Home News A crude economy: Canada’s dependence on the oil industry

A crude economy: Canada’s dependence on the oil industry

by Savanna Craig November 28, 2017 0 comment

Plans to lower greenhouse gas emissions, while expanding the fossil fuel industry

Thick, sticky, black crude oil infused with sand could realistically be considered Alberta’s lifeblood. Canada’s lust for this natural resource keeps the nation from successfully meeting lower greenhouse gas (GHG) emission goals.

Every day, 2.5 million barrels of the substance are pumped out of Alberta’s land, according to a report released by the Pembina Institute, a Canadian non-profit think-tank. The tar sands account for 140,000 square kilometres of the province’s territory—a slice of land larger than England and only slightly smaller than the state of Florida.

“The oil sands are a key part of the economic growth potential for Canada,” said Amberly Dooley, the manager of the oil sands for the Canadian Association of Petroleum Producers (CAPP). A driving force of this growth is the demand from the United States, which purchased 3,228 million of the 3,867 million barrels produced across Canada daily in 2016, according to CAPP.

Dooley claimed the oil sands will play a key role in the country’s economic future and projected a 53 per cent increase in output by 2030.

Canada’s dependence on oil as a significant export puts a lot of pressure on the country’s economy—as shown by the matching fluctuation of the price of oil and the Canadian dollar.

“Our dollar is coupled to the price of oil and that’s no coincidence,” said Daniel Horen Greenford, a Concordia PhD student investigating Canada’s impact on climate change. He is looking at how, by exporting oil, Canada drives oil consumption and GHG outside its borders.

According to Horen Greenford, the price of oil and the Canadian dollar have been in sync for about a decade, although Global News claims the trend began as early as 2003. The cause, according to the news outlet, was a rise in the price of oil coupled with a heightened demand from major economies, like the United States and China.

According to Horen Greenford, Canada’s investment in the oil industry over the last decade has made the country’s economy “volatile,” despite only accounting for two per cent of the country’s (gross domestic product) GDP. The same can be said for the job market within this industry.

While the national unemployment rate rose to 6.3 per cent in 2014, the rate in Alberta dropped to 4.4 per cent after the province created 63,700 new jobs that year, according to Statistics Canada. Yet in the first month of 2015 alone, the price of oil plummeted from US$53 to US$31.45 a barrel, reported CTV News. The unemployment rate in Alberta spiked as the province lost 19,600 jobs in 2015—the province’s largest hit since 1982, according to the same source.

By November 2016, Statistics Canada reported that the province’s unemployment rate had peaked at nine per cent. A rise in the price of oil the following year, however, led to the creation of 12,000 new jobs in Alberta, lowering unemployment to 7.8 per cent.

Despite the roller-coaster tendencies of Canada’s oil industry, the allure of employment stems from its potential prosperity. In 2014, the annual salary for newly graduated engineers working in Alberta was $80,000, while employees in senior executive positions earned up to $380,000, according to Oil Sands Magazine.

According to Peter Graham, a professor at Concordia’s School of Community and Public Affairs, the appeal is based on more than just the salary. “Under the current economic regime, the aspect of having a job and being productive is a critical aspect of identity,” he said. As such, “when unemployment rates go up, suicide rates generally follow.”

Amid the significant drop in oil price in 2015 and the subsequent job losses, CBC News reported that 30 per cent more Albertans committed suicide in the first half of the year compared to the same period in 2014.

CANADA’S GREENHOUSE GAS EMISSIONS

In November, more than 15,000 members of the global scientific community published a letter in the peer-reviewed journal BioScience, titled “World Scientists’ Warning to Humanity: A Second Notice.” The letter was a follow-up to an appeal written in 1992 by more than 1,700 independent scientists, which urged a drastic change in environmentally destructive practices in order to avoid “vast human misery.”

The recent version of the letter revisits the 1992 warning and emphasizes the global community’s shortcomings in the decades since.

“Humanity has failed to make sufficient progress in generally solving these foreseen environmental challenges, and alarmingly, most of them are getting far worse,” the letter reads. “Soon it will be too late to shift course away from our failing trajectory, and time is running out.”

Graphic by Zeze Le Lin

Despite Canada’s agreement to reduce its GHG emission levels by 30 per cent below 2005 levels by 2030, the country plans to expand its fossil fuel industry. From 2014 to 2015, national emission levels only decreased by five megatonnes—from 727 to 722, the National Post reported. This is a far cry from the 2030 target of 523 megatonnes.

According to Environment and Climate Change Canada, the entire oil and gas sector is the nation’s largest GHG emitter in 2015, responsible for 26 per cent of the country’s emissions. Alberta’s oil sands alone represented 9.8 per cent of these emissions. Close behind was the transportation sector—which relies heavily on the fossil fuel industry—at 24 per cent.

Yet, in 2014, the federal government had approved 81 tar sands mining projects scheduled to begin between that year and 2020, according to the Pembina Institute report. At that time, there were also 74 projects in the application stages and 56 more announced for after 2030. Taking into account that not all of the planned projects will proceed, the Canadian Association of Petroleum Producers still predicts that, by 2030, oil sands production levels will rise from the 2014 rate of 2.5 million barrels per day to 4.8 million, according to the Pembina report.

As such, it seems reasonable that the Ottawa Citizen reported that oil sands emissions are expected to be responsible for more than half of the total 124 per cent increase in Canada’s GHG output between 2010 and 2030.

“At some point, people will wake up and realize we have a choice: get off fossils fuels or face a very grim—and possibly terminal—future as a species,” said Concordia’s professor Graham. “This means that long-term investments in fossil fuel infrastructure is beyond greedy and stupid—it is suicidal.”

Graham stressed that closing Canada’s oil sands would not only greatly reduce the country’s emission levels, it would also put Canada in “a much better position to exert moral persuasion over countries to cut their emissions and close their mining operations.”

Yet CAPP manager Dooley claims the oil sands are only one piece of the puzzle, since the transportation and industrial sectors are also large GHG emitters. “The oil sands industry is probably one of the leaders in developing technology innovations to help look at reducing the GHG created by the operations in Northern Alberta,” she added.

Graphic by Zeze Le Lin

PUSHING AWAY FROM THE OIL ECONOMY

As of 2015, there were more employees in the global renewable energy sector than the oil and gas sector, according to the Huffington Post. While renewable energy jobs worldwide totalled 8.1 million in 2015, the oil and gas sector lost 250,000 jobs that same year.

Relying on hydropower as well as wind, geothermal, biomass and solar energy, Costa Rica survived on 100 per cent renewable energy for 300 days this year, according to The Independent. Legislators in Hawaii and California have also set goals to make their states 100 per cent reliant on renewable energy by 2045.

In 2015, Swedish Prime Minister Stefan Löfven pledged to make his country “the first fossil-free welfare state in the world,” and announced a US$546-million action plan for renewable energy and climate change, according to Global Research, a Montreal-based centre for research on globalization.

Even oil-giant Saudi Arabia has been making efforts to diversify the country’s economy and reduce its dependency on oil, according to The Washington Post.

In Canada, there were 36,000 employees working in the renewable energy sector, reported by the International Renewable Energy Agency (IRENA) last year. Yet, while Canada is the world’s seventh-largest manufacturer of wind energy, 43 per cent of the country’s energy production still comes from crude oil and another 33 per cent from natural gas, according to Natural Resources Canada’s 2016-17 “Energy Fact Book” report.

There are, nonetheless, some sustainable initiatives taking place across the country. Ontario, for example, has become a large producer of wind energy and has reduced operations of coal-fired power plants. In Quebec, Hydro-Québec produces 99 per cent of its electricity using water, which significantly lowers the province’s GHG emissions, according to the company’s website.

According to Natural Resources Canada, 96 per cent of Quebec’s energy in 2010 was generated using hydropower. Yet, on a regional basis, Quebec only generates 4.1 per cent of Canada’s total energy, while Alberta produces 62.8 per cent on average, according to the same source.

“We have the technology but not the political will to move towards greener cities,” said Ricardo Duenez, a Concordia professor in the geography, planning and environment department.

“Fossil fuels are not economically viable anymore,” Graham said. “They’re not good for the economy.” The reason alternative, solar and wind energies are not a bigger part of Canada’s energy production, the Concordia professor explained, is because of a widespread anxiety induced by capitalism that generates an excessive need for natural resources and fear about a reality without these goods.

Graphic by Zeze Le Lin

“Government will not lead—only follow. The days of heroic and enlightened politicians is over,” Graham said. “Politics has become a career, not a calling. Scientists especially need to re-imagine their role in society.”

Echoing this sentiment, Duenez emphasized the smaller-scale changes that can be made by individual Canadians. As an example, he cited the city-wide compost system that Montreal began expanding on in 2015, with the goal of having every household in the city compost by 2019.

“We need to think [of] what ways we can live together with nature while having a happy lifestyle,” Duenez said. The key, he added, is accepting that we need to learn to live with less.

“Montreal should look around the world for examples,” Duenez said, using Asia’s vertical farming industry as an example. Instead of growing crops in fields outdoors, vertical farming is done inside old warehouses and discontinued factories. Vegetables and herbs are grown in these tight spaces, using unnatural light and cloth instead of soil, according to BBC News.

In 2015, as the price of oil dropped, Alberta oil sands workers created the Iron and Earth initiative to promote sustainable energy and train unemployed electricians from the oil sands for renewable energy jobs in Alberta. According to the initiative’s website, the members of Iron and Earth believe that Canada has failed to take a leading role in the global renewable energy industry and needs to develop “a more diversified approach” to its energy sector.

“Simply waiting for government to act would provide the highest certainty of failure,” Graham said. “Individual people need to change the way they talk to each other, change the way they interact with the environment and change their understandings of the human place in the world.”

Graphics by Zeze Le Lin

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