President and CEO of Canada West Foundation
The following speech was presented to the annual symposium of The Energy Council, in Regina, Sask., on June 20, 2014.
As you all know, the greatest challenge to the further development of energy resources is climate change. My remarks today are going to be about why our current approach on climate change will fail and what we can do about it.
But before I do that, I want to tell you a bit about the foundation I lead. The Canada West Foundation is one of Canada’s great think tanks. We focus on the long-term prosperity of western Canada. You could name any important topic, and we have likely researched it, commented on it, stimulated debate about it, and made practical recommendations to improve it.
Our Centre for Natural Resources Policy champions the responsible development of the West’s abundant resources. Our Centre for Human Capital Policy champions the development of a skilled and productive workforce. And with our Centre on Trade and Investment Policy, we are broadening our work to North America and the globe.
I hope a desire to act together is why you are in Regina this week, representing 16 jurisdictions, engaging on the common challenges and opportunities you face. And when it comes to one of the greatest challenges of our time – how to achieve carbon reductions as world energy demand explodes – it is only through joint effort that success will be possible.
Because the way we have been thinking about leadership on this file is fundamentally flawed. No single state, province, country, or continent can solve this problem on its own. But it is not Mission Impossible, either. Two decades ago , North America came together to forge an agreement to deal with acid rain. Were we successful? Discounting two seconds ago, when was the last time any one of you heard acid raid mentioned in the news, or anywhere for that matter?
The challenge of greenhouse gas emissions is, of course, even larger.
Today, the world’s top five emitters are a diverse group. China leads the pack, producing 29 per cent of global emissions. The U.S. remains in second, contributing 16 per cent, followed by the Europe at 11 per cent, India at six per cent, and Russia at five.
Clearly, emissions are coming from a mix of OECD and non-OECD countries. But, a shift is happening. And it’s rapidly changing the global picture.
Take India, for example. At a glance, its contribution of six per cent to global emissions does not seem overly significant. In fact, it produces only three times as much as Canada [2%] – and we are not a big contributor. Yet, since 2002, India’s carbon emissions have increased by 75 per cent. Let’s compare that to what is happening here. In 2012, emissions in the U.S decreased by four per cent. In Canada, our economy grew by 6.3 per cent between 2005 and 2010, but our emissions decreased more -- by 6.5 per cent.
Then there is China, which emits more carbon each year than the U.S and Canada put together – almost twice as much. China’s carbon emissions have increased by 150 per cent since 2002. In the past decade, its average annual growth in emissions has been 10 per cent. Clearly, increases in emissions from China and India are, today, the largest source of increases in global emissions. As President Obama said in January, if China and India keep growing emissions like this, "we’ll be four feet under water" -- which I must say sounds a lot snappier than "under 1.2 metres of water" as we would say in Canada!
The trend couldn’t be more clear. By 2040, on our current trajectory, non-OECD countries will produce 70 per cent of global emissions and those emissions will be perilously high.
So what to do about it? One approach advanced by the environmental movement is to try to shut down development of emerging economies by denying them access to critical resources such as oil.
Right now, nearly half of the world’s population survives on less than $2 a day. We can’t even buy a cup of coffee for that much in North America. So think of the impact industrialization will have on people living in those conditions.
For the first time, mere existence will no longer need to be their primary concern. Citizens will have access to better and proper diets and shelter. As incomes rise, people will buy and consume more meat and dairy products, and with industrialization, people will have access to health care, education, social services, manufactured goods, and much more.
This will, in turn, stabilize the global population. After all, there is a direct relationship between income and family size. When health conditions improve, people lose fewer offspring and are less dependent on descendants to care for them in old age, and so they have fewer children. In developed countries where women have many opportunities to work outside the home, they start families later in life and typically fewer children.
A rapid decline in the average number of children per mother in countries like India is already well in evidence. And in contrast to the lowest income countries which continue to have high birth rates, wealthy countries now have birth rates so low that a decline of their populations is basically guaranteed.
But while the industrialization of emerging economies presents an opportunity for the global population to stabilize, it also presents a massive risk to the planet. Industrializing the developed world will bring about a tremendous increase in consumption. Ecosystems all over the world are already shrinking to make way for homes, farms and factories. This is the reality we face.
But can we really say that the moral answer is to try to deny the people of the world the opportunity to develop by denying them access to energy?
How could we say to the one billion kids living in poverty in developing nations – that’s every second child in the world, by the way – that they should be satisfied with the $39 a month they may receive from World Vision? That running water, a pair of shoes, or a place to go to school is too much to ask for? How could we tell their mothers they cannot access protein to feed their families a better diet? Or electricity to heat their homes? Or medicine for their ageing parents? Just to protect our own comfortable lifestyles.
This approach is like being at an all-you-can-eat bonanza, walking back from the buffet table for the tenth time and saying to the poor starving folks you pass outside the restaurant, "Sorry, but we have determined it would not be in our collective interest to allow you to join in."
Too many westerners have adopted this ridiculous mindset. And not only is it wrong, it's also impossible. The emerging economies are going to get energy whether we like it or not. We all know that. The real questions are from where and will they use an energy mix less destructive than the one we used during our industrialization.
So, shutting down pipelines and other ways of accessing resources isn't the answer. What about the Kyoto Protocol?
When countries around the world first began to consider that the ever increasing amount of pollution being pumped into the air was causing a problem that would multiply as emissions rise, most countries understood that this is a global issue. However, developing nations, understandably, told the developed countries – you created the problem, and you must take on the bulk of the responsibility for it. Therefore, the Kyoto agreement placed the major reduction commitments squarely on the shoulders of the industrialized world.
The language of the final accord recognized "that developed countries are principally responsible for the current high levels of GHG emissions in the atmosphere as a result of more than 150 years of industrial activity" and agreed to place a heavier burden on developed nations under the principle of "common but differentiated responsibilities."
What Kyoto ignored was the net effect of creating highly differentiated regimes. This net effect has been for major sources of emissions to simply relocate to the developing world. In other words, the emissions moved but were not reduced.
From a global perspective, both developed and developing nations need to own this issue, and both need to contribute to the solution. Developed nations have historically been the large emitters but due to their much larger populations, it will not take long for the developing world -- if it industrializes as we have -- to surpass our overall emissions. This is truly a shared problem.
There is actually no greater risk to the environment of the planet than they Kyoto mindset -- the irrational fixation on our own emissions, rather than the global problem – and opportunity – as the global population rises out of poverty.
And this will not be easy. No country, no government, wants to spend money to reduce someone else’s emissions. And yet, this is exactly what we will need to do. But we will also need to engage with the emerging economies about the critical role they will need to play.
The industrial revolution in the emerging economies has what the original did not, and that is technological know-how that exists right here, right now in North America. This is what will play a pivotal role in getting things right this time around.
We know the energy systems of developing countries, like ours, rely on fossil fuels. It would be hypocritical to tell them, or force them, to switch to other sources when in North America we ourselves are still struggling to make renewable energy economically viable. The total abandonment of fossil fuels is at this point a non-starter.
What will matter is affordable technology. Clean coal technology, conversion to natural gas, improving efficiencies in base and intermittent power sources, and reasonably priced renewables – we’ve been focusing on these things in our own jurisdictions, and their real importance is on a global scale.
Boundary Dam is the largest coal-fired power plant in the province of Saskatchewan. Coal-fired power generation also happens to be the major source of electricity in the largest developing countries. Not surprisingly, it also produces nearly one-quarter of the world's carbon emissions.
China relies on coal-fired power, too. Nearly 70 per cent of China’s coal-fired plants were built in the last 10 years, with plans to add three more per month through to the end of 2016. Cutting emissions through carbon capture will be essential in the short term. As you heard in the case of the Boundary Dam, a retrofit can add thirty years to the lifespan of a plant and – with carbon capture technology – also greatly reduce emissions. Perfecting this technology and marketing it to the massive number of new coal plants coming online in developing countries, as well as older units found throughout the world, is a prime example of a meaningful, and measureable, way in which knowledge developed in North America can be part of the solution of reducing global emissions.
And ironically, this extraordinary contribution would never show up as a credit to Saskatchewan’s environmental record for people captured by the Kyoto mindset.
Everyone cares tremendously about the price of energy, and they should. It affects our cost of living. It affects the cost of manufacturing. It affects our ability to compete. The recent and widespread conversion of coal to natural gas for power in the United States has been market driven, and fueled by the extraordinarily low price of natural gas. The low cost of this power source makes it hugely attractive. And as a cleaner source than other fossil fuels, it has the added benefit of reducing carbon emissions. The conversion to natural gas as a relatively cheap source of energy has also, as you know, been one of the key factors in the re-shoring of manufacturing back to North America.
Natural gas in the form of shale gas has been found all around the world. And it is Canadians and Americans who have developed the technology to extract it, and who have been safely doing so for decades.
It will also be vital to continue to deploy and reduce the commercial cost of renewable technologies. But with respect to these technologies, we have to acknowledge that cost matters and stop using green economy as a banner for ill-conceived job creation strategies that just lead to expensive, unexportable products.
What is not responsible is the environmental narcissism that has taken hold of North America. The idea that our own emissions are what matters most is both false and dangerous.
The public recognizes the danger of rising greenhouse gases and is demanding solutions. Unfortunately, for some, the only choice they see is stopping development. Protesting or signing a petition provides instant gratification, feeds into latent NIMBYism and – since it is presented with no consideration to the cost or pain – what’s not to like? Especially when the choice of action is presented as a moral imperative – save the planet, save your children’s future, do the right thing.
The problem is, stopping resource development in North America will not save the planet, will not create a future for our children, and will not show leadership. It will actually do just the opposite.
Many sub-national governments are doing a lot to reduce emissions, but how much of an effect can New Brunswick or Wyoming really have when China’s emissions have increased one hundred fifty per cent in less than fourteen years?
Compare that trend to the current "bête noir" of the environmental movement – the oil sands. Emissions from the oil sands constitute 0.1 per cent of the worldwide total. Between the nearly 50 companies operating in the oil sands and the many different avenues through which the Government of Alberta makes investments, billions of dollars are poured into technologies to extract the resource in cleaner ways and to protect and reclaim the environment. Certainly, these investments are good for the province and a very good thing to do, but how much is all this investment actually contributing to reducing global greenhouse gas emissions? I think you know the answer to that.
We need to shift the conversation about solutions back to a global perspective. We need to move away from the Kyoto mentality of throwing vast amounts of money and effort at small, local problems, and focus on how investments in mechanisms like innovative technology can have a wide-reaching – beyond that, a global – impact on reducing emissions.
We must reject the mindset that we can deny the people of the developing world the basic resources they need to prosper.
And we need to stop adopting policies that simply move industries and emissions beyond our own borders.
Please do not feel any guilt whatsoever about discussing how to grow your own production of energy resources that the world desperately needs. Do, however, give great attention to how you can better contribute to reducing emissions on a global scale. And as you travel from here and go on with your business, champion greater multilateral engagement – I mean engagement with the emerging economies – on how we can work together to tackle the real climate change issue, which is the industrialization of the broader world.
North America has an incredible opportunity to be a leader. This will ironically require much less attention on our own environmental performance and focusing much more attention on how we can help the world beyond our borders. We can stop shooting ourselves in the feet and start aiming for targets that matter. And when we do so, I have no doubt that we will find success.