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“I am a Canadian, free to speak without fear, free to worship in my own way, free to stand for what I think right, free to oppose what I believe wrong, or free to choose those who shall govern my country. This heritage of freedom I pledge to uphold for myself and all mankind.” ~~ John G. Diefenbaker

MUIR -- One hundred lashes with a gluten-free noodle await anyone who dares to crystal ball on the criminal future existence of fossil-fuel infrastructure

Canada is increasingly a country of energy pessimists and energy optimists, where the nation’s economic foundation of oil and gas has become the ideological battleground for much bigger issues.

Those who believe that energy supplied by Canada is a beneficial contribution to the global economy are pitted against others carrying out a moral crusade, ostensibly in the name of climate, that necessitates the harassment of corporate sinners through demarketing, delegitimizing and divesting.

Monday’s election showed pretty clearly where most westerners stand on this. We are energy optimists. I would even say energy realists, in contrast to the energy fantasists who will do just about anything (short of paying more for their flights) to stop the oil & gas business that symbolizes and contributes to climate emissions.

The Trans Mountain pipeline project has until now provided a handy barometer of how we are, as a country, reconciling economic and environmental interests. A seemingly endless barrage of court challenges, accompanied by pauses, tweaks and the addition of new layers of costly conditions, has got us to a place where the project is actually under construction.

For years, political pundits have been predicting the Liberals would lose seats in Vancouver ridings adjacent to the pipeline’s Pacific terminus on Burrard Inlet where, in 2015, the party won five of the seven ridings that touch shoreline.

Local residents were subjected to climate marches, encampments, inflatable killer whales, ersatz economic studies, vexatious lawsuits, high-volume rhetoric about this and that certain disaster, celebrity drop-in visits, and ever-inventive activist gambits to further whip up public concern.

In the end, all of this amounted to a big fat “meh”. The Liberals held onto all of their seats. It was the pipeline-opposing NDP who were forced to concede one of their two seats in the area, to the pro-oil Conservatives.

It’s almost as if voters are prepared to believe that the project will be done safely and create the benefits that its promoters and its owners (now the taxpayers of Canada) have been saying. If everyone had the same confidence in the Liberals that Burrard Inlet voters do, the new Parliament might look very different.

Credit where it’s due: the Trudeau government saved the Trans Mountain project through its interventions, just as it has made impressive contributions toward LNG development in the west. However, it’s also evident that the elaborate dance the Liberals performed to get to this point comes at a very heavy price.

To show those city residents they were serious about protecting the marine environment, Liberals killed the Northern Gateway Pipeline and then passed their northwest Pacific tanker ban into law. In the long term, this will cost Canada hundreds of billions in lost resource revenues and prevent access to what Transport Canada officials stated was a much safer area for shipping crude oil than Vancouver.

The Liberals also set about implementing a raft of policy changes that led to the complete collapse this week of the Liberal vote in Alberta and Saskatchewan. While many elsewhere are prone to dismiss any Prairie complaints as just more whingeing from the peanut gallery, it’s plain to see that specific changes did occur that resulted in investment being driven away, with no tangible benefit for the environment or Canadians.

We know for a fact that in 2018 alone, 37 major projects worth $77 billion were cancelled in Canada. The CEO of Enbridge recently stated that more than $30 billion in investment has been lost due to major pipeline projects being cancelled or stalled. The University of Calgary’s School of Public Policy said that pipeline capacity constraints mean $14 billion a year in lost revenue per year. 

What the Liberals pitched as better regulations, are seen by investors as decreased certainty. 

As part of the elaborate dance to charm Burrard Inlet, the federal government cooked up a porridge of climate / energy ideas that are represented to be our national energy policy (they aren’t), but left us rudderless to develop long-term plans for energy development serving national priorities.

Few resource export economies hamstring themselves by adopting climate policies better suited to importing nations. Unfortunately, Canada has been nearly unique in doing exactly that. In recent years, numerous oil sands investors have departed Canada because of costs that do not exist in other jurisdictions. The announcements are always tactful, leaving the field open to creative explanations by industry adversaries: bitumen is lousy, the oil sands are too expensive to develop and can’t survive low prices, U.S. shale is destroying the oil sands business model, the world is moving off fossil fuels, etc.

The example of the Kearl oil sands project in northern Alberta shows a much different story. The Imperial-owned site is regarded as “the next generation” of oil sands mining that is now producing bitumen with about the same life-cycle greenhouse gas emissions as crude oils refined in the United States. According to an internal company forecast that recently came to light, the impact of future government emissions policies for just that one mine was estimated to cost $14 billion Canadian.

For Alberta’s Cold Lake in-situ operation, imposed government climate costs were forecast to shorten the asset’s projected economic life by 28 years, resulting in billions of dollars in lost spending and government revenues. 

A larger portfolio of 14 oil sands projects faced a total of $30 billion worth of added costs unique to operating in Canada. 

These figures appear in document being discussed this week in a New York State courtroom, where the attorney general is pursuing a convoluted thesis that Exxon lied to investors about climate costs. (Document here.) What the numbers really tell us is that international investors are highly sensitive to the extra expense of doing business in Canada, just as they are aware that it is very easy to go almost anywhere else in the world and develop similar resources but without the extra costs. And they are doing precisely that, in droves, with the latest sign being a fresh round of layoffs at Husky.

The capital exiting Canada, or bypassing it altogether, isn’t sitting in the bank. It is flowing into oil & gas investments in jurisdictions elsewhere that are incapable of matching Canada’s excellence in managing its resources, its environment, and the equitable distribution of resource benefits. The United States this week filed its formal intent to exit the Paris climate treaty. I wish they weren’t doing this, but the fact is that the result is going to be a giant sucking sound as our energy industry is drawn south. Thus, the result of all the efforts to landlock Canadian hydrocarbons has simply been to move the climate impacts to places with a lower bar for emissions. They call this progress.

In recent years it has become off-limits to discuss the long-term strategic implications of major projects that will affect national prosperity decades into the future. One hundred lashes with a gluten-free noodle await anyone who dares to crystal ball on the criminal future existence of fossil-fuel infrastructure. In the absence of dialogue, the energy fantasizing proliferates.

The energy-aware rolled their eyes on election night when the CBC announcer in Prince Edward Island hailed the “carbon-free” Tesla of a Green candidate, apparently unaware that, despite PEI’s lovely wind farms, the province and its electric cars are mostly dependent on imported electricity from New Brunswick where a majority of power is generated by fossil fuels.

During the English-language leaders’ debate, energy-savvy westerners looked askance at Bloc Quebecois leader François Blanchet demanding that the federal equalization formula be changed to reward his province because it has abundant hydropower, implicitly at the expense of the western industries that already pay Canada’s rent. 

Could there have been a statement more savvily calculated to send westerners’ blood pressures soaring? 

Small wonder that equalization is going to be a topic of intensive study on the Prairies over the next couple of years leading up to Alberta Premier Jason Kenney’s promised 2021 referendum on the matter. The dangerous topic of national unity is already on the table in the minds of some, and that is a place no Canadian should want to go.

By way of contrast, the green-haloed, oil-exporting Norwegians remain quite firm and unabashed in maintaining clear separation between their energy policy and their climate policy. This helps to explain why they are now are inaugurating a new, 50-year oilfield project while shrugging off any criticism.

As part of the Trans Mountain dance, the Liberals have felt it necessary to genuflect at the environmentalist altar while offering up the family silver as tribute, knowing even so that, in return, the world’s eco-radicals will still condemn them for their leader’s “stunning hypocrisy”. 

It’s not like we haven’t trained the environmental movement on how to get their way. 

The Great Bear Rainforest on the coast of British Columbia was the result of a decades-long strategy by the American foundations to exert their will in Canada. At this stage of the game they and their branch-plant factotums are the pros in the room. It’s just a matter of rinse and repeat.

Back in 2015, Justin Trudeau’s first act of office as Prime Minister was to place a five-year moratorium on oil exploration in Canada’s Arctic. Canadian officials must have been slack-jawed with astonishment that Canada would hand the U.S. a half-decade head start in the Arctic offshore even before official briefings could be completed, particularly since it was President Obama – yes the saviour of the environment President Obama –  who opened up the Arctic offshore for drilling before the end of his tenure (before implementing a few reversals in the policy when Trump won, setting Trump up to look anti-climate).

The Trudeau government’s Arctic move was not the only major act of what economists call sterilization. Prepare for the situation to worsen. It now turns out that in term one, Justin Trudeau was just getting started. Term two means the Liberals will be expected to get busy on their 2019 campaign pledge to set aside 25 per cent of the country’s land and oceans from development and industrial activity by 2025.

In the case of land, that means more than doubling what is currently off limits. Five years after that, a further five per cent will be added, for a total of 30 per cent. Parks are huggable, right? Sure ... but don’t be surprised when the land, water and resources that fall into the new reserves, protected areas and parks just happen to include strategic routes and oil and gas basins that favour American interests.

That’s how this stuff works, folks. And don’t be surprised when these designations occur not under legal instruments controlled by Canadian levels of government, but are part of intricate UN agreements that make it much harder for Canadians to respond to changing future needs.

There has been plenty of the aspirational talk about “compassionately” eliminating entire industries through a “just transition” to … who knows what. Maybe it is time to hear from respected economists who can speak to proven means of transitioning to affordability by building wealth.

Among G7 nations, Canada was among the least hard hit by the 2008 global collapse. In 2008, per capita GDP in Canada was $46,6000 (current USD). The figure increased to $52,500 in 2014, driven largely by investment in resource development, particularly oil and gas. Yet by 2018, Canadians were back at $46,200 — a drop to $40,000 after inflation. 

This means that Canadians’ purchasing power in terms of per capita GDP had dropped by 14%. 

In the same time period, Americans saw 11% growth in real income. At least it could be worse: Spain, for example, slumped 23.5 per cent, according to World Bank information. Norwegians were actually facing a worse decline than even Spain, from $100,000 a year to $67,000. However, they made the conscious decision to invest full-bore in fossil fuels, resulting in a reversal that began in 2016 and continues today.

The Bank of Canada reported that half of Canadians are now $200 or less away from financial insolvency at month-end.  This is why affordability was so important to Canadians as they went to the polls this month. They can sniff the prospect of a diminished future for themselves and their children.

Today, hundreds of thousands of Canadians in the oil and gas sector remain unemployed, or underemployed. The effects ripple through the economy. We are at an inflection point for Canada. The one thing that Canadians should demand until they are blue in the face is for all government decisions to be anchored in terms of growth in the nation’s economic prosperity in real terms.

For the Vancouver kids skipping school for the latest climate strike, the direction the country goes from here is of material importance. Yes, we need to do right by the environment, but in carrying out this duty do we wish to be a Spain or a Norway? That’s a choice we have a say in.

Those who work in and around the western resource industries tend to know what they’re talking about when it comes to energy issues, because the industry depends on facts and professionalism. Many of these individuals simply do not believe that the natural resources located the west are a liability, or something to be ashamed of, let alone phased out. 

This is a perfectly defensible position. 

No matter what the climate scenario, the fact is that humans will consume an immense amount of energy in the future. They will inevitably choose to procure it at the lowest possible cost. If Canada retreats from providing its energy products to the world, that won’t create a shortage of energy, but it will reduce the amount of responsibly produced, lowest-carbon energy on the market.

Achieving net zero emissions is the next target of Canadian hydrocarbon producers. That’s ambitious, but it’s what the world is going to need. If you listen carefully to what Greta Thunberg told Albertans last week, believe it or not she’s actually on the same page when it comes to achieving net zero.

Trans Mountain is real and it’s happening, with evidence this week in Edmonton that construction on Spread 1 is finally getting underway. If this project can be completed, it proves that progress is possible.

Canadians can continue to build their future on industries that are reliable and necessary, and susceptible to needed improvements through investment in innovation. Political decisions made over the next two, three or four years will have a considerable impact on whether we recover and retain the operating room needed to continue this work. 

Stewart Muir is Executive Director of Resource Works, and a historian and award-winning journalist, with a passion for the natural legacies of British Columbia.

A graduate of Simon Fraser University and the University of British Columbia, he was a director of The Nature Trust of British Columbia from 2006 until 2014. During a fellowship at the renowned Centre for the Study of European Expansion at Leiden University in The Netherlands, he studied economic botany and the long-term consequences of deforestation and climate change. 

Stewart Muir was a contributing author to The Sea Among Us: Life and History of The Strait of Georgia. An award-winning book, The Sea Among Us covers the natural and human history of a body of water that is of fundamental importance in every sense to all British Columbians.

As lead writer of a civic-provincial review of Vancouver's 2011 Stanley Cup riot, Muir helped to frame recommendations to prevent such incidents in future.


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