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Trudeau won't phase out Alberta's oil industry — but the world might
So much for the furor around the so-called “just transition”, eh? After so much hot air over its implications for Alberta and its future, the federal government’s rebranded “sustainable jobs plan” for the energy sector landed with a dull thud last week.
Far from trying to “phase out” Alberta’s oil and gas industry, as any number of provincial politicians have pretended of late, it’s really just a plan to plan for the future — and monitor the progress of said plans. “"Canada is extraordinarily well-positioned to take advantage of the opportunities that will come through the transition to a low-carbon future,” Natural Resources Minister Jonathan Wilkinson said at a press conference. “We are advancing a plan for the future. We are not simply hoping for the best.”
That’s good to hear, I suppose. "It is complex, and so it should be,” Wilkinson said. “It requires that we work together."
Given the newly elected premier of Alberta’s combative reaction, I wouldn’t hold my breath there. But as I write in this week’s column, the real test will be how it reacts to the emerging reality Ottawa is trying to address — one that’s being driven by forces far outside its control.
There was an earthquake in Alberta on Tuesday, albeit one most people couldn’t see or feel. A new report from the Canadian Energy Regulator and the future it describes could soon upend lives and livelihoods, along with most of the province’s political conversations, for decades to come. The question now is whether the province and its conservative government will actually acknowledge its existence, much less do anything to stop it.
The report from the Canadian Energy Regulator modeled, for the first time, what demand for oil and gas would look like if either Canada or its global trading partners met their stated goal of reaching net-zero emissions by 2050.
It’s not pretty.
If both Canada and the world stay on their current course in terms of climate policy, one that would lead to disastrous levels of warming, demand for Alberta’s oil would increase moderately and peak around 2035. That’s the best case scenario for Alberta’s oil and gas industry, if you can even call it that.
In the Canada Net-zero Scenario, oil demand peaks by the end of the decade and falls to 3.9 million barrels per day by 2050. Fossil gas production follows a similar trajectory, rising modestly into 2030 before declining by almost 40 per cent over the next two decades. For an industry, and a province, that seems to still believe demand will rise indefinitely, this would be a major shock to the system.
But it’s the Global Net-zero Scenario that should have every policy maker in Alberta awake at night. It envisions a world where oil prices sit at $35 a barrel in 2030 and just $24 per barrel two decades later, resulting in a 76 per cent decline in Canadian oil production by 2050 from 2022 levels. “In our analysis, shortly after the total operating costs of a facility exceeds its revenue, it shuts down for the remainder of the projection period,” the report concludes. “Oil sands facilities that have the highest operating costs begin shutting down early in the 2030s. As oil prices continue to drop, more and more facilities shut down production, and only the lowest-cost projects are still producing in 2050.”
Fossil gas doesn’t fare much better, with 2050’s production expected to fall by two-thirds compared to 2022 levels. LNG exports aren’t about to save the day for Alberta here, either. After plateauing at 2 billion cubic feet per day in 2029, the Canadian Energy Regulator expects them to fall off dramatically beginning in 2045. By 2050, they could be as low as 0.3 bcf/day.
The UCP and its allies in the Postmedia pundit class will continue to pretend the world achieving net-zero emissions by 2050 isn’t realistic, even as they’ve committed to the same net zero timeline. They will continue to insist they can reach their emissions reduction targets by exporting more LNG, a fantasy that the federal government is apparently now willing to at least humour. “Credit for LNG deals with other countries is essential to Alberta’s emerging policy to go net-zero by 2050,” the Calgary Herald’s Don Braid wrote. “Without that agreement, the province would have to radically reduce oil and gas production.”
But if Braid had actually read the full report, he’d understand that federal policy isn’t the real threat here. Instead, this is a verdict being rendered by the thing conservatives are supposed to worship: the market. “This analysis underscores that Canada’s economic prospects will be profoundly affected by global forces outside our control, especially as market demand shifts in response to accelerating technological change and other countries’ policy ambitions,” the Canadian Climate Institute’s Dale Beugin says. “The global transition toward net zero will have big implications for Canada’s new and existing export markets—even if the world acts too slowly to stabilize warming at 1.5° C.”
And make no mistake: while Alberta’s leaders aren’t willing to get serious about the energy transition, other parts of the world are. China remains focused on cornering this huge new market, with ever-more massive investments in electric vehicle production, battery technology, wind turbines and solar panels. The United States threw nearly $400 billion at carving out its own piece of this multi-trillion dollar pie last year with its Inflation Reduction Act. And Europe continues to aggressively wean itself off both oil (through electric vehicle mandates) and Russian gas imports (through energy conservation and the rapid deployment of renewables).
The biggest risk here to Alberta, then, is clearly to the downside — and that’s before even contemplating the inevitable shift in OPEC’s market management strategy away from cutting production to drive up prices. Once they decide to start pumping as much as they can before the fossil fuel era comes to a close, there’s no telling how low prices might get.
In other words, Alberta has a few years to get its house in order when it comes to both its finances and environmental liabilities before things get really, really real. What it needs right now is a sophisticated conversation about the opportunities associated with the energy transition and how best to balance their pursuit against the need to help impacted communities adapt and evolve. What it’s probably going to get is yet another exercise in petulant navel-gazing and scapegoating, one that begins and ends in Ottawa.
If the Alberta NDP wants to chart a course back to power in 2027, it has to take on the leadership role here that the UCP will almost certainly abdicate. It needs to explain what’s really at stake here for Albertans and their kids, which policies can help them manage the growing uncertainty around the future, and why addressing the province’s huge inventory of unreclaimed wells and oil sands tailings ponds can’t wait until the companies responsible for them go bankrupt or walk away.
That won’t be easy. Many people would rather ignore the truth here than confront its long-term implications. The UCP, for its part, will continue to pretend this is the federal government’s fault. And the mainstream media in Alberta, or what’s left of it, will struggle to put this issue in its proper context, leaving many people stuck in low-information silos where this issue will be written off as either a globalist conspiracy or the legacy of two prime ministers named Trudeau.
The days of fighting over pipelines, at least, are finally over. But an even bigger fight is now on our collective hands: the battle between an uncomfortable truth and some convenient fictions. Albertans had better choose wisely.
Postmedia: If it dies, it dies.
While I was away on vacation — moving and all of its various aftermaths, actually — Bell Canada took a knife to its media division by cutting 1,300 positions, closing two of its remaining foreign bureaus and shuttering nine radio stations.
This isn’t surprising, even if it’s still disappointing. The economics of journalism have been in tatters for a while now, and they get more threadbare by the day. Canada may have the most challenging media market on earth, given our relatively small population, lack of linguistic or geographic barriers and proximity to the biggest entertainment and information factory in the developed world. Mix in the rise of the internet and its impact on the advertising market and you have a recipe for disaster — one that’s being cooked up almost everywhere lately.
The next domino to fall, it seems clear, is Postmedia. Yes, they’ve been laying off people for years now, and they recently sold their signature office building along Deerfoot Trail in Calgary to U-Haul (lots of irony there). But there will come a day, and probably not very far in the future, where what’s left of Conrad Black’s former media empire collapses completely.
As former journalist and writer Marc Edge suggested in the Globe and Mail last week, we should probably let that happen. For once, I agree with him.
I understand the impact that collapse would have on the reporters and editors who are left, as well as the communities they still try to serve, however ineffectively. But we need to marshal our efforts to build something new and viable, not sustaining something that doesn’t work any more. That’s especially true when said something exists mostly to feather the nests of its executives and fill the coffers of its bondholders, who have been milking the increasingly barren company dry for years now.
I don’t have any brilliant ideas here, other than supporting independent media like Canada’ National Observer and my earlier suggestion that the CBC step up and fill the increasingly obvious voids being created at the local level across Canada. Funding for the Canadian Press and other editorially neutral organizations, with the proviso that they hire reporters and assign them to communities or beats that aren’t being covered, strikes me as another good option.
But we also have to reckon with the reality that news, at least in the way we used to understand it, is no longer an attractive commodity. As Andrew McDougall wrote in the Ottawa Citizen, “news is now a vegetable in an ocean of content candy, and no one likes eating their vegetables.” Reversing those appetites, or at least finding a way to make the vegetables more palatable, is as much a part of the job here as anything else. That’s as much on all of us as it is on what’s left of our media.
Pierre Poilievre wins the battle to lose the war
I was going to write a column on the recent federal byelections and what they might mean for the next election, but two of my colleagues in the pundit class beat me to the punch. Over on his Substack, Evan Scrimshaw took an early look at the Conservative Party of Canada’s ongoing attempt to snuff out Maxime Bernier and the People’s Party, one that continues to hurt them in the places where they really need to win. “Yes, they clearly annihilated the PPC and have wounded Bernier, if not killed him off. But it came at a cost, and that cost is clear. In the seats where the Liberals are the target, they’re going backwards, three straight fucking times.”
Writing in the Globe and Mail, Andrew Coyne had a similar take. “It is, after all, the perennial ambition of the Liberals to frighten NDP voters into their camp with tales of the unspeakable carnage the Tories would visit upon the country if ever they were let into power,” he wrote. “A Conservative leader whose every word or gesture seems to validate such fears is the stuff of Liberal dreams.”
There’s still time, in theory, for Poilievre to moderate his message and tack towards the centre. But as he’s said before, he’s not much for turning. I wouldn’t bet on it happening any time soon — which might be the best news of all for the Trudeau Liberals in a year where almost nothing has gone right.
The Wrap
Given that I was off last week there’s not much to recap or review here, other than my very sincere belief that you should never move unless you absolutely, positively have to.
My podcast, Maxed Out, is now going into repeats for the summer season. We’re going to play with the format a bit come the fall, I think, but stay tuned for details. I helped my colleague David McKie close out his season on Hot Politics with a conversation about the byelections, federal politics, and all other manner of suitably toasty topics.
I also joined the CBC’s Kathleen Petty for a taping of West of Centre, where I talked about the future of the Alberta NDP and what they ought to be thinking about as they go forward. Check it out here.
That’s it for now. As always, you can find me on Twitter at @maxfawcett and by email at [email protected].