This past summer, the Business Council of British Columbia’s chief economist stumbled onto economic data he says surprised him and left him deeply concerned.
Ken Peacock was looking for information on the economic dimensions of CleanBC – the provincial government’s plan for how the province will meet its next legislated greenhouse gas emission reduction target in 2030.
By clicking through the CleanBC Roadmap to 2030’s supporting materials, he landed on economic modelling commissioned by the province. That data suggested that B.C.’s economy would be $28.1 billion smaller in 2030 due to the impact of CleanBC policies.
“This is literally when I'm slipping out of my seat that sunny Monday morning in the summer,” said Peacock, who also serves as BCBC’s senior vice-president.
“I've been around long enough to know immediately a $28.1 billion setback in the B.C. economy is very significant.”
The modelling, produced by Navius Research, suggests that GDP in nearly two-dozen areas of B.C.’s economy will be below where GDP otherwise would have been in 2030, absent the policies within the current CleanBC roadmap. Grouped broadly by sector, the modelling projects downward adjustments in GDP for transportation (by 15.8 per cent), heavy industry (by 19 per cent), buildings (by 6.8 per cent) and the fossil fuel industry (by 17.6 per cent). Electricity is the only main sector category on the spreadsheet that shows GDP increasing as a result of CleanBC.
“This is very, very significant,” said Peacock.
The additional emissions caps and costs imposed under CleanBC – including a carbon tax scheduled to more than double between 2023 and 2030 – can be expected to dampen investment and cap exports, he said.
This view is supported by analysts at BMO Capital Markets, who wrote in September that emission caps for B.C.’s oil and gas industry – in combination with other climate policies – “could act as an indirect production cap for industry in B.C.” and could make further development “potentially uneconomic for much of industry.”
The text of the CleanBC plan itself states that, based on provincial data, the province expects initiatives under CleanBC will generate “GDP increases of 19 per cent by 2030” from 2020 levels and job growth of seven per cent by 2030 from 2020 levels.
GDP is only referenced three times in the 72-page document. According to Peacock, the increases are not clearly supported by the province’s modelling.
“There is no room for net job growth of any sort of healthy proportions or level in those modelling results. It just is not possible,” said Peacock. “We are concerned about serious job losses and serious impact to income over the next six years.”
According to BCBC’s analysis of the province’s data, B.C.’s average annual economic growth rate will slow to 0.4 per cent in the second half of this decade.
“This is bumping along recession territory,” Peacock said, adding that real inflation-adjusted per capita income appears to decline by more than one per cent annually from 2025 to 2030 under CleanBC. That translates into an estimated average reduction in real per capita income, per household, of $11,000 by 2030.
“This is real purchasing power ... and it's back almost two decades. It is a massive contraction.”
In an interview with BIV, B.C. Minister of Environment and Climate Change Strategy George Heyman said the province did not attempt to model growth in clean energy, clean technology or other sectors of B.C.’s economy because not enough information was available to model it, and because the province at the time did not yet have a “fully fleshed out plan” to model.
“We did have some sense of what areas might shrink as a result of some of the actions that we were proposing and those were able to be modelled,” he said. “I still stand by my claim that what the Business Council did and what others are doing with the Business Council claim is simply looking at a snapshot of our report and taking it out of context.”
When asked whether the provincial government is now better able to quantify the anticipated positive economic benefits of CleanBC, and how those relate to some of the projected costs, Heyman pointed to examples of investments that are already occurring in the province, including E-One Moli Energy (Canada) Ltd.’s $1 billion lithium-ion battery cell manufacturing facility planned for Maple Ridge. The project includes an $80 million investment from the province and a $204.5 million federal investment, and is expected to create 350 jobs.
The province’s modelling shows that some elements of B.C.’s economy will see declines in GDP, Heyman said. He maintains that it is an incomplete snapshot of B.C.’s economy and the economic opportunities that will materialize.
“I certainly communicated to the Business Council that I thought their take on what they thought was a great find in our data was not in context and therefore wasn't an accurate portrayal of the future of the B.C. economy, or the tremendous opportunities that we can either accept and seize, or we can miss out on as this world moves somewhere else,” he said.
The CleanBC Roadmap to 2030, which was launched in October 2021, describes the policies it contains as “bold, ambitious actions” to decarbonize B.C.’s economy and ensure greenhouse gas emissions in 2030 are 40 per cent below where they were in 2007.
It builds on an earlier CleanBC plan and responds to emissions projections that showed greater action was needed to meet that 2030 target, according to the province.
“There is a trade off,” said Nancy Olewiler, an economist and co-chair of the province’s Climate Solutions Council.
“The more we save now, the less we have to spend but the more we protect against having not enough spend in the future,” she said. “And I think that's exactly what we're talking about is investing now in all the things that transition the economy.”
B.C.’s roadmap to 2030 is part of a longer-term plan to transition to a net-zero economy by 2050. In a recent column for BIV, Olewiler argued that there are economic benefits to industry embracing that transition, but that the benefits of innovation and new technologies are not captured by the modelling the province used to inform the development of its CleanBC plan.
As a result, she told BIV that the modelling shows some of the short-term costs of investing in B.C.’s transition to a cleaner economy.
But it doesn’t capture, for example, the hundreds of thousands of clean energy jobs that Clean Energy Canada estimates will be created in B.C. between 2025 and 2050.
“There are always transition costs,” Olewiler said. “The longer we delay in taking action, the higher the costs are going to be.”
Some benefits of CleanBC investments and policies will be visible in the short term, such as the potential savings realized by a household that invests in a heat pump, said Olewiler. But many, including significant job creation, are anticipated to occur in the years following 2030.
In a podcast interview with BIV, Peacock said he has presented BCBC’s analysis of the short-term economic implications of CleanBC to various groups of business and political leaders. He says further discussion and consultation is needed, and suggests B.C. retain its net-zero targets for 2050, but recalibrate its policy timelines and targets for 2030.
“From a sort of economic perspective, the question arises – given those costs, is it worth the rapid and aggressive pursuit of reducing our emissions in that manner?” he said.
Heyman told BIV the province wants to provide businesses with certainty, and wants to work with business to ensure B.C. remains competitive.
"This is about transitioning the economy as well as ensuring that existing parts of the economy grow as they transition," he said. "The elements of the economy that won't do well are the people or those that refuse to change, refuse to adopt a response to climate change."