Our Changing Climate and its Economic Impacts

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We are suffering a fever.  Month after month, this old planet just keeps getting warmer.  Not actually hotter month by month – we still have summer and winter.  But each month is usually a little bit warmer than it was a few years ago at the same month.  Despite the cold episodes in our winter here in eastern Canada and the long slow start to Spring, when they average in our temperatures with those from the rest of the world, the NOAA scientists report a much warmer than usual year.  If things continue this way through the northern summer, we could see some significant damage to coral reefs due to coral bleaching both in the Caribbean and in South-east Asia.

MAr-May 2014 global temp NOAA

On this map showing temperature anomalies as percentiles for the March to May period, eastern North America stands out as the only substantial land area with temperatures cooler than usual for this time of year.  Image courtesy of NOAA National Climatic Data Center.

NOAA’s global report for the month of May reports May 2014 was the warmest May on record averaging 0.74oC above the average for the 20th century.  This was primarily due to warm ocean temperatures; when they examined land temperatures only, this May was only the fourth warmest.  Looking further back, the global average temperature for the March to May period was the second warmest on record behind that for 2010.  The March to May map shows how eastern North America was clearly doing a very different dance to the rest of the world, remaining cooler than average while virtually every other land area on the planet was warmer or much warmer than average.  Australia, which had had a warm summer continued with its warmest May ever, while Alaska recorded its sixth warmest May.

The NOAA climate scientists are still declaring an el Niño event has about a 70% chance of starting in the next few months, and an 80% of commencing by later this Fall.  I think we are probably headed for a warm Fall and Winter.  Of course, that is ‘we’ globally.  There remains the chance that some portion of the globe, like eastern North America might do its own thing as it did last winter – you can always depend on the weather (rather than climate) to be undependable!

Economic Costs of Climate Change are Starting to be Recognized

While there remain plenty of climate change deniers out there, national governments and the business community are beginning to think about the economic costs of climate change.  It’s funny to me that we have abundant evidence of serious environmental consequences of climate changes now occurring, but these do not seem to grab the attention of governments and business.  Somehow, economic costs seem so much more real than environmental ones.  Still, at least they are starting to recognize the substantial costs of continuing business as usual, and that is far better than sitting dumbly assuming that nothing out of the ordinary is happening.

One action that got media attention was an Op-Ed in the New York Times on June 21st by former US Treasury Secretary, Henry Paulson.  He stated that we are “staring down a climate bubble that poses enormous risks to both our environment and economy. The warning signs are clear and growing more urgent as the risks go unchecked”.  In Paulson’s view we, meaning the US, has got to act and soon.  His preferred approach?  A carbon tax.  He says that failing to act on carbon pollution will be catastrophic: “With [the 2008 financial collapse]  indelibly affecting my perspective, viewing climate change in terms of risk assessment and risk management makes clear to me that taking a cautiously conservative stance — that is, waiting for more information before acting — is actually taking a very radical risk. We’ll never know enough to resolve all of the uncertainties.  But we know enough to recognize that we must act now”.  A dyed in the wool, senior Republican who clearly gets it.

I also saw an interview in GreenBiz.com with Mike Robinson, VP of Sustainability at General Motors, concerning GM’s recent signing of the Climate Declaration, an advocacy device organized by Ceres to bring businesses and individuals to lobby the US government to take action on climate change.  The list of names is interesting; GM is certainly the largest corporation on board.  And, gee whiz, there do not appear to be any fossil fuel companies to be seen!

ClimateDeclaration_42814

The Climate Declaration and the companies that had signed on by late June.
Image from GreenBiz.com.

OECD’s New Report on the Global Economy

The OECD is an international, business-friendly organization.  It has just released a report, Policy Challenges for the Next 50 Years, forecasting the global economy through the next several decades.  In typically positive, upbeat fashion, it tries to put the best spin on a global economy that has been stumbling about since the 2008 crash.  Still, it is forced to admit that GDP growth will decline over the next 50 years and that income inequality will become greater.  OECD has a remarkably conservative view of the likely impact of climate change, simply stating that “rising greenhouse gas concentrations pose the most comprehensively global risk to economic output”, and then going on to say, “while the full effects of unfettered GHG emissions are expected to produce their largest economic damages after 2060, rising global temperatures may start to affect GDP earlier.”  A couple of paragraphs later they estimate that global GDP might be reduced by between 0.7 and 2.5% by 2060.  They clearly don’t see climate change as anything to worry about just yet.  Do the authors pay any attention to environmental woes, or the costs of environmental crises that are happening around the world right now?

What I did find interesting is that the OECD report drew attention to their previously published estimate that a broad effort to mitigate CO2 pollution could yield a 6% boost to the global economy, partly because there exist some 550 different measures encouraging production of fossil fuels, amounting to $ 90 Billion (in 2011), and in addition, there are measures encouraging use of fossil fuels in various emerging and developing countries that together amount to $ 544 Billion (2012 data).  It seems a no-brainer to shift away from fossil fuels as quickly as possible, but as we all know, forging a comprehensive global climate treaty is not proceeding very well.

A New Way Forward to Break the Impasse in Climate Negotiations

This conveniently lets me turn to another article.  Writing in the journal Nature Climate Change, Marco Grasso, Università Milano-Bicocca, Italy, and J. Timmins Roberts, Brown University, Rhode Island, provide a perspective on how to move the negotiations for the climate treaty forward.  In A Compromise to Break the Climate Impasse, they suggest 1) initially limiting negotiations to a group of just 13 countries (actually 12 plus the EU) that together account for 81% of total cumulative emissions since 1990, 2) using national rates of consumption of carbon rather than rates of production to determine relative responsibility, 3) taking both responsibility and capacity to act into account in achieving an equitable apportionment of shares of emissions to be cut back, and 4) taking the negotiation back to the full suite of UNCCD member countries only after these 13 have reached agreement.  It’s an interesting proposal, although one would still need to get the US, China, Russia, India, and so on to reach agreement, and then gang up and push Canada and Australia to agreement also.

There were several interesting details in this article concerning Canada.  Canada ranks 7th in this group of 13 in terms of cumulative emissions, with 2.1% of total world emissions since 1990.  One can say that Canada only contributes a measly 2%, or note we are the 7th worst carbon polluter.  I expect Stephen Harper to cling to the former view.  Secondly, Canada’s production-based emissions since 1990 are almost identical to its consumption-based emissions: 10,693 metric tonnes CO2 produced in fuel and other products, and 10,953 metric tonnes CO2 released during consumption.

So much for the Harper government line that our CO2 performance looks so poor relative to other countries because we are a resource-exporting nation.  No, we export a lot of fuel that then gets burned elsewhere, but we also emit a lot of CO2 in operating our economy – about 260 metric tonnes more.  We are just really rather irresponsible emitters of CO2 all around! 

Some other countries have substantial imbalances, notably South Africa (29%), Russia (26%), and China (15%) which produce a good deal more CO2 polluting products than they consume, and the EU (22%), and Japan (21%) which consume more such products than they produce.

The compromise sounds to me like a worthwhile approach to explore.  But of course, I thought having the full 100+ countries sit round the table and agree would be an approach that would work once everyone understood how serious the problem is.  I keep forgetting that politicians only think short-term, and only about winning.

Growing Recognition of the Value in Formal Economic Accounting of Natural Capital

In the same issue of Nature Climate Change, Matthew Agarwala, of the London School of Economics, and three colleagues provide a commentary on economic accounting for natural capital.  They begin with the point that at least $ 40 Trillion per year is omitted from estimates of the global annual GDP.  This $ 40 Trillion is an estimate by the World Bank of the value of goods and services derived from the natural world for free every year.  It’s an under-estimate because the World Bank only used data from some of the ecosystem goods and services in just 100 countries.

Before going further, many ecologists, including me, have a real concern that converting nature to a sum of money representing what it does for us risks turning nature into a commodity that might be replaced by something man-made and believed to do the same things.  In fact, nature has tremendous esthetic, spiritual, cultural, historical and religious value beyond its value in providing us with goods and services.  Also, nature does not exist to fuel our economy, and we are hubristic enough without encouraging each other to convert nature into dollars and cents.  Still, for those, like Henry Paulson who live and breathe dollars and cents, pointing out the tremendous economic value provided to our economy by nature is probably a worthwhile exercise.  Just remember that is not the only value nature possesses.

Anyway, Agarwala and colleagues maintain that both governments and corporations are beginning to see the value in providing a proper economic valuation of their natural capital, in order to more accurately measure their economic performance, assets and liabilities.  They tell of a recent demand by shareholders that giant ExxonMobile “disclose the potential impact on natural capital asset (fossil fuel reserves) values if governments were to enforce emissions restrictions consistent with the 2 °C temperature rise target.”  Shareholders have a right to this information because the reserves are the major capital asset of the corporation, and if they suddenly become reserves that cannot be marketed, the value of the corporation drops like a stone.  The resulting report, which ExxonMobile has to be forced to publish, claimed that “none of [ExxonMobil’s] hydrocarbon reserves are now or will become stranded” on the grounds that they consider such an aggressive emissions reduction policy to be “highly unlikely”.  Now doubt they consider it highly unlikely because they believe they have the governments of the world suitably stuffed into their corporate back pockets (and evidence from Canada suggests they may well be right).  In fact, it is almost certain that there will be substantial ‘stranded assets’ left in the ground when we finally come to our collective senses and stop using fossil fuels.  If that does not happen, we will be so busy dealing with run-away climate change that we won’t much care about balance sheets or profits and losses in the markets.

Agarwala and colleagues discuss the difficulty of adequately valuing many natural capital assets – what is the value of replenishing oxygen in our atmosphere?  Plants on land and in the oceans share this immense job, while we keep consuming it.  They suggest that building economically acceptable approaches to value carbon, or CO2, may be a good beginning even though it is more of a liability than an asset, with other types of natural capital valued later.  They also consider the ways in which climate change and economic activity interact in affecting value of natural capital, and how it is important to include all important types of natural capital in the accounting.  For example, they state “hydropower in the Mekong River Basin (MRB) may serve a low carbon agenda, but the MRB is also a biodiversity hotspot, home to at least 877 fish species, the world’s largest inland fishery and the 70 million people that depend on it for up to 70% of their protein intake.  The more than 60 dams currently under consideration on the Mekong would interrupt nutrient deposition and fish migrations, compromising downstream agriculture and fisheries with estimated impacts ranging from +US$33 billion to –US$274 billion.  A focus purely on carbon would omit these broader natural capital impacts with severe consequences for public wellbeing, private sector revenues and social and political stability.  Crucially, the economic valuation of natural capital offers a common metric, allowing these competing goals and impacts to be compared on local and global levels”.

Of course the real value of natural capital accounting comes when decisions are being made on the profitability of undertaking particular ventures, whether these are being contemplated by governments or corporations.  If those planning a venture were required to not undertake it unless there is an overall economic profit in so doing, or if the overall economic loss is offset by the resulting societal benefit, we would be making far better decisions, as governments or as corporations than we do now.  It still won’t turn governments or corporations into model conservationists, but I think it would move them a lot closer to this goal than going on as we presently do.

Why, just today, Twitter alerted me to an article describing a hare-brained scheme by some group of Italian developers fronted by John Travolta (who just lost any cred he ever had with me) to turn Lighthouse Reef, one of Belize’s three Caribbean atolls, and location of two UNESCO World Heritage sites, into a megaresort for millionaires, called Puerto Azul, including a private jetport, a Formula One speedway, and an outdoor amphitheatre dedicated to Andrea Bocelli.  On a coral reef!  It seems some money has already been used to fly Belizean dignitaries to a glitzy launch event in Cannes, but it is not a done deal, and I’d like to believe Belize is capable of avoiding such a travesty.  (I do not need natural capital accounting to know this is a terrible project, but if the accounting was done it might help to persuade those who apparently do not see anything wrong with building a Formula One speedway on top of a reef.)  The fact that such outlandish projects proceed to the point of a launch party is bizarre.  There is a fairly extensive desert just across the Mediterranean, south of Italy with lots of room for speedways and amphitheatres.  You don’t build them on top of living reefs.  You really don’t.  It’s simply the wrong thing to do………

great-blue-hole-belize

The Blue Hole on Lighthouse Reef, perhaps soon to be a new Formula One speedway, a giant amphitheatre, and a modern jetport.  Some people (like John Travolta) just seem to like to mess things up!

But come to think of it, the world does include Dubai, which has done a masterful job of building stuff on top of its few scattered, suffering reefs.  So let’s use natural capital accounting to try and hold brain-dead developers and their glitterati friends to a higher standard than is currently used!

Sat_Map_Jan_07_OL

The Dubai coastline, sort of a developer’s wet dream.  Fortunately, the 2008 global economic crash has ensured that most of this awfulness has not yet been built.  Palm Jumeirah, the structure at the left, was built, and now functions as a rather strange holiday destination.  Image from Wikipedia

Categories: Climate change, Economics, Politics | Leave a comment

Zone Tropical Coastal Oceans; Manage Them More Like Land

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Lots of People Live Along Tropical Coasts

We appear to have been always a coastal species.  If we define ‘coastal’ as ‘within 100 km of a coastline’, then the coastal strip comprises 21% of all land, but is currently occupied by 2.6 billion people, 37% of humanity.  If we limit attention to the tropical coastal strip, 1.36 billion of us, 20% of all humanity, currently live on just 7% of all land, at densities that average twice as great as in inland areas.  Nine of the world’s 19 megacities, larger than 10 million occupants, are tropical coastal cities.  These numbers are part of a recently published study by a geographically broadly distributed group of scientists I had the pleasure of leading.  They are based on 2011 demographic data.

Manila 1989 vs 2012 lo rez USGS and NASA credits

Landsat satellite images depict the growth of Manila between 1989 and 2012.  Covering 638 km2, its greater metro region now houses 11 million people, making it the 9th largest city by population.  One fifth of the global population occurs along tropical coasts in small villages and in cities like this.  Image courtesy U.S. Geological Survey – Earth Resources Observation and Science Center, and National Aeronautics and Space Administration – Land Processes Distributed Active Archive Center

Using available data on demographic trends, we determined that by mid-century, 2050, the tropical coastal population will have grown by 45% to 1.95 billion, living at an average density of 199 people per km2 (the present average density on tropical coasts is 141 per km2).  What happens along tropical coasts is of direct concern to a sizeable number of people, many of whom derive their livelihoods, and much of their food from the nearby ocean.

Sale et al Figure 1

Global population density emphasizing the coastal region (within 100 km of shore) based on LandScan 2011 data. Population density is greatest in the tropical coastal region, where 20% of the planet’s 7 billion people live on a mere 7% of Earth’s total land area at densities averaging 141 km-2.
Figure from Sale et al, 2014, Marine Pollution Bulletin.

Present Coastal Management Policies are Failing Globally

Conceived and funded primarily by Canada-based Institute for Water, Environment and Science, of the United Nations University, our project began with a small workshop held at the University of Queensland, Brisbane, Australia.  The team included fisheries scientists, conservation scientists, social scientists and an expert in marine law.  Most of us had wide experience in efforts to improve coastal management in the tropics and that experience came from around the world.  We looked critically at the status of tropical coastal waters and their fisheries, made reasonable projections to mid-century, and concluded that current procedures and level of effort to improve management of these coastal waters are seriously inadequate.  They are doomed to fail unless changed.

The fact is that coastal waters in the tropics have been being degraded by human activities for a very long time, just as is the case in temperate regions, and for much the same reasons – overfishing, pollution of various types from on-land activities, and inappropriate coastal development that leads to habitat destruction in coastal waters.  With growing populations the local stresses on coastal ecosystems all increase, making the task of managers more difficult year by year.  In addition, climate change and associated global impacts of humanity, most notably ocean acidification, are also creating stronger pressures on coastal waters.  Sea level rise, although happening slowly, forces ecosystems like salt marshes and mangrove forests, portions of the coastal fringe to migrate inland where that is still possible, and be squeezed into an ever narrowing range where our onshore development makes migration impossible.  Sea level rise also increases the potential damage to infrastructure due to tropical storms.  Acidification and warming are having growing impacts on many components of coastal marine ecosystems.  Most notably in the tropics, these impacts are making coral reefs less viable and the reef science community has been documenting the depressing deterioration of coral reef ecosystems for some time now.

One portion of our study was a look at the consequences for fishery production of the loss of corals on coral reefs.  It has been known for some time that many small reef fish species disappear, or become less abundant, following loss of coral.  We were able, using a modeling approach, to show that the changes in the reef ecosystem brought about by loss of coral also lead to a substantial reduction in the reef’s capacity to produce fishery species – those larger fish species that are major targets of coastal fisheries.

When one adds the environmental impacts of climate change and ocean acidification to the impacts of a growing human population, it is clear that stresses on coastal marine ecosystems are going to increase significantly through mid-century.  In other words, if our policies for managing these coastal ecosystems are inadequate now, they will be of even less use in future years.  We have to tackle the problem of how to manage the coastal ocean differently.

IMG_0292

Throughout the tropics, as here in Indonesia, millions of people derive their food and livelihoods from the coastal ocean.  Photo © Yvonne Sadovy de Mitcheson

We Know Why Policies Fail and How to Fix This Problem

The final part of the article is about why current policies fail and what can be done about it.  The good news is that current failure is not because we lack the technology to fix most of the problems we observe.  We know how to reduce fishing pressure.  We know how to reduce pollution of coastal waters.  We know how to develop our coastal lands in ways that do not destroy the capacity of the coastal ocean to continue to be productive and healthy.  We even know how to avoid conflicts between such uses of the coastal ocean as fishing, aquaculture, conservation, tourism and commerce.  But we are failing, repeatedly, to put this knowledge to good effect.

The reasons for this failure are several.  First, there is a widespread tendency to fail to approach management in a sufficiently integrated manner, with a holistic view of what is to be achieved.  Instead, we attempt to manage fisheries without reference to the impacts of pollution on the ecosystem the fish live within.  Or we manage water quality, without regard to the impacts of overfishing and habitat destruction.  Or, worst of all, we assume that climate change will have very deleterious impacts, and, feeling hopeless, we cease to pay any attention to local causes of habitat degradation, believing it’s not worth worrying about.  This tendency to tackle specific aspects (or none at all) rather than the whole problem is encouraged by the administrative structure a government has set up – separate agencies for fisheries, conservation, ports & harbors, and so on.  The tendency can be overcome, but only if there is leadership with vision to see the need to work more holistically.

Second, there is a great tendency to do things at too small a scale in space or time.  Environmental management is really about managing our impacts so that the ecological system can operate successfully.  It follows that the change to our activities needed to change our impacts must be mounted at an ecologically appropriate scale, and preferably with boundaries that mirror real ecological boundaries rather than artificial jurisdictional ones.  To do this requires sometimes that management agencies collaborate with agencies in neighboring jurisdictions in order to be able, together, to manage a large coastal ecosystem.  Then too, changing our impacts on a coastal marine region always takes time, and only after our impacts are beginning to lessen can the ecological system begin to repair itself.  Ecological change has its own timeframe, sometimes quite short, but frequently quite long relative to human attention spans.  This means that the results of a reduction of our impacts may not be observable for decades, or even longer.  Planning a project that requires real ecological results within 3-5 years almost guarantees failure, simply because the effort has not been sustained for sufficient time.  Indeed, many current efforts, done at too small a scale and for too short a time period, yield small, good-news stories of local success, which lasts a few years and then withers because the project has finished, and the effort has not been institutionalized.

Third, technical experts often forget that real live humans are a part of the system their efforts are designed to change.  And humans have cultural, societal, religious and traditional belief systems that strongly influence their responsiveness to new ideas.  There are pervasive beliefs, in many social systems, that the ocean is so immense that we can never really harm it – there will always be fish to catch.  Or beliefs that the ocean is so large that we can always dispose of our waste materials safely in it – it is impossible to pollute coastal waters, because pollution discharged there will simply be diluted away.  These beliefs are very strong, in developed as well as developing communities, despite many examples of evidence to the contrary.  Just try telling a recreational fisherman in Florida that, actually, recreational fishing has measurable and serious impacts on the abundance of reef fish populations, and needs to be regulated!  The belief systems that are integral to a particular community must be accommodated in any plan to implement or improve coastal management.  This accommodation is not achieved by lecturing people on the need to change, by providing data on the reasons why change is required, or even by painting pictures of how their world will degrade if they do not change.  It is achieved by working with people, over long periods of time to build their understanding of the need, and their receptivity to the actions to be implemented.  Far too few coastal management programs devote enough time to this public outreach, education, and accommodation effort.

Fourth, and perhaps most important, many efforts to improve coastal management fail because there is an absence of truly committed leadership.  This leadership can exist within government, in an environmental management agency, in a local NGO dedicated to conservation, in a particular stakeholder group such as a coastal fishery cooperative, or a tourism association, but it has to exist somewhere for success to be possible.  In many places in need of improved coastal management, this leadership does exist, but it lacks the tools and the finance to have any effect.  Such places are ones ripe for making real improvements to the condition of their coastal ocean.  Other places may lack any evident leadership for environmental improvement, and if that is the case, efforts to make improvements there will likely fail.

Our article proposes a superficially simple approach to obtaining success in coastal management, given that appropriate leadership is available.  We suggest the use of marine spatial planning (MSP) as a Trojan horse.  MSP is an objective methodology for prioritizing and then partitioning a marine region among competing uses.  It has been used successfully in the conservation arena to build networks of marine protected areas, but we suggest its use can be extended as the procedure for what amounts to land planning of the coastal ocean.  We routinely zone land for different uses; it is time to begin to zone the coastal ocean in a similar way, and MSP could facilitate doing that.

Beware_of_Greeks_bearing_gifts

We see Marine Spatial Planning as useful in its own right for ocean zoning, but also as a Trojan horse to insert the needed integrated, holistic perspective, and spatial and temporal scale at which to undertake coastal management.  Figure from Wikipedia Commons, after painting by Henri Motte

But in our view, this use of an objective zoning technique has its chief value in how it will solve the other major impediments to progress in coastal management.  To apply MSP in the sweeping way we propose would demand that administrative agencies collaborate effectively over time, would facilitate a more holistic view of the goal, would encourage an ecologically appropriate spatial and temporal scale of action, and hopefully would recognize the need to invest in understanding the needs, desires and beliefs of particular stakeholder groups.  In this way, MSP is a Trojan horse delivering a number of solutions to problems that were perhaps not even perceived at the time the decision to attempt to improve coastal management was made.

While our article paints a serious view of a degraded future for coastal populations throughout the world’s tropics, it does propose a workable approach for avoiding this future.  Yes, if climate change continues unchecked, life in many coastal regions will get a lot worse than it is now.  But if serious efforts are taken to correct the local causes of degradation, these coastal regions will be in far better shape than would otherwise be the case.  We know what the problem is, but we also know how to fix it.  The first step on that path is to recognize just how serious a problem it really is.  The second step is to get serious and appreciate that more of the same old approaches is just not good enough.  There is work to be done.

Categories: Changing Oceans, Climate change, coral reef science, Fisheries | Leave a comment

It’s Time for a Serious Discussion: Tar Sands, Fossil Fuels, Keystones and Gateways, and Canada’s Alternative Futures

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Pembina-Institute-Competing-in-Clean-Energy

A 2013 report by the Pembina Institute suggests Canada could build a robust industry based on alternative energy, especially if government supports comparable to those lavished on the
fossil fuel industry were provided.  Image © Pembina Institute

It’s time.  Canadians need to begin the discussion that we have been avoiding having ever since the Harper government pulled us out of the Kyoto Accord.  Yes, there is a lot of tar sands bitumen in Alberta.  Yes, it can be made into oil at considerable expense both in energy used to get it out of the ground and processed and in environmental contamination along the way.  Yes, the actions involved in digging it up or forcing it up with steam, processing it, and shipping it out, as well as in building the infrastructure to do all these things can generate jobs and economic activity.  But is this the right thing for Canada to be doing?

The tar sands industry has been growing rapidly, and there still are not adequate regulations in place to control its environmental excesses.  The Harper government, seemingly totally in the back pocket of the multinational energy corporations, has been a cheer-leader rather than a regulator for this industry from the moment it came into office.  Canada is a net energy exporter, and IEA data confirm that the tar sands production is largely surplus to our own energy needs.

The IEA’s Key World Energy Statistics for 2013 report that in 2012, Canada was the 6th largest oil producer, sending 182 Mt oil, or 4.4% of global production to market.  That year, Canada was also the 9th largest net oil exporter, with 82 Mt oil sent to the US or overseas.  In a 2014 article, the IMF estimates 2013 Canadian oil production to be 61% derived from tar sands oil.  The way I interpret these numbers is that a) Canada is a significant oil producer, b) Canada has net exports (total exports – imports) equivalent to 45% of production, and c) 61% of production derives from the tar sands.  It’s reasonable, therefore to suggest that if Canada voluntarily ceased all export and import of oil, it could provide for its own oil needs and still cut tar sands production by 82 Mt from the current 111 Mt, retaining production of 29 Mt from this source to cover Canadian oil needs.  The arithmetic looks like this:

  Current situation Proposed change
Non-tar sands production

71 Mt

71 Mt

Tar sands oil production

111 Mt

29 Mt

Total oil production

182 Mt

100 Mt

Surplus for export

82 Mt

0 Mt

 

I am not proposing Canada disrupt its economy to this extent overnight, but bear with me while I take this line of thought a bit further.  IEA statistics also show that Canada is a net exporter of natural gas:  As the world’s 5th largest producer Canada generates 157 billion m3 of gas, and has net exports of 57 billion m3 (these amounts are equivalent to approximately 193 and 70 Mt oil in energy content).  Given that natural gas is a less polluting from of fossil fuel to use (less CO2 released per unit of energy), Canada could cease exporting natural gas, and further reduce oil production by 70 Mt.  That brings tar sands activity to a halt, while reducing production of other oil to 30 Mt!

Of course, Canada also produces and exports coal.  According to IEA data for 2011, Canada produced 48 Mt of coal, and had net exports of 17.3 Mt coal.  Since 1 tonne of coal has an energy equivalence of 0.7 tonnes oil these amounts are equivalent to 33.6 Mt oil produced and net exports of 12.1 Mt.  Given that coal is a much less desirable fuel source environmentally than oil, Canada might decide to cancel coal production entirely, replacing the 21.5 Mt oil equivalent of coal used within Canada with natural gas and using its remaining ‘excess’ gas production to replace oil.  In this scenario, tar sands production would still cease while production of other oil would drop to 51.5 Mt produced.  Again, here is the arithmetic with all amounts converted to metric tonnes of oil equivalents:

 

Current case

Cease oil exports

Cease oil and gas exports

Cease coal production

Non-tar sands oil production

71 Mt

71 Mt

30 Mt

51.5 Mt

Tar sands oil production

111 Mt

29 Mt

0 Mt

0 Mt

Oil exported

82 Mt

0 Mt

0 Mt

0 Mt

Gas produced

193 Mtoe

193 Mtoe

193 Mtoe

193 Mtoe

Gas exported

70 Mtoe

70 Mtoe

0 Mtoe

0 Mtoe

Coal produced

33.6 Mtoe

33.6 Mtoe

33.6 Mtoe

0 Mtoe

Coal exported

12.1 Mtoe

12.1 Mtoe

12.1 Mtoe

0 Mtoe

 

The point I am making here is that it is within Canada’s power to radically alter the mix of fossil fuels we produce and whether or not we export without altering in any way the extent to which fossil fuels collectively supply our own needs.  We have production at present which is sufficiently in excess of the needs of our economy that we could choose tomorrow to shut down the tar sands completely, close all coal production and cease exporting any fossil fuels.  Of course, these options are draconian, and they would seriously inconvenience our customers and the corporations that have invested in production facilities on the assumption that they would be allowed to produce.  Draconian, but not impossible, and not outside the law – these are Canadian resources until they are dug up, and as a sovereign nation, Canada has the right not to develop its resources.  If Canada needs a justification for being draconian, it could claim that it is both reducing its own CO2 emissions, and foregoing export of fossil fuels because they are environmentally damaging and should be kept out of the market.  Sounds pretty environmentally responsible to me.

Making any of these shifts overnight would be impractical, because there would need to be extensive retooling to convert power plants to gas and to increase the availability of electric and gas-powered vehicles.  These shifts would result in job losses.  They would result in revenue losses for governments, primarily the Federal and Alberta governments.  And there would undoubtedly be legal battles with the energy corporations.  On the other hand, they would result in new employment opportunities in the reshaped economy, they would ease the pressures on the Canadian environment from water, soil and air pollution, they would cut the foolhardy waste due to the permanent contamination of enormous quantities of water used in tar sands extraction, and they would make a significant impact on the need to reduce Canada’s emissions of CO2.  These are all significant pluses that need to be factored in to any assessment.

While my simplistic scenarios look radical in the extreme, I’ve partly been emboldened by a report from the International Monetary Fund that provides a far smaller economic importance to the tar sands industry than one hears from government or from industry groups such as the Canadian Association of Petroleum Producers, CAPP.  The IMF report, with the innocuous title, “Canada.  Selected Issues”, appeared in February 2014.  It deals with two issues: “The unconventional energy boom in North America: Macroeconomic implications and challenges for Canada”, and “Is ‘dead’ money alive?  A firm-level analysis of Canadian non-financial listed corporations’ cash holdings and capital expenditure behavior.”  (I’ll spare you any discussion of the latter.)  The report sounds quite positive about the value of Canada’s tar sands industry, but it identifies significant risks related to possible loss of demand, and refuses to entertain the rosy growth projections talked up continuously by the Harper government and the producers.  Hannah McKinnon, of Environmental Defense, writing in the Huffington Post dissects the report, pointing out that it sees the tar sands as worth only about 2% of Canada’s $1.2 Trillion economy rather than the enormous engine that we must help grow even bigger.

Before dismissing out of hand the kinds of changes in fossil fuel policy I’ve thrown out here, a careful economic analysis of the full costs and benefits of the tar sands industry is called for.  Those costs must include the environmental costs, and the various subsidies provided to the fossil fuel industry by Federal or Provincial governments.  That would be a useful step in deciding among alternative futures.  It has not happened, because we have not been discussing any alternatives to the scenario preferred by the tar sands multinationals and by the government – a scenario that is based on a rapid tripling of production from the tar sands, all presumably for export.  Just because the industry wants to grow very big very quickly does not necessarily mean it is in Canada’s best interest to let this happen.  The current clamor over proposed new pipelines is all about building sufficient transport capacity for a ramped up production.  Without any increase in production Canada does not have a need for more pipelines unless the eastward flow of gas and oil that would be needed to compensate for a closeout of imports would require this.

There are many other things Canada can do to act to restore some of the environmental damage we have been causing.  Laudable decisions by several provinces to alter the mix of sources of electricity or encourage energy conservation, and by the USA to regulate mileage minima on automobiles (which Harper proudly announced Canada would go along with, while ignoring the fact that we could not avoid this) mean that Canada has made some slight headway in the battle to reduce CO2 emissions.  That headway has been smaller than it might have been because of the expansion in tar sands oil production, and the federal Harper government is distinctive in having done nothing that I can see to deal with Canada’s emissions other than commit to the Copenhagen Accord and then do nothing except lie about the progress they claimed Canada was making to fulfill the pledge.

Many of the steps that can be taken have commercial possibilities building the innovative technology to make an energy infrastructure powered in completely new ways.  Some of the steps involve changing Canadian attitudes to what constitutes success, by individuals and by economies.  All of the steps that could be taken help reduce the growing costs of environmental or climatic disasters.  It’s perhaps ironic that the floods of the spring of 2013, the most costly ‘natural’ disaster in Canadian history at $6 Billion, occurred in Alberta, the Province that has grown rich on royalties paid by tar sands multinationals.

canada-gdp-growth

Canada’s economy has been growing since 2011, but very slowly

Finally, it’s perhaps timely to raise questions about the economic costs and benefits for Canada of exploiting the tar sands, because the trickle-down that industry cheerleaders talk about has simply not been trickling down.  While the Harper government constantly stresses its wise and responsible management of the economy, and while the economy has shown positive rates of growth since the first quarter of 2012, the growth rates have been anemic, especially when Canada’s rate of population growth is factored in.  A report by Jim Stanford of the Canadian Centre for Policy Alternatives released in 2012 pointed to Canada’s middling performance since the 2008-9 recession, in contrast to government claims of superior performance.  And what growth there has been since the recession seems to have been gobbled up by the top 1% which, in Canada, have captured 37% of income growth while the bulk of Canadians are less well off than they were in the past.  Never mind that most of the profits from Canada’s resources boom are whisked offshore by predominantly foreign-owned multinationals.

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Canada currently has the second greatest income inequality with the top 1% capturing 37% of total income growth.  Figure © OECD

It is time to have a serious discussion about the kind of nation Canada wants to become, about the extent to which a sound environment is valued, and about the many different ways to structure Canada’s economy.  I am certain there is more than one path forward which will restore quality of life, though perhaps not grow vast wealth, while also restoring Canada to a place among the progressive nations that work together to restore our damaged environment and climate.  Better to choose one of those paths than to trip slavishly down the only path the Harper government will yet consider; one that requires continuous expansion of tar sands production and the infrastructure to get all that oil to market, but still does not seem to be providing anything very positive for the vast majority of Canadians.

cetacealab_orca at Gil Island

Orcas photographed off Gil Island, in the channel to Kitimat, the proposed terminal for the Northern Gateway pipeline.  Photo © CetaceaLab.org

Categories: Canada's environmental policies, Coal, Economics, Politics, Tar Sands, Uncategorized | Comments Off