OPINION | Maybe it's time for equalization of greenhouse gas emissions, too
Rethinking how we share the benefits — and costs — of Canada's abundant but disparate natural gifts
Canada is remarkable in that we experience it very differently depending on where we live, but we have managed to sustain these differences while integrating them into a whole.
This is true of the economy, too.
It is very different from one province to the next, often because of distinctive regional resource endowments. This variation is a challenge, but also a strength. Developing the gift of oil and gas has generated remarkable wealth for Alberta — and Canada.
Yet, because we see Canada through our peculiar, local lens, it is easy to lose sight of how the whole thing fits together. That our differences are just as important as the things we share in making Canada a great place to live.
We sometimes forget that in the dark economic days of the mid-1990s — when there was deep concern regarding the health of our economy and few levers to pull — tax and subsidy changes coordinated by prime minister Jean Chrétien and premier Ralph Klein turbocharged development of the oilsands. They saw that its development would help sustain both Alberta and Canada, contributing to our shared project.
Equalization captures the importance of protecting local differences within a framework of shared values. The generosity of spirit it embodies reminds us of the value of working together to take advantage of our differences in shaping a shared and sustainable future.
But perhaps it's time to think of equalization more broadly.
The oilsands: A shared project
The oil factories that drove the Alberta oilsands were built by workers from across Canada, with machinery and parts often manufactured in other provinces.
Building these factories — sometimes a decade-long process costing tens of billions of dollars — had a massive and nearly immediate effect on investment and employment in the Canadian economy, long before an ounce of oil was extracted.
It took another 10 years before associated production and oil revenues became sizeable, easily outpaced until then by revenues from natural gas.
Yet, the pace of change was fearsome, leading Peter Lougheed and later premiers to bemoan the environmental and social costs of such rapid development.
Alberta will continue to bear these costs in part because the economics of oil factories mean that, unlike oil rigs, they will go on producing oil for many years, even when short-term returns are near zero.
Thinking about things like this and how Canada varies from one region to the next — and how this strengthens us — can be useful.
Local variation, national opportunity
When polled, Albertans favour strict environmental regulations at about the same rate as other Canadians.
The difference?
They must balance this against the vast employment benefits and government revenues that come from oil and gas. These things directly shape their lives. Hence, the recent provincial election result.
Voters in each province have their own, local version of this calculation. We all agree that decarbonization must be managed over the next couple of decades, but Albertans have a peculiar stake in how this works out.
Again, there is an opportunity to share.
Greenhouse gas emissions for Alberta look particularly bad compared with other provinces due in part to an accident of geography.
While Alberta's natural gift came in the form of oil and gas, three of the four largest provincial economies were gifted extensive hydroelectric resources. Their emissions are relatively low, making Alberta stand out.
Just as with financial resources, it is useful to think about how the gift of low emissions in three large provincial economies might help offset some of the Alberta effect, while it works to reduce its contribution.
Understanding these differences widens our view and will improve policy choices.
Equalization of environmental impacts
Equalization is one of many mechanisms we have for helping to manage local variation.
The formula might play a role in responding to modern realities by better capturing the costs and benefits of extracting non-renewable versus renewable resources.
Should the treatment of these two types of resources be clarified, given the limited life span of non-renewables? How might we link this to the need to build funds to remediate the environmental damage associated with resource extraction, which remains long after industry has moved on?
The oil industry sells to an open market and takes a price for its resources while provinces sell hydro mainly into controlled provincial markets. Revenues from hydro are both more predictable and do not always capture the full cost of production.
The uncertain value of Alberta's resources is seen as its problem to solve. It might be useful to think more broadly about how to better manage the relative uncertainty of one revenue stream against the more predictable character of the other — to the benefit of all.
We have a shared interest in a sustainable future that allows Canada to continue doing what it does so well, integrating distinct parts into a hugely successful whole. How might we help Alberta decarbonize its economy and manage the social and environmental effects of oil and gas extraction at the same time?
Sharing is a wonderful thing.
This column is an opinion. For more information about our commentary section, please read this editor's blog and our FAQ.
Calgary: The Road Ahead is CBC Calgary's special focus on our city as it passes through the crucible of the downturn: the challenges we face, and the possible solutions as we explore what kind of Calgary we want to create. Have an idea? Email us at: [email protected]
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