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Here Comes the Next Economy. Are First Ministers Ready?

This is a blog written by Mitchell Beer. The opinions expressed in this article are of the author’s, and are not necessarily reflective of the views of GreenPAC.

When Prime Minister Justin Trudeau and provincial/territorial premiers meet in Vancouver this week, they’ll be searching for agreement on the pan-Canadian climate framework that Trudeau promised to introduce within 90 days of the 2015 United Nations climate summit in Paris.

It’s a big enough, ambitious enough agenda. But the real question facing First Ministers, and the elephant in the room that will dominate their deliberations, is bigger still. It comes in two parts:

What kind of economy do we want for Canada in the 21st century? (Because it’s 2016!)

And however that’s answered, is the plan realistic against anything we know about the future shape of global energy use?

The Fossils Come Out to Play

Canada-wide carbon pricing is one of the high-profile items on the First Ministers’ agenda, and there’s been a lot of advance positioning in the weeks leading up to the meeting.

“This is not right for Saskatchewan, and may I say, I don’t think it’s right for the country right now,” Premier Brad Wall told CBC in mid-February. “The last thing we need right now is a tax increase or a new federal carbon tax or, frankly, a provincial carbon levy. Now’s not the right time for any of those things.”

Wall’s comments were eerily reminiscent of ex-prime minister Stephen Harper’s statement in mid-December 2014, when the oil price crash was just beginning to pick up steam: “Under the current circumstances of the oil and gas sector, it would be crazy—it would be crazy economic policy to do unilateral penalties on that sector,” Harper told the House of Commons. “We’re clearly not going to do that.”

You would almost think Wall was setting up for a provincial election in mid-April. Or that the federal Conservatives were on their way into a leadership campaign, with Wall being touted as a possible candidate.

Nah. Couldn’t be.

Reality Bites

At least a handful of premiers seem likely to try to defend or resurrect the fossil industry during the First Ministers’ meeting. The underlying issue, though, is whether that industry has any prospect of success in a world of constrained carbon, low oil prices, and surging clean energy technologies.

Consider these news snippets, most of them from the last couple of weeks:

  • Now that the world’s governments have adopted 1.5°C as the long-term limit on average global warming—with Canada playing a lead role at a crucial point in Paris negotiations—the available carbon budget for the world’s fossil producers is even more limited. Even in a 2.0° scenario, most of Canada’s tar sands/oil sands production and all Arctic oil and gas would be unburnable. It would have to stay in the ground. At 1.5°, small island states will actually have a fighting chance of surviving the wrath of rising seas. But the remaining “atmospheric space” for future carbon emissions is essentially cut in half, according to a paper earlier this month in the journal Nature Climate Change.

  • At a major oil and gas conference in Houston last week, Saudi oil minister Ali al-Naimi had a stark warning for high-priced fossil producers: If you can’t compete, get out of the market. “It sounds hard, and unfortunately it is,” he said. But “cutting low-cost production to subsidize higher-cost supplies only delays an inevitable reckoning.” Al-Naimi wasn’t pointing a finger at Canada, but given the cost of diluted bitumen production, he might as well have been.

  • International auditing and consulting firm Deloitte forecast that one-third of the world’s fossil producers may not survive 2016, and since September, analysts have been projecting that the oil crash could last through 2018.

  • Even if fossil prices begin to recover toward the end of the decade, the next crisis will be on the near horizon. According to Bloomberg New Energy Finance, electric cars will cost less to own and operate than conventional vehicles, as early as 2022. The ensuing rush to cleaner, cheaper mobility will be enough to take another couple of million barrels of daily demand out of global oil markets, triggering the next price crash.

That’s just a small sample of a daily surge in reporting and analysis, all pointing to a major industrial transformation in Canada’s immediate future.

The Economy We Want: First Ministers Can Have It All

If you believe that resource development, specifically fossil development, is Canada’s only path to prosperity, the future looks bleak. But the oil price crash is also the opportunity of a lifetime to build the economy we want.

Clean energy already created more direct employment in Canada than the tar sands/oil sands in 2014, before the oil price crash began to hit. And at the Paris conference, the Canadian Labour Congress and Climate Action Network Canada co-hosted a workshop that pointed to the million climate jobs the country could create over the next five years. It’ll just take the right vision, supported by the right infrastructure investments.

Which means that if they make the right choices, First Ministers really can have it all.

They can embark on a grand nation-building project (somewhat more decentralized than they may have thought) to craft a 21st century energy economy.

They can meet and exceed Canada’s current international climate commitment that calls for a paltry 30% reduction in carbon emissions by 2030.

And they can create a million person-years of climate-related employment by 2020.

That sounds like a pretty good starting point for discussion when the First Ministers get together. It might even be the right fodder for a triumphant closing communiqué.

Mitchell Beer is President of Ottawa-based Smarter Shift and curator of The Energy Mix, a free, thrice-weekly digest on climate, energy, and low-carbon solutions. He represented Sierra Club Canada as an accredited observer at the 2015 United Nations climate summit in Paris.


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