With the oil and gas sector declining in economic importance, in Alberta and across the rest of Canada, the time has come to recognize that the “oilsands era is over”, Parkland Institute political economist Ian Hussey concludes in a recent post for The Tyee.
While there will be plenty of jobs in cleanup and closure operations, Hussey writes, much has changed since the first tar sands/oil sands mine and processing plant opened in Fort McMurray 50 years ago. While “at 17% of Alberta’s economy, the oil and gas sector remains the largest industry in the province, its size relative to the overall economy has shrunk by more than 25% since 1986,” he notes. And “the oil sands only account for 2% of Canada’s economy.”
As far as a public financial interest in Big Oil, he notes that non-renewable resource revenue has fallen from 30 to 40% of Alberta’s total income during the tar sands/oil sands boom from 2000 to 2011, to just 5.7% in 2015-16, with a forecast of 8.3% in 2017-18. And there’s no likely shift on the horizon, with the Big Five fossils responsible for 80% of Alberta’s tar sands/oil sands output—Suncor, Canadian Natural Resources, Imperial, Cenovus, and Husky—“all saying they only plan to invest a fraction of past levels over the next decade, to improve the productive capacity of existing facilities.”
All of which means fewer jobs in the oil fields. Currently, says Hussey, the Canadian fossil industry “employs about 180,000 workers, which is only 1% of Canada’s total jobs, and almost 100,000 fewer jobs than Canada’s environmental and clean technology industries.”
And as for the jobs that remain, at least two of the Big Five are committed to “de-manning” their operations as fast as they can. “I don’t know if we’ll get to zero,” Executive Vice President Kiron McFadyen told investors last year. “Can we get close to zero? That’s what we’re trying.”
No longer the employer it once was, the oil and gas sector also increasingly puts its shareholders at risk, as the federal floor tax on carbon, set to reach C$50 per tonne in 2022, works its way through their asset values: Citing a recent Parkland report, Hussey notes that the $320 billion in carbon liabilities the Big Five would incur by burning all their proven reserves would outweigh their total assets, at $250 billion, their combined stock value, at $190 billion, and the size of Alberta’s entire economy, at $310 billion.
“The enormous cost associated with these reserves being combusted underscores the simple reality that business as usual is not an option for these companies,” he said earlier this month, when the report was released. “Unfortunately, we’re not seeing that reality reflected in their actions to date.”
But shareholders are hardly the only ones at risk. “Indeed, the consequences of extracting and burning the proven reserves of the biggest oil sands producers would be catastrophic,” he writes, given that 80% or more of the world’s known fossil reserves must stay in the ground to meet even the limited targets in the Paris agreement.
That reality points back to a contradiction in Canadian policy that has been front and centre in the latest public fights over Kinder Morgan’s Trans Mountain pipeline expansion. “Our provincial and federal governments adopted policies and programs to help us meet our [Paris] commitment, including increased renewable energy generation, better public transit, carbon taxes, improved fuel standards, energy efficiency initiatives, and phasing out coal-fired electricity,” Hussey writes. But at the same time, “the governments of Alberta and Canada have developed policies, specifically the oil sands emissions cap and two new pipeline approvals,” that will “facilitate an almost 50% growth of the oil sands industry.”
A far better path for the province, he says, would be to recognize that the tar sands/oil sands have had their day, and that renewables are taking their place as the world’s primary sources of energy—and as significant job providers. Since meeting Canada’s Paris commitments will require phasing out the high-emitting bitumen extraction industry by 2050, it makes sense to start now.