Pursuing a Clean Growth Future

When measuring progress on climate change, governments, analysts, and advocates too often benchmark success according to a single metric: greenhouse gas (GHG) emissions. Yet to succeed in the long term with such a major adjustment to our economy and society, climate policies must position Canada to succeed in economic and social terms as well.

Conversely, as governments implement policies to drive and support economic growth, they should not measure success only in terms of Gross Domestic Product (GDP) growth. In the long term, failure to address climate change will undermine economic growth and the well-being of Canadians.

Clean growth connects climate change to Canada’s economic and societal ambitions such as GDP growth, job creation, affordable living, and good health. It moves away from a focus on all-or-nothing trade-offs between different objectives towards identifying and supporting integrated solutions that address multiple goals simultaneously. Clean growth offers a vision for how Canada can prosper and thrive while addressing climate change. Furthermore, it recognizes that those goals can be mutually supportive—if they are managed carefully.

In the context of climate change, clean growth is inclusive economic growth that reduces GHG emissions, strengthens resilience to a changing climate, and improves the well-being of Canadians.

To provide a more tangible illustration of clean growth, and to start the process of measuring progress, this report proposes and analyzes 11 key statistical indicators. Together, they provide a sketch of the elements needed to achieve clean growth success. Measured over time, the indicators can provide insights on where progress has been made, where progress is lagging, and where there are critical information gaps. In many cases, they also help identify policy opportunities and challenges, while underscoring the need for new and different approaches to how governments and businesses collect and analyze data.

Defining Clean Growth

While clean growth encompasses a range of environmental issues, we focus on climate change for two reasons: 1) climate change represents the most significant clean growth challenge for Canada in the coming decades and 2) our Institute mandate is to provide research and analysis that informs climate change policy decisions. For our purposes, clean growth focuses on the intersection of climate change goals, economic growth, and well-being.

While we focus specifically on climate change, our approach is in many respects broader than traditional interpretations of clean growth or green growth (Box A). We maintain a focus on economic growth and GHG emissions as core elements, but we also integrate aspects of well-being and resilience to a changing climate. This leaves us with three core elements of clean growth: economic growth; improved Canadian well-being; and addressing climate change (Figure A). Each is important in its own right. Canada has committed to address climate change by significantly reducing GHG emissions, through both its 2030 target and a goal of achieving net-zero emissions by 2050. It has also committed to ensuring that Canadian communities are resilient to a changing climate under the Pan-Canadian Framework on Clean Growth and Climate Change, implying that businesses, governments, and individuals will be able to manage and bounce back from the physical impacts of climate change.

At the same time, economic growth underpins the prosperity of Canadians, driving the jobs and income that make Canadians increasingly better off and the fiscal capacity for high-quality government services and supports. Improving well-being is even broader in scope and is about ensuring that all Canadians—across all backgrounds and circumstances—are prosperous and healthy and have a clean and safe environment. This is particularly relevant to Indigenous peoples, who are expected to keenly feel the impacts of climate change on their livelihoods, health, and well-being and are well placed to play a significant role in nature-based and clean energy climate solutions (YHI, 2019; Townsend et al., 2020).

Box A: A Short History of Clean Growth

Various organizations have defined or referenced clean growth in different ways, at different times. In Canada, the Pan-Canadian Framework on Clean Growth and Climate Change (PCF) includes clean growth as one of its three pillars, along with mitigation (reducing greenhouse gas emissions) and adaptation (adjusting to a changing climate). Within this context, clean growth is often used to capture a set of programs aimed at supporting Canada’s clean technology sector.

Both Canada and the U.K. have adopted the term “clean growth” over the original “green growth,” likely a result of a desire to include a broader range of energy sources in the definition. The idea of green growth was first developed in South Korea and then adopted by the Organisation for Economic Co-operation and Development (OECD) following the 2008 financial crisis. The core idea of green growth is that countries can pursue both economic growth and environmental action at the same time. Contrary to common thinking at the time, the two did not need to be trade-offs against one another.

Entities such as the OECD and the World Bank made it clear in their analysis and research that economic growth does not flow automatically from all environmental policies, and environmental benefits do not flow automatically from economic policies. The policies selected and designed by governments matter, particularly in terms of the extent to which they support and drive growth through improved efficiency, innovation, the creation of new markets, investor confidence, and reduced environmentally related economic risk.

Not long after the term “green growth” became mainstream, the World Bank added the word “inclusive.” As one of the main international organizations working to end poverty and promote shared prosperity in developing and emerging economies, it recognized the importance of ensuring that green growth pathways were consistent with broader societal priorities. The term “inclusive green growth” was then adopted by the G20 (Group of 20) as a cross-cutting priority on their development agenda. Important connections—and concerns—between clean growth pathways and Indigenous rights and reconciliation have also been identified.

The OECD regularly produces a set of green growth indicators, comparing the performance of member countries across multiple categories. These indicators encompass a broad range of issues and are useful for comparisons across countries. Many do not, however, have the provincial or local detail important to informing policy within Canada.

Sources: United Nations (2020); OECD (2011); YHI (2019).

Achieving climate change, economic growth, and well-being objectives simultaneously is the challenge that lies at the heart of clean growth. Indeed, some environmental activists, academics, and journalists have questioned whether these objectives are at odds and pull in different directions (Cassidy, 2020). Economic growth has historically been linked to GHG emissions, leading to concerns about whether economic growth and emission reductions are inherently incompatible. On the other side, there are concerns that addressing climate change means sacrificing economic growth and the prosperity of current generations.

Yet clean growth is both possible and desirable (see Box B). Clean growth can retain the positive aspects of growth—such as higher incomes, innovation, and jobs—while implementing policies to address undesirable side effects, such as GHG emissions and social inequities.

In fact, achieving success on one objective requires success on the others.

Box B: Why Advocate for Clean Growth?

By Dr. Richard Lipsey, Clean Growth Expert Panelist and Professor Emeritus at Simon Fraser University

The Canadian Institute for Climate Choices is dedicated to studying policies for clean growth—policies that encourage the advantages of economic growth while mitigating its undesirable side effects. This implies that we believe that simultaneously cleaning and growing the economy is both possible and desirable.

There are those that will disagree with us. Some disagree on whether clean growth is possible, while others disagree on whether it is desirable. Those who deny the possibility argue there is a trade-off in which you can have more of one but only at the cost of less of the other. A more extreme position is held by those who deny the desirability of maintaining a growing economy, arguing that modern growth has been harmful on balance, so that if it is slowed or stopped as a consequence of greening the economy, so much the better.

We reject both these views. On balance, growth has benefited all societies. We also observe that countries such as Sweden that have steadily reduced greenhouse gas emissions have also been successful in producing growing economies combined with high levels of well-being.

Growth is mainly driven by new technologies: technologies to make new products, to make existing products in new ways, and to organize production, distribution, and finance in new ways.

The past hundred years have brought modern dental and medical equipment, penicillin, bypass operations, safe births, control of genetically transmitted diseases, personal computers, compact discs, television sets, automobiles, opportunities for fast and cheap worldwide travel, affordable universities, central heating, air conditioning, and food of great variety free from ptomaine and botulism, much less the elimination of endless domestic drudgery through the use of detergents, washing machines, electric stoves, vacuum cleaners, refrigerators, dish washers, and a host of other labour-saving household products that their great grandchildren take for granted. Twentieth-century technologies also helped address terrible diseases that disabled or killed—plague, tuberculosis, cholera, dysentery, smallpox, and leprosy, to mention only the most common.

Those of us living through the first decades of the 21st century are seeing similarly massive changes but in different directions: biotechnology, nanotechnology, artificial intelligence, and clean technology. If technological change and the growth that it drives continues, we can look forward to such things as longer and healthier lifespans, the end of many inherited diseases, the replacement of body parts with prosthetics that function at the command of artificial intelligence, the innovation of new environmentally friendly materials, and the development of new energy sources that bring an end to the age of fossil fuels.

Modern growth and globalization have benefitted the world as a whole, raising billions from poverty to middle class standards. Yet these benefits have also come with undesirable side effects. Income inequality and a lack of social mobility remain persistent problems in many countries, particularly for vulnerable and racialized groups. Unskilled workers in advanced countries were hurt as they transitioned from being relatively scarce locally to relatively plentiful globally. Environmental damages, including greenhouse gas emissions, have also increased. These undesirable side effects need to be ameliorated by public policy, not by throwing the baby out with the bathwater and stopping growth.

These ameliorating policies need to be an important element of clean growth. We who live today can be thankful that some earlier-day Luddite did not persuade governments to stop growth-inducing technological change decades ago—just as our children and grandchildren will be grateful that we did not slow or halt the pace of the technological change from which they will benefit 50 or 100 years from now.

Sources: Lipsey et al. (2006); Lipsey (2019).

For example, global markets and investor preferences are shifting in response to government policies to rapidly reduce GHG emissions. These shifts create both risks and opportunities for economic growth in Canada. Reducing emissions in at-risk sectors, shifting resources towards lower-carbon sources of economic activity, and developing new low-carbon sources of growth will help support Canada’s economy through global transition.¹

Sustained economic growth will also be challenged if the economy is not resilient to a changing climate that poses significant risks, including damaged infrastructure and built structures, lost worker productivity, and disruption of business operations and supply chains. As a result, finding ways to improve Canada’s ability to manage and recover from these risks supports economic growth objectives.

Technology, investment, and trade will play an integral role. Simultaneously achieving economic growth and addressing climate change depends significantly on the extent to which we develop and adopt low-carbon and resilient technologies in Canada.² Public and private investments in low-carbon and resilient infrastructure are fundamental to enabling these technologies and changing behaviour. And international trade and investment provide a way to grow both domestic and global markets for low-carbon and resilient technologies while generating economic opportunities for Canadian exporters.

Ultimately, economic growth is a means to an end—making Canadians better off. However, an approach that focuses only on a narrow, GDP-centred definition of clean growth misses other factors that are essential to the well-being of Canadians.

For example, aggregate economic indicators can mask stark differences across regions or populations. The transition to a low-carbon and resilient economy cannot be successful if it increases regional unemployment, exacerbates existing inequalities, or lets the most vulnerable suffer the brunt of climate change impacts. Understanding and addressing these impacts where they occur is fundamental to achieving clean growth.

The transition is not just about protecting people from risk, however. We also need to seize opportunities to improve well-being. For example, reducing GHG emissions offers enormous potential to improve the health of Canadians. Harmful air pollutants that increase our risk of disease and premature death are often co-emitted with GHGs. There are also opportunities to connect people to new sources of jobs and income.

Finally, nature lies at the foundation of the economy, human well-being, and climate change. Thriving ecosystems can sequester and store carbon, protect against floods, cool urban areas, improve water and air quality, provide food and natural resources, support wildlife, and generate many other benefits. Maximizing these benefits requires a deep comprehension of the linkages between nature and economic and human activity. Indigenous people play a critical role and need to be included in the development of policies and plans. Indigenous people have a unique relationship with nature, given inextricable linkages to their livelihoods and well-being and as stewards and protectors of many important ecosystems.

Measuring Clean Growth

To make clean growth measurable, we developed a series of statistical indicators based on a review of domestic and international approaches and consultations with internal and external experts (Box C). Together, these indicators provide a starting point for tracking progress on clean growth and identifying priorities for action. We targeted indicators that fall at the intersection of climate, economic, and societal objectives.

The statistics selected do not perfectly measure every aspect of clean growth. In many cases, data are not available or are incomplete. However, the process of trying to find indicators and analyzing those we select is informative. They help us better understand the interconnections between climate change, the economy, and societal well-being. It also helps identify areas where additional data collection and analysis would be useful, flags areas for further research, and identifies areas where government policy could better support clean growth.

Box C: Selecting Clean Growth Indicator Categories and Statistics

To select the indicator categories in this report, Institute Expert Panelists and staff reviewed various approaches relevant to clean growth, such as the Pan-Canadian Framework on Clean Growth and Climate Change, the U.K. government’s Clean Growth Strategy, OECD Green Growth Indicators work, World Bank reports on Inclusive Green Growth, UN Sustainable Development Goal indicators, and the concept of Doughnut Economics. The group considered the relevance of these approaches in the context of Canada’s climate change objectives and challenges, asking ourselves how we would measure success in 2050. This allowed us to determine the scope of indicator categories and to use an iterative process to finalize the 11 shown in Figure B.

After determining the 11 categories, we considered options for both headline and supporting statistics. In evaluating the options, we used several criteria: relevance to our definition of clean growth; usefulness in informing government policy directions; ability to show medium- and long-term progress; data availability for time series; data quality; and comparability at the national, provincial, and/or municipal level. Few statistics met all our criteria, leading us to complement headline indicators with additional statistics and analysis. We then tested the indicators with several external experts and stakeholders, helping us refine our data selection, presentation, and accompanying analysis.

Our proposed indicator framework starts with two statistics that map out the overarching goals of clean growth (Figure B). The first indicator is most closely linked to the traditional definition of clean growth: low-carbon growth. It targets the decoupling of GHG emissions from GDP over time, setting out a dual objective to both grow the economy in a lower-carbon way and reduce emissions without stopping economic growth. Our second indicator targets economic resilience, aimed at limiting the costs Canada faces from a changing climate. This indicator suffers from a dearth of data but highlights some of the key areas where improved tracking of the costs of a changing climate could inform policy and investment decisions.

The next set of indicators target areas that catalyze low-carbon and resilient growth. These include technology development, technology adoption, low-carbon and resilient infrastructure investment, and low-carbon and resilient trade. These interconnected indicators together form the engine needed to accelerate clean growth progress. If we can develop technologies that make it easier and cheaper to reduce emissions and improve resilience, we can better achieve economic and climate goals simultaneously. One of the biggest barriers to technology development, however, is slow adoption. Accelerating adoption will help drive strong domestic markets for new innovations while reducing the emissions intensity of growth. Investment in long-lived infrastructure is also a critical element. If we invest in infrastructure that is not low-carbon or resilient, we will increase future costs. Infrastructure such as electricity transmission or electric vehicle charging can also be an important catalyst of technology development and adoption.

Trade is also a catalyst of low-carbon and resilient growth. Increased global demand for low-carbon and resilient products and services creates growth opportunities for Canadian businesses, while spurring innovation and economies of scale that drive down the costs of technology adoption over time. Canada can play a role in accelerating this cycle by increasing our own exports and imports of low-carbon and resilient products and services, financing efforts in developing countries, and shifting foreign direct investment patterns.

We have termed the final indicator set foundations. While it may be technically possible to make progress on decoupling emissions from growth or reducing the costs of climate change, without progress on the foundational elements, it is less likely to be lasting and durable. We target five key areas where we see the greatest risks—and opportunities—to pursuing a clean growth transition that improves outcomes for all Canadians. The first is low-carbon jobs. Stable and gainful employment is a key concern as Canada and the world accelerate action to reduce GHG emissions. While transition creates both employment risks and opportunities, they may not be experienced evenly across sectors, regions, and individuals. Our focus is therefore on achieving aggregate growth in jobs as emissions decrease, while minimizing regional and individual job loss and ensuring broad access to new employment opportunities.

The second is affordable energy, which is another area of worry for Canadians struggling to make ends meet. Lower-income households are more vulnerable to rising costs for essential goods and services such as heat, power, and transportation. Tracking and monitoring their expenditures in these areas can help flag concerns and inform the development of relevant policies as energy systems shift.

The third is inclusive resilience, addressing concerns that the most vulnerable in society will bear a larger burden from a changing climate. Those with financial means can move, rebuild, adapt, and recover more quickly than those in poverty or those who face challenges due to health, age, discrimination, or disability. In the absence of action, there is a risk that a changing climate will exacerbate societal inequalities. By improving our understanding of who is most vulnerable to a changing climate, governments can develop targeted policies to protect and support them. We use poverty as an indicator for those that are vulnerable but also identify several other measurement opportunities at the local level.

The fourth is clean air. The enormous opportunity to improve the health of Canadians and limit health risks from a warming climate is often lost in efforts to reduce GHG gas emissions. Air pollutants come from many of the same sources as GHGs, and the evidence is growing that air pollution increases the risk of respiratory, cardiac, and neurological disease, causing over 14,000 premature deaths each year in Canada. Tracking progress on clean air can highlight linkages with climate action.

Finally, we consider thriving ecosystems. With growing interest in carbon offsets and planting trees, it is important to step back and take a holistic view of the status of Canada’s ecosystems and the many benefits they provide as policies are developed. Unfortunately, however, ecosystem data are very limited. We therefore rely on the land use, land use change, and forestry data provided in Canada’s National Greenhouse Gas Emission Inventory, which highlights important land-based emission sources and sinks.

The sections that follow outline and analyze each indicator. The final section highlights the main conclusions drawn from these indicators and provides findings and recommendations to inform improved data collection and policy development.

Note: this report uses the term “carbon” as a shorthand for carbon dioxide equivalent of all GHG emissions.
Resilient technologies can include anything that helps prevent, avoid, or protect against the impacts of a changing climate (e.g., robot firefighters, tick-tracking systems, or fire-resistant building materials).