proposed Northern Gateway Pipeline, and protests in 2012 around metal mining in Ontario’s “Ring of Fire”). At a basic level, the manner in which Canada is perceived abroad can affect Canadians’ perception of their industries, which can in turn influence a company or sector’s social licence to operate. A plan that spells out the goals and targets needed for Canada’s low-carbon transition and actions to show for it would help alleviate concerns on all sides.
Finally, the economy’s high-carbon intensity relative to others’ and reliance on high-carbon exports will, in the long term, affect Canada’s trading position. So-called green stimulus spending that occurred in 2008 in several parts of the world signalled confidence in the higher growth potential of low-carbon economic activity relative to growth in traditional sectors.40 Although not all players will benefit from a first-mover advantage, the value of strategically assessing and seizing niches in a nascent low-carbon economy is unequivocal. Conversely, allowing an economy to centre its trade on high-carbon exports in the absence of a long-term transition plan can lead to long-term stagnation and economic malaise. Reduced carbon-competitiveness — the relative carbon intensity of one’s economy or a specific product as compared to that of one’s peers — can ultimately result in a decrease in the terms of trade for affected products (i.e., decline in the relative value of the product traded resulting from decreased demand). In the context of multinational branch plants, the lack of a supportive policy environment can also make the capital investment required to improve one’s competitive position internationally difficult to acquire.
e
Supported by campaigning by ForestEthics, an environmental advocacy group, 16 large companies in the U.S. and one city have publicly announced their intention to limit or avoid the use of carbon-intensive transportation fuels (ForestEthics 2012).
f
The failed Chinese takeover bid for Noranda and the controversy over competing foreign bids for Canada’s Potash Corporation are examples of this dynamic at work.