Next Steps on Energy

Michael Howlett and Nigel Kinney on the two large steps Canada can take to alter the existing domestic energy mix.
By: /
July 4, 2014
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Burnaby Mountain Chair in the Department of Political Science at Simon Fraser University

Following intense debate over Canada’s use of its own natural resources and the conduct of its mining companies abroad, the Canadian International Council is curating a project on natural resources over five weeks to examine Canada’s future policy environment for domestic resource extraction, energy security, and international regulatory standard-setting. The project will glean its insights from a variety of stakeholders from government, the private sector, and nongovernmental organizations in order to present a number of perspectives to better explain the challenges that we face moving forward and to delve into some of the controversial aspects of international, national, and provincial politics.

Below is the seventh response from Professor Michael Howlett and Nigel Kinney of Simon Fraser University the immediate steps that Ottawa should take to lessen its reliance on natural resources and fossil fuels.

Unlike many countries, Canada is in a very favourable position vis à vis its internal energy uses and its supply of energy resources. In this sense, Canada is similar to countries like Norway or Qatar—or even Saudi Arabia and Venezuela—in that ‘reliance’ doe not mean, as it does in countries like the Ukraine, Germany, China or Japan, being at the mercy of foreign suppliers like Russia or Iran. Rather ‘reliance’ here generally concerns (a) reliance on energy exports to generate wealth and (b) the mix of energy types consumed domestically and the impact this mix has on other goals and areas such as climate change or environmental protection.

The first issue has been addressed in the previousquestions. While it may be possible to continue to export large amounts of natural gas, oil, and coal in a responsible way that minimizes climate change impacts from mining and transportation and even offsets aspects of their use in other countries through, for example, tree planting and forest preservation and other carbon neutralization techniques, none of this is being done by the current Harper government and little hope is held out for positive progress in this direction without a change in government.

On the second issue, there are two large steps Canada can take to alter the existing mix of internal use. The first is to promote off-fossil fuel development through greater investment in renewable resources including wind, solar, geothermal, and hydro-electricity combined with efforts to conservation in key areas such as home heating and residential and commercial use. Many provinces, led by their provincial utility companies have embarked on such projects and have enviable track records but have received little help, if any, from the federal government. By the National Energy Board’s most recent figures, Canada’s electricity production is trending in the right direction with a majority of new projects now coming from ‘green’ sources such as wind, solar, geothermal, and hydro (nuclear projects being a more controversial aspect of this mix). This is in sharp contrast to oil production, which has increased exponentially over the past decade with even larger increases projected over the next 20 years. Much of this oil production, of course, is strictly for export, and is never fully refined, let alone used, while on Canadian soil.

The second and equally vital step would be for Ottawa to enact a federal carbon trading or taxation program to curb both carbon production and consumption. Again, the provinces have led the way in this area as a carbon tax program has been enacted in both British Columbia and Quebec with varying degrees of success. Quebec’s tax has been viewed as mostly unsuccessful, which has been attributed to its tax being too minimal to promote off-fossil fuel use. British Columbia’s carbon tax, on the other had, has been largely effective in reducing emissions while redistributing much of the resulting revenue back to individual consumers in a ‘win-win’ scenario for both citizens and the environment. Indeed, British Columbia’s provincial tax could be used as model for the federal government to curb the nation’s reliance on natural resources. An improvement to this program would see a larger portion of the revenue funneled towards green energy sources or other programs aimed at reducing consumption of natural resources as opposed to returning all of the funds to consumers.

A second, related option would be create a cap and trade program similar those created in the United States (to address the problem of acid rain), the EU, and recently in Japan. Cap and trade systems usually involve a greater amount of planning and regulatory involvement to implement but have proven to be equally effective to a carbon tax in reducing emissions while generating funds which in this case go to companies which reduce emissions by the greatest amount. The implementation of a carbon tax/cap and trade system combined with a shift of investment away from oil and natural gas towards renewable energy would put Canada back on the path toward a sustainable future—at least as far as its domestic consumption is concerned.