As countries transition to greener economies, workers may struggle. Denmark and Canada show ways to help workers and businesses prosper through change.
Pressure for action on climate is building. But change can bring winners and losers, as some industries contract and others expand.
What do these changes mean for workers and businesses, and how can they be supported through the transition to a greener economy? The answer may vary by region.
NBS reached out to experts from Denmark and Canada to discuss the experiences of workers and businesses in their regions and what they’ve learned about how to ease the transition.
Peter Karnøe is a Professor of Planning at Aalborg University in Denmark. Denmark is known for its leadership in moving towards sustainability and Karnøe has studied the surprising success of wind power and led a multi-sectoral project examining the country’s shift toward renewable energy.
Lyn Brown is Vice President, Communications and Marketing, at Alberta Innovates. Alberta Innovates is a provincial corporation in Canada dedicated to innovation, research and entrepreneurship in long-standing sectors of Alberta’s economy and through emerging, transformative technologies in new sectors.
Listen to the Podcast
Brown and Karnoe had the same advice for managers guiding their workers in this time of change. Managers need to involve workers in order to bring them along and draw on their insights.
Brown and Karnoe also described countries at different points on the sustainability journey, charting different paths forward. They shared their perspectives on the appropriate scope, timing, and strategies for climate transition.
Comments have been edited.
How Managers Can Support Workers
Lyn Brown: Let employees know that they have a place in the future, that they have valuable ideas to shape it. Everyone from C-suite to frontline team leaders can cultivate a learning environment that helps upskill, cross-train, and identify new opportunities and needs. In my experience, resistance to change often comes from a place of fear. So, invite different perspectives and wisdom, talent, and experience. Do this early and often. Enlist workers’ support in larger system wide changes that need to occur. An employee is a consumer at home and a voter at the polls. That’s a powerful trifecta when people are truly involved.
Sharing knowledge — both STEM (science, technology, engineering and math) and arts and humanities — excites people about the part they can play in advancing their company, their function, and their discipline. We need to bridge specializations to make good science accessible to more of us who are non-experts in a given field.
Peter Karnoe: Yes, I also think that very often the commitment and talents of workers and what they can accomplish if they are allowed to do it is overlooked. However, Danish leadership in wind power builds such company entrepreneurship involving the work force into a collective effort that also includes NGOs and political regulation stimulating new technologies.
Denmark’s Story: Green Transition Means Societal Boom
Peter Karnoe explains:
Wind turbines help drive the Danish economy.
I studied the Danish wind turbine industry starting in the late 70s, developing in the 1980s, when it was seen as a foolish act by the majority of societal actors. Now, it’s seen as the key driver of our society in terms of bringing in green energy and a lot of jobs. Wind power accounts for about 30,000 jobs in Denmark, in a population of 5,7 million, and a lot of jobs globally in the Danish-controlled value chains.
Danish workers have strong support through market transition.
In Denmark we have this “flexicurity” labor market model, negotiated over many decades between business owners, unions and the state. So, you get high minimum wages during employment and high social benefits while you’re unemployed. The labor market model also includes re-skilling, an educational investment in re-training worker skills that is paid by partly the state, partly the unions and partly industry.
But still, of course, we haven’t found completely the golden egg for how to make sure that exactly this particular worker is going to have a particular new job. So on the aggregate it’s nice, but for individual lives, change will still create uneasiness, of course.
Financial redistribution smooths Denmark’s green transition.
Taking action to address climate change can raise costs — of energy and products, for example. Nobody wants the French situation with demonstrations on the streets protesting a gas tax. Denmark introduced a ‘green tax compensation’ which, during the last five years, reimbursed some of the state’s income from new energy taxes back to low income people. Both government and the financial sector see this as a model of how to impose a higher price on CO2 emissions and environmental damage, and then help some families and some low income people to still have an okay life.
In the phase we are in in Denmark, there are very few voices of resistance or concern about green transition. Energy sector, industry, government agree: we can do it. For example, the Danish Industry Association just came with their own climate plan for how to speed up policy changes. (It involves shifting the taxes, subsidies, rules and regulations in existing markets in order to stimulate new clean technology Research and Development and market opportunities. The same ‘stick and carrot’ approach actually fostered early Silicon Valley technologies and oil, gas, and nuclear power in the United States.)
The only actor who hasn’t fully committed to a national climate plan is the unions. So that’s interesting. But the government is, on behalf of the unions, trying to develop a model of sharing the cost.
Next steps in the green transition focus on electro fuels.
In Denmark, wind power already generates some 50 per cent of Danish electricity consumption. The hottest focus is how to use wind-power-generated electricity outside the electricity sector, to replace fossil fuels in the transportation sector. This venture is called electrofuels, or Power-to-X. Technically, you operate a wind turbine that produces electricity, use the electricity in an electrolyzer, which is producing hydrogen and oxygen out of water. And then you add hydrogen into a chemical process and you get liquid fuels: ammonia, methanol and methane. Ammonia has half the energy content of fossil fuels and can burn in big ships and replace bunker oil.
Denmark has a ship engine manufacturer that is world-leading. And we also have A.P. Møller- Maersk, which is the world’s biggest container fleet. And they have a strong interest in becoming green. So industry actors on wind power, ship engines, electrolyzers and container operators are actively negotiating to foster a network that, with some state policies, can develop the new value chain for electrofuels.
These are the big steps in the Danish transition for the next five to 10 years. The timeframe is short because of the climate urgency. It takes time to develop and scale electrofuels;we must start now to have something that can be scaled from 2030 and onwards.
These changes shouldn’t displace workers.
The container shipping fleet company will continue to operate their ships with as many people. The electrolyzer producers will be able to produce more electrolyzers because that will be a growing market. The combustion ship-engine manufacturer will design and produce new types of engines that run on ammonia.
A transportation system running on electrofuels requires drastic scaling of wind power. We will have to invest a lot, mainly in offshore wind, so we will have a lot of activity for workers in the wind turbine companies and in the construction sector.
As we are entering a commitment to faster change, the unions have been saying “We have to protect jobs.” But what I see is that businesses are transitioning, and thereby they are creating new jobs and maintaining existing jobs.
Industry supports transition.
Industry supports change because government policies shifts regulations and thereby market conditions, and these market conditions provide opportunities for Danish companies to develop new first mover strongholds that can lead to leading international positions like we have for wind power.
As a country, we were surprised at how Denmark became world leaders in wind turbines in the 80s. This consciousness about, “Well, we did something good there. How did we do it?” is now used as a model. “Well, we can maybe do it once more, to become among the first movers who go into electro fuels.” Because very few other countries have this amount of wind power and have this kind of policy commitment to reduce emissions.
Government drives action.
In Scandinavia, we do not believe that the marketplace alone can find a way into the future, because markets are imperfect. Disutilities like CO2 emissions and climate change are either neglected by market actors because they do not have a price, or are paid by citizens and give rise to social conflicts.
So therefore, as shown with wind power, innovative policymaking for the new market conditions is helping industries to see the future. And we are not afraid of that in Europe. Even elsewhere —the strong state is used in North America to to rescue the financial sector after the 2008 crisis, and in this current pandemic.
Denmark may be unusual because it is small-scale, well-organized, and so on. But what has been achieved in terms of wind power and energy system transition has led to the attention of many outside Denmark.
In Denmark during the last 30-40 years, what was initially seen as alien proposals for more wind power, energy efficiency, and electrofuels has for us gradually become the ‘new normal’ in climate change conversations. The grassroots — citizens and many researchers – were driving companies and policy makers to go for wind power. But tribute also to those who opposed the transitions because their counterarguments led to better thinking and technologies. Local conversations and experiments gradually came together and reinforced each other.
After so many years of talking about these transition and energy efficiency issues, this is where other people are starting now. So often when I meet people from other countries, I think, “what happened in your country for the last 30 years?” The Danish path to transition seems to be easier because we have the ‘flexicurity’ labour market model. It’s one way that society, with an active state creating business opportunities, can move forward productively — with workers being a central part of that transition.
Canada’s Story: Transition Risks Leaving Workers Behind
Lyn Brown explains:
Canada’s economic base has been natural resources and Alberta epitomizes this.
In my province, Alberta, the petroleum industry has defined the economy for more than half a century. Petroleum products accounted for more than 70 per cent of the province’s exports in 2018 (excluding services). Agriculture, manufacturing, artificial technology and digital health are also key sectors. But Albertans have pride in the region’s oil and gas emphasis, which provided good jobs, financed technology development and generated research excellence.
The green transition stresses workers.
With the current COVID-19 pandemic adding to the global market disruptions facing the industry, there’s anxiety among thousands of workers employed directly byand in small ventures dependent on the petroleum industry.
I’ve seen, over 10 years in the coastal forestry sector of British Columbia, the concern that arises when climate change or other sustainability considerations place industries and people’s livelihood at risk. For some workers, this transition from a known economy to an emerging economy is a fearful journey, because it displaces them. For those who have poured their lives into sectors of society that are under attack, there’s also a sense of being discarded, with good efforts never acknowledged by critics.
When decisionmakers look at the workforce with the view that certain skill sets are no longer relevant, what they’re saying to people is: “You are no longer relevant.” And I think that approach establishes demarcation lines that create defensiveness rather than dialogue.
Stress leads to polarization.
So, as I have witnessed it, the reaction tends to become a polarizing debate. It’s a zero-sum deliberation where established sectors or established companies are displaced, disrupted by the new. Having worked with pulp and paper and elsewhere, I’ve come to appreciate how much common ground there is and how little of it seeps into the discussion. Everyone can agree to clean air, drinkable water, biodiversity, safe neighborhoods, affordable access to quality health care and a job with purpose as desirable goals.
Existing industry shouldn’t be discarded.
What works in Denmark may be less applicable to a country of 38 million people where one region holds a concentration of bitumen [fossil fuel] resources. In a country that’s rich in resources, as Canada is, fossil fuels — for at least some foreseeable future — will be part of the mix.
Do we need to find better ways, lower the emissions? Absolutely. And I think if you talk to anybody in the petroleum industry, they would say they’ve been developing better technologies and processes for 30 years. There is intrapreneurship and innovation and there are green industrialists in that sector just as there are in universities or renewable energy companies.
If we include the established players and recognize the intrapreneurship that is making those sectors more sustainable — then we bring the people who work in that supply chain along too.
So, bitumen for combustion is perhaps not where the product can be best used. Perhaps it should be converted into carbon fibre and other materials that will support those new energy sources: for example, constructing windmills and other elements of physical infrastructure. Our clean resource and applied research teams are dedicated to developments that keep jobs and environment in mind.
Combine long-standing sectors with emerging technologies.
Here in Alberta, we have one of the foremost global teams in artificial intelligence. Artificial intelligence is an emerging technology arena that is transforming every other sector from the mining and energy industry to agriculture.
In Alberta, we see artificial intelligence going into rail and truck transportation systems to make them more efficient so we can get product from where it’s made to where it’s consumed in ways that are less impactful on the receiving environment. And it’s being deployed in agricultural practices. The Canadian AgriFood Automation and Intelligence Network is putting into place a smart farm platform, using soil sensors and robotics.
Artificial intelligence and smart agriculture and bitumen beyond combustion are all sectors and capabilities that are uniquely available in Alberta and Canada. These solutions can move people from a place of fear, seeing their livelihood as being discarded, to believing they’re part of the future. We can marry longstanding sectors with emerging technologies and social/human sciences to create new opportunity and transformative change that leaves no one behind.
Change may take time.
I appreciate the sense of urgency and the need to act now. But we can embrace progress while we strive for perfection. Sometimes the deliberation around climate change or renewable energy gets focused on perfection and neglects people who are working on iterative improvement within the system that exists today.
Dialogue can overcome polarization.
I think there is more common ground than what we witness in provocative media headlines and soundbites that grab attention. The B Corps community attests to that. So, what can business do or how can business and policy makers and academics work together to create a bigger forum for dialogue, sort of like a tent with roof but no walls?
I think we are seeing it happen through the pan-Canadian Energy Future Forum. Canada’s Eco Fiscal Commission provided a platform for discussion and exploration of issues of energy and renewable resources. Smart Prosperity is another forum that is involving a multiplicity of voices.
As soon as you say, “We’re really here to solve a wicked problem and we’re going to focus on a solution, not critique the many ways that got us here,” it gives us a better starting point to leapfrog and learn from areas like Denmark or India or China or wherever the new knowledge is emerging.
There are declining levels of trust in institutions. Involving people in the solution, involving people in the transition that will affect them directly, builds greater willingness to move forward.
The benefit is creating the bridge that says to someone who has older knowledge: “You have perspectives that are valuable. Work with us on the ground to design that transition, transformation at a neighborhood level.”
Karnøe, P., & Garud, R. 2012. Path creation: Co-creation of heterogeneous resources in the emergence of the Danish wind turbine cluster. European Planning Studies, 20(5), 733-752
Peter Karnoe writes: ”Here are details of the collective that realized Danish wind power. The history begins on page 736.”
Doganova, L., & Karnoe, P. 2015. Clean and profitable: Entangling valuations in environmental entrepreneurship. In A. B. Antal, M. Hutter, & D. Stark (Eds.), Moments of valuation: Exploring sites of dissonance. Oxford University Press.
Peter Karnoe writes: ”This paper describes the typical Danish entrepreneurial approach — linking environmental concerns, company action, and state regulations — applied to liquid manure from animal agriculture. The paper tracks the effort from 2007-2015. The effort did not succeed because it was ahead of its time, or at least ahead of the appropriate CO2 price for farming. Farming is only now included in the Danish commitment to CO2 emission reduction, through the Paris Agreement.”
Kristof, N. May 12, 2020. Danes haven’t built a “socialist” country. Just one that works. New York Times.
Peter Karnoe writes: “A well-informed article about the Danish labor market model and educational model.”