Hughes: Selling Off Fossil Resources at ‘Bargain Basement Prices’ is Poor Energy Strategy for Canada

Canada’s current practice of harvesting bitumen and fracked oil and gas and selling them off at bargain basement prices is a poor excuse for an energy strategy, Alberta-based earth scientist J. David Hughes argues in a recent opinion piece for the Edmonton Journal.

Particularly when, “like it or not, we need to plan for a major transition over the coming decades from our reliance on fossil fuels to renewable energy.”

While Canadians will likely need some oil and gas for the foreseeable future, Hughes writes, the majority of today’s production is exported. That means getting a low price for the resource, while driving production high enough that the rest of Canada would have to decrease greenhouse gas emissions 49% by 2030 and 84% by 2050 to hit the country’s targets under the Paris Agreement.

He calls that “an unlikely prospect barring economic collapse.”

Whenever talk turns to a managed decline in Canada’s fossil production, the first thing the industry’s boosters talk about is the revenue it apparently provides to fund public services. But Hughes, citing data from the Canadian Association of Petroleum Producers, notes that fossil royalties fell 44% from 2000 and 2017—from C$11.9 to $6.6 billion—while hydrocarbon liquids production grew 77%. The effective royalty rate fell from 18.3 to 6.2% across Canada, and from 19.5 to 5.1% in Alberta.

And yet, “Canada has no energy plan beyond pedal-to-the-metal export of its non-renewable energy assets,” Hughes writes. “The rhetoric from Premier Rachel Notley’s government that the sky will fall without [the Trans Mountain pipeline expansion] and the federal government’s ‘national interest’ justification for buying it have no merit.”

The alternative, he asserts, is to “look at the big picture and develop a viable energy plan that will meet Canada’s long-term energy needs and emissions reduction targets.”