These days it seems like the theatre of parliament is spilling out well beyond Ottawa’s borders.
In public discourse around the federal government’s policy of accelerating resource development in western Canada, accusations, counter-accusations, slander, hyperbole and hysteria have taken the place of reasoned debate. Even Canadians who are well informed about energy issues have just cause to wonder which side to believe.
Amidst all the rhetoric, lately I’ve been feeling nostalgic for the good ol’ days of 2011, when the energy debate in Alberta had a more constructive flavour. At the time, two leading sources in the province said something virtually unprecedented, but eminently reasonable: for Alberta to be a global energy power, we need to aggressively drive down the impact a barrel of oilsands crude has on the environment, even while we save and plan for its displacement by cleaner, cheaper sources of energy.
In April 2011, the Premier’s Council for Economic Strategy, a blue ribbon panel, produced the report “Shaping Alberta’s Future.”(It was quickly dubbed the “Emerson report,” since the panel’s chair was former federal Conservative cabinet minister David Emerson.)As an Alberta-based energy and environment think-tank, the Pembina Institute supports many of the findings and recommendations of the Emerson Report, including:
- Alberta’s natural resource base is our economic strength in the short term, and responsible development of heavy oil represents a large wealth-creation opportunity for Alberta.
- We need to lessen our strong reliance on heavy oil development in its current form through economic diversification.
- Alberta has the potential to be a global leader in using innovation to drive down the carbon intensity of fossil fuel resources, an area where we can develop competitive advantage.
- Our natural resource wealth offers the opportunity to invest in ways that would make our economy much less dependent on natural resource development over the long-term.
The Emerson Report also concluded that as Albertans we must plan ahead, since it is almost certain that oilsands production will eventually be displaced by lower-cost, lower-emission alternatives. Emerson put it in a succinct and unvarnished way: “We may have heavy oil to sell, but few or no profitable markets wishing to buy.” This is why Emerson and his esteemed colleagues recommended that we work to broaden Alberta’s economic base sooner rather than later, to decrease over-reliance on one source of energy. (Whether, when and by what alternatives oilsands crude is displaced is a topic worthy of rich debate, but with sustained low natural gas prices and the development of liquid natural gas terminals on BC’s West Coast, we sure are giving developing countries like China the strong temptation to power their growing fleets by compressed natural gas instead of gasoline.)
Later in 2011, Alison Redford declared in her leadership platform that “hydrocarbons will not remain the world’s fuel of choice forever and Alberta must be prepared for the spread of alternative sources.”In November, after becoming Premier, she echoed the Emerson report when she told the Economic Club of Canada that, “Greening our energy on a global scale is also critical. More than ever, consumers are demanding environmentally responsible products… we must fill their requirements.” In her comments we see the same themes: clean up our oilsands crude now, plan for its eventual replacement by cleaner, cheaper sources and make sure that Alberta is well positioned to provide those cleaner, cheaper sources of energy.
What makes these statements remarkable is that one would hardly call Premier Redford and David Emerson’s CEO-level panel a group of granola-munching environmentalists. Rather, implicit in their analyses is a recognition of a tectonic, global shift taking place right now: the shift to cleaner forms of energy and the rise of the lucrative clean tech economy supporting it—an economy that is currently worth USD$1 trillion annually, and will be worth $3-$5 trillion a year by 2020. Currently Alberta risks getting left behind.
So what needs to happen? As Emerson and Redford have recommended, first we must drive down the environmental footprint of the oilsands on a per-barrel basis, to maintain access to markets for our biggest energy product at the moment. I’ve heard from some companies that are starting to talk about a 50 per cent reduction of carbon intensity at the point of production, to ensure their oilsands products can compete with most other imported sources of crude.
This is the ambition we need.
The Redford government’s commitment to launch “AOSTRA-2,” reviving a former oilsands innovation program that would be refocused on “the sustainability, environmental and emissions-related technology challenges of today,” is a good start. (We also need to carefully manage the pace and scale of overall development, to ensure that our intensity gains are not all for naught.)
Second, we must save for the future when heavy oil is displaced and take serious steps now to shift capital from polluting energy to cleaner energy. The Emerson Report recommended establishing a “Shaping the Future Fund, based on proceeds from the sale of non-renewable energy assets (primarily royalties) to ensure that wealth produced by converting natural assets today is invested wisely in our economic future.” In its election platform, the Redford government promised a “renewed fiscal policy and savings strategy to reduce dependence on non-renewable resource revenue and seek Albertans’ input on the future of the Alberta Heritage Savings Trust Fund.”
Whether through earmarking royalty revenue, redirecting tax breaks or expanding the scope and strength of Alberta’s carbon tax, shifting capital could serve several purposes. It could lessen the risk of investing in clean energy, investment that lags what happens in Silicon Valley, New York and Shanghai given the conservatism of Canada’s banks and investment houses. It could create low cost working capital for Alberta clean tech firms as they walk through the valley of death, or provide loan guarantees for Alberta clean energy producers as they enter foreign markets, a complement to an export strategy that includes clean technology.
The economic prize up for grabs is massive, and the importance of changes in the global energy market for our province’s future cannot be overstated. The sooner we Albertans turn our backs to the political theatre of late and do what we know needs to be done, the better.
– By Ed Whittingham
Ed Whittingham is the Executive Director of the Pembina Institute, a Canada-based environmental think tank whose mission is to advance sustainable energy solutions through research, advocacy, consulting and education.
Ed joined Pembina in 2005 as director of the consulting program, through which he led a variety of stakeholder, policy and technical analysis projects on sustainable energy production and consumption. Ed also serves in an advisory capacity to companies, industry associations, government bodies and research networks on sustainable energy solutions.
Ed holds an International MBA from York University’s Schulich School of Business, where he specialized in corporate sustainability and international business.