Where Canada Gets Energy Wrong

Canada’s environmental performance is undermining its image as an energy superpower, argues Madelaine Drohan.
By: /
January 22, 2014
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Madelaine Drohan
Canada correspondent for The Economist, Author of The 9 Habits of Highly Effective Resource Economies, and contributor to The Economist Intelligence Unit

It’s that time of year when the world’s business and political elite flock to Davos, Switzerland for the annual meeting of the World Economic Forum.

This year, they will be shown the forum’s latest report on which countries do the best job of providing an affordable, sustainable, and secure energy supply. It’s no surprise that Norway is in the top spot. Of the 124 countries assessed, they have done the best job of managing the trade-offs necessary to ensure that energy contributes to a country’s economic, social, and environmental well-being. But it is somewhat of a shock to find Canada down in 14th place, below countries such as Colombia, Costa Rica, Romania, and Latvia. Yes, we've been lapped by Latvia.

This isn’t a great result for a country that Prime Minister Stephen Harper once boasted was an emerging energy superpower and whose government has poured time and resources into trying to achieve that status. And it cannot be dismissed as an assessment put together by the “environmental and other radical groups” that have been the bane of Natural Resource Minister Joe Oliver’s existence. The report is the result of a three-year research project by the World Economic Forum and Accenture, a global accounting firm. Only the most bull-headed of governments could ignore the message that Canada trails a wide range of countries in managing energy for the greater good.

The message is actually more pointed than that because Canada scored higher than any other country except Norway when it came to energy access and security, one of the three main factors the authors looked at. Even on economic growth and development its score exceeded some of the countries that were in the top 10. It is on environmental sustainability where Canada sank like a stone, not matching the score of any of the top 10 and even falling below some of its fellows in the second tier of the top 20.

Over and over again the report points to the environment as Canada’s weak spot, albeit in the carefully measured language of a global accountancy firm. “While the economically developed and resource-rich United States and Canada perform well across indicators for energy security, they face increasing pressure to improve the environmental sustainability of their energy systems,” say the authors. Further on in the report they give Canada high marks for the carbon-intensity of power generation, which is dominated by hydro, but go on to say that on methane and nitrous oxide emissions, Canada’s performance is not only among the lowest in the North American region, it is down in the lower quartile of global scores. Methane and nitrous oxide, along with carbon dioxide and fluorinated gases, are the four most important greenhouse gases.

Canada’s failure to address in any meaningful way its greenhouse gas emissions under the Conservatives and the Liberals before them won’t surprise Canadians who have followed this file. After signing the Kyoto Protocol and promising to bring emissions down to a level six percent below where they were in 1990, the Canadian government has since withdrawn from the protocol (the first country to do so) and made ineffective attempts to reduce emissions by regulations. Emissions have actually grown from 591 megatonnes carbon dioxide equivalent in 1990 to 702 megatonnes at the end of 2011 and the trajectory is upward. Moves such as the closure of the Nanticoke coal-generating plant by Ontario earlier this month will dampen future growth.

The federal government likes to focus on the reduction in carbon intensity (emissions per unit of GDP) that has taken place since 1990 and to point out that Canada’s carbon dioxide emissions accounted for only 1.8 percent of global emissions in 2010, down from 2.1 percent in 2005. But the plain fact is that Canada is belching out more of the stuff than ever before and it is unlikely to meet even its revised target, agreed to under the Copenhagen Accord in 2009 of reducing emissions to 17 percent below 2005 levels by 2020. Long-promised regulations for the oil and gas sector have been repeatedly delayed. The prime minister appeared to put them off again when he said just before Christmas that he hoped they would be done in concert with the U.S. “over the next couple of years”.

The government does not lack for advice on what it could be doing to improve this lamentable record. Putting a national price on carbon would be a good start. But rather than reviewing the numerous reports that have pointed to a better way, it’s worth looking at what the report’s authors said was good about Norway. “The country’s success arises mainly from two factors: its vast natural resource endowment and its focus on developing renewable, sustainable energy,” they said.

The report went on to say “Norway has placed great emphasis on furthering its environmental sustainability, setting itself the ambitious target of reducing its 1990 levels of global greenhouse gas emissions by 30% by 2020, and to becoming carbon neutral by 2050. Through the roll-out of a number of sound policies, Norway has made great strides towards a low-carbon economy with virtually all its electricity supply coming from hydro, and efficiency measures in public and private buildings. The wealth accumulated from its petroleum revenue positions Norway well to invest in developing new solutions for a low carbon future.” Canada compares favourably on the first of these factors but trails dismally on the second.

Canadians know much, if not all, of this story. Some even dismiss environmental costs as the price of being a major energy producer. But the country’s poor record will now be laid out in black and white for the 2,500 business and political leaders in Davos. The facts cannot be easily countered with a government advertising campaign showing mountains and lakes and forests. When the forum has praised the stability of Canada’s banking system in the past, the government has made much of the finding in news releases and speeches. You can confidently predict the only thing that will accompany this report is silence.