“No country would find 173 billion barrels of oil in the ground and just leave them there,” Trudeau told participants at the big CERAWeek oil and gas conference. “The resource will be developed. Our job is to ensure this is done responsibly, safely and sustainably.”
The question for Finance Minister Chrystia Freeland as she settles into her new cabinet portfolio is whether that statement still rings true in the context of a global health emergency, an accelerating climate crisis, a mounting wave of fossil-fuel divestment and stranded assets, and the meteoric rise of clean energy alternatives.
Nearly three and a half years since Trudeau’s speech, the world has changed. Canada, for the most part, has not.
There is much uncertainty about how Mark Carney’s role will evolve. But the story so far may suggest a government that is considering two of the key steps in addiction recovery: admit you have a problem, and get the help you need. Even if the details have to wait for a September cabinet retreat, and for all the mail-in ballots to be counted in the US election, Ottawa must not foreclose the essential option of making its pandemic and addiction recovery a green one.
Now into the third year of its mandate, the Ontario government under Premier Doug Ford is being assessed for its handling of the COVID-19 crisis. The impressions are mixed.
On a personal level, the premier’s responses to the pandemic have generally been regarded favourably. He has at times conveyed deep personal empathy for those affected by COVID-19 and their families.
At the same time, the province has struggled to provide effective responses to the COVID-19 crisis, seemingly uncertain of what direction to take or of the scope of its own authority and capacity.
Controversies over the government’s plans to reopen elementary schools without reducing class sizes are the latest in series of stumbles in managing the crisis.
‘Have fun’
The Ontario government was initially slow to recognize the scope of the pandemic and the risks it posed. COVID-19’s global spread was apparent by early March, yet the premier confidently advised Ontarians to “go away” and “have fun” over the March break holiday.
By the time a provincial lockdown was imposed on March 18, most of those travellers were already back in Ontario. Some brought the virus with them, where it began to spread into the community, most critically to long-term care facilities.
The disaster that ensued in long-term care centres has been well-documented. More than 1,450 long-term care residents have died of COVID-19. More may have perished due to neglect as portions of the care system, particularly in for-profit facilities, effectively collapsed.
The province was again slow to respond, despite well-known risks in the sector, especially its increasing reliance on part-time itinerant staff, and more general concerns over the quality and level of care being provided in long-term care facilities. Many of these issues had been highlighted less than a year earlier in the July 2019 report of the inquiry into the murders of nursing home residents by nurse Elizabeth Wettlaufer.
Elizabeth Wettlaufer is escorted by police from the courthouse in Woodstock, Ont., in June 2017. THE CANADIAN PRESS/Dave Chidley. THE CANADIAN PRESS/Dave Chidley
The province’s promise of an “iron ring of protection” for care facility residents failed. The government then studiously avoided a formal judicial inquiry into the COVID-19 care home disaster, opting for a less formal commission, which will lack public testimony, under oath, by key officials in system.
Seasonal workers
Early warning bells were also sounded around the potential risks to large numbers of temporary foreign farm workers employed in Ontario. Crowded, unsanitary living conditions, as well as the vulnerability to deportation for workers who lack permanent resident status if fired by their employers, were again well-known long before the arrival of COVID-19.
Yet the province failed to take proactive action, despite having substantial legal authority to set and enforce standards and practices for farm operators under occupational health and safety, public health and agricultural legislation.
Those responsibilities were left to the ad hoc efforts of local health units, most notably in Windsor-Essex. The result was more than 1,000 cases of COVID-19 among temporary farm workers and at least three deaths.
School reopenings
The government’s latest missteps have been around the reopening of schools in September. Major concerns are being raised by health experts, school boards, teachers and parents about the government’s approach to opening elementary schools.
The government seems to be proceeding on a largely business-as-usual model with normal, pre-pandemic class sizes. Personal protective equipment will be provided for teachers, and masks are required for students in grades 4 to 8, and are recommended for younger children.
But health experts and public health authorities have highlighted the need to reduce class sizes to control COVID-19 in schools. With smaller classes, any outbreak would be limited to a smaller group. Teachers are also far more likely to be able to manage the behaviour of their students in smaller classes.
The Ford government, overall, has presented an image of deep concern and empathy for the victims of the pandemic. But it’s flailing when it comes to delivering the kinds of concrete, proactive measures that COVID-19 requires. The premier’s own management style remains more like that of a city councillor — someone who is genuinely trying to help his constituents, but suggests he’s up against forces beyond his control.
‘Final sign-off’
This is an odd stance for a premier who once declared that he had “final sign-off on everything in this province.” At times the government has seemed unable to grasp the scope of the many tools at its disposal to deal with the pandemic.
The province is spending nearly $6 billion annually to keep hydro rates artificially low. In that context, it should be able to find the means to implement a safer and more effective plan for reopening public schools, where there are significant risks of triggering a second wave of COVID-19.
Despite its challenges in dealing with COVID-19, the province has been quietly efficient in the ongoing pursuit of its pro-business agenda. In fact, in many ways, that agenda has accelerated under the cover of the pandemic.
The land development industry continues to be a favourite of the government. Proposed revisions to the Growth Plan for the Greater Golden Horseshoe region released in June would compel municipalities to make land available to developers to accommodate doubtful projections of population growth to 2051.
Migrant workers in Leamington, Ont., wave hello at one another. The Ford government has failed to ensure temporary foreign farm workers were safe from COVID-19 duing the pandemic. THE CANADIAN PRESS/Rob Gurdebeke
The same proposed amendments would permit aggregate extraction operations (for example, gravel pits and quarries) in the habitat of endangered and threatened species. The province’s environmental assessment process, in place since the mid-1970s, was largely dismantled through the government’s omnibus “Economic Recovery Act” pushed through the legislature in July.
Where the government’s combination of empathy, administrative ineptitude and responsiveness to whatever developers and other industries seem to ask of it will lead is unknown. But that doesn’t serve the interests of Ontario residents very well. Nor does it provide a very strong basis on which to head into an election less than two years away.
B.C. was expected to experience less severe economic fallout than other provinces because it was in a better fiscal position heading into the Covid-19 pandemic, allowing it to provide large amounts of fiscal stimulus, according to the think tank’s economic outlook released on Monday.
Also, along with P.E.I. and Manitoba, lower per capita Covid-19 cases mean B.C. would likely suffer smaller economic declines.
The report forecasted a relatively modest contraction of 5.5% for B.C. in 2020, and an expansion of 6.7% in 2021.
‘Western Canada’s oil sands are high-cost ventures compared to most other types of oil resources,’ shows Carbon Tracker’s recent report, Pipe Dreams: Why Canada’s proposed pipelines don’t fit in a Paris-compliant world.“In an economically rational low-carbon world where structurally lower oil demand is satisfied with the most competitive (lowest cost) supply options, no new oil sands projects would go ahead on economic grounds.”
No New Pipelines Are Needed
“Oil demand will be lower in a Paris-aligned world…The projects which go ahead in a world of limited demand are those that have the lowest production costs.”
Prospective pipeline projects represent a significant expansion of capacity, with taxpayer support. However, new pipelines are surplus to requirements under Paris Agreement demand levels.
The Pipe Dreams report has 7 key findings.
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.
Lastly, the Canadian authorities face the challenge of trying to reconcile their natural resources development plans with their positioning on climate. With Canada previously having shown leadership on climate change issues, the government’s support for pipeline projects reliant on the failure of the Paris Agreement risks damaging its global credibility.
Chrystia Freeland: deputy prime minister of Canada and minister of finance
Bill Morneau, former finance minster, was a supporter of the Trans Mountain Pipeline, but now that he has resigned, it puts the project in question, as it does the other pipelines too.
Chrystia Freeland, deputy prime minister has replaced him. Her view seem to be more aligned with Trudeau’s. In his pre-election promises, many of them included a greener economy, with a reduction in emissions and pollution.
Intergovernmental Affairs Minister Dominic LeBlanc met with the new Newfoundland and Labrador Liberal Premier Andrew Furey, on August 20, to discuss their oil and gas problems. Like Alberta, this sector makes up a fair portion of the GDP at 25.7%.
Troubling still, is the millions more Muskrat Falls will cost the province, which has become a real boondoggle for the province. Mr LeBlanc suggested this wouldn’t interfere with Canada’s commitments to fight climate change, but this is the same old tirade the federal Liberals have been touting out since they were elected in 2015. It’s amounted to very little other than lip service.
In Alberta, where oil gas and mining is around 27.4% of the provincial GDP, Alberta Premier Jason Kenney has been getting comfortable with how the money and support has been flowing from the federal government. He has pipelines moving, and coal mines popping up along the eastern slopes of the Rockies.
The Alberta Energy Regulator board was dismissed last Fall for “gross mismanagement and waste of public resources, and critical failures of board oversight and management override of internal controls.” Mr. Kenney’s campaign manager and climate denier, John Weissenberger, is the new vice president, with Laurie Pushor as chief executive officer. Neither of the appointments are inspire trust from the general public, but social licensing, of any kind, is of little concern to Mr. Kenney. He wants the economy churning out money and fossil fuel jobs. Making protesting illegal means he’s bothered with fewer complaints.
The common denominator neither of these two premiers counted on was Chrystia Freeland being appointed minister of finance. In her role as deputy prime minister, she was responsible for handling western alienation. She grew up in Alberta and has an understanding of this issue. She is a huge advocate for human rights world wide, and she has performed superbly at every challenge she has been handed.
She will have an understanding of how the poor have had to live in pollution and how these communities have been marginalized with no-one to speak for them. She will be well aware of the health affects oil, gas, and coal have imposed on these people and how it has affected the health of the world’s population. She will be more attuned to Trudeau’s vision of creating a greener recovery than Mr. Morneau was. He is more of a capitalist and was more apt to direct funds, unaligned with the prime minister’s vision.
'The restart of our economy needs to be green': Freeland on de-carbonization of Canadian economy pic.twitter.com/9yYk37pi2c
Her words are inspiring. Her views are less myopic than those of the former minister. She has global working experience and is an international communicator. It may be too early to feel hopeful, but her contribution to Canada’s economy and recovery will not be insignificant.
“No country would find 173 billion barrels of oil in the ground and just leave them there,” Trudeau told participants at the big CERAWeek oil and gas conference. “The resource will be developed. Our job is to ensure this is done responsibly, safely and sustainably.”
