Workforce Readiness as Canada Decarbonizes – Skills-Mismatch Risk and Strategic Responses

From: Labour market watchers
To: Lin Al-Akkad
Re: Workforce Readiness as Canada Decarbonizes – Skills-Mismatch Risk and Strategic Responses

Transitioning from a declining coal-mining town into a growing hydrogen-energy region is already a huge personal leap for workers, but it becomes far tougher when job-training programs, labour-market signals and industry standards keep shifting.

To succeed in a low carbon economy, Canadian workers need a system that aligns current skills with future demands in a stable efficient, transparent and predictable way.

Recent data show that Canada’s workforce is undergoing a major structural transition toward a low-carbon economy, though the scale and speed remain uncertain. About 3.1 million workers, roughly 15 percent of the  labour force will see their jobs disrupted over the next decade, according to RBC, while up to 400,000 new positions will emerge in clean and transitional sectors.

Clean Energy Canada and the Pembina Institute estimate the low-carbon workforce in 2021 was roughly 430,000, and projected it to grow by nearly 50 percent by 2030. Federal initiatives, including the $99-million Sustainable Jobs Training Fund launched last year, aim to reskill workers from high-carbon sectors, such as oil and gas, steel, and automotive manufacturing, into roles in renewable energy, EV maintenance, and hydrogen technologies.

However, reliable data on how many workers are actually shifting from high- to low-carbon industries remain limited, underscoring the need for stronger labour-market tracking and skills-matching strategies.

The resulting changes in occupational demand raise a significant challenge: how to ensure that the Canadian workforce is prepared and aligned for emerging roles in low-carbon economy, and that displaced workers (from higher-carbon roles) are smoothly transitioned. The traditional mechanisms for skills mapping, labour-market intelligence, and training programs are fragmented or outdated. The central question: Do Canadian workers hold the transferable skills needed for the shift, and if not, how large are the gaps? And what policy/strategy response is required?

The Matching Skills Model I introduced in my recent C.D. Howe Institute paper discusses this very question and guides reskilling Canadian workers from existing occupations with a focus on energy, manufacturing, logistics/supply-chain into a lower-carbon economy.

The research finds that many Canadian workers already possess a strong base of transferable skills, such as critical thinking, problem-solving, and operational know-how are applicable in emerging energy occupations. My model is a future-ready workforce methodology and strategy

It measures the “distance” between occupations based on required knowledge, skills, abilities and education. In many cases, these distances are surprisingly small. For instance, petroleum pump system operators could transition into biomass plant technicians with a relatively minor skill gap (distance score 0.43). This indicates that targeted retraining, rather than wholesale reskilling, could help redeploy significant portions of the existing workforce. However, sectoral variations still matter.

Manufacturing and logistics occupations tend to have fewer variations when transitioning to a low carbon economy making transitions relatively smooth. The energy sector itself, however, presents wider variations. Advanced areas such as nuclear, carbon-capture, and nanotechnology demand more specialized training, posing steeper transition challenges.

The federal Occupational and Skills Information System (OaSIS) remains the primary data platform for occupational information. Yet it lacks many emerging green-economy roles, such as nano-engineering technologist or nuclear monitoring technician, limiting policymakers’ and training providers’ ability to forecast demand accurately. Without updated classification systems, it becomes difficult to design responsive training and employment programs. The policy goal should not be simply to subsidize new “green jobs” programs, but to build a durable, data-driven system that matches evolving skill needs in the energy transition with available Canadian talent.

This requires three steps:

First, establish a national skills-forecasting and labour-market intelligence platform, co-led by government, industry, and postsecondary institutions, to identify the emerging occupations and credentials required in the transition to net-zero.

Second, embed modular, stackable training pathways within existing colleges, trades programs, and upskilling initiatives so that workers in legacy energy sectors can pivot quickly into adjacent clean-energy roles.

Third, create regional transition compacts that align funding for retraining, infrastructure investment, and employer incentives, ensuring that workers in carbon-intensive regions benefit directly from the new growth sectors.

A key policy instrument that has been overlooked in the current debate is the use of real-time labour-market data from Employment and Social Development Canada and Statistics Canada. These datasets could be integrated into a publicly accessible “Energy Workforce Dashboard,” tracking vacancies, skill demand, and training outcomes across provinces.

By making the energy transition workforce strategy transparent, measurable, and regionally responsive, Canada can move from one-off training grants to a sustainable skills-matching system, one that supports both climate goals and economic resilience.

Lin Al-Akkad is a Public Policy Analyst. She holds a Master of Public Policy from the University of Calgary.

To send a comment or leave feedback, email us at blog@cdhowe.org.

The views expressed here are those of the author. The C.D. Howe Institute does not take corporate positions on policy matters.

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