Analysis

Climate change will push Canadian business onside

Stephen Harper, seeing himself as the representative of conservative business interests, has been dragging his feet on climate change. But once businesses see where the money is, they will speed us into a low-carbon future faster than anyone thought possible.

Companies seem conservative today, but just watch when they reach the profitable tipping point

Governor General David Johnston rides in a traditional horse-drawn carriage surrounded by Mounties. A hundred years ago the booming horse and harness trade fought a rearguard action against business competition from the motor car. (Canadian Press)

Until he lost his shirt in the Dirty Thirties, a relative of mine was an influential businessman in southern Saskatchewan. Among his interests was a livery stable, with a blacksmith, harnesses, buggy whips and everything you needed to keep horses on the road and in the field.

Horses are still with us, of course, but today it is hard to realize what an enormous industry they supported only a hundred years ago.

As skeptics scoff about Prime Minister Stephen Harper's grudging concession on the G7 agreement to end the use of fossil fuels, I think it is useful to remember how quickly businesses can completely transform an economy once they get the bit between their teeth.

"If we can get companies putting their innovative genius to work on solving environmental problems, we're going to find solutions that we can't even imagine today," says Stewart Elgie, a professor of law and economics at the University of Ottawa.

He is confident that when it comes to fighting climate change, business will pull its share of the load. But we have to get over a hump.

Horse sense

A hundred years ago, the saddlery and harness business had its own industrial journals, well worth perusing. United States Leather, making a product essential to harnesses, was one of the 12 founding companies in the Dow Jones Index.

An inspection of one of world's biggest monthly harness trade magazines, produced in Walsall, England — a world hub of harness and saddle making — shows that to a large extent, the industry did not see the end coming.

"Whilst some commentators (quite correctly) predicted disaster for the saddlery and harness trade," says a commentary published by Walsall Council, "others were more complacent, dismissing the motor car as an unreliable and expensive plaything which would never catch on."

Obviously existing businesses, whether harness makers then or carbon producing industries now, represented by conservative politicians, never want to see radical change happen. They represent a major force for maintaining the status quo.

But according to Elgie, Canadian businesses are on their way to altering the economy for good.

Seeking profit

Whether installing solar panels or managing the finances behind cap and trade markets, the more companies that realize they can profit from overcoming climate change, the more they will change from foot-dragging to leadership.

Tax incentives and regulations may be necessary to get the process started, says Elgie, but after that happens the economy could be only five years away from a tipping point where a majority of companies have changed their thinking.

"Instead of being in the compliance part of a company's brain, all of a sudden it becomes part of the profit part of a company's brain," says Elgie.

That unleashes the strong forces of the market. "It is universally acknowleged that [markets] have unlocked a level of human ingenuity, innovation and effort really never before witnessed in human history." 

According to his research on the Porter Hypothesis, rather than weakening an economy, the effort and innovation to overcome environmental problems can actually send the economy on to greater strengths. He quotes the example of British Columbia, where the economy has grown strongly despite a 16 per cent reduction in the use of carbon fuels.

More complex industries

Whether it is charcoal burners displaced by coal, weavers displaced by factory looms, or livery stables replaced by cars, when one industry dies, another, often more complex, industry takes its place.

United States Leather lost its place on the Dow in 1905. After a steady decline in the industry after the First World War, the Saddlery and Harness Journal managed to linger for a while, only ending publication in 1933. In three decades horses went from industrial and essential to recreational and processional.

Like the livery and saddle business, the carbon fuels industry will not go easily, especially at first.

Conservative thinkers like Harper may want them to stay alive past the date they are no longer wanted. But that is swimming against the tide, says Elegie. He says repeated economic analysis shows that increasing efficiency in resources has always led to economic success. 

The land in Saskatchewan where my relative raised horses for his livery stable is now dotted with oil wells to fuel the vehicles that helped put him out of business.

But once competing businesses become engaged in the next transformation to a carbonless economy, you may be surprised how quickly the world changes once again.

And maybe in three decades oil wells will go the way of the buggy whip.

Follow Don on Twitter @don_pittis

More analysis by Don Pittis

About the Author

Don Pittis

Business columnist

Don Pittis was a forest firefighter and a ranger in Canada's High Arctic islands. After moving into journalism, he was principal business reporter for Radio Television Hong Kong before the handover to China. He has produced and reported for the CBC in Saskatchewan and Toronto and the BBC in London. He is currently senior producer at CBC's business unit.

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