Energy policy anyone?

For a country whose Prime Minister boasts of Canada as ‘energy super power,’ it should give one pause that Canada is a country without any energy policy. In fact, we are the only country in the OECD without an energy policy. The Canadian government is also forbidden by a lop-sided trade agreement from diverting energy exports from the US to domestic use. No matter how low resources become in Canada, under NAFTA, the government cannot interfere in the commitment to continue the export of whatever proportion of the total is exported to the US. Some energy super-power.

That is not to say we have no policy priorities related to energy. The de facto energy policy of the Harper government is the rapid expansion of the Athabasca tar sands (or ‘oil sands’ if you have gone through the Alberta re-education programme). From the current 1.3 million barrels of crude oil a day, the Harper government has set a goal of 6 million barrels of crude a day. This rapid expansion is destined for export.

It will be exported as crude, because oil companies find it too expensive to refine the crude near the bitumen. That is because the ‘hell bent for leather’ approach to development creates a localized hyper-inflationary bubble all around Fort McMurray and through most of Alberta. Former Premier Peter Lougheed calls it ‘the traffic jam.’ You cannot find a skilled labour force, or materials, at a reasonable price, so we allow the crude to flow through pipelines from Alberta to reach the United States where refineries are being built to convert tar sands crude to petroleum. And, we have discovered, two super tankers a week depart Vancouver, through treacherous channels to the Juan de Fuca Strait and out to other nations. Crude oil exports pass right by the Gulf Islands every week—and Kinder-Morgan plans to expand to ten tankers a week.

Funny thing to be an ‘energy super power,’ yet still import 54% of the oil used in Canada. All of Eastern Canada depends on oil from OPEC nations. We have no Strategic Petroleum Reserve. We lack any infrastructure to get tar sands crude to the rest of Canada.

Funny thing to be an ‘energy super power’ that is allowing the rampant expansion of the tar sands to undermine the economic health of Canada. I first learned of the increasing warnings of ‘Dutch Disease’ through the 2008 Report on Canada from the OECD. The Organization for Economic Cooperation and Development is an elite club of the world’s wealthiest nations. Canada is a member. From its lavish Paris headquarters, the OECD economists analyze the performance of nations and issue annual updates. It was in the 2008 report that the OECD first warned that the intense concentration of economic and political activity on the tar sands was actually hurting the Canadian economy overall.

This is due to a well-known phenomenon first experienced in the Netherlands. When the Netherlands discovered rich off-shore natural gas, the boom in production had the effect of increasing the value of the Dutch guilder. It did this to such a degree that the manufacturing sector in the Netherlands was devastated. Exports cost too much. While one part of the economy was doing well—other portions were suffering. This became known as Dutch Disease.

Norway avoided it by taking all the oil and gas revenues out of circulation and putting them in a heritage fund. Despite the fact that Norway patterned its plan on Peter Lougheed’s vision, Ralph Klein cancelled the vision. Alberta now has $14 billion in a heritage fund and is in deficit. Canada came down with Dutch Disease. In fact, some economists estimate that for every job created in the oil sands, another was lost elsewhere in Canada. Well before the September 2008 recession, Canada had lost over 300,000 jobs in manufacturing and nearly 100,000 more in pulp and paper. In order to rebalance the Canadian economy, the OECD recommended a go-slow approach in the tar sands and the implementation of a national carbon tax. The carbon tax, plus cutting subsidies to fossil fuel production (an estimated $2.8 billion/year in Canada), would have the effect of slowing down tar sands development, getting the Canadian dollar unplugged from the price of a barrel of oil, as well as helping reduce greenhouse gas emissions.

Last week, the International Energy Agency made essentially the same observations about Canada’s skewed economic picture and offered the same prescription: slow down tar sands development, kill fossil fuel subsidies and put in place a price for carbon. (See ‘World Energy Outlook, 2010,’ IEA.)

The astonishing thing about this global debate on Canada’s economic health and the extent to which it is undermined by the tar sands is that Canadians do not even know the debate is taking place. We continue to swallow the outrageous whopper that the tar sands are an engine of growth for the whole country.

And when we do discuss the tar sands, we have a nonsense debate presented as a zero sum game of ‘shut them down’ or ‘keep them.’ Instead, we should be asking if we should develop the tar sands beyond the current 1.3 million barrels of oil a day, and if so, how? And should we allow expansion in the absence of a national energy strategy?So here we are—the alleged ‘energy super power’— wasting more than half of the energy we burn, exporting to beat the band while importing 54% of what we use, canceling the support for renewable energy, while protecting the taxpayer subsidies to the wealthiest companies on earth. Thanks to the demonized Trudeau National Energy Plan, decades later, we are operating ad hoc. We have gone from ‘hewers of wood and drawers of water’ to ‘scrapers of bitumen and wasters of water’ and our economy is getting distorted in the process.

Let’s start using those dangerous words—‘national’ ‘energy’ and ‘strategy’—in the same sentence again. Let’s push for a sensible energy plan for all Canadians.

Elizabeth May, Order of Canada, is the Leader of the Green Party of Canada and nominated candidate for Saanich Gulf Islands.