William Macdonald is a corporate lawyer turned consultant with a long history of public service and social engagement.
This is the second of two articles. Part 1 covered the changes in regional and national political outlook in Canada since the 1960s – in Alberta and Quebec in particular. Part 2 outlines a new grand national bargain based on net-zero carbon emissions that Canada will need to thrive over the next two decades.
Canada needs to rekindle its post-Second World War success, which was based on social and economic advance going hand in hand – an approach largely absent in the federal governments under Stephen Harper and Justin Trudeau.
To again move forward boldly and together as a country, we should explore the possibility of a low-carbon, east-west energy corridor between Quebec and British Columbia that would carry Western Canadian oil and Quebec hydro power.
We have entered a huge moment for Canada and the rest of the world. But as I discussed in Part 1, there are daunting challenges ahead, as well as great opportunities. Canada is largely through its 40-year Quebec separatist crisis, but now faces a potential Western Canada crisis.
This national unity challenge comes from oil and Alberta, and it is aggravated by external factors. Quebec separatism arose from within the country at a time when the external world was largely stable and friendly to Canada.
The Alberta Wexit risk today partly reflects challenges from within Canada – including insufficient efforts on climate change and Indigenous relations from the oil industry, Alberta and Ottawa. And these are set against a long background of Alberta political disaffection that stretches back to the Great Depression and was intensified after the discovery of oil in 1947.
But now the rest of the world is highly unstable, and Alberta’s oil industry is under siege from opponents in Canada and abroad.
Yet I sense an opportunity in the present moment for Alberta and Quebec to find common cause that strengthens each and strengthens Canada. Quebec is now thriving and more confident than ever. Alberta is less thriving and more challenged than at any time since the postwar birth of its oil industry. But each province needs help from the other and from the country as a whole. They have the basis for a grand bargain between them – one supported by Ottawa, Ontario and the rest of the country.
Both Quebec and Alberta need concrete things, and the rest of the country needs national unity. The right alliance between Alberta and Quebec can bring each what it seeks – substantively and politically. Quebec has survived hard existential and identity threats. Alberta is no longer thriving and needs to move beyond its dependency on oil and agriculture, yet still strengthen both sectors. And both provinces need to move more of their economies into high tech and other promising industries of the future.
A grand bargain is also the political way forward to help both the federal Liberals and Conservatives overcome their huge respective regional political challenges. The Liberals have been mostly shut out west of Ontario for 50 years (B.C. has been a partial exception). The wide divisions on social issues among Conservatives hamper them in much of Eastern Canada (Erin O’Toole is trying hard to move beyond these).
And all provinces still need greater access to markets in the others. This would provide the impetus for successful negotiations to achieve mutually acceptable political outcomes. Ottawa could provide another enormously helpful catalyst with a federal “bind-the-country-together” infrastructure fund. No project would qualify for the federal funding that did not cross at least one provincial boundary.
A small possible example: Quebec wants and needs a divided four-lane highway between Montreal and Gatineau near Ottawa (the road is now two lanes). The province could request help in return for allowing a pipeline between the two sets of lanes.
The good news is that much of the private sector is already on board for a national effort, including the most contentious sector: Alberta’s oil sands producers. They realize that for Canada as a whole to get to net-zero carbon emissions, there will have to be bargaining, trade-offs and co-operation between all regions and sectors.
In August, 2019, three of the biggest oil sands producers took out a full-page ad in The Globe and Mail. “We have big decisions to make as a country,” Canadian Natural Resources Ltd. (CNRL), Cenovus Energy Inc. and MEG Energy Corp. said. They sought to put responsible energy decisions at the centre of the then-approaching federal election.
The ad came a month after CNRL adopted a long-term goal of achieving net-zero greenhouse gas emissions from its oil sands operations. Steve Laut, then CNRL executive vice-chairman, outlined a potential path forward. “Instead of relying on planting trees or purchasing carbon offsets to reach the net-zero goal, innovation will be the key. We’re trying to get there just using technology and Canadian ingenuity,” he told CBC News.
Earlier this year, Cenovus announced its intention to achieve net-zero greenhouse gas emissions by 2050, aligning its ambition with the federal government’s pledge last fall and in the recent Throne Speech to legislate its goal of net-zero emissions from Canada by 2050.
Of course, burning oil produces greenhouse gases and extracting it from the oil sands is particularly energy-intensive. But as Mr. Laut explained, achieving net-zero may not be an unrealistic aspiration. Industry and governments are dedicating substantial and growing resources to develop and deploy technological innovations across the oil sands sector.
Mr. Laut expects continuous, significant additional reductions in greenhouse gas emissions through innovation. He cited carbon capture, storage and conversion, along with transformational production technologies and hundreds of individually small optimizations that, cumulatively, will be meaningful. “It won’t be easy, but there is a lot of technology out there. It’s impressive,” he said.
The goal is not to eliminate emissions from the oil sands entirely, but to lower them to the point where they are no longer globally fundamental to addressing climate change. There are two other compelling reasons to see CNRL’s net-zero commitment as far from “pie-in-the-sky.”
First, the company has put its name behind it. It wouldn’t position itself to be humiliated on such a big issue. Second, its future as a business depends on it. CNRL is a deeply serious oil sands player at a time when many foreign giants, in particular, are abandoning Alberta. The company has recently made two large acquisitions, Royal Dutch Shell’s oil sands mining assets and Devon Energy Corp.’s oil sands and heavy oil operations, to become Canada’s largest oil sands producer. CNRL has decided to lead and put its money where its mouth is.
The rest of Canada could greatly assist in meeting the oil sands challenge by committing to a low-carbon national energy corridor, led by Ottawa with the support of Ontario, Quebec, Alberta, most First Nations, non-ideological environmentalists and the energy industry. The needed discussions could be launched this year. If it were to take as long to get to net-zero emissions as it took to get from the Charlottetown Conference of 1864 to the arrival of the first transcontinental train in Vancouver in 1886, the low-carbon goal could be reached by 2042.
It is worth taking the time to get all the way there in the interests of national unity, economic growth and climate change. The likely alternatives are far worse. Disunity and the stranding of significant oil sands assets would be a large negative for Canada and its standing in the world.
But it is best to focus on the multiple benefits of such a corridor. They would be environmental, economic and political. Production and transport of lower-carbon oil sands crudes would see a “both-and” achievement of economic growth and real climate change action, while tempering rising separatist sentiment in Alberta without triggering serious negative sentiment elsewhere.
The basic team-up would be between Quebec and Alberta. Quebec would export green electricity to the rest of Canada, while Alberta would transport lower-carbon oil across Canada and to the rest of the world. B.C. could also export large amounts of its green electricity to Alberta, which now generates almost all of its power by burning coal and natural gas.
First Nations, too, would have more opportunities to achieve both-and objectives of increased economic opportunity and jobs in the oil sands sector, while addressing climate change and other environmental issues (emissions and preservation of air, land and water).
A low-carbon corridor would contribute to better national and regional economic balance as well. A revitalized lower-carbon oil sector would generate greater export revenue and support a forward-looking agriculture policy and a globally competitive Canadian high-tech sector.
High tech is now centred primarily in Southern Ontario, Montreal and Vancouver. Calgary and Edmonton would be able to join in as Alberta’s energy-based economy stabilizes and modernizes. Perhaps the federal government, Alberta and Saskatchewan could launch a technology research project to further reduce emissions from the oil sands.
Ottawa also needs help in meeting its goal under the Paris Agreement of national net-zero by 2050. The oil sands represent the single largest source of greenhouse gas emissions growth in Canada. As things stand now, experts say the country cannot meet its goal.
There would be short-term economic benefits to a corridor as well. A megaproject of that scale would overcome the post-2008-09 failure of Canada to achieve the usual sector rotation in a recovery – from stronger consumer spending to enhanced exports and business investment. Canada only rotated recently to a late-in-the-cycle uptick in exports, but had not yet seen increased business investment. And now we are struggling with the huge COVID-19 growth setback.
Canada desperately needs to preserve middle-class jobs for political and economic reasons. The rise of extreme global populism is the result, in part, of reduced opportunities for less-educated and less-skilled workers to support their families with adequate wages. Canada’s natural resource sector jobs are high paying and can’t be outsourced – a unique strength in minimizing and helping those left behind.
Indeed, the future of social programs hangs in the balance. A lower-carbon oil sands would provide outsized royalty and tax revenue to Alberta and Canada to help sustain valued social programs. This is ever more important today as Canada faces unprecedented increases in government debt.
If much of this new national bargain sounds too grand, perhaps it’s best to consider the narrowest and most traditional of motives: the bottom line. As Mark Carney, the former Bank of Canada and Bank of England governor who is now United Nations Special Envoy for Climate Action and Finance, declared in 2019: “Companies that don’t adapt will go bankrupt without question.”
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