Alberta Premier Rachel Notley couldn’t have picked a better time to head to China. She left a fresh dump of snow behind in Edmonton, for starters.
Perhaps more importantly, she headed to a country that is interested in expanding trade opportunities with Canada and its provinces – not put up obstructionist market barriers of the nature U.S. President Donald Trump appears intent on building.
The protectionist noises emanating from south of the border have a lot of provinces in this country nervous. Alberta is one of them, in terms of being vulnerable to the whims of its No. 1 trading partner. The United States accounts for more than 86 per cent of Alberta’s exports; with Ontario it’s just over 80 per cent.
That’s also known as having all your eggs in one basket.
British Columbia is the one province that has weaned itself off that same reliance. Today, just over 53 per cent of the province’s exports go south of the border, compared with nearly 35 per cent for Asia, nearly half of that to China. The province’s Canadian counterparts look at that kind of trade diversity with envy. When the United States sneezes, B.C. doesn’t automatically catch a cold.
The primary reason Alberta has been so desperate to get a pipeline built to tidewater is so it can more easily access lucrative Asian markets, China in particular. And the province would undoubtedly find a market there for its oil – but perhaps not the same one that might have existed even five years ago.
As much as Ms. Notley would like to ink some deals while she’s in Beijing (she is also visiting Japan on the trip), she is also there to learn more about how the People’s Republic is managing a rather remarkable energy transformation. China has begun to undertake the kind of transition from fossil fuels to clean-energy alternatives that Ms. Notley and Prime Minister Justin Trudeau talk about in a mostly futuristic sense because it is still considered heresy to mention such things in Canada’s oil capital.
China’s demand for energy is projected to grow by less than 2 per cent a year over the next 20 years, compared with 6 per cent annually over the past 20 years, according to a 2017 forecast produced by energy giant British Petroleum. Along with this, the country is reducing its reliance on fossil fuels, while ramping up production of cleaner, lower-carbon fuels.
Coal is increasingly a dirty word, although the country will continue to rely on it for years. In 2015, coal accounted for two-thirds of the country’s energy profile. By 2035, that number is expected to be 45 per cent or less. In January, China cancelled more than 100 new coal-fired plants that were in the planning stages or were already being built.
Meantime, renewables, nuclear and hydroelectric power, which now supply just 12 per cent of China’s energy needs, will account for more than 25 per cent of it over the next two decades. The country is the global leader in solar power and has fundamentally changed the economics of the industry in a short period of time.
The Chinese can see the writing on the wall when it comes to world energy trends in a way Mr. Trump can’t. Alberta needs to as well. Think about this one statistic in BP’s forecast alone: Last year, the company projected there would be 57 million electric cars on the road by 2035; in one year that estimate has jumped to more than 100 million.
Dieter Helm, an economics professor from Oxford and one of the most highly-regarded energy analysts in the world, recently said the downturn in the oil market has only begun. (The rise in alternative energy forms will escalate as the cost to produce them continues to fall). Once upon a time, the energy executives Prof. Helm advises would have scoffed at such a notion; they don’t any more.
The quickly changing energy landscape is unquestionably something Ms. Notley will be discussing with her Chinese hosts. So will trade opportunities, which is always a fraught conversation.
Canadians don’t mind selling stuff to China, but have less appetite for the Chinese moving into this country seeking investment opportunities. But business can’t be a one-way street. And with the United States looking to man the trade barricades, deals with the Chinese may provide an economic lifeline for this country.Report Typo/Error