How Can Canada Develop Its Energy Riches to Build a Great Future?
By Bob Elton
Making the most of Canada's energy riches has been tough work of late: The U.S. recently denied permits for the Keystone Pipeline which is planned to bring oil from Alberta to the United States; there are multiple permitting processes in place to decide on pipelines that would bring oil from Alberta through British Columbia to the West Coast and on to Asia; and competing proposals are being developed for LNG (liquefied natural gas) terminals which would enable the export of shale gas to Asia. These processes can divide us more than we would like.
Canada is not a large country in terms of population, at only 34 million, but we are the fifth largest energy producer in the world -- behind only Russia, the United States, China and Saudi Arabia. Major decisions around energy are needed all the time. Accordingly, you would expect a coherent energy policy to be in place to help frame those decisions -- but you would be disappointed.
One reason for that is our constitution -- energy jurisdiction is shared between the Federal and Provincial governments, and the Provinces face such varied energy circumstances that it is difficult to develop a bold national policy.
What are Canada's energy choices?
On the supply side, Canada has great energy resources beyond our current production, so we have stark choices about the extent, speed and nature of development.
On the demand side, we are like many countries rich in energy resources. We use energy inefficiently and unsustainably by world standards. Although our self image is probably one of being at one with nature, modern Canada is a very urban country with energy usage habits that rival those of the United States and greatly exceed those of Europe.
Compared with most of the great energy exporting nations, we have a great ability to diversify our economy -- we have a well educated workforce, healthy immigration levels to build our population and well-developed infrastructure. The question for Canada should not need to be limited to: How can we develop energy resources? Instead, we should ask: How can our energy resources best help us to build a competitive economy and a great society for generations to come?
Canadian energy policy and our sense of what it is to be Canadian
Canada is a young country, and constitutionally our Canadian identity is not defined by our Government but by all of us, whenever we came here. It follows that our identity must be shaped by our values, rather than by particular historical events or culturally shared experiences.
How can we apply our values to the discussion of our energy policy and our energy future? These are some of the major questions that we can address before we decide on each incremental energy investment.
The economic benefits of developing energy reserves are clear, especially where we see increasing prices for most forms of energy. But who benefits and to what extent?
If resource-rich provinces earn royalties and the benefits of the jobs involved in construction, and if this tends to drive the dollar up over time, what does this do to Provinces that are relatively resource poor, and whose manufacturing base is hard hit by higher energy prices and a higher Canadian dollar?
What is the best way to deal with the economic benefits -- should Provinces set up funds as was done by Norway, so that surpluses can be invested rather than just spent? If countries based on petrodollars have often struggled to deal with the effects of rich energy resources, why do we think Canada will be different?
How can we best talk about the environmental effects of developing energy resources for export? If we are in favor of aggressively developing energy resources, especially fossil fuel based resources, then what exactly is our position on climate change? Is it, for example:
We deny that climate change is a problem that can be alleviated by restricting greenhouse gases (GHGs); or
We agree that it is a problem that can be alleviated by restricting GHGs, but because today there is no worldwide way of restricting GHGs, it follows that if we do exploit our resources someone else will; or
We agree that climate change is a problem than can be alleviated by restricting GHGs, and therefore we need to manage the risks of basing our economy too much on fossil fuel extraction, both financially and environmentally; or
Some other clearly articulated position?
Is our vision of Canada one that sees us continue to build our competitiveness through many tools including education and training; and if so, how will we ensure that our energy vision and policy will help us to achieve that?
Should we put a priority on adopting a culture based on sustainable consumption at home, which would help us economically as well as environmentally, and would help us to do business better with countries where energy efficiency was prized?
And finally, how should we trade off benefits today, against benefits for the future? Do we place higher value on our own interests than those of future Canadians? How should we value the natural capital, such as water or habitat, that we use when we generate and produce energy? Do we regard it as free because currently it is not priced into the market? Or should we try to price it or at least put a value on it?
Creating a new framework to shape Canada's energy choices
Canada will benefit from a framework that allows us to develop an energy architecture that reflects Canada's situation and also our values.
The "New Energy Architecture" -- report by the World Economic Forum offers a great opportunity for us to develop that framework, using lessons learned from other countries around the world, especially those that most resemble us.
Canadians need to clearly debate and articulate the balance that we want to strike among energy security, economic benefit and environmental value. Doing that will help us all to understand the many specific energy development decisions that need to be made.