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Natural resources minister defends plan to transition to green economy

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Natural resources minister defends plan to transition to green economy

Canada’s biggest challenge going forward won’t be job losses in the oilpatch, says Natural Resources Minister Jonathan Wilkinson. It will be filling all the new jobs in the green economy.

Wilkinson has announced that new legislation will be coming this year to help workers in carbon-intensive industries move into jobs such as building retrofitting, carbon capture, and the mining and processing of critical minerals used in computers and green technology.

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The details of the plan have not yet been released. But Alberta — the heart of Canada’s oil and gas industry — is already pushing back. Both Premier Danielle Smith and provincial Environment Minister Sonya Savage have accused the federal government of jeopardizing Albertans’ livelihoods.

Here is part of Wilkinson’s conversation with As It Happens host Nil Köksal.

Minister Wilkinson, what’s your message for energy workers who are getting anxious as they wait to see what is in your “just transition” legislation?

I’m not a big fan of the words “just transition.” I actually prefer to talk about this as sustainable jobs.

Ultimately, what we are focused on is ensuring that we’re building an economy that’s going to create good jobs, well-paying jobs and economic opportunity in every province.

Alberta Premier Danielle Smith tweeted this week that your government’s “ill-conceived and short-sighted plan is extremely harmful to the hundreds of thousands of Canadians who are supported by the energy sector and will be detrimental to Canada’s economic recovery.” What would you say to Premier Smith?

I think it’s important for her to understand what the bill is and what the action plan is and what it’s not. And I want to give Premier Smith her due credit in the sense that she’s relatively new, so she hasn’t been part of some of the conversations on this that have been going on for some time.

But this is not about doing something to Alberta. This is about actually working with Alberta. We want to partner with Alberta in the context of talking about the opportunities going forward.

Those are the opportunities for the conventional energy sector. But there are also opportunities for other sectors of the economy that actually are going to be huge opportunities —  like critical minerals in and the processing of critical minerals.

Certainly, we’re interested in Canada continuing to play a role as a provider of conventional energy products, but those need to be in the context of reducing emissions. And we want to work with Alberta on: How do we reduce emissions so that the products that we sell as we move through this transition are the lowest carbon products that exist anywhere on the planet?

That’s good for Alberta. That’s good for Canada. That’s good for the world.

On Jan. 2, 2023, @ABDanielleSwith tweets: "The federal government's ill-conceived and short-sighted plan is extremely harmful to the hundreds of thousands of Canadians who are supported by the energy sector and will be detrimental to Canada's economic recovery. #ableg #cdnpoli" Beneath that, @SonyaSavage tweets: "The federal government has announced its intention to table a Bill that will phase out hundreds of thousands of direct and indirect jobs in the energy sector. This should be of concern not just here in Alberta, but across the country."
Alberta Premier Danielle Smith and Environment Minister Sonya Savage tweeted their criticisms of the federal government’s plan to move Canada towards green energy jobs. (@ABDanielleSwith/Twitter)

Alberta, though, is apparently not at the table … so what are Alberta energy workers supposed to take away from that? Why isn’t Alberta part of these negotiations?

We did actually go through quite an extensive series of consultations as we started to move towards developing this legislation and this action plan. It very much included companies in the energy sector. It very much included the labour unions in Alberta. And it did include the government of Alberta, where there were discussions between officials over the course of the past couple of years.

I do think there is enormous scope for collaborative work here.

Alberta’s Environment Minister Sonya Savage … [tweeted]: “This bill will phase out hundreds of thousands of direct and indirect jobs in the energy sector. This should be of concern not just here in Alberta, but across the country.” What’s the disconnect here? Because how they are seeing what your plan is and what you’re saying are very far apart.

I think that there are ways in which we can move forward collaboratively. I think we need to be thoughtful about how we are using terminology. I think the … words around “just transition” are a bit of a loaded term for people in Alberta and Saskatchewan. I grew up in Saskatchewan. I’m certainly sensitive to that.

It’s one of the reasons why I prefer to talk about all of this as sustainable jobs. This is about ensuring prosperity and ensuring place-based prosperity because the opportunities that are available in Nova Scotia are different from those that are available in Alberta. And we need to be working collaboratively with the government, with labour, with industry and others to ensure that we’re actually making the appropriate steps forward.

A woman wearing a black blazer is speaking in front of a Canadian flag.
Alberta Premier Danielle Smith says Wilkinson’s plan is ‘ill-conceived and ‘short-sighted.’ (Jason Franson/The Canadian Press)

You told our CBC News colleagues that if you have a concern, you’re concerned that “there are so many opportunities” that will be coming through this with this plan that “we will not have enough workers to fill the jobs.” I wonder if you’re concerned that you’re over-promising [or] overselling here?

I actually don’t. I am very optimistic. And I think if you step back and you think about some of these opportunities — so you think about critical minerals, for example — you cannot have an energy transition without significantly augmenting the amount of critical minerals being produced and processed in Canada and in other jurisdictions around the world. That is going to create enormous numbers of jobs.

Even work that we are doing with respect to just improving energy efficiency … about 70 per cent of the buildings that are standing today are going to go through a deep retrofit if we’re actually going to achieve net zero by 2050. That’s going to drive enormous jobs.

If you step back and you think through all of the different opportunities for Canada, they are big. If you are somebody who got to choose where you were going to live based on economic prospects in most places, you would choose Canada.

What kinds of jobs will come with this plan?

It is different in different parts of the country. But if you think about Alberta, certainly there are enormous jobs in carbon capture and sequestration, if we are focused on reducing emissions from the energy sector.

There are jobs in critical minerals and minerals processing, which heretofore has been done largely in China, which obviously cannot continue given the strategic nature of that.

There are going to be enormous construction jobs in building up the electricity grid, including small modular reactors in Alberta.

There are jobs in the biofuels sector. There’s enormous opportunity in hydrogen, both for domestic use and for export.

If you go to the East Coast, I mean, one of the big areas that both Nova Scotia and Newfoundland are extremely interested in is offshore wind for the purpose of producing hydrogen to provide to Europe.

I honestly am of the view that — particularly given some of the demographic challenges that Canada is facing on a go-forward basis — that our issue is not going to be that we have people for whom there are no jobs.

It is going to be that there are so many different opportunities that we are not necessarily going to be able to pursue them all as a country because of limitations on labour. And we’re going to have to be very, very thoughtful about that.

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Economy

How Russia is pushing its central bank to give ‘upbeat’ economic updates

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The Russian government is not loving its central bank’s gloomy economic assessments. Instead, it is reportedly asking for more jolly outlooks.

The Russian economy has been under stress ever since the country invaded Ukraine in February 2022, triggering widespread sanctions from the West and its allies, which hit the energy giant’s oil and gas revenue.

Through it all, the Russian central bank has been candid about its assessment of the country’s economy, which at times stood at odds with more bullish statements from the Kremlin.

But that may soon change — Russian officials are putting pressure on the country’s central bank to give more “upbeat” assessments about the country’s economy, Bloomberg reported on Tuesday, citing people familiar with internal deliberations.

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In December, analysts at the Bank of Russia — headed by governor Elvira Nabiullina — said they anticipated “new economic shocks,” due to a $60 per barrel price cap on Russian oil and the European Union’s ban on the country’s crude. In October, research from the Bank of Russia showed the country’s economic activity stalled in September — in part, due to President Vladimir Putin’s partial mobilization order that sent many fleeing the draft.

Senior government officials have criticized the central bank for mishandling market expectations and for giving forecasts that were too pessimistic and alarmist, Bloomberg reported.

The Bank of Russia, though, is open to improving these forecasts so as to send a signal that it’s on the path to monetary easing in the months ahead, per Bloomberg.

The Russian economy likely contracted by 2.5% in 2022 from a year ago, but was still beating expectations, President Vladimir Putin said in televised remarks on January 17, per Reuters.

It’s not just propaganda. Key to the central bank’s messaging is interest rates. Russia’s key interest rate is 7.5% now, but the government wants the central bank to express more optimism about the economy in a signal that it could start cutting rates, per Bloomberg. But the Bank of Russia is concerned about higher inflation should rates fall.

Russia covers its budget deficit by borrowing domestically, so interest rates are important for the government. A slump in energy revenues, coupled with an increase in defense spending has pushed Russia’s budget deficit to 1.76 trillion rubles in January, or $24.75 billion.

The deficit — which is only for the first month of 2023 — is already at 60% of Russia’s plan for a $2.93 trillion-ruble deficit, Insider previously reported.

The Bank of Russia did not respond to Insider’s request for comment sent outside regular business hours. It’s also in a communication blackout ahead of its first board meeting of 2023 on Friday, per Bloomberg.

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Economy

Biden highlights economy, spars with Republicans in State of the Union speech

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U.S. President Joe Biden sought to overcome pessimism about the country’s direction — and his own political prospects as he stares down a re-election bid next year — in his second State of the Union address to Congress and the nation Tuesday night.

But his optimistic vision faces stiff headwinds from Republicans in control of the House of Representatives, who the president called on to help him “finish the job” of rebuilding the economy from the COVID-19 pandemic and record inflation at home and abroad.

“The people sent us a clear message. Fighting for the sake of fighting, power for the sake of power, conflict for the sake of conflict, gets us nowhere,” Biden said. “That’s always been my vision for the country: to restore the soul of the nation, to rebuild the backbone of America — the middle class — to unite the country.

“There is no reason we can’t work together in this new Congress.”

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House Speaker Kevin McCarthy, sitting behind the president for the first time since he took on the role, appeared unmoved by Biden’s pitch for bipartisanship and the listing of his administration’s accomplishments during two years of Democratic control of Congress.

McCarthy — who vowed to be “respectful” during the speech earlier Tuesday — is leading negotiations with Biden and Democratic leaders on raising the nation’s debt ceiling, which Republicans say must be tied to significant government spending cuts. Biden has pushed for a “clean” debt ceiling increase without cuts to future spending or existing programs like Social Security and Medicaid, longtime targets of fiscal conservatives.

Biden faced boos and shouts of “liar” during his speech when he mentioned some Republicans were eying changes to those programs. That led to what appeared to be an ad-libbed response from Biden, and led to a seemingly vocal pledge from members of both parties that the programs would remain untouched.

“I tell you, I enjoy consensus,” he said with a grin.

U.S. hitting debt ceiling could destabilize global economy

The president on Tuesday made the case that targeted government spending found in major bills he has signed like the US$1-trillion infrastructure act will achieve results in the coming months and years.

“Jobs are coming back, pride is coming back because of the choices we made in the last two years,” he said.

The speech showed Biden has shifted his focus from pushing for a flurry of major legislative victories to accepting more limited action with a divided Congress. House Republicans have vowed to undo many of those achievements while prioritizing investigations into allegations against Biden’s family and administration.

Biden promised he would veto any bill that would raise the cost of living for average Americans.

Click to play video: 'State of the Union: Biden talks shootdown of Chinese spy balloon, says it’s not good to ‘bet against America’'

More Buy American policies

Biden has walked a delicate tightrope over the past two years, balancing the need to work with Republicans on some matters while criticizing the party’s positions. He began his term two weeks after rioters stormed the U.S. Capitol to disrupt the certification of his victory over Donald Trump, who remains a force within the Republican party.

Although he celebrated on Tuesday that democracy remained “unbowed and unbroken” two years after that Jan. 6, 2021, attack, Biden’s address showed his continued efforts to appeal to “America First” conservatives aligned with Trump’s policies while continuing to pursue Democratic priorities.

He announced new standards that will require all construction materials used in federal infrastructure projects to be made in the U.S., an expansion of his Buy American policy that has alarmed key trading partners like Canada.

“On my watch, American roads, bridges, and American highways are going to be made with American products as well,” he said.

A request for comment from Canadian Trade Minister Mary Ng’s office was not immediately returned Tuesday night.

Biden’s focus on the U.S. economy came after an unexpectedly strong jobs report last week that found unemployment fell to a 53-year low of 3.4 per cent, and over 517,000 jobs were added in January.

Click to play video: 'U.S. Inflation Reduction Act ‘changed playing field’ in terms of global competition: Freeland'

U.S. Inflation Reduction Act ‘changed playing field’ in terms of global competition: Freeland

The White House is using those numbers and other signs of economic improvement, including falling gas prices, to counter Republican attacks and recent polling that found a majority of Americans are unsatisfied with the country’s direction and don’t want Biden to run for re-election.

Biden has not officially announced his re-election bid for 2024, which could pit him against Trump once again.

Crime and policing

Among Biden’s guests for the State of the Union was the mother and stepfather of Tyre Nichols, a Black man who died last month after being beaten by five police officers who are now charged with second-degree murder and other crimes.

Biden called for more action on national policing standards in response — a slim prospect in the divided Congress, although both parties rose to their feet to applaud the president’s remarks and Nichols’ family.

Click to play video: '‘Do something’: Biden pushes for action from Congress on police reform'

‘Do something’: Biden pushes for action from Congress on police reform

He also urged lawmakers to pursue meaningful immigration reform that would tighten border security, offer a path to citizenship for migrants who cross into the U.S. legally, and crack down on fentanyl trafficking that has led to a surge in fatal opioid overdoses.

Another guest, former House speaker Nancy Pelosi’s husband Paul Pelosi — who was brutally attacked inside the couple’s San Francisco home last year — was introduced by Biden as an example of the need to reign in domestic extremism and political violence.

“We must give hate and extremism in any form no safe harbour,” he said. “Democracy must not be a partisan issue. It’s an American issue.”

Arkansas Gov. Sarah Huckabee Sanders, who gained a national profile as Trump’s press secretary, delivered the Republican response to Biden’s speech, which he alleged was full of falsehoods.

She focused much of her remarks on social issues, including race in business and education, and alleged big-tech censorship of conservatives.

“While you reap the consequences of their failures, the Biden administration seems more interested in woke fantasies than the hard reality Americans face every day,” she said. “Most Americans simply want to live their lives in freedom and peace, but we are under attack in a left-wing culture war we didn’t start and never wanted to fight.”

Sanders also criticized Biden’s foreign policy that she alleged has made America less safe from threats posed by China and other hostile actors.

—With files from the Associated Press

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Economy

Given high inflation, slowdown in Canada’s economy is ‘a good thing,’ Tiff Macklem says

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Bank of Canada governor Tiff Macklem says that although a slowing economy may not seem like a good thing, it is when the economy is overheated.

Speaking in Quebec City on Tuesday, Macklem said that higher interest rates are working to cool the economy as elevated borrowing costs are constraining spending on big-ticket items such as vehicles, furniture and appliances.

As demand for goods and services falls, Macklem says the economy will continue to slow.

“That doesn’t sound like a good thing, but when the economy is overheated, it is,” he said.

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In addition to global events, the overheated domestic economy pushed up prices rapidly, he said.

To slow the economy domestically, the Bank of Canada has embarked on one of the fastest monetary policy tightening cycles in its history. It has hiked its key interest rate eight consecutive times since March, bringing it from near-zero to 4.5 per cent.

However, last month, the Bank of Canada said it will take a “conditional” pause to assess the effects of higher interest rates on the economy.

“Typically, we don’t see the full effects of changes in our overnight rate for 18 to 24 months,” Macklem said on Tuesday.

“In other words, we shouldn’t keep raising rates until inflation is back to two per cent.”

However, the governor said the Bank of Canada will be ready to raise rates further if inflation proves to be more stubborn than expected.

Bank of Canada hikes interest rates again to 4.5%

The Bank of Canada is raising interest rates again, bumping it to 4.5 per cent. This marks the eighth increase in less than a year, leaving some homeowners scrambling to keep their mortgages.

As gas prices have fallen and supply chains have improved, inflation in Canada has slowed since peaking at 8.1 per cent in the summer. Macklem called this a “welcome development,” but stressed inflation is still too high.

“If new data are broadly in line with our forecast and inflation comes down as predicted, then we won’t need to raise rates further,” Macklem said.

For inflation to get back to two per cent, Macklem said wage growth will have to slow, along with other prices.

Wage gains lagging inflation

Wages have been growing rapidly for months but continue to lag the rate of inflation. In December, wages were up 5.1 per cent.

Though annual inflation is still at decades-high levels, economists have been encouraged by a more noticeable slowdown in price growth over recent months.

The Bank of Canada forecasts the annual inflation rate will fall to three per cent by mid-year and to two per cent in 2024.

Royce Mendes, an economist with Desjardins, said that Macklem is crossing his fingers that the rate hikes he has implemented so far will be enough to get it done.

“The head of the Bank of Canada seems quite comfortable sitting on the sidelines even as his U.S. counterpart will be discussing the need for further monetary tightening south of the border,” Mendes said.

 

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