This is a review of Chapter 8 of Open Canada's Report: A Global Positioning Strategy for a Networked Age
First off, Canada is not now, nor is it ever likely to be, an “Energy Superpower”. This term was first used by Prime Minister Harper on the eve of the 2006 G8 meeting1. As evidence he stated:
'Canada is the world's third largest producer of gas, seventh in oil production, the biggest hydro-electric generator and the biggest supplier of uranium. Alberta's tar sands are second only to Saudi Arabia as the world's largest oil reserve.'
‘Harper also stated Canada believes in "a free exchange of energy products based on a competitive market - not self-serving monopolistic political strategies."'
Harper is an economist by training. Mainstream economics demands growth, and growth in GDP is historically highly correlated with growth in energy consumption. Notwithstanding the fact that they are finite, fossil fuels currently provide more than 80% of Canada's energy. Mainstream economic assumptions that the "invisible hand" of the markets will somehow find an alternative to fossil fuels at the scale they are currently used is a pipedream. No combination of renewable and nuclear energy can come close to the energy throughput currently provided by fossil fuels. The Canadian practice of liquidating non-renewable energy resources as fast possible to stoke economic growth is a sell-out to the energy security of future generations.
The "Energy Superpower" mindset of Harper and the authors of the Open Canada report show they are not in sync with the geological realities of the energy production and consumption trajectory the world and Canada are on. Let's look at the facts putting Harper's statements into perspective and then at the conclusions of this chapter of the Open Canada report:
A couple of fundamental facts underlie any discussion of energy in Canada:
The Open Canada report advocates expanding market options to speed the liquidation of Canada's fossil fuels. These include the construction of the Enbridge Gateway pipeline for oil sands exports from Edmonton to Kitimat on the West Coast as well as the construction of an LNG export terminal in Kitimat. Apache has supported the Kitimat LNG export proposal and has also advocated building a 500 kilometre pipeline to connect Kitimat to gas supplies in northeast BC and Alberta.
In reality, there are no worries in having our number one customer for oil sands production accept our product – period. Mexico, the number three oil exporter to the US behind Canada and Saudi Arabia, has experienced a collapse in what was the number two producing field in the world – Cantarell – and may soon become an oil importer. Compared to the majority of oil suppliers to the US, Canada is a model of political stability and reliability.When push comes to shove, the Americans, being the greatest oil addicts on earth, will take our oil as there will be few alternatives.
As for exporting gas, this is a delusion, based on hype from the US of the potential of shale gas deposits, which is defied by falling Canadian production (now 8.7% per year). Overall declines in Canadian gas production without drilling are 21% per year due to natural depletion, and even replacing this production is going to be very difficult, as evidenced by the steep declines in AERCB forecasts10, let alone growing it for export.
The Open Canada report advocates a "National Green Energy Policy" for Canada, which involves, among other things, re-branding the oil sands through technologies such as carbon capture and storage (CCS) to mitigate their carbon footprint. The futility of CCS at scale to mitigate such emissions is the subject of a separate analysis (involving energy waste, complexity, scale, etc.). Moreover, the much maligned ecological footprint of the oil sands is currently related to the extraction of only four billion barrels of oil, not the mess that will be left after extracting the 27 billion barrels "under active development" or the purported 174 billion barrels ultimately available. An alternative focus for the Open Canada report should have been a "National Green Energy Security Policy" for Canada, recognizing the one-time nature of fossil fuel endowment and its importance for future Canadian energy security. As well, fossil fuels will be needed to build the infrastructure required for a much lower energy footprint, which is the only way forward to a more sustainable future...
The Open Canada report does, however, make some sensible recommendations, which include:
Suffice it to say there is really only one sustainable way to reduce emissions from non-renewable fossil fuels and promote energy security, and that is figuring out every conceivable way not to burn them in the first place. This will involve:
Energy is a commodity unlike any other as it underpins all aspects of modern industrial society. The finite nature of non-renewable fuels demands a comprehensive plan to manage the power-down that will occur, whether we like it or not. Canada needs a comprehensive strategy to manage this transition. Although the Open Canada report provides some sensible recommendations, it fails to recognize the longer term trajectory we are on with the supply of fossil fuels and energy security for future generations. Failing to address these issues is at our peril.
2 BP Statistical Review of World Energy 2010
3 Statistics Canada retrieved July, 2010
4 Alberta Energy Resources Conservation Board Report, June, 2010 http://www.ercb.ca/docs/products/STs/st98_current.pdf
5 2010 CAPP Crude Oil Forecast, Markets and Pipeline Report www.capp.ca/getdoc.aspx?DocId=173003
6 BP Statistical Review of World Energy 2010
7 Statistics Canada retrieved July, 2010
8 BP Statistical Review of World Energy 2010
9 World Energy Council Survey of Energy Resources Interim Update 2009 www.worldenergy.org/documents/ser_interim_update_2009_final.pdf
10 Alberta Energy Resources Conservation Board Report, June, 2010, http://www.ercb.ca/docs/products/STs/st98_current.pdf
A version of this article was published in July 8, 2010 in The Mark