Iron & Earth Executive Director reflects on her recent Structural Change in Germany study tour
It was mid-June, and the wildfire smoke had started to fill the Ottawa skies. I was in the nation’s capital visiting Employment and Social Development Canada, Iron & Earth’s first federal funder, discussing their $16.6 million investment in our ambitious plans to build resilient communities and deliver sustainable jobs.
Days later, I was on my way to Germany at the invitation of the country’s Consul General in Vancouver, Marc Eichhorn, and the German Federal Foreign Office. I was one of a group of 14 delegates from around the globe who came together in Berlin to learn about the structural changes the country is experiencing on its journey to a net- zero economy by 2045. Germany adopted its Climate Change Act on June 25, 2021. But it faces challenges very similar to the ones countries like Canada are grappling with, beginning with the training and reskilling that will be needed to put workers at the centre of the net-zero transition.
Left to right:
Ben Speggen (USA); Christopher Àvila Mier (Mexico); Baba-Tamana Gqubule (South Africa); Nir Deutsch (Israel); dr. Alpa Urmil Antani (India); Luisa Da Silva (Canada); Zuzana Vondrová (Czech Republic); Lena Panayiotou (Cyprus); Cathy Gormley-Heenan (UK); Adwoa Awua Banful (Ghana); Pedro Martin Fernandes (Brasil); Guy-Assane Yapi (Ivory Coast). Absentee: Martin Vladimirov (Bulgaria)
In Canada, it's predicted that employment in the net zero economy will grow by 7% annually until 2050. Alberta will experience a whopping 10% growth, adding 419,000 jobs.
Germany has its sights set on producing vast amounts of renewable energy: 254 terawatt-hours in 2022, and that demand is set to grow. That activity is already creating more jobs than there are people to fill them, 1.5 million in the renewable energy industry by 2035
Like many developed countries, Germany is experiencing a wide shortage of skilled workers. The largest group are aged 45-64, placing them close to retirement age, and the number of skilled workers is expected to decline by 5% by 2040.
This gap is compounded by the lack of youth aged 15 to 24 entering vocational training. Although more are acquiring university level skills, institutions outside major metropolitan areas like Berlin, Frankfurt, and Dusseldorf are seeing their enrolment numbers decrease.
Now, those under-enrolled universities are looking abroad for qualified students who can raise the enrolment numbers. And it makes sense for the country, as well: Germany recognizes that one way to solve the shortage of skilled workers is through immigration of students or workers into fields that are in demand.
And Canada is in a similar position, with 700,000 skilled workers expected to retire by 2028. Canada, too, is looking to immigration to help ease the shortage of workers, but so far, we aren’t meeting our targets – in 2019, we only admitted 2,365 skilled workers.
Germany also depends on other countries to source the raw materials for the infrastructure to decarbonize its renewable energy supply chains. Duisburg, on the shores of the Rhine River, boasts the world’s largest inland harbour and has far-reaching rail and road links. You wouldn’t think of Germany as a gateway to China, but with goods arriving on 35 trains to Duisburg each week, it’s not insignificant. China, in particular, has many materials Germany needs, including more than 98% of Europe’s rare earth minerals. If you want to access China, start looking at Germany. It is the new Silk Road.
By comparison, Canada is rich in raw materials. We have some of the largest known reserves and resources of rare earths in the world, an estimated 15.1 million tonnes of rare earth oxides that are essential to producing goods like cell phones and electric cars. With Volkswagen’s announcement of a $7 billion investment to establish an electric vehicle battery manufacturing plant in St. Thomas, Ontario, we already see German companies looking to divest away from China’s raw goods dominance.
Sandra Reus, Thyssenkrupp Steel Europe AG, talks about the structural change to a hydrogen based industrial process at the Duisburg site.
Carbon neutrality, or net-zero, means that a country’s emissions are balanced by the removal of emissions. Germany's plan includes creating natural areas that capture and store carbon.
Already you can see this everywhere – cities are literally becoming greener as indigenous vegetation is introduced back into urban and rural areas. Take the example of Lucerne, a legume being used to produce milk because corn, which is often the traditional cattle feed, doesn’t grow well or at all in Germany. Not only can this plant thrive in semi-arid areas, but Lucerne has many other benefits: the plant itself can be used to make biodegradable plastic, the deep roots help reduce soil erosion, and the fibrous parts of the plant can be used for building materials.
Throughout Germany, natural areas are being encouraged. Entire areas once industrial have turned into green havens. Such is the example of Essen, a city in the historic Ruhr Valley. Its past as a coal mining, coal power generation, and coal-reliant heavy industrial hub, employing 480,000 people at its peak in the 1950s, is now recognizable only from the infrastructure that remains standing. Essen's Zollverein Coal Mine Industrial Complex is now a UNESCO World Heritage Site, and the city was named the European Green Capital in 2017, and employs more than 801,000 people in its service sector.
Germany is in the process of phasing out lignite coal mining, and ensuring that no one is left behind. Lignite coal operators will receive €4.35 billion (6.34 billion Cdn) in compensation for lost business. There will be further funding to support the transition to a new net-zero industry, and, up to €5 billion (about 7.2 billion Cdn) in pension support to enable the estimated 40,000 affected workers aged 58 or older to retire early. Those who don’t retire early will be upskilled into the growing rail industry. Training centres have already been set up across Germany.
As Canada embarks on its own sustainable jobs transition, there’s a lesson here: it costs roughly €125,000 (182,00 Cdn) to enable a worker to retire several years early, or, a fraction as much to upskill workers into a new, net-zero industry.
Building out this renewable energy technology and infrastructure will require an enormous number of skilled workers. Canada has an opportunity to participate in this market – we can upskill our own workforce and be the leaders in building the future global renewable energy market, starting now. Regardless of the path Canada embarks on for itself, we shouldn’t miss out on the economic benefits of collaborating with other jurisdictions in facing their supply and demand challenges.
This demand is most visible at Thyssenkrupp, Germany’s largest steelmaker, and the second-largest in Europe. The company risks losing its competitive edge if it doesn’t switch over to renewables, and it’s easy to see why. Thyssenkrupp alone emits 2.5% of Germany’s annual CO2 emissions, and with carbon pricing, those tonnes of carbon cost upwards of €5.5 billion ($8 billion Cdn) per year in fees – effectively ending Thyssenkrupp’s business case.
But Thyssenkrupp is tackling this challenge head-on. They are moving to a hydrogen-based reduction process whose byproduct will be water or water vapour instead of CO2 emissions. Thyssenkrupp aims to be one of the largest hydrogen producers, but the market simply doesn’t exist yet to make that business case feasible. So what is the solution? To Thyssenkrupp, it is to build out the hydrogen economy now, before they’re priced out by the cost of carbon, and that means starting with blue hydrogen – hydrogen produced from natural gas – while building out the technology to produce green hydrogen from renewably-generated electricity.
Luisa Da Silva, Executive Director, Iron & Earth, with Mrs. Elke Büdenbender, Germany’s First Lady and Jurist
As I rounded out my trip, I was honoured to be welcomed into Schloss Bellevue to visit with Mrs. Elke Büdenbender, Germany’s First Lady. I tell her about the wonderful trip, the amazing people, and the learnings I've taken away. We talk about the challenges and opportunities that lie ahead for both Canada and Germany.
Mrs. Büdenbender mentions that smoke from the Canadian wildfires has blown over the Atlantic and reached Spain. I’m reminded that the world really is small and we are all in this together.
(Editor's Note: You might want to check out 2 related podcasts. Learning from the German experience and an interview with German Consul General, Marc Eichhorn.