Political Economy

G05 - Navigating Sustainability Transitions: Insights from Political Economy

Date: Jun 12 | Time: 03:30pm to 05:00pm | Location:

Chair/Président/Présidente : Shehnoor Khurram (York University)

Discussant/Commentateur/Commentatrice : Sam Rowan (Concordia University)

Discussant/Commentateur/Commentatrice : Angela Carter (Memorial University of Newfoundland)

The effect of FDI on the carbon footprint of global trade: cross-country evidence: Zarlasht Muhammad Razeq (University of Warwick)
Abstract: Foreign direct investment (FDI) and international trade are the key drivers of international production and development in the era of Global Value Chains (GVCs). Despite the significant body of research on the spillover effects of FDI on growth and development, the effect of FDI on climate change and sustainable development has received little theoretical and empirical attention. Most of the discussion about the effect of FDI in the context of climate change and sustainable development has raised concerns about the carbon leakage from North to South, where environmental standards are less stringent, making the latter an attractive destination as a pollution haven for production relocation and FDI. This paper aims to examine systematically if this is the case: does FDI from upstream North increase the environmental impact of trade and investment in recipient countries? The paper answers the research question by relying on statistical analysis and sectoral data on FDI and carbon emissions (CO2) for 67 countries between 2003 and 2018. We find that greenfield investment positively affects the CO2 content of bilateral exports with differences in the effects across sectors, between final and intermediate products, and in relative positions of trade partners along the supply chains. The implication of these findings for investment policy is that the design of green transition and green investment strategies must consider not only the environmental impact of FDI but also the export composition and GVC position of trading partners.

Workers as words: how rhetorical appeals to labor are deployed in contested just transition discourses: Carley Chavara (University of Toronto)
Abstract: This paper asks how did it come to be constituted that state and provincial level representatives claim federal just transition policies are hurtful to fossil fuel workers when labor representatives supported the legislation? In both the case of the United States’ proposed Build Back Better Initiative in 2021 and Canada’s proposed Just Transition legislation in 2023 key political representatives at the state and provincial level (Sen. Joe Manchin and Premier Danielle Smith, respectively) came out against the legislation, partly on the ground that it was bad for fossil fuel workers. At the same time, the key unions in these polities (United Mine Workers Union and the Alberta Federation of Labor, respectively) publicly supported the federal legislation. I explain this puzzle by using the critical discourse analysis method developed by Fairclough. I treat each piece of legislation as a key text and comparatively analyze politicians’ and unions’ official press releases and public comments, as well as the discourse of relevant corporate actors. I find that despite public rhetoric appealing to labor, state and provincial governments aligned with capital on the climate policy, and despite labor’s support of just transition, popular and even academic discourse portray labor as obstinate to climate action. This study makes an important empirical contribution to academic literature on just transition by providing contradictory evidence to existing assumptions on the political role of labor in the green energy transition and makes the theoretical contribution of including workers in their own words as key political texts.

Mining for Green: Capturing value and promoting transformation in the local economy in extractive industries in a period of flux – Lessons from mining industries in Labrador, Sudbury & Kamloops, BC: Scott McKnight (University of Toronto), Dan Breznitz (University of Toronto)
Abstract: The fast-unfolding transition to low- and zero-carbon technologies will require a dramatic increase in the production of minerals and metals. The multi-faceted importance of extractive industries—to national security, to the global economy and to the unfolding transition to low-carbon energy sources—presents a generational opportunity for resource-rich areas. At the same time, extractive industries like mining are under a range of pressures—to reduce the carbon intensity of their operations; to provide minerals and metals at stable and affordable prices; and to generate good-paying, stable and physically safe jobs. The anticipated increase in production in the context of varied and complex demands on the mining industry presents opportunities for local communities, companies and government to be active participants and sources of innovation, and not merely sites of extraction in mining for the ‘green’ energy transition. What can mineral-rich areas with robust mining ecosystem like Labrador, Sudbury & Kamloops, BC learn from one another in generating wealth, capturing value in this transition, maximizing benefits for the province and making that growth sustainable over the long run? This research project presents preliminary findings from fieldwork in these areas with the overarching aim of systematizing lessons in creating local and sustained value in extractive industries.

Why isn’t the mining industry ready for the energy transition: Introducing the concept of Facilitator Industries: Scott McKnight (University of Toronto), Dan Breznitz (University of Toronto)
Abstract: The technologies needed for the low-carbon energy transition will require huge increases over current volumes of mineral and metal production. However, despite government urging, expectations of high demand, and record profits for miners, why aren’t companies investing more in preparation of this generational opportunity? Two main obstacles constrain the massive expansion in mineral output needed for the energy transition: first, the mining industry lacks the financial and human capacity needed to provide the many mineral inputs at sharply increased volumes for the low-carbon energy transformation; second, the mining industry faces too many sources of uncertainty (political, ESG-related, technological) for the industry to transform itself. This leads us to the bigger question: How to transform ‘mature’ industries to meet the demands of new technological paradigms? To answer this, we introduce the concept of a ‘facilitator industry’, which has several characteristics: First, a facilitator industry predated the technological revolution in question (e.g. green tech) and is no longer or was never revolutionary in technology; 2) this industry is essential to facilitating and diffusing the ‘core’ industry to achieve its revolutionary potential; and finally and most importantly, 3) the facilitator industry needs to be thoroughly transformed to take on a much enhanced role for that core industry to reach its revolutionary potential.