Alberta

By Elizabeth Perry - Work and Climate Change Report, May 31, 2021

In Search of Prosperity: The role of oil in the future of Alberta and Canada was released on May 26, that cataclysmic day of bad news for the oil and gas industry when the Dutch courts ordered Royal Dutch Shell to reduce its emissions immediately, and shareholders at Exxon and Chevron defied management to press for climate-friendly policies. The future of the oil and gas industry is also grim in Canada, according to In Search of Prosperity, published by the International Institute for Sustainable Development (IISD). Using economic models, it concludes that “the volatility of the industry poses a much greater threat than low prices to the Alberta economy – more than five times worse than the effect of just low prices.” And further: “….. unless there are innovations in the uses of oil for non-combustion, also known as “bitumen beyond combustion,” the oil sector will contribute less and less to Alberta’s prosperity.” According to the modelling, employment in the oil sector will potentially decrease byan average 24,300 full-time jobs per year toward 2050 ( accompanied by a potential 43% drop in royalties to the Alberta government). 

How to cope with those upcoming job losses? Another report from the International Institute for Sustainable Development (IISD), also released on May 26, suggests the EU Just Transition Mechanism as one of its model strategies for the future. 10 Ways to Win the Global Race to Net-Zero: Global insights to inform Canadian climate competitiveness offers an overview of the global policy literature and describes successful case studies, including the innovation of green steel in Sweden; hydrogen policy in Germany; collaboration in the form of the European Battery Alliance and the European Transition Commission; the Biden “all of government” approach to governance in the U.S.; New Zealand’s consultation with and inclusion of the indigenous Maori; and the EU’s Just Transition Mechanism as part of the European Green New Deal. The report’s conclusion offers five strategies, including that the Canadian government must take action as a “top priority” on its promised Just Transition Act.

The discussion of Just Transition in 10 Ways to Win provides a brief, clear summary of the complexity of the EU Just Transition Mechanism, and states that the EU approach is consistent with the recent report, Employment Transitions and the Phase-Out of Fossil Fuels by Jim Stanford, published by the Centre for Future Work in January 2021. Stanford argues that a gradual transition from fossil fuels is possible without involuntary layoffs, given a “clear timetable for phase-out, combined with generous supports for retirement, redeployment, and regional diversification”.

The IISD also recently published Achieving a Fossil Free Recovery (May 17), an international policy discussion with a focus on ending subsidies and preferential tax treatments for the fossil fuel industry. The report concludes with a brief section on Just Transition as the predominant framework for the transition to a clean energy economy, and calls for a social dialogue approach. As in previous IISD reports (for example, Fossil Fuel Subsidy Reform and the Just Transition in 2017), the authors argue that dollars spent to support and subsidize the fossil fuel industry could be better spent in encouraging clean energy industries. This argument also relates to an April 2021 IISD report, Nordic Environmental Fiscal Reform, which offers case studies of the success of environmental taxes – for example, in the use of tax revenue to support the Danish wind energy industry which now employs 33,000 workers.

By Elizabeth Perry - Work and Climate Change Report, April 19, 2021

Two new reports expose Canada’s continuing financial support of the fossil fuel industry and call for a phase-out. These appeared in the same week as the federal government reported Canada’s latest National Inventory of Emissions to the United Nations’ UNFCC, showing that the oil and gas industry is the top source of carbon emissions in Canada.

The first report, by Environmental Defence, is Paying Polluters: Federal Financial Support to Oil and Gas in 2020 , released on April 15. It estimates that the government has provided or promised at least $18 billion to the oil and gas sector in 2020 alone, including $3.28 billion in direct subsidy programs and $13.47 billion in public financing. Paying Polluters decries the lack of transparency – especially for funding through Export Development Canada – but nevertheless attempts to list the tax subsidies and direct spending programs, in an Appendix at the end of the report. In addition to obvious subsidies, the tally includes loans for pipeline construction, research into new technologies for cleaner processes, job subsidies for reclamation of oil wells, and even policing costs for pipeline construction – think $13 million taxpayer dollars paid to the Royal Canadian Mounted Police to protect the construction site of the Coastal GasLink pipeline.

Environmental Defence concludes with five recommendations, including a call for greater transparency, and for “a roadmap to achieve Canada’s commitment to phase out inefficient fossil fuel subsidies before 2025, and shift these investments and public finance towards supporting a path to resilient, equitable zero-carbon societies.” It should be noted that the government first pledged to phase out these subsidies in 2009. The report is summarized, with reactions, by Sarah Cox in The Narwhal, on April 16.

A second report, Correcting Canada’s “One-eye shut” Climate Policy, was released on April 16 by the Cascade Institute. It summarizes Canada’s history of fossil fuel production, and refutes those who argue that we are a small country whose emissions don’t compare to those of China or the U.S. Calling on Canada to accept its global responsibility, the authors state that “Canada’s 2021-2050 oil and gas production would exhaust about 16 percent of the world’s remaining carbon budget. Canada is indeed a “carbon bomb” of global significance.” This is the first of many hard-hitting, frank statements in the report, including a highly critical discussion of the “fool’s gambit” of hydrogen production, and an assessment that “A highly resourced and well-organized “regime of obstruction” has developed in Canada to block effective climate action and ensure increased fossil fuel extraction.”

By Francesca Hannan, Stephen Buhler, and Simon Black - The Socialist Project, April 4, 2021

By Elizabeth Perry - Work and Climate Change Report, March 29, 2021

On March 25, the Supreme Court of Canada released a majority decision stating that the federal government of Canada was within its constitutional rights when it enacted the 2018 Greenhouse Gas Pollution Pricing Act — which required the provinces to meet minimum national standards to reduce greenhouse gas emissions. The decision enables the federal government to move on to more ambitious climate action plans, since it ends a two-year battle with the provinces, and affirms the importance of the climate change issue. The majority decision states that national climate action “is critical to our response to an existential threat to human life in Canada and around the world.” Summaries and reaction to this hugely important decision include an Explainer in The Narwhal , and “Supreme Court rules federal carbon pricing law constitutional” (National Observer) . Mainstream media also covered the decision, including a brief article in the New York Times which relates it to U.S. policy climate.

The Canadian Labour Congress issued a press release “Canada’s unions applaud Supreme Court decision upholding federal carbon pricing” – pointing out that the carbon tax is only one piece of the puzzle in reducing GHG emissions. Unifor emphasized next steps, calling on the provincial premiers of Ontario, Saskatchewan and Alberta, and the federal Conservative leader, to “stop complaining” and devise their own climate action plans. Similar sentiments appeared in the reactions of other advocacy groups: for example, Council of Canadians; the Pembina Institute ; Clean Energy Canada, and the Canadian Association of Physicians for the Environment (CAPE) .

Political reactions

The reaction and explanation of the case from the federal government is here. The CBC provides a survey of political reaction here. Ontario, Saskatchewan, and Alberta were the three provinces who lost their Supreme Court case: in a press release, Alberta’s Premier Jason Kenney pledged that his government will continue to “fight on”, and will now begin to consult with Albertans on how to respond to the court’s decision – as reported in the National Observer, “Alberta has no carbon tax Plan B, was hoping to win in court: Kenney” (March 26) . Kenney further stated, “We will continue to press our case challenging Bill C-69, the federal ‘No More Pipelines Law,’ which is currently before the Alberta Court of Appeal.” [Note Bill C-69 is actually titled An Act to enact the Impact Assessment Act and the Canadian Energy Regulator Act… and was enacted in June 2019]. Ontario’s “disappointment” is described in this article in the Toronto Star and Saskatchewan’s government reaction is described here by the CBC . A sum-up Opinion piece appears in The Tyee: “Sorry Cranky Conservatives! Carbon Pricing Wins the Day” (March 29).

By Elizabeth Perry - Work and Climate Change Report, February 22, 2021

With the goal to leverage their collective financial clout, Canadian university endowment funds and pension plans launched the University Network for Investor Engagement (UNIE) on February 18. Working through SHARE, Canada’s leading not-for-profit in responsible investment services, “The UNIE initiative will focus on key sectors where advocacy can make the biggest difference, including finance, transportation, energy and utilities, and manufacturing, focusing both on reducing greenhouse gas emissions and accelerating the transition to a low carbon economy.” Initial participants include Carleton University, Concordia University, McGill University, McMaster University, Mount Alison University, Université de Montreal, University of St. Michael’s College, University of Toronto Asset Management, University of Victoria, and York University.

This development follows on a number of statements and initiatives by Canadian pension administrators – most of which reflect this general strategy to prefer engagement as shareholders over divestment from fossil fuel holdings. Some examples:

In November 2020, the CEOs of Canada’s eight major pension administrators, with approximately $1.6 trillion in assets under management, issued a press release announcing their joint position statement, Companies and investors must put sustainability and inclusive growth at the centre of economic recovery. The text calls on companies to provide consistent and complete environmental, social, and governance (ESG) information, and continues: “For our part, we continue to strengthen our own ESG disclosure and integration practices, and allocate capital to investments best placed to deliver long-term sustainable value creation.” The signatories included: AIMCo, BCI, Caisse de dépôt et placement du Québec, CPP Investments, HOOPP, OMERS, Ontario Teachers’ Pension Plan, and PSP Investments.

“Why are Ontario pensioners investing in future Alberta stranded assets?” (in Corporate Knights, December 16, 2020) describes investment by OP Trust (which holds the pension funds of Ontario civil servants, teachers and healthcare workers) in a natural gas electricity-generation plant in Alberta. The authors summarize the growing global realization that fossil fuel investments are financially risky and conclude, “The people at OPTrust have begun to recognize this. They’ve created multiple reports, with pretty graphs and rosy statements about supporting the Paris Agreement. But this statement rings out: “Emission reduction targets are not today’s objective.” Like many other organizations, they are unwilling to walk the talk.”

By Nick Engelfried - Waging Nonviolence, January 29, 2021

When President Biden rescinded a crucial permit for the Keystone XL pipeline last week, it marked the culmination of one of the longest, highest-profile campaigns in the North American climate movement. The opposition to Keystone XL included large environmental organizations, grassroots climate activist networks, Nebraska farmers, Texas landowners, Indigenous rights groups and tribal governments. Few environmental campaigns have touched so many people over such large swaths of the continent.

The Keystone XL resistance was part of the ongoing opposition to the Canadian tar sands, one of the most carbon-intensive industrial projects on the planet. Yet, it came to symbolize something even bigger. Many activists saw stopping Keystone XL as a measure of success for the climate movement itself.

“Keystone XL isn’t just any project,” said longtime activist Matt Leonard, who coordinated several major protests against the pipeline. “Its defeat is a testament to what movement building and direct action can accomplish.”

A stroke of President Biden’s pen finally killed Keystone XL. But paving the way for this victory were countless battles at the grassroots level, where activists tested new tactics and organizing strategies that built a bolder, savvier climate movement. Some of the groups involved took radically different approaches to politics, leading to unexpected alliances and occasional bitter feuds. And there were losses — other major oil pipelines, including the southern leg of Keystone XL itself, were completed even as the fight over the more famous northern half dragged on.

Yet, resistance to the Keystone XL’s northern leg succeeded against overwhelming odds. While there is always a possibility it could be resurrected someday, chances of that happening anytime soon seem slim. Understanding how this victory happened — and what it means for the climate movement — requires examining how 10-plus years of tar sands resistance played out in far-flung parts of North America.

By Axel Dalman and Andrew Grant - Carbon Tracker - July 2020

Carbon Tracker’s modelling shows no new oil sands are needed in a low carbon world.

Prospective pipeline projects represent a significant expansion of capacity, with taxpayer support. However, new pipelines are surplus to requirements under Paris Agreement demand levels.

Canadian authorities face the challenge of trying to reconcile their natural resources development plans with their positioning on climate. Canada has previously having shown leadership on climate change issues, but its government support for pipelines – which are reliant on the failure of the Paris Agreement – risks damaging its credibility.

Key Findings:

Our research has previously shown that no new oil sands projects are needed in a low carbon world. All unsanctioned oil sands projects are uncompetitive under both the International Energy Agency’s 1.7-1.8°C Sustainable Development Scenario (SDS) and c.1.6°C Beyond 2 Degrees Scenario (B2DS).

All proposed new pipelines from Western Canada, in particular Keystone XL and Trans Mountain expansion, are surplus to requirements in a Paris-compliant world. Pipeline capacity may have proved a constraint in recent years, but under SDS, all future oil supplies from Western Canada can be accommodated by upgrades and replacements to existing pipelines, local refining and limited rail freight.

Even if discounts for Canadian crude narrow, new oil sands projects remain uneconomic. Western Canadian heavy oil trades at a steep discount to international benchmarks due to quality and transport challenges, averaging $25 below Brent over the last decade. Even if greater pipeline capacity reduces this to $10 in the future, in line with levels seen during previous periods of unconstrained supply, new projects still remain uneconomic under the SDS. Indeed, even if Canadian heavy oil were to trade at parity with Brent, which is extremely unlikely due to its lower quality, there would still be no new oil sands production under the B2DS and just 120,000 bbl/d would enter the market in the SDS – a level which would be covered by existing rail capacity.

Investors in oil sands face depressed cash flows in a low carbon world of falling oil demand and weak pricing, but will be forced to produce or pay the price due to inflexible “take-or-pay” transport fees for excess new pipeline capacity.

While take-or-pay contracts spread the impacts, pipeline investors still face financial risks as upstream production weakens. Uncontracted capacity will probably remain unused by producers, and contracts may cannibalise tariffs from other pipelines. Even take-or-pay commitments are subject to counterparty risk in a falling oil market.

The Canadian government’s stakes in Keystone XL and Trans Mountain could well prove to be a drain on the public purse. Under the SDS, government tax revenues and the value of the assets are unlikely to reach the levels anticipated at the time of sanction.

Canada’s leadership position on climate change may be undermined by its support for projects reliant on the failure of the Paris Agreement.

Read the report (Link).

By Doug Nesbitt - Rank and File, February 27, 2020

Across the country, the right-wingers are outraged once again about the loss of thousands of potential jobs in the Alberta oil sands. Teck Resources, the Vancouver-based energy company, pulled its proposal to develop a new massive oil sands mine north of Fort McMurray. Jason Kenney wasn’t the only politician choking for air after getting the news.

Teck claimed their “Frontier” mine would produce 7,000 short-term construction jobs, 2,500 operating jobs, and generate tens of billions in government revenues. Naturally, these figures are highly suspect coming from an industry known to bury the truth as often as it buries bodies.

Whatever the case, we know a lot of jobs would have been created and we also know the costs to the global environment would have been immensely bad. Teck’s decision to pull the application reflects a trend of oil sands divestment by financial powers and energy corporations. They’re even beginning to invest in renewables.

Meanwhile, over the decades, oil companies have saddled Alberta with 100,000 orphan wells, countless toxic tailings ponds, and a whopping $70 billion clean-up bill for the public. With Teck’s decision to run away from their big Alberta mine, Big Oil and the banks are spelling big trouble for Kenney and the countless politicians who have staked their lucrative careers on the oil sands.

And so Kenney loudly proclaims his incredible concern for jobs – as he axes real jobs. Kenney is overseeing devastating cuts to healthcare and government services, and his party estimates between 6,400 and 7,400 public sector jobs will be eliminated. Ah right, the public sector is the big problem, not the decades of low royalties allowing huge oil wealth to flood out of the province.

By Marc Lee and Seth Klein - Corporate Mapping Project, March 2020

IMAGINE IT’S 2025 AND BECAUSE OF THE ESCALATING CLIMATE CRISIS, governments in Asia have declared ambitious new climate action plans, including the elimination of metallurgical coal for steel manufacturing within five years, to be replaced by state-of-the-art hydrogen-powered furnaces; and an aggressive transition off of natural gas and toward renewables within a dec-ade. After a short period of time, BC’s fossil fuel exports dry up, workers are laid off and local communities get hit with declines in both public- and private-sector jobs due to falling incomes.

It is this type of scenario that needs to inform planning for BC’s fossil fuel industries (coal, oil and gas). This report’s framework for a managed wind-down aspires to thoughtfully and strategic-ally phase out the extraction and production of fossil fuels in BC, most of which are exported and burned elsewhere.

The BC government’s continued interest in expanding production and export of its fossil fuels suggests little willingness to contemplate a managed wind-down so long as there are external buyers for BC resources. However, there is a risk that market conditions could change abruptly as other jurisdictions implement more aggressive climate policies and importers cut their con-sumption of fossil fuels. Fully phasing out BC’s fossil fuel industries over the next 20 to 30 years may be — for now at least — politically unthinkable. Nonetheless, this report aims to start a necessary conversation in BC. The managed wind-down framework is built on four pillars:

1. Establish carbon budgets and fossil fuel production limits;
2. Invest in the domestic transition from fossil fuels and develop a green industrial strategy;
3. Ensure a just transition for workers and communities;
4. Reform the royalty regime for fossil fuel extraction.

More than half of BC’s gas production is exported to Alberta for oil sands processing, with additional exports to the United States. Only 9 per cent of production is consumed within BC. Virtually all of the province’s coal is exported, with little domestic consumption. The bulk of production is higher-quality metallurgical coal used in steelmaking as opposed to thermal coal used to generate electricity.

Read the report (PDF).

By Ian Hussey - Parkland Institute, March 2020

Major restructuring and consolidation of the Alberta-dominated Canadian oil and gas industry has been taking place since 2014 (Hussey et al. 2018), when the lower-for-longer oil price scenario in which the province still finds itself began.

This report explores the employment, capital spending, and operational spending implications of the ongoing restructuring and consolidation of the industry. More specifically, the report explains that oil sands industry maturation—which was significantly advanced over the latest commodity cycle—means there has been a recent shift in the industry from its growth phase (2000–2018) to its mature phase (2019 onward).

Read the report (Link).