I am always surprised at how the underlying story gets missed. In the case of the global warming tale, the Green Shift announcements, and so on, what doesn’t get reported is how close to the end of a hydrocarbon-based world we are. Given the Canadian climate — and the fact that it is our commodity exports, particularly oil and gas, that are holding Federal Government revenues “together” by holding up the national economy — one would think we might discuss the current state of economic peril we find ourselves in. Instead, we see crowing, triumphal note after head-in-the-sand note being posted from almost all the blogs, regardless of political affiliation — and no attention being paid to the real situation.
So let’s do exactly that.
Light crude production in Canada is expected to dry up in about a decade. Natural gas production in this country, in slightly less time. We are not building the refineries necessary to actually use the tar sands products. (Why not? Natural gas is a key element in how this sludgy sand yields up its hydrocarbon content: if natural gas has a useful life of less than a decade, the plant won’t pay for itself.)
With world oil production — particularly of the light crudes for which our Eastern-based refineries (which depend on imported oil already) — already slipping downward as a share of global production, and, indeed, global total production (including our own) also now less than demand, precisely where will we get petroleum from? As for natural gas, we’re not equipped to receive liquid natural gas (LNG) shipments — nor do we have the pipelines built to transport it. Nor is there a particularly favourable source of supply, either: exhaustion of natural gas on other continents lags North America by only a decade or so. Again, not enough to make building the infrastructure a viable economic proposition.
Yes, we could raise the moratorium on development offshore in British Columbia. Yes, we could build the Mackenzie Valley pipeline. Offshore BC is a decade away if we start now. Assuming we ran roughshod over the Dene and just built the pipeline, its economic life isn’t long, either.
Gordon Campbell in BC, of course, has pinned his hopes on a “hydrogen corridor” running down the west coast of North America. But what’s the feedstock to produce hydrogen — today? There are two: electrolysis of water, or cracking the hydrocarbon molecules in natural gas. There is an interesting experiment being done in Japan right now to produce a water-supplied fuel cell suitable for both mobility applications (e.g. road traffic) and as a power supply in buildings or for the grid, but it’s not mature yet. As for building a hydrogen infrastructure supplied by natural gas? What’s the lifespan of that? — certainly no better than the lifespan of using natural gas directly (heating homes in winter comes immediately to mind).
Ethanol has also been proposed. Where’s the capital investment in ethanol plants using scrap wood chips, bits of dead-by-pine-beetle tree, etc.? It’s not happening fast enough. Nor are we doing the pragmatic thing and arranging to buy ethanol from Brazil, where they produce it from scrap sugar cane stalks, cheaply and efficiently. No, where we’re doing it, we’re doing it from corn. A maize-based ethanol infrastructure has a lousy energy conversion ratio: it requires at least as much hydrocarbon-based energy as inputs, for fertilizer, industrial-scale combines, and to run the conversion plants, as you get out of the ethanol. (Brazilian ethanol converts at a favourable ratio. At the scale required, the energy coefficients for wood chip conversion are not fully worked out yet — it’s important to remember that these operations are likely to be built on a local scale, just as the sawmills and pulp mills of timber country are.)
We could, of course, make more use of electrical power. We’d better move quickly: dam construction for large-scale outputs, or nuclear plants — even coal-fired plants with carbon sequestration technology — are usually decade-long construction jobs, even when you waive all the environmental evaluations, tell the local First Nations their claims will not be honoured, and pass laws forbidding legal action to delay the project. Heavy construction requires a heavy investment in fuels, too. Eventually we’ll be making choices: get to work and heat buildings, or build things, or feed ourselves (fertilizers, industrial “agriculture”).
There’s a lot of talk about alternative power. BC has many sources: extensive geothermal zones, wind potential on the coast, even solar arrays. The three Prairie provinces could do wind and solar. It’s a pity, isn’t it, that it’s not happening: in BC, for instance, the Independent Power Production [IPP] scheme put forward by BC Hydro in 2003 allows Hydro to buy out the producer after their project is built. (Not that the BC Transmission Corporation has the capability to handle much of this power, for little of it will be base load.) Why would anyone invest in a plant infrastructure only to lose it at cost once it’s been depreciated (and still useful), i.e. why give up the profits? Is it any wonder little is happening?
So what does this add up to? A sea change in the way we live, like it or not. Yes, Canada has great assets in the energy space. But they don’t make us independent of shortfalls.
When that day comes, our economy takes a nosedive. So do our exports, the vast majority of which still go to the United States, thanks to the unending myopia of Canadian businesses. (There’d be, for instance, no trouble in lumber towns if we could just recognise that the rest of the world does not use American-sized boards — and if we produced the products other countries want to buy. Instead we tell them they have to change, then moan when we don’t get the business.) The USA will be even worse off than we are.
It’s been pointed out that we ought to be thinking about these issues. Assuming Obama wins the US Presidency this November, we can anticipate a challenge to NAFTA: he campaigned on this (and needs to carry the states — all near our border — who think NAFTA has hurt them). A Democratic-controlled Congress will not be trade-friendly. Good: bring it on. We should be prepared to let NAFTA go — Homeland Security has already closed the US border to the point where integrated supply chains don’t work reliably any longer, and they have to work with an ever-sinking US dollar — in order to remove the lock-in that forces us to sell a continuing percentage of our hydrocarbon production to the US ahead of Canadian needs. Failing to do so simply advances the day our furnaces and pumps “go out”.
Eventually, alternatives will bring us back up. Don’t count on them being ready en masse in time. We may well find ourselves back in the 19th century for two or three decades while we sort it out. (If that doesn’t put paid to global warming, what will?)
All of this, of course, strongly suggests that our Governments are about to be put on a starvation diet. Instead of new mass social programmes, any spending should be going on the infrastructure needed to continue Canadian life in a reasonable fashion (the last time I looked, this was still a very cold country with a short growing season). Pruning of existing wasteful spending should also be undertaken.
For here’s the rub: without cheap energy and a continuing supply of it, the centre cannot hold. Large-scale anything requires it. When this breaks down, the pieces fall away. Except, of course, that (with the exception of the Maritimes) even our provinces are too large to hold together. (Australia and the United States, to name just two, will experience similar fracturing.)
A North America divided into a hundred plus polities will be a much poorer North America, and a much weaker one.
Any politician who isn’t dealing in these long-term realities is delusional, and leading us down the garden path to a much harder future than is necessary to experience. By that standard, there are no leaders in Canada today.
UPDATE: To my surprise, after writing this, I found half of the op-ed page of this morning’s Globe & Mail taken up with pieces on this topic written by Michael Warren and Margaret Wente. The last thing we need here is a big government approach: set up a regulatory framework that encourages investment, put what money we have into infrastructure to support the housing and employment stock we have to work with, and let the market price mechanisms do the job of encouraging personal change. After all, the last $35.00/bbl on the oil price has yet to have its impact on the consciousness of citizens!