Bigger population, smaller carbon footprint: Can Canada have both?

Having more people means more heating, lighting, and general demand for energy

Jeff Lagerquist
Tue, January 24, 2023

Experts hope immigration-fuelled population growth will create economies of scale for Canada's energy transition. (GETTY)

Canada's population is rising at the quickest pace since the height of the post-war baby boom as Ottawa targets almost 1.5 million new permanent residents by the end of 2025. That's good news for a nation with an aging workforce and stubbornly-tight labour market. But what about reaching net-zero by 2050? Can a larger Canada achieve meaningfully lower emissions?

Simple math suggests more people means more heating, lighting, and general demand for energy. Owing partly to its large geography, dispersed population, and wide range of temperatures, Canada had the worst per-capita lifestyle-related carbon emissions record by far in a recent analysis of 10 economies spanning various income levels.

At the same time, the nation's population is booming. Statistics Canada data show Canada is growing at the fastest clip since the second quarter of 1957. International migration accounted for 94 per cent of the 362,453-person increase seen in the third quarter, according to the agency. This sent the national population above 39 million for the first time.

Growth is set to pick up in the coming years. Ottawa's annual immigration plan released in November calls for 465,000 permanent residents in 2023, 485,000 in 2024, and 500,000 in 2025 to counter "critical labour market shortages causing uncertainty for Canadian businesses and workers."

"I think the government's preference is to think about immigration to enhance the economy, and then enable green investment," Bruce Newbold, a professor at McMaster University's School Of Earth, Environment & Society, said in an interview. "There are challenges, yes, in terms of that relationship between immigration and energy use."

Andrew Leach, an energy and economics professor at the University of Alberta, says it's essential to consider both sides of the supply-demand equation when it comes to Canada's immigration-fuelled population growth. Immigrants add to the labour supply, but also push up demand through increased consumption.

"One of those demand items is also going to be energy. All else equal, more energy consumption will mean more emissions," he told Yahoo Finance Canada.

"But I think you need to include consideration of where we need to end up re: net-zero, which is rapid decarbonization of household and transportation energy use."

Last April, the Intergovernmental Panel of Climate Change (IPCC) released a report calling for swift action by world leaders to avoid the worst potential impacts of the climate crisis. Canada was identified as one of the highest per-capita emissions producers among developed countries, alongside Australia and the United States.

It’s going to take a lot more investment to meet these goals.Bruce Newbold, professor at McMaster University’s School Of Earth, Environment & Society

In late-2021, Royal Bank of Canada pegged the cost of transitioning Canada's economy to net-zero emissions at $2 trillion over the next 30 years. The bank's report calls the 13-digit sum "hefty," but "affordable." Of course, that was some time before widespread calls for a recession in 2023.

Among today's headwinds for Canada's economy is a persistent skilled labour shortage, which factors into scarce affordable housing in cities where new immigrants typically settle. The situation prompted the federal government last week to bolster a program for construction workers who have overstayed work permits or visas to become permanent residents.

Canada Mortgage and Housing Corporation figures released earlier this month show urban housing starts actually declined year-over-year in 2022. Meanwhile, Statistics Canada data show cities seeing their strongest population growth in over two decades.

Mike Moffatt, senior director of policy and innovation at the Smart Prosperity Institute, says building affordable urban density will help lower emissions through more efficient buildings and less reliance on cars.

"Size does matter," he said. "It's one of the reasons larger population cities tend to have a lower carbon footprint [per capita]."

On top of the housing supply issue, Moffatt says Canada lacks the labour capacity to hit ambitious green building retrofit targets set by Ottawa.

"If we do it right, bringing in more of a skilled workforce actually helps us make those investments," he said. "Adding more people doesn't necessarily make the situation better, but it provides the raw ingredients."

Moffatt says new residents in regions like Quebec, where electricity is virtually emissions-free and EVs are more popular than average, will be inclined to have a smaller carbon footprint. However, he also expects those who settle in areas where more fossil fuel is needed to play an important role.

"Let's say we had a bunch of people locate in rural Saskatchewan. Ironically, that actually might make it easier for Saskatchewan to make investments in new power generation, and close existing coal plants," he said. "The analysis gets kind of complex."

Leach sees climate-friendly economies of scale kicking in as Canada's population grows.

"As we move toward vehicle and home electrification, and decarbonization of our electricity supply, adding more people doesn't change the trajectory much," he said. "Insofar as we have more distributed energy storage, generation, and demand response, more people add more flexibility to our power systems."

Leach also notes that some of Canada's worst-emitting sectors, like oil and gas production, are export-oriented, and therefore subject to the whims of global markets more so than forces within Canada.

"More domestic immigration doesn't really change the global market for Canadian commodities," he said.

For McMaster professor Newbold, the correlation is clear. Canada's population must get bigger before its economy can become greener.

"If we don't have immigration, our economy is not going to prosper, and we're not going to be able to pay for those investments that we need in order to make a green economy," he said.

"It's going to take a lot more investment to meet these goals."

Jeff Lagerquist is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jefflagerquist.