Harper: Carbon Pimp to the World – A Disastrous Policy

Canada Economy Environment News & Analysis Work & Labour
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TarSandsStephen Harper, the Prime Minister of Canada, has centred much of his economic and political strategy on building Canada into one of the largest carbon exporters in the world. Even before the sharp drop in the price of oil, coal and natural gas, this strategy was damaging to other and more important parts of the Canadian economy.

Climate Change – Getting Hotter

Canada is currently the fifth largest exporter of carbon in the world. In spite of the dangers for humanity of climate change, the Canadian government, with the support of the provincial governments in British Columbia (BC) and Alberta, has been working to increase carbon exports to the world. Harper is acting like a pimp peddling carbon all over the world. This totally ignores the need to reduce drastically the use of fossil fuels if a global warming disaster is to be avoided.

The International Panel on Climate Change usually makes cautious statements, as they have to be agreed to by a large body of scientists. Yet the recent report (IPCC, 2014) stated the changes to the earth’s climate are likely to cause “severe, pervasive and irreversible impacts for people and ecosystems”. They state that even if greenhouse gas emissions are stopped that, “many aspects of climate change and associated impacts will continue for centuries” and “the risks of abrupt or irreversible changes increase as the magnitude of the warming increases.”

Yet in spite of all the international conferences, CO2 releases are still increasing and Canada’s domestic and exported carbon are a major part of this increase. Global carbon emissions for 2014 were 40 billion tonnes, compared to 32 billion tonnes in 2010. 2014 was the warmest year on record, following on from 38 consecutive years of above-average temperatures.

Canada’s Carbon Exports Now and Future Plans

Canada exports coal, oil and gas which together mean that Canada is the fifth largest exporter of carbon in the world.

Coal

Canada has coal reserves of approximately 10 billion tonnes, the fifth largest in the world. Coal production, mainly in BC and Alberta, has increased dramatically over the last few decades; 10 to 15 million tonnes per year in the 1970s, jumping to 65 – 75 tonnes per year since the mid 1980s.

The majority of coal produced is consumed in Canada to generate electricity in Alberta and Ontario. There are plans to reduce coal use in the production of electricity but there are plans to increase significantly coal exports, especially from British Columbia. Currently Canada is a net exporter of around 25 million tonnes of coal a year, making it the 8th largest in the world.

BC, already the largest exporter of coal in North America, has proposals to open 18 new coal mines. More than $400 million is being invested to upgrade five coal terminals in British Columbia to increase export capacity to more than 82 million tonnes annually.

Natural Gas

Canada produces over 157 billion cubic metres of natural gas, mainly in BC and Alberta, making it the fifth largest producer in the world. Until recently Canada exported over half of all production, making it the fourth largest net exporter worldwide, and all of it going to the US.

However, with the increased supply of gas from domestic fracking in the US this market has declined, with net exports falling from 90 billion cubic metres in the early 2000s to below 60 billion cubic metres a year since 2011. Revenue from gas exports has fallen even more sharply, as the price in North America has more than halved between 2008 and 2010.

As conventional gas production declines, more is produced by fracking – a process highly damaging to the environment because of the huge amounts of water mixed with toxic chemicals injected into the rock. This water is then contaminated. Fracking also releases the highly reactive greenhouse gas, methane; needs large energy inputs to fracture the rock; and increases the likelihood of earthquakes.

BC’s reserves of natural gas, available by fracking, are estimated at 83 trillion cubic metres. The provincial government hopes to massively increase the production of natural gas, and export it mainly to Asia, as the price for gas there is at least three times higher than in North America. However, liquefying natural gas has further environmental costs, in addition to the damage of fracking and the release of carbon when burned. To export gas to Asia requires liquefying it so it has 1/600 of the volume. The gas turns to a liquid at -163o C; this requires enormous use of energy to cool the gas. For one of the typical proposed plants, if the liquefaction is powered by electricity it will take around 7,000 gigawatt hours per year, if powered by burning natural gas then around 1 million tonnes of carbon dioxide will be released each year.

Last year there were at least 18 proposals to build liquid natural gas (LNG) plants in BC. However as gas prices have fallen worldwide, it is unlikely that most of them will ever see the light of day as even a small plant costs several billion dollars to construct.

Oil

Canada has the third largest reserves of oil in the world, (some say it is second only to Saudi Arabia); however, almost all of it is in the form of tar sand bitumen, which requires far more energy to extract, water used to process and causes much more environmental damage than conventional oil extraction. Currently Canada is the sixth largest producer of oil, mostly from Alberta and some from deep-water rigs off the east coast. Canada is the ninth largest exporter in the world, with almost all the exports going to the US.

The US market for oil has dropped due to widespread fracking, so the Canadian government and the tar sands companies are desperate to export oil beyond North America. Tar sands production is around 2 million barrels per day (2013) with the aim of increasing production to 3.7 million barrels per day by 2020 and over 5 million barrels per day by 2030. To make this profitable, the bitumen needs to be exported beyond North America.

At present there are 5 pipeline proposals to transport Alberta’s bitumen to the deep water ports: to the Pacific Ocean, Enbridge to northern BC and Kinder Morgan to Vancouver; Keystone XL to the Gulf of Mexico; and Line Nine and Energy East to the Atlantic Ocean.

Canada’s Dirty Carbon Exports

Canada’s fossil fuels are some of the most environmentally damaging produced in the world. Almost all the coal is extracted from huge open pits – with pollution to air, water and soil. The tar sands are infamous around the world as one of the worst environmental disasters on the planet. Most of the future production of natural gas will come from fracking.

Overcoming Barriers to Carbon Exporter

Harper’s aim to boost carbon exports has faced many obstacles, including environmental regulations, Canadian scientists, First Nations and many Canadians across the country. Harper has worked to weaken or remove most of these barriers.

Cut & Muzzle Scientists

Over the past seven years, the federal government has dismissed more than 2,000 scientists, and closed down hundreds of programs and world-renowned research facilities. Programs that monitored things such as smokestack emissions, hazardous wastes, food inspections, oil spills, water quality and climate change have been drastically cut or shut down.

The free flow of information has been restricted in two ways: through the muzzling of scientists who might communicate scientific information, and through the elimination of research programs that provided scientific information or evidence. The federal government and its agencies have closed research and science libraries.

Gut Environmental Rules

The energy companies and their government faced many legal and regulatory obstacles to the rapid expansion of carbon exports, especially from the Alberta’s tar sands.

In January 2006 in Houston, Texas, a meeting organized by the Canadian and US governments explored ways to expand tar sands production. One of the key concerns expressed at this meeting were the barriers of existing regulations

“Governments are encouraged to streamline the regulatory approval process and better manage the risk to both pipeline and energy projects. Canadian governments have already gone a long way to coordinating and streamlining the environmental and regulatory approvals, but more needs to be done.” (The Oil Sands Experts group)

Note the lack of concern about the risk to the environment or human health!

Since 2006, the government has been dramatically ‘streamlining’ regulations, with the scarping or gutting of many laws. This process has stepped up in the last few years.

  • Canada withdraws from the Kyoto Protocol in 2011.
  • Canadian Environmental Assessment Act abolished in 2012. Repealed and replaced with a completely new CEAA which is weaker.
  • Canadian Environmental Assessment Agency weakened in 2012. Environmental assessments are no longer required for projects involving federal money. Cabinet will be able to over-rule decisions. A retroactive section sets the clock at July 2010 for existing projects.
  • Canadian Environmental Protection Act weakened in 2012.
  • Fisheries Act weakened in 2012. Fish habitat provisions will be changed to protect only fish of “commercial, Aboriginal, and recreational” value.
  • Navigable Waters Protection Act changed and weakened in 2012. Pipelines and power lines will be exempt from the provisions of this act. The National Energy Board now absorbs responsibility for the Navigable Waters Protection Act (NWPA) whenever a pipeline crosses navigable waters. The NWPA is amended to say a pipeline is not a “work” within that act.
 Before this change, over 2 million lakes and over 8,500 rivers were protected; now only 97 lakes and 62 rivers are protected.
  • Energy Board Act neutered in 2012.
  • National Round Table on the Environment and the Economy eliminated in 2013.

Attack Opponents

The Canadian government, in an attempt to weaken opposition to carbon exports in general and the tar sands in particular, has stepped up attacks on environmental groups and has had a host of conflicts with First Nations.

First Nations

For many years the Canadian government largely ignored First Nations, leaving many, especially on reserves, in poverty, lacking basic infrastructure – even clean water – and with under-funded education. The main activity of the state was to criminalize aboriginal people while ignoring the racist attacks on their rights and even existence. However, with the drive to increase resource extraction conflicts with First Nations have increased. Many of the resources are on land claimed by Indigenous peoples or the access passes through their lands.

Initially Harper’s strategy was to find a few friendly leaders he could cut deals with, while ignoring the majority of people. However, this has utterly failed and he faces rising opposition with the growth of Idle No More and a growing number of Nations opposing the extractive rape of the land.

Over 130 First Nations across BC have signed the Save the Fraser Declaration to stop the proposed tar sands pipelines from Alberta to the coast of BC. Many Nations have set up blockades and occupations, and have brought forward court challenges to many resource extraction projects.

Harper has zig-zagged between ignoring, trying to coax and cajole, and, if that fails, bullying First Nations to accept his agenda. After decades of under-funding for reserves, in 2014 the government launched an attack on First Nations finances in the name of transparency, with the threat to cut off funding for core services.

Environmental Groups

The government has ordered the Canada Revenue Agency to audit environmental groups, and other critics, to see if they infringe charity rules. The government provided an extra $13.4-million for this audit, which so far has looked at 52 organizations, all of which are environmental or progressive groups, while no charity on the right wing of politics has been investigated. This has required the audited organizations to devote large amounts of staff time and resources to the audit. It has contributed to a climate of fear of losing charitable status among many organizations.

The government has criticized environmental groups for taking funds from abroad, implying that they are anti-Canadian, while never commenting on the $billions of foreign money pouring in to the tar sands. Joe Oliver, then Natural Resources Minister, said in 2012 that environmentalists are “radical groups” who “threaten to hijack our regulatory system to achieve their radical ideological agenda.”

Most alarming of all in today’s context, the government has increasingly linked environmentalists to terrorists. A recently released report by the RCMP, from 2014, views climate change as a “claim” rather than reality. It states that:

“There is a growing, highly organized and well-financed anti-Canada petroleum movement that consists of peaceful activists, militants and violent extremists who are opposed to society’s reliance on fossil fuels.”

The report speculates, without any evidence about, “violent environmental extremists [that] engage in unlawful activity”.

This is at the same time that the Conservative government has introduced legislation which allows the security agencies to collect information on and disrupt the activities of suspected terrorist groups. The new law, Bill C-51, would allow the infiltration of environmental groups, and defines “activity that undermines the security of Canada” as anything that interferes with the economic or financial stability of Canada or with the country’s critical infrastructure.

Selling and Subsidizing Fossil Fuels

Subsidizing Fossil Fuels

The federal and provincial governments hand out large bribes to the fossil fuel industry. The Pembina Institute, in 2010, estimated that the Canadian government gives tax breaks of $2 billion a year. The provincial governments are also very generous to the oil and gas industry.

BC’s Auditor General stated that the province gave $587 million of incentives to the fracking industry in 2014. They will receive another $1.25 billion to support drilling deep shale gas wells. The government has also given subsides of $840 million since 2004 to build roads and pipelines. The government of Alberta is estimated to provide $1.1 billion in subsidies to the tar sands. The provinces of BC, Alberta and Saskatchewan all charge lower royalties than the comparable US states.

The BC government is also planning to build a huge new hydroelectric dam, Site C on the Peace River, to generate 5,000 gigawatt hours a year, all of which will be needed to condense natural gas to a liquid for export. The dam is expected to cost around $10 billion, which will be a further subsidy from the BC people to the fossil fuel industry. As if the existing handouts are not enough, in February 2015 Harper announced a further federal tax break, worth a minimum of $50 million but probably much more if the plans go ahead, to encourage the export of liquefied natural gas from BC.

These figures of course ignore the external costs of the fossil fuel industry including the damage to the local environment through extraction, harm to people’s health and the contribution to climate change. These costs are not paid by the energy companies, but are paid by local communities, people and the environment.

Selling the Tar Sands

Sometimes it seems like the Conservative government of Canada is a sales rep for the fossil fuel industry, especially the tar sands.  The government has spent millions on advertising.

An advertising campaign, paid for by the Canadian government, in the US in support of the Keystone XL pipeline cost $24 million. Further millions were spent successfully lobbing the European Union to not label the tar sands ‘dirty oil’. In addition Canadian politicians and civil servants have held hundreds of meetings to persuade the US and Europe to favour the tar sands oil and its projects. Harper has visited Washington and New York many times, acting like a second-hand oil sales rep. Except he does it on the taxpayers’ expense, for example a hotel bill of $65,582.91 for his September 2013 visit to New York.

No such thing as Free Market

The governments’ subsidies to the fossil fuel industry, the lobbying and advertising, and the removal of environmental standards all demonstrate that the fossil fuel industry in Canada is not simply a product of market forces, rather it is the outcome of decisions by politicians to favour one section of the economy – at the cost to others.

 

Impact on the Canadian Economy and Employment

Although the fossil fuel industry receives large government subsides it provides relatively few jobs. It is true that Alberta tar sands do provide employment, but this huge environmental disaster zone provides far fewer than many other sectors. Even green energy jobs are catching up, with a fraction of the government support of the tar sands.

Clean Energy Canada reported in 2014 that, “in 2012 there were 23,700 direct clean-energy sector jobs and 22,340 direct oil sands jobs.” Of course, there are more indirect jobs based on the tars sands. According to Statistics Canada (table 383-0031), in 2012 the total number of jobs in oil and gas extraction was 57,305 with a further 70,000 in supporting jobs. Still, fewer than 130,000 in jobs in total.

In BC only 3,000 people are directly employed in oil and gas extraction. Over the two years of 2013 and 2014, the province’s net gas royalty receipts (after deducted subsidies) averaged $2.5 million a month, which is less than 1/10 of 1% of BC government revenues.

Canada an Exporting Nation

Canada with its large land mass (2nd largest in the world) and relatively low population (35 million people) has a very low population density of 3.8 people per square kilometre. It has vast natural resources and, from the first colonization, has been an exporter of raw materials – from fur and timber to grain, and now carbon.

Since 2000 the total value of Canadian exports has risen from $386 billion to $443 billion and carbon products have doubled in value from 14% to 28% of total exports, while over the same time the value of manufactured goods and wood products have declined sharply.

2000

2013
$ % of total $ % of total
Food (Animal Vegetable & processed

26,937,484,493

7%

48,964,414,816

11%
Mineral Fuels

54,367,118,707

14%

123,859,768,686

28%
Other Mined

34,484,409,558

9%

65,496,638,898

15%
Wood & products

49,465,317,772

13%

29,203,102,674

7%
Assorted manufacture

172,706,269,951

45%

120,450,094,713

27%
Other

47,718,166,856

12%

55,489,820,601

13%
Total Value

385,678,767,337

443,463,840,388

Canadian Domestic Exports 2000 – 2013 (from Stats Canada)

De-Industrialized Canada

The decline of manufacturing exports paints a grim picture of the costs of Harpers’ carbon policies. Between 2000 and 2010 Canada lost 570,000 manufacturing jobs.

One example of the disaster, and insanity, of Canada’s energy exporting economic policies is the fate of the Canadian iron and steel industry. The main ingredients for making iron are iron ore, coal and limestone – all of which Canada has in abundance and exports. Until 1990, Canada was a net exporter of steel. Now net imports account for 20% of steel consumed in Canada. Canada imported $12.2 billion of steel in 2012, mostly from the US, but also more than $1 billion of steel from China, $400 million from Japan, and $300-million from South Korea in 2012. The policy of shipping raw materials half way round the world and then importing back the manufactured steel is an environmental and employment disaster.

By 2007, all of Canada’s steel mills were taken over by foreign-owned businesses, and many have been closed down. Hamilton, once the steel capital of Canada, no longer makes steel!

Production Imports Exports Consumption Imports Less Exports as % of consumption

1970

11.2

1.5

1.6

11.1

-1%

1975

13

1.4

1.3

13.2

1%

1980

15.9

1.5

3.5

13.3

-15%

1985

14.6

2.4

3.6

13.2

-9%

1990

12.3

2.9

3.8

11.2

-8%

1995

14.4

5.3

4.7

15.0

4%

2000

16.6

8.9

5.0

19.8

20%

2005

15.3

9.9

6.0

18.0

22%

2010

13

8.9

7.0

15.7

12%

2011

12.9

9.2

6.4

15.7

18%

2012

13.5

9.6

6.2

17.3

20%

Canadian Steel (in Million Tonnes)

(Data from World Steel Association: http://www.worldsteel.org)

Export of Raw Materials

The story of steel is repeated across many industries as more and more of the Canadian economy relies on exporting unprocessed raw materials and then importing finished products. Most of the tar sands production is exported as bitumen, with the refining taking place in the US, Europe and Asia.

The forestry industry was once a mainstay of the Canadian economy. As recently as 2000 it was the single-largest contributor to Canada’s trade surplus, outperforming the auto and oil and gas industries. As recently as September, 2004, 308,664 Canadians earned a living from logging, paper making and wood products manufacturing. A decade later, the industry employed just 190,651 people. All across Canada mills have closed and jobs have disappeared. This in not due to a drop in demand for wood products and paper, in fact world-wide demand is up. Demand for paper has grown, on average, 1.7% per year over the last decade. It is true that demand for paper is shifting from North America and Europe to Asia, but Canada is responding to this shift by increasing the export of pulp while paper exports decline.

The value of pulp exports to China nearly quadrupled between 1998 (US$251 million) to 2004 (US$965 million). Since 2004, when the volume was just over 1 million tonnes of pulp, it has grown to over 4 million tonnes in 2012.

A similar trend is apparent in the export of raw logs from BC. In 1997, less than 200,000 cubic metres of raw logs were exported, by 2013 this had soared to over 6.5 million cubic metres.

Carbon Pimp: A double disaster

Harper’s strategy of basing the economy on the export of carbon was always a disaster for the climate and for humanity. It was also never a good economic policy, if the aim was to improve Canadians’ living standards. But this was never Harper’s aim, as all his attacks on public services, union rights, etc clearly demonstrate.

Harper’s strategy, at best, would enormously enrich the fossil fuel industries, with a few well-paid jobs in these industries. Now, with the sharp drop in fossil fuels prices, this strategy is in tatters.

The only thing saving Harper is the lack of a campaign in support of a well-developed program to provide good jobs in converting to a clean energy economy with massive public investment in public transit, building insulation, alongside good quality public services. The barrier to this transformation is not technical or a lack of resources. The technology already exists to meet all the world’s energy needs from clean energy. Canadian non-financial corporations are sitting on over $626 billion of dead money that they refuse to invest. This money, if under democratic public, control would go a long way to transforming the economy

After years of talk, it is clear that big business and politicians cannot be relied onto tackle climate change – CO2 emissions are still increasing. They certainly cannot be relied on to provide good quality, secure jobs – these jobs are disappearing across Canada. The profit-based world today ignores the needs of the environment and people.

A socialist society would be able to tackle global warming and provide good jobs, to protect the planet and ensure human well-being.

 

References

 

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