Who should build our electric cars?

The following is a re-print of the July 2024 edition of Shift Storm, the CCPA’s monthly newsletter which focuses on the intersection of work and climate change. Click here to subscribe to Shift Storm and get the latest updates straight to your inbox as soon as they come out.

The future of private vehicles is electric. Between government mandates and manufacturer commitments, every car and light truck for sale in Canada will be a zero-emission vehicle (ZEV) in the next 10-15 years.

ZEVs aren’t the be all and end of all of net-zero transportation. For both practical and environmental reasons, we need to shift a large share of the trips currently taken by car into public transit or active transportation, such as walking and cycling. But ZEVs are still enormously important given the outsized contribution of internal combustion engines to our climate challenges.

The looming question for Canada is not whether the transition will happen, but where those vehicles will come from.

It’s easy to assume they’ll be built here. North American governments and auto manufacturers are finally pivoting toward the production of ZEVs. Splashy investments in battery facilities have made headlines in recent years, and auto workers have won strong collective agreements that include retooling for ZEV production. Auto manufacturing creates thousands of good jobs with many spin-off benefits, so ensuring the industry successfully pivots to ZEVs should be a priority in any green industrial strategy for Canada.

Yet our domestic auto industry lags a decade behind China’s, which correctly anticipated the industry’s zero-emission future and proactively invested in manufacturing. While many North American automakers are still working out the kinks in first-time ZEV models, Chinese companies such as BYD have developed and refined high-quality models that sell for a fraction of the price of their North American competition. China is now the largest producer of ZEVs in the world and increasingly looking to sell those vehicles overseas.

That has put Western governments in a bind. Do they allow cheap ZEVs to flood the domestic market, potentially driving down emissions? Or put up trade barriers to protect domestic ZEV manufacturers and auto workers as they scale up production?

As my colleague Stuart Trew discusses over on the CCPA blog, it now seems likely that Canada will follow the U.S. and EU’s lead in imposing customs tariffs and/or countervailing duties on Chinese auto imports—and there are good reasons for doing so. The use of forced labour in the Chinese ZEV supply chain, the suppression of workers’ rights and wages in the manufacturing process, and the exploitation of cheap, polluting coal power, have all artificially lowered the cost of production of Chinese ZEVs. To the extent possible—WTO rules might make it tricky—we absolutely should be using trade policy tools to pressure China on these fronts.

However, I am less convinced by the argument that China unfairly subsidizes production through its various purchase incentives, tax policies and public procurement programs. Canada, too, has set aside tens of billions of dollars in tax breaks for clean tech manufacturers, including automakers, alongside consumer incentives. For its part, the U.S. has established an extensive subsidy program through the Inflation Reduction Act. If our corporate subsidies aren’t stacking up, then maybe we should be taking a page out of China’s book, which has been massively successful at scaling up ZEV production and adoption in that country through a decade of public leadership.

There is a path forward here that balances trade measures—especially those grounded in human rights, wages and environmental considerations—with a renewed commitment to accelerate ZEV uptake at home. We should be wary of excessive tariffs that merely insulate the domestic market from outside pressures to decarbonize faster.

If you’re interested in diving deeper into the Canadian auto landscape and the role of the labour movement therein, a new book from UBC Press promises to scratch that itch. Shifting Gears: Canadian Autoworkers and the Changing Landscape of Labour Politics by Stephanie Ross and Larry Savage will be published next month and it looks like an interesting read.

Otherwise, I’ve only got a few new pieces of research for you this month as the summer publication lull continues. Expect a more action-packed update in September.

Storm surge: this month’s key reads

Oil workers need more than money to feel good about a just transition

A new paper published in Environmental Sociology by UBC’s Parker Muzzerall, “Can a just transition achieve decarbonization?” provides important insights into Canadian oil workers’ opposition to climate and just transition policies. Through interviews with workers in the oil sands, the paper develops a nuanced picture of their resistance to change.

On the face of it, the issue is simple—workers are skeptical that a global transition away from fossil fuels is underway and they are consequently skeptical that federal transition policies will do more good than harm. Underpinning these concerns, however, is a deeper concern about the “ontological security” of fossil fuel regions. The thought of moving away from oil and gas undermines a sense of place and a way of life that workers are not prepared to give up.

That’s an important finding for those of us advocating for just transition policies. Providing top-down income support, retraining programs or relocation funding may alleviate the short-term economic costs of a transition away from oil and gas, but it does little to secure a future for those workers in their communities.

I strongly agree with Muzzerall’s conclusion that “we need to develop just transition policies that are localized, community-led, needs-based, and designed to create new in situ opportunities for fossil fuel-producing regions to prosper in a low-carbon future.”

We need to empower communities to determine their own paths forward and then provide the right kinds of support for them to realize a post-fossil future—an approach my co-authors and I called for in our 2023 paper, Don’t Wait for the State.

Letting communities lead does not mean compromising on the imperative of decarbonization. Ending fossil fuel production is essential and there will inevitably be conflict in the process. But providing unasked-for support to workers serves no one.

Research radar: the latest developments in work and climate

Carbon credits don’t work, says corporate net-zero group. The Science Based Targets Initiative (SBTi) is a corporate-backed NGO that works with companies and financial institutions to help them set net-zero targets. SBTi is hardly progressive, but its latest synthesis report is a damning critique of the state of the carbon offsets market. Not only have carbon offsets been “ineffective in delivering their intended mitigation outcomes,” according to the report, but they also introduce “potential unintended effects of hindering the net-zero transformation and/or reducing climate finance.” You know what the alternative to carbon credits is? Actually reducing corporate greenhouse gas emissions.

Scotland needs more public spending to achieve a just transition. Scotland’s Just Transition Commission continues to put out useful research. More countries should follow their lead. In Investment for a Just Transition, the commission reaches the important conclusion that “if investment provision is left to the market alone, we will see an unjust and ineffective transition.” The report calls on the Scottish government to play a stronger coordinating role between the various sectors and institutions implicated in Scotland’s transition away from fossil fuels. There is no substitute for public leadership backed by public spending in situations where economic, environmental and social goals overlap.

U.S. party platforms worlds apart on climate. The Democrats’ draft platform generally holds the line on Biden’s green industrial policy agenda. There aren’t many exciting new ideas here, but a continued focus on clean energy, green jobs and environmental justice is welcome. The Republican platform doesn’t even mention the word “climate,” and instead commits to ending “market-distorting restrictions on oil, natural gas, and coal.”

Trade agreements shield fossil fuel assets from climate action. Last month I highlighted how the investor-state dispute settlement (ISDS) mechanism found in many investment treaties poses a risk to climate policies. A new report from E3G, Investment treaties are undermining the global energy transition, finds that 62 per cent of foreign-owned fossil fuel assets are protected by these kinds of agreements. E3G recommends some modest, climate-friendly reforms to the system, but we shouldn’t shy away from more radical interventions to strengthen democratic control over global energy production.

New book investigates links between mining and exploitation. A new book from Canadian and international academics, Mining and Indigenous Livelihoods, promises to unpack the relationship between the mining industry and various Indigenous peoples around the world. The book comes out next month, but based on the authors’ commentaries it looks like a valuable exploration of the “long-lasting ecological, social and cultural impacts of mining activities,” which are all the more relevant given the current rush for critical minerals.

A just transition agenda for mining investors. On a related note, the UK-based Just Transition Finance Lab published a new report, Unjust Minerals, that calls on mining investors to respect communities, protect workers and develop local economies. That’s all well and good, but I’m skeptical that we’ll see foreign investors take these sorts of considerations seriously in the absence of binding regulation and/or international agreements.

Chilean power company models a private sector just transition. A separate brief from the Just Transition Finance Lab, Tapping multilateral finance to support a just transition, explores the case study of ENGIE Chile, a private energy company, as it transitions off coal. The company has worked with trade unions, governments and international lenders to develop an explicit just transition strategy for the company. It remains to be seen whether workers truly end up ahead at the end of this process, but it’s a promising start.

Acemoglu throws cold water on AI hype. There’s no doubt that the short-term impacts of generative artificial intelligence have been overhyped, but this newsletter has previously argued that the long-term impacts are too big to ignore. New research is questioning that assumption. A paper by famed economist Daron Acemoglu, The Simple Macroeconomics of AI, estimates that AI will boost U.S. productivity over the next ten years by merely half a per cent—leading to a cumulative increase in GDP of about one per cent—which would hardly be disruptive to workers or particularly transformative for the broader economy. Acemoglu’s model does find an increase in income inequality due to AI but, again, the impacts are quite small.

Webinar series on Indigenous-led just transitions. Indigenous Climate Action and Sacred Earth Solar are hosting a three-part online learning series on September 5, 12 and 19, which you can sign up for here. The webinars will unpack the Just Transition Guide they published last year, which, as I said at the time, is well worth a read. I’m very much looking forward to these webinars.