BC’s premier and Canada’s prime minister are both betting our future on fossil fuel exports.
Resource exports have long been the mainstay of our provincial wealth. But B.C. and the world aren’t the same as they were when my great-grandfather started one of a dozen salmon canneries at the mouth of the Fraser River. We don’t have as many fish anymore. We’ve found new ways of extracting natural gas, as have myriad other countries. We’re starting to price water. We have a below-average tech industry in B.C. that still employs more people than the forestry, mining and oil and gas sectors combined. And the world has five times more fossil fuels in the ground than can be extracted without calamitous future impacts from rising temperatures that are already forcing massive infrastructure retrofits and disaster-cleanup investments.
Canada’s and B.C.’s bet on future resource-extraction riches is ripe with risks that deserve a lot more attention. When former U.S. Labor Secretary Robert Reich was in Vancouver recently, he pointed to three megatrends shifting the world’s economies: globalization, job-displacing technologies and dependence on natural resources.
“While natural resources are a blessing, they are also an economic curse,” he warned. “There are two major reasons. Number 1 is because those natural resources are normally owned by somebody or some group. And those owners usually do very well.
“But the social costs of utilizing those resources or transporting those resources or extracting those resources often fall on others, who are not so fortunate.”
Think about the anti-fracking protests in New Brunswick.
“The second issue is that a natural-resource-based economy has a currency that is pumped up by the sale of those natural resources internationally. And that pumped-up currency is a disadvantage to every [other] industry.”
He cited the example of Australia, where thriving mining and other resource-extraction industries have driven up the value of the Australian dollar, making it much harder for Australian manufacturers and high-tech companies to compete.
Further, he warned, “natural resources are subject to huge changes in the global economy. One minute you can be riding very high, and the next minute, you can be riding very low because commodities – and the demand for commodities – can go all over the place.”
Green Party MLA Andrew Weaver illustrated this point in a recent talk to the UBCM conference. He challenged the much-touted price differential in Asian markets for B.C.’s natural gas: “Canada has less than 1% of the world’s proven natural gas reserves. Russia has 20 times as much natural gas as all of Canada combined, and they’ve recently signed long-term export agreements with China. Russia transports its gas to China by pipes. It doesn’t require the costly process of liquefying it and tanker traffic across the ocean.”
If carbon pricing becomes the norm – as a recent Organisation for Economic Co-operation and Development report strongly recommends – the attractiveness of fossil fuel investments shifts dramatically.
Selling off our fossil fuel endowment can only be justified if it is financing a transition to a low- or zero-carbon economy for the next generation. Norway, with a population comparable to B.C., has amassed a $720 billion heritage fund from fossil fuel royalties that it is looking at investing in renewable energy assets and “sustainable” companies.
We have neither the funds nor the willingness to even admit that climate change changes everything.
The costs and risks of bulldozing our way down the traditional resource economy path are growing. For some jurisdictions, so are the opportunities for an immensely more resilient new future. It’s time we joined them. •
