Good Sunday Morning,
We are in the midst of a once-in-a-century energy transition. There are three forces driving that transition. The first is decarbonization. Decarbonization is happening whether the carbon industry, and those who depend on it for votes, like it or not. It's not just because of the Paris Accord but because economically, a decarbonized future makes more sense. Already alternatives are so competitive that they are the energy of choice for new capacity being built all around the globe, including the US. And their costs continue to drop. That means the economics of maintaining outdated energy infrastructure will become less and less attractive, moving their inevitable date of obsolescence closer and closer.
To put it in simple terms, we will only put up with our poor quality, flaky and finicky VCR until we can afford a DVD. And now that we can stream movies at will on the web, why would we even bother dealing with the fingerprints on that shiny piece of plastic. The oil industry has successfully stifled innovation in transportation for decades, but their own efforts to globalize our economy and free global trade, are now overtaking them.
The digitization of mobility is perhaps the most compelling and immediate transformation washing over us. The reason it's compelling is because we are seeing it first hand in our daily lives. By now we all know someone who owns a computer on wheels, aka the electric car. Most of us still think we can't afford one or that it does not meet our every need, but as we hear more stories from our friends and neighbors about how fantastic they are, how much money they save, and how easy it is to make alternate arrangements for longer trips, that is changing rapidly.
"Waymo is preparing to launch a ride-hailing service akin to Uber’s, but with driverless cars. The self-driving car-maker spun out of Google was approved on Jan. 24 to operate as a transportation network company (TNC) in Arizona, the state department of transportation told Quartz." And you can watch this self-driving car navigate the snowy streets of Moscow. This is not science fiction. It's already happening. Yandex is said to be worth $3.725 billion, and operations span 127 cities in six countries (Russia, Azerbaijan, Armenia, Belarus, Georgia, and Kazakhstan).
What we have not yet fully grasped, and perhaps it's because the oil industry is scared to death that we do, are the profound changes that will accompany the digitization of mobility. New cars, gas and electric, are already incorporating smart sensors all around so that your cruise control no longer only holds a steady speed but anticipates your surroundings and slows down and speeds up automatically to stay in the flow of traffic.
These are just little incremental changes to ease us into the burgeoning reality of driverless cars. Which, by the way, will have a safety record far better than anything we have now. No excess blood alcohol levels, no poor vision, or distracted conversations, no road rage or falling asleep at the wheel, all of which currently make driving on our highways a game of Russian roulette. Even without electrification, the energy efficiencies of driver-less cars, communicating with one another and their surroundings, are massive. But with the reduced maintenance and cost of electric vehicles the impact on our energy demand is colossal.
This very interesting forum hosted by the Scientific American also points to the third contributor; the de-centralization of our economy brought about by a new, distributed energy resource paradigm that eliminates the transportation of energy over vast distances and makes it possible to generate energy where it's needed. This new and exploding paradigm makes more economic sense and undermines the economics and viability of pipelines, tankers and mega-projects around the globe.
As our economy becomes more and more digital, it empowers customers to make better choices about where to purchase their energy and who to purchase it from. Oil companies know this, especially the ones that have unfathomable investments in dying and unpopular resource assets. No longer is Tar Sands bitumen sold on its merit as a fuel, but rather its extraction and export is framed as an "in our national interest" maxim. "We need to subsidize the jobs of a bygone era for the good of us all." It was the same argument made in favour of the coal industry a couple of decades ago. Only Trump is making it now.
There are almost 150,000 inactive oil-wells in Alberta, many of them abandoned by companies that have filed bankruptcy. So far the courts have sided with the creditors and decreed that banks get paid before any environmental cleanup is undertaken. There is an oil industry funded "Orphan Wells Association" (OWA) that is supposed to manage the cleanup of these wells. They were backlogged before the last price collapse and now are overwhelmed. The OWA receives $15 million per year from the Alberta Energy Regulator (AER) which in turn receives funding in the amount of $165 million from industry royalties under the direction of the Alberta government. Put this in the context of the $3.3 billion annually we provide in subsidies to this dying industry.
If we want to see how this oil business plays out, the abandoned wells in Alberta is a fabulous case study. Farmers can't stop oil companies from coming on their land to drill and pump oil (a case Justin and Rachel are trying to make with BC when they tell us we can't stop them) and then, as you can hear in this interview at the 07:16 mark, they are left with a litany of consequences. The parallels are striking including the liability claim by third parties who sue the farmer for lost profits due to the oil company's failure to meet expectations.
The supreme court case discussed in this program is part of the bigger picture where we have to decide if we as citizens will accept the liabilities of corporate short shortsightedness. When small business participates in activities that can have long range consequences they are often asked to post a bond. Why is it we explicitly trust large corporate entities to meet their long term obligation to society? Do we really think that the CEO and board of Suncor, with annual operating profits of around $800 million, will take on the liability of Tar Sands cleanup after the bottom falls out of the heavy oil market? It currently stands at almost $48 billion dollars, more than all the royalties Alberta collected from the Tar Sands since 1969.
The industry no longer makes economic sense. Ian Hussey points out in the Tyee that "in the last three years, the sector cut more than 50,000 jobs, and industry forecasts suggest, at best, one-third of those jobs will be recovered by 2021. More than 30,000 oil and gas jobs simply don’t exist anymore. The Canadian oil and gas industry now employs about 180,000 workers, which is only one per cent of Canada’s total jobs, and almost 100,000 fewer jobs than Canada’s environmental and clean technology industries." He goes on to explore the costs of downstream emissions.
A detail that Craig Spence Writer unpacks in his Notley-Trudeau Dystopia. "To put things in context, Alberta (population 4.1 million) produces more greenhouse gas emissions than any other province, including Ontario (population 13.4 million). It produces about 275 megatons of GHGs compared to B.C.’s 50 million. Alberta’s Climate Leadership Plan (CLP) allows for a 47 percent increase in Tar Sands emissions, up to a maximum of 100 megatons per year. That’s their self-imposed ‘cap’. So, if Canada is going to meet its commitment under the Paris Agreement – to cut greenhouse gas emissions to 30 per cent below 2005 levels by 2030 – who’s going to do the reducing?"
Craig goes on to remind us that: "Investing in the capacity for increased long-term production of tar sands oil sends a signal to the world, does it not? It says Canada is sanctimoniously and dubiously claiming it will achieve its GHG targets under the Paris Agreement, at the same time as it increases global oil production – sort of like a drug dealer boasting about being clean, while he sells heroin to addicts out on the street."
Perhaps the reason the oil companies are so intent on exporting bitumen in raw form is not because they want to export jobs, but because they want to export the downstream carbon emissions to other jurisdictions as well. As I pointed out in a previous post, the carbon emissions from current Tar Sands energy sold to the world are almost equal to all carbon emission from our entire country, including those produced by Alberta to mine this bitumen. Now Trudeau is openly threatening Canadians that we won't get any money for spill response nor will he honour Canada's Paris commitments to the international community unless Rachel gets her pipeline.
Bullying us into quasi-constitutional submission or browbeating us with bogus job numbers so we step aside and let the carbon bubble charade continue, isn't going to work. There was a time when we considered helping Alberta maintain its current production of bitumen and transport it safely, in solid form, to export markets. But that door has closed, that opportunity has passed. Rachel Notley and Justin Trudeau declaring war on the West coast for wanting a proper environmental assessment, and planting their concrete shoes firmly in the last century's economy, pretty much put an end to that.
Adam Olsen in his second episode of "The Public Circle Live" explains the hypocrisy of Justin Trudeau's rhetoric: "The [broken] NEB process was not good enough for a pipeline going East but it was good enough for a pipeline going West." Sonia Furstenau calls Justin Trudeau's defense of Kinder Morgan pipeline approval "doublespeak" and says the latest NEB ruling only further undermines the public's mistrust in the process.
This was purely a political move. Everyone, including Justin Trudeau and Gerald Butts, knows that the economic benefits of the Tar Sands are fading into the history books and are being eclipsed by the costs of climate change. But not everyone has the integrity to face that reality or the courage to stand up to big oil.
As this twitter exchange between Andrew Weaver and Gerald Butts (Trudeau's chief advisor) points out, after Paris, Justin Trudeau could have been a global climate leader. Instead he and his cabinet have wrapped themselves in the mantle of a dying industry and are sounding more and more like oil company apologists. During the Trans Mountain Pipeline debate in the House of Commons last week, Elizabeth tried five times to inject some semblance of rational thought and accountability into the misleading talking points delivered by both the Conservatives and Liberals. You can see for yourself, by visiting her "Week in Review" page, that no one was prepared to actually answer Elizabeth's questions.
Texas got 18 percent of its energy from wind and solar last year. And Portland Oregon became the first city in the US to ban fossil fuel expansion capacity, a decision upheld by the Oregon Court of Appeals.
This coming Thursday "A panel on Indigenous Resilience to Kinder Morgan" will convene at SFU in Vancouver. And on Saturday March 10th, a mass mobilization supporting Kwekwecnewtxw in the lower mainland area will kick things off. They are inviting thousands of people to join this mobilization and send a clear message to Prime Minister Trudeau: This Kinder Morgan pipeline will never be built.
Mark your calendar - be there,
"It is our job to work tirelessly for justice, for peace, and for a planet that can survive with a human civilization that thrives. This is the challenge that we take on as Greens." Elizabeth May, October 19th, 2015
This weekly missive is authored by Thomas Teuwen, our SGI EDA coordinator. Opinions expressed are his own. We welcome your comments and feedback. If you were sent here by a friend and would like to subscribe to our weekly email simply click here. You can also go to the archives section of our SGI website to read back issues. And if you are on twitter please join in on this hashtag.
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