Canada's shift to net-zero emissions likely to drive higher inflation | Canada News Media
Connect with us

News

Canada’s shift to net-zero emissions likely to drive higher inflation

Published

 on

Solar-powered homes, electric tractors and hydrogen-cell trucking fleets: Canada has big net-zero ambitions, but getting there will require trillions of dollars in investment and will likely fuel hotter inflation for years to come, economists said.

Over the last decade, Canadian business investment has sagged, running well below historic levels and leading to excess supply in the economy, which pushed down inflation and allowed for structurally lower interest rates.

But that trend is set to reverse, said David Dodge, an economist and former Bank of Canada governor, as spending ramps up during the so-called green transition.

“We have major investment efforts to deal with climate change and to convert everywhere from the use of fossil fuel,” Dodge said in an interview with Reuters.

This spending will lead to a “tendency for prices to have some upward pressure rather than some downward pressure” starting as soon as next year, said Dodge, who headed Canada’s central bank from 2001 to 2008.

Economists around the world already are warning of greenflation, higher energy prices and consumer costs as the global economy shifts to cleaner energy sources. Stronger business investment, demand for skilled higher-wage workers, and more innovation spending will also fuel price increases.

But hotter inflation will lead to higher interest rates, a worrisome risk for Canada’s highly-indebted households, which are weighed down by C$2.5 trillion ($2 trillion) in debt, more than the country’s annual output.

Canadian inflation is at an 18-year high of 4.7%, while the Bank of Canada‘s key interest rate has been at a record low of 0.25% since March 2020. The central bank has signaled it could hike as soon as April, but money markets are not ruling out an increase as soon as this month.

HUGE BILL

Canada, the world’s fourth-largest oil producer, has pledged to reduce emissions 40%-45% below 2005 levels by 2030 and committed to achieving net-zero emissions by 2050.

The Royal Bank of Canada says getting to the net-zero target will cost C$2 trillion over three decades. Ian Lee, a professor in the Sprott School of Business at Carleton University in Ottawa, thinks it could cost more, pointing to the sheer prevalence of natural gas as a heating and industrial fuel.

“We’re talking about rebuilding the entire energy-based economy, from oil and gas to electric, and so it’s going to be at a scale never before experienced,” Lee said.

“I have no doubt it will be inflationary,” Lee added. “You do anything at that scale, and it’s going to be inflationary.”

Roughly 54% of Canadian homes are heated with fossil fuels, mostly natural gas, with 40% of them using electric heat, according to official data. Fossil fuels – mostly natural gas and coal – are used to generate 18% of Canada’s electricity.

Homes, schools, businesses and industrial complexes will need to run on renewable electricity rather than gas. Cars, trucks, farm equipment and entire transport and industrial vehicle fleets will need to make the shift to electric.

Heightened demand for electricity will also require a major expansion of the power grid.

But some economists argue it is not clear the inflation bump will be persistent, pointing to how rapidly energy costs can fall once renewables are in place.

“Germany came in and basically subsidized everyone to put solar panels on their roof. That had a large negative impact on inflation because, obviously, it brought down power prices,” said Stephen Brown, senior Canada economist at Capital Economics.

Ultimately, the climate-related restructuring may in the short term feel “hard to swallow,” Bank of Canada Deputy Governor Toni Gravelle said during a panel at the COP26 climate change conference in November.

“But in the long term, you have actually a lot more jobs, you have an economy that’s much more flexible … It’s a win-win at the end of the day,” he said.

($1 = 1.2457 Canadian dollars)

 

(Reporting by Julie Gordon in Ottawa; Editing by Steve Scherer and Paul Simao)

News

B.C. ports shuttered as lockout takes hold in latest labour dispute

Published

 on

VANCOUVER – One of Canada’s most vital trade arteries is cut off as employers at most of British Columbia’s ports lock out their workers in a dispute involving about 700 unionized foremen.

The BC Maritime Employers Association says it defensively locked out members of the International Longshore and Warehouse Union Local 514 after the union began strike activity yesterday.

However, union president Frank Morena says the employers grossly overreacted to the union’s original plan for an overtime ban, adding that its negotiators are ready to re-engage in talks at any time.

Canadian political and business leaders have expressed concern with another work stoppage at the ports, after job action from the big railways earlier this year and a 13-day strike in a separate labour dispute last year.

The Greater Vancouver Board of Trade says it is relaunching its Port Shutdown Calculator, a tool to illustrate the economic damage caused by the labour dispute and introduced during the job action last year.

Board president Bridgitte Anderson says the latest port shutdown will disrupt $800 million worth of goods daily, with every hour of the closure fuelling inflation.

“This shutdown is the latest in a long line of highly damaging labour disputes that have hurt Canada’s economy and international reputation,” Anderson says.

“Through the Port Shutdown Calculator, we want to demonstrate the profound and escalating impact of this labour dispute.”

The employers and the workers represented by Local 514 have been without a contract since March 2023.

This report by The Canadian Press was first published Nov. 5, 2024.

The Canadian Press. All rights reserved.



Source link

Continue Reading

News

Canada Post, union, still disagree over weekend delivery following weekend talks

Published

 on

Canada Post and the union representing its workers are commenting on how weekend talks for a new contract went, with the employer calling them less productive than they’d hoped and the union claiming their employer is focused on flexibility to deliver parcels at the lowest possible cost.

The Crown corporation says in a news release late Monday that neither side has provided the minimum 72-hour notice of their intent to start a labour disruption, but the Canadian Union of Postal Workers repeated a threat on its website that it “won’t shy away from taking the next step” if there is no real movement at the bargaining table.

The issue of parcel delivery seven days a week was referenced in both statements, with Canada Post saying significant change is required to prevent if from falling behind in the delivery market.

The union’s statement says its priority is ensuring weekend delivery does not compromise their regular, full-time routes on weekdays, and it says it isn’t satisfied Canada Post’s plan will accomplish that.

It says its negotiators also focused on improvements to a short-term disability plan.

The Canadian Union of Postal Workers could have been in a legal strike position as of Sunday.

“The threat of a strike during the holiday shipping season has already had a serious effect on our business, which has impacted volumes and revenue and will further deteriorate our financial situation,” Canada Post said in its statement Monday.

“To date, the union has been either resistant to change or has required serious constraints on our flexible delivery proposals, which would negate any potential benefits of the change. We remain hopeful that further discussions will afford a breakthrough, but urgency is now required.”

The union’s statement said its negotiators remain at the table and that the negotiations committee appreciates “the tremendous amount of support from members.”

“Your encouragement has not gone unnoticed,” it said.

Federal Labour Minister Steven MacKinnon met last Thursday with the union and Canada Post management to encourage them to reach a negotiated settlement.

The union announced last week its members had voted overwhelmingly to support a strike if a deal could not be reached at the bargaining table

Canada Post has said operations are continuing as normal.

This report by The Canadian Press was first published Nov. 4, 2024.

The Canadian Press. All rights reserved.



Source link

Continue Reading

News

Nova Scotia election: Tory leader won’t invite Pierre Poilievre to join campaign

Published

 on

HALIFAX – Federal Conservative Leader Pierre Poilievre is riding a wave of popularity in most parts of Canada these days, but you wouldn’t know it if you asked the leader of Nova Scotia’s incumbent Progressive Conservatives.

Tim Houston, who is seeking a second term in the premier’s office, said Monday he had no plans to invite Poilievre to join him on the campaign ahead of the Nov. 26 provincial election.

“No, because … I’m not a member of any federal party,” Houston told reporters during a campaign event in Halifax.

“There is no federal equivalent to the Nova Scotia PC party … there is a Conservative Party of Canada. That’s a completely different party with a different leader. I am not a member of that party. I have no intention of inviting the leader of the Conservative Party of Canada to campaign with me.”

He did not mention Poilievre by name.

Houston went on to explain that no real division exists between the federal and provincial wings of the New Democratic Party and the Liberal party.

“I am not beholden to any federal leader like my counterparts in this election are,” the 54-year-old accountant said, referring to provincial NDP Leader Claudia Chender and Liberal Leader Zach Churchill, both of whom are contesting their first election as party leaders.

“It would be a welcome sight if either Mr. Churchill or Ms. Chender would put Nova Scotians before their party politics.”

For the past week, however, Houston has frequently taken partisan shots at Churchill, trying to link him with the flagging popularity of Liberal Prime Minister Justin Trudeau.

But that strategy — a favourite among conservative premiers — can be risky, said Erin Crandall, a politics professor at Acadia University in Wolfville, N.S.

“If you’re framing the attachment between a federal and provincial party as a detriment … it would be contradictory to go ahead and campaign with what would be the equivalent party leader at the federal level,” Crandall said.

More importantly, Crandall said the latest polls suggest Atlantic Canadians are not that impressed with Poilievre.

Last month, Abacus Data released the results of a national survey of 1,900 people, showing that 40 per cent of committed voters surveyed in Atlantic Canada would support Poilievre, but that figure was the second lowest in the country, with Quebec voters showing the least interest in the Tory leader at 24 per cent.

On Saturday, Abacus CEO David Colletto released a Nova Scotia poll showing Houston’s party was well ahead in voter support, but it was clear that finding had little if nothing to do with Poilievre.

“One of the important findings from our … survey is the relative unpopularity of both Justin Trudeau and Pierre Poilievre in Nova Scotia,” Colletto said Sunday in a social media post. “As in other provincial elections, Trudeau will be a factor, but in (Nova Scotia), so too could Poilievre.”

While 56 per cent of those surveyed in Nova Scotia held a negative view of Trudeau, Poilievre wasn’t far behind at 45 per cent, the provincial poll indicated.

Crandall suggested Poilievre, well known for his combative, hardline approach to politics, is probably facing the same kind of pushback that led to the defeat last month of New Brunswick’s Progressive Conservative government led by Blaine Higgs.

Under Higgs, the Progressive Conservatives adopted a socially conservative approach that included championing, among other things, a decision to order teachers to seek parental consent before using the preferred pronouns of transgender students under 16 years of age.

“What we found in New Brunswick was that ended up alienating some traditionally conservative voters, those who view themselves as fiscally conservative but not socially conservative,” Crandall said. “There does seem to be less tolerance for that type of approach to politics.”

Poilievre did not take part in the New Brunswick election campaign.

And it’s almost certain Trudeau will not campaign in Nova Scotia.

Churchill, a 40-year-old former policy analyst and student organizer, said as much on Monday during a campaign event at the provincial Liberals’ campaign headquarters in Halifax.

“We’re running our own campaign,” said Churchill, who was first elected to the legislature when he was 26. “Tim Houston is trying to trick and fool people that this provincial election has something to do with whose governing the country. It doesn’t. So, no, we don’t plan (on inviting Trudeau).”

As for Nova Scotia’s NDP, which the Abacus provincial poll said was in a tight race with the Liberals for second place, Chender was joined on the campaign trail by federal NDP Leader Jagmeet Singh on Friday and Saturday, marking the end of the first week of the campaign.

“Jagmeet is our federal leader and a friend,” Chender, a 48-year-old lawyer and former consultant, said Monday during a campaign event in Halifax.

“We heard on the doorsteps how happy people are about things like the (federal NDP’s) dental care program … people are so excited to finally get dental care when they couldn’t afford to before.”

Crandall said the federal NDP’s decision to support Trudeau’s minority government for about three years through a now-defunct confidence and supply agreement probably won’t have much of an impact on the outcome of the Nova Scotia election.

“In comparison to the Liberals right now, the NDP federal leader is relatively popular,” Crandall said. “I don’t think (the federal NDP/Liberal alliance) is going to have much of an impact in the eyes of (Nova Scotia) voters.”

This report by The Canadian Press was first published Nov. 5, 2024.

Note to readers: This is a corrected story. A previous version said Premier Tim Houston is a former accountant. In fact, he still has his accounting certification.



Source link

Continue Reading

Trending

Exit mobile version