Canada West Foundation Blog

By: Michael Cleland

Much has been made in recent years of the potential for green tech and green energy to generate thousands of new high tech jobs to replace the lost jobs in traditional manufacturing. Most, or maybe all, of the claims behind these slogans are hard to sustain.

Starting with the basics

The job—the only real job—of the energy system is to deliver safe, reliable energy to the economy in the most cost-effective way possible. As it turns out, left to itself, the system also efficiently produces significant economic benefit through direct jobs and profits; indirect jobs and profits in associated manufacturing and services; and royalty and tax revenues to governments. When taxed is properly regulated, it can produce desirable environmental outcomes. But when government energy policy gets it backwards—when the ancillary objectives are put ahead of the primary role—the system ends up costing the economy rather than adding to it.

Traditionally, governments have got it backwards by subsidizing energy costs for energy-intensive resource processing and manufacturing. But, as studies have shown in Quebec among other places—and as Nancy Olewiler explains in her article for Let’s talk Energy last July—these sorts of subsidies are a net drain on the economy.  Subsidies redirect energy production from its most productive return in alternative markets and reduce the overall benefit to the energy producing jurisdiction. As often as not, it is future generations who pay through government debt, although the bill may often land on some ratepayers or on essentially voiceless constituencies such as current taxpayers  if carefully disguised and diffused throughout the economy.

Green tech manages the interesting feat of flipping the old model on its head, but without yet turning it right side up. Instead of subsidizing energy costs for consumers, the idea of green tech is to accept higher energy costs in order to subsidize supposedly clean energy production. For this to work, almost inevitably, governments have to resort to green jobs protectionism so that the subsidies do not leak from the subsidizing jurisdiction. Let’s look at these in turn.

Economic Results

An article published last spring entitled “Study of the Effects on Employment of Public Aid to Renewable Energy Sources” through the Universidad Rey Juan Carlos, looked at the Spanish experience with subsidizing renewable energy and concluded that the net effect for the Spanish economy was dire. Each so-called green job carried with it a net cost to the Spanish economy of 2.2 jobs lost for each one created, largely due to the higher cost of energy which flowed through the rest of the Spanish economy. This is pretty basic: higher input costs make an economy less competitive, especially in the short-run.

A new study entitled “Omitted Costs, Inflated Benefits: Renewable Energy Policy in Ontario” just released by Energy Probe finds much the same thing for Ontario, this time expressed as an ongoing annual ratepayer subsidy of $200,000 for each job created. The source of the higher costs is not hard to find. If power producers receive as much as ten times (or more) the normal rate for their production, someone has to pay. Someone also has to pay if the system has to shoulder costs for back-up power and new transmission in order to take on new, remote and intermittent power sources.

Keeping the jobs in a jurisdiction is difficult when competitors already have a leg up or where labour costs are much lower. The energy system in Canada and elsewhere in North America is highly efficient and low cost. It generates extremely high paying jobs—skilled operators, trades and professionals. However, it does not generate many of them—just over 350,000 jobs in direct employment are created for the whole energy sector nationwide (inclusive of gasoline retailing or about 2.5% of Canadian employment). You can have two out of three: more jobs, high paying jobs or competitive energy prices, but you cannot have all three without protecting domestic production and putting the extra costs on to tax payers or future generations. This is where protectionism comes in.

The cost of protectionism

The green jobs debate in several jurisdictions in the US and Canada inevitably includes voices who express a clear preference for locally produced power or related equipment over imports in order to grow green jobs—whether it has a real comparative advantage or not. A striking example is where “green” is carefully defined to exclude certain types of power production such as large hydro. The evidence, if fairly examined, will show that even large reservoir-based hydro can have less environmental impact per unit of energy produced than smaller scale projects. Not always, not inevitably, but if green is what we want (in the sense of low carbon), then we should be indifferent to the source, provided only that appropriate environmental regulations are applied to the production process.

Conveniently, however, for some who are promoting green tech, big hydro has acquired a bad name over several decades. By simply defining it out of the game, they are able to effectively hobble the competition with what are, in essence, quantitative restrictions (which are, if not actually illegal, then certainly in violation of the spirit of WTO and NAFTA rules) while cloaking themselves in virtue. Of course, who pays is the hapless consumer or, if political will is weak, the hapless taxpayer, or if weaker still, the next generation.

The cost of energy protectionism to the economy is not only the increased costs imposed on consumers. One of the great achievements of the United States and Canada in the energy sphere is the relatively seamless integration of our energy systems, which results in both efficiency and reliability. When what otherwise might be natural economic flows of energy are impeded by exclusionary rules, the system becomes more sclerotic. A classic case of this effect exists within the US itself, where different motive fuel requirements meet different smog reduction needs in different metropolitan areas make the gasoline market fragmented, less efficient and more costly to consumers.

Getting back to the basics

Governments legitimately want to drive the energy system to a cleaner, lower carbon future. Regrettably, most governments in North America got cold feet when it came time to create demand for lower carbon technologies through the creation of a carbon price and have instead substituted supply-side measures such as green jobs subsidies combined with green job protectionism. These add to consumer costs by stealth and compromise the functioning of the energy system. Compounding the harm, they do little to achieve their objective. As recent experience in the US and Ontario demonstrates , without adequate demand, supply-side subsidies have a very difficult time creating viable industries. The result, in any event, can easily be a net cost in jobs, not a gain.

We need to get back to basics. If a green energy economy is what we want, we need to re-open the energy and carbon pricing discussions and ensure that investors and consumers have the right incentives. Following that, there is arguably a case for selected government interventions such as funding for research and development for new technologies, and providing consumer information since both address legitimate market failures. Beyond that, both theory and evidence strongly indicate that governments pushing green tech risk achieving the worst of all worlds—one that is neither greener nor more fully employed.

By: Gil McGowan

Albertans watched closely as Premier Alison Redford revealed her newly constructed cabinet last Wednesday, with a special focus on the portfolio swap between Minister Ron Liepert and Minister Ted Morton. As Energy Minister, Ron Liepert led the national discussion about a Canadian energy strategy, which culminated with the Energy Mines and Minister Conference that was held in Kananaskis this past July. With the Energy portfolio now in the hands of former Finance Minister Ted Morton, here are a few issues that cannot be ignored when it comes to discussions about Alberta’s energy future.

Value-Added Jobs

Former Alberta Premier Peter Lougheed is right when he said that when it comes to the oil sands, the real jobs are in upgrading and refining. According to a study done by the forecasting firm Informetrica for the Communication, Energy and Paperworkers union (CEP), if the volume of raw bitumen expected to be sent down the Keystone XL pipeline were instead upgraded here in Alberta, it would create more than 40,000 direct and indirect Canadian jobs. It would also generate hundreds of millions of dollars in additional tax and royalty revenue for Canadian governments—revenue that could help pay for services that Canadians value like education and health care.

Now that the world is teetering on the verge of yet another recession, we simply can’t afford to lose so many jobs and so much potential revenue “down the pipeline.”

In order to avoid this fate, Lougheed has been exhorting Albertans to “think like owners” and demand long-term job creation as a condition of development in the oil sands. Unfortunately, our current policy makers continue to focus on “ripping and shipping” our resources instead of finding ways to move up the value chain. In fact, if you add up the bitumen export capacity of the XL pipeline and the existing Keystone and Alberta Clipper pipelines, energy companies will be able to export ALL of the expected increase in oil sands production for the next 20 years. In other words, we’ll be closing the door on a real value-added strategy for a generation.

The big question from the Canadian labour movement’s perspective is this: once the construction jobs on pipeline and extraction-only oil sands projects are complete, where will the jobs for Canadians come from? A Canadian energy strategy simply must have an answer to this question.

Energy Security

Like it or not, we live in a world that runs on oil. For the time being at least, individuals and businesses simply can’t make do without the stuff. Yet Canada is the only major oil producing jurisdiction in the world that doesn’t have a coherent national strategy that puts the interest of its citizens first.

The results are perverse. Despite our status as a net energy exporter, Ontario, Quebec and the Maritime provinces import roughly 700,000 barrels of crude oil a day from places like Saudi Arabia, Algeria, Nigeria and Venezuela. In fact, Quebec and the Maritime provinces import more than 80 percent of the oil they use from outside Canada. Why? Because almost all of our pipelines run north-south. Shockingly, we don’t have the infrastructure to send western oil to our fellow citizens in the eastern half of the country.

Former Energy Minister Liepert and others are right when they say we should be looking for new markets for our oil; after all, demand from our biggest costumer, the U.S., is stagnating and quirks of the U.S. distribution system mean we’re not getting world price for what we sell.

But if new markets are what we’re looking for, doesn’t it make more sense to build pipelines connecting west and east within our own country before building pipelines to supply refineries in Texas and China? Building pipelines to supply the Canadian east as opposed to the Far East also has the benefit of keeping the jobs, profits and tax revenue associated with upgrading and refining within Canada.

Economic Impact of Oil

Driven by massive investment in the oil sands, Alberta’s energy sector has become the driving force behind the Canadian economy. This has been great news for Albertans and the hundreds of thousands of other Canadians who have flocked to our province to participate in the boom. But from a national perspective, by relying too heavily on the energy sector, we run the risk of developing what economists call Dutch Disease. This is an economic condition in which a booming energy sector drives up the currency and oil-related investment but, in the process, drives down investment, profits and jobs in other sectors, particularly manufacturing.

A national energy strategy should recognize this threat and take steps to deal with it. One possible solution is the one offered by former Alberta Premier Peter Lougheed: set a slower pace for development in the oil sands. By proceeding with five or ten projects at a time (instead of the sixty-plus that are currently on the books), we would reduce the likelihood of developing a full-blown case of Dutch Disease. As added benefits, a more reasonable pace for development would also make it easier to address cumulative environmental impacts and it would reduce (perhaps eliminate) the need to bring thousands of temporary foreign workers into the country to supplement the domestic construction labour force. In other words, a slower pace for development would ensure that it would be Canadian workers who would benefit most from the construction of major Canadian resource projects.

Royalties

Royalties are not taxes. They are the price that forestry, mining and energy companies pay to develop resource assets owned by Canadian citizens. The good news is that royalties generate billions of dollars each year, especially in resource-rich provinces like Alberta, Saskatchewan and Newfoundland. This is money that we use to build needed infrastructure and fund vital public services like education and health care. The bad news is that we don’t always (or even often) get the best possible price for the sale of our assets. In Alberta, for example, under the Stelmach government, we’re actually collecting fewer royalties as a share of our overall energy oil and gas sector’s revenue than the Social Credit government did in the late sixties (and less than a third of the proportion that was collected under Lougheed). To rectify this problem and ensure Canadians get the best possible price for the sale of their assets, a national energy strategy could introduce a truly national process for setting and bargaining royalty rates so that energy companies could no longer play one jurisdiction against the other. The bottom line is this: in an environment characterized by historically high oil prices and rapidly declining options for oil companies in other parts of the world, provinces like and Alberta, Saskatchewan and Newfoundland hold all the cards. By cooperating, we can play those cards more aggressively and successfully. Energy companies won’t fold or leave the table, because they have nowhere else to go.

Transition

A post-carbon economy is years away, but make no mistake, it’s coming. It’s coming because the science around global warning is real and frightening; because a global political consensus has emerged in support of a greener economy; and because, more practically, the world is running out of oil (at least cheap oil).

This doesn’t mean that we should stop developing our oil resources. The oil sands are one of our countries most valuable assets at the moment and it would be foolish not to exploit them. However, what the coming of a post-carbon economy does mean is that we’re going to have to start looking at the oil sands in a different way. In particular, we should very consciously start thinking of the oil sands as a transitional resource, a resource that will help provide us with the revenue necessary to build the next, greener economy in Canada.

If Alberta can agree to a national energy strategy that uses the oil sands as a bridge to a better future for the entire country, then not only will our country’s economic prospects be brighter, we may also be able to manage the “politics of envy” that inevitably come from one province having so much more wealth than other.

A true national energy strategy has to be much more than a plan to build a couple of pipelines that export jobs along with our oil. We can do so much better. In fact, for sake for future generations of Canadian, we need to do much better.

Gil McGowan

Gil McGowan was recently re-elected to his fourth term as president of the Alberta Federation of Labour (AFL), Alberta’s largest union organization, representing more than 145,000 workers in both the public and private sectors.

Raised in rural north-central Alberta, McGowan received degrees from both the University of Alberta in Edmonton (Bachelor of Arts in History) and Carleton University in Ottawa (Master of Journalism) before embarking on a career in journalism.

McGowan then worked for the Alberta labour movement as a researcher, communications officer and community organizer for a decade before being first elected as AFL president in 2005.

As a union staff member and communications coordinator for the group Friends of Medicare, McGowan helped lead the broad public opposition to privatization in Alberta’s health care system.

As president of the AFL, McGowan has presided over the substantial growth of his organization and has been instrumental in putting many important issues on the agenda for public discussion in Alberta, including workplace safety, the use (and abuse) of temporary foreign workers and the loss of jobs due to the increasing export of raw bitumen (as opposed to creating value-added jobs in the province by doing the upgrading and refining here).

McGowan is the author of several award-winning studies on the Alberta economy including Crumbs from the Table, Missing Out on the Boom and Lost Down the Pipeline. He appears regularly in the Alberta media as a spokesperson for labour issues and is a frequent author of guest columns in Alberta’s major newspapers.

McGowan is a member of the Communication, Energy and Paperworkers Union (CEP) Local 445. He lives in Edmonton with his wife and three children.

A new publication released by the Canada West Foundation illustrates Canada’s current energy reality and highlights opportunities for a bright energy future.

Catching a Rising Tide: A Western Energy Vision for Canada by Sheila O’Brien and Shawna Ritchie, draws from one-on-one conversations with 50 leading western Canadian experts in energy and the environment who share their vision for energy. Energy has been an important centerpiece in public policy discussions for the last half-century, conversations which are now part of a global debate.

“Western Canada has expertise in the production of various energy resources, but we have also had to address the need for sustainable and responsible development and the reality of unequal resource distribution—making our energy reality a microcosm of global energy production,” notes authors O’Brien and Ritchie. “This gives western Canada’s vision for energy particular importance in national discussions about where energy should and could go in the future.”

Canada has the opportunity to become a supplier of choice for energy products, services and expertise, supported by environmental and social records that define our values as a nation and give us a stronger voice internationally. However, achieving this vision will be a challenge for all Canadians regardless of where they live. As the Foundation’s President and CEO, Dr. Roger Gibbins explains, Catching a Rising Tide, “provides a model for western Canadian thought leadership on the big national policy issues of the day, setting out creative options rather than narrow prescriptions.”

To purchase a copy of Catching a Rising Tide: A Western Energy Vision for Canada, click here.

By: Larissa Sommerfeld, Policy Analyst

Today Alberta’s new cabinet will be sworn in.

Some regard the selection of her Cabinet to be Premier Alison Redford’s first test. How many fresh faces will have new jobs? Who will be shuffled? Will any of the old guard remain?

Those involved in water policy will watch the Environmental portfolio closely. Will veteran Minister Rob Renner stay or go?

Perhaps more importantly, what does the election of Redford mean for Alberta’s water?

On her campaign blog, Redford wrote, “while I believe that water needs to be conserved, this does not necessarily imply that it should be treated as a commodity with a market-driven price. Such a move has far-reaching and complex implications, none of which, especially in areas like licensing and export obligations, have been adequately explored.”

She went on to write that any changes to water policy would be arrived at through public consultations. However, she did refer to the fact that she would move “ahead with a new water management framework for the province.”

While her statements were ambiguous, it is clear that Redford will wade into the water debate cautiously. She is aware that the status quo cannot continue, and is committed to ensuring the stability of Alberta’s water supply. So, while we know the ends, we do not yet know the means to get there.

One fundamental question will be whether Redford will follow any of the recommendations put forth by the Premier’s Council for Economic Strategy in the 2011 report Shaping Alberta’s Future. When it comes to water policy, the report recommended that the province create an Alberta Water Authority. The Authority, an independent organization, would be tasked with gathering and maintaining a robust water database for the province, developing a long-term water infrastructure plan, and perhaps most importantly, “oversee[ing] an Alberta water allocation exchange.”

This Authority would “encourage the growth of activity that delivers the highest possible benefit to the province for the water used.” In other words, the Premier’s Council recommended that an active water market in Alberta be developed—one where those industries that could generate the highest benefit to Alberta are awarded the right to use an allocated amount of water. (What is meant by benefit is still to be determined.)

Although a pseudo water market currently exists in the southern half of the province, the idea of a market is extremely controversial. Stakeholders have expressed concern that a firmly entrenched market would favour those who can pay large sums for a license—for instance, an irrigator likely could not compete with a large oil company.

While there has been much discussion about further developing water markets in Alberta, the Stelmach government did not wade too far into the debate. Now that we have a new government, perhaps we’ll see some movement in this area.

Will Redford follow the advice of the Premier’s Council? Or will she start from scratch—engage in public consultations and carefully assess the implications of a water market before initiating new policy? Or will she wait until the next general election? Water just might be one of those issues that isn’t touched until a clear government mandate—which isn’t entirely certain right now—is given to the Redford Progressive Conservatives.

Only time will tell. But today’s pick for Environment Minister might give us a few hints.

By: Brittany Anderson

The Alberta Energy Challenge (AEC), hosted by the University of Alberta School of Business and the Commerce Energy and Environment Group, is a business case competition focused on exploring the opportunities and challenges present in the dynamic energy sector. AEC brings together top commerce, engineering and economic students from across North America and provides them with an unparalleled opportunity to further develop and explore their interests in energy and the environment.

Teams of four undergraduate students from each participating institutions were asked to research and develop a comprehensive and innovative solution to a real time challenge presented by Suncor Energy. An interdisciplinary panel of industry and academic consultants were made available to the delegates to augment their understanding of key problems and comment on the feasibility of proposed alternatives. Additionally, students were provided access to a library of information on Alberta’s energy industry through JuneWarren-Nickles publications prior to their arrival in Edmonton. They also had access to all publicly available information and University of Alberta databases to develop their solutions. The competition culminated on the final day where each team presented their analysis and ideas to a distinguished panel of judges, including senior representatives from Suncor Energy, Cenovus and CMA along with leading professionals in the Alberta energy sector.

Suncor’s Andrew Stephens, Senior Vice President of Business Services, gave the students a piece of advice with his opening keynote address; he highlighted the need for the public to become informed on topics concerning energy and from there to have educated discussions about Canada’s energy future. AEC was able to introduce teams that encapsulated a wide variety of educational backgrounds, viewpoints and skill sets. The diversity of experience allowed for numerous viewpoints to emerge during the competition and new areas of focus to be discovered during the presentations. As each team developed a solution to the Suncor-issued case, numerous viewpoints emerged.

The top three finalists were announced Sunday afternoon. Two University of Alberta teams and the University of Saskatchewan competed for the first place title. Deliberated on by a panel of twelve judges, the first place trophy was awarded to the University of Alberta.

As energy topics gain more and more media coverage, with talk about a national energy strategy brought to the forefront, the need for higher energy literacy rates has never been more prevalent. The University of Alberta School of Business is proud to offer Natural Resources Energy and the Environment as an option to its undergrad student. With an ever expanding energy industry in Alberta, this choice ensures new grads have a wide range of knowledge before entering the industry.

With plans being secured for next year’s competition, AEC is looking forward to engaging more students and growing to become a larger and more competitive challenge. The Alberta Energy Challenge allows students across North America to look at real challenges presented by the energy industry today, and is a great example of how youth can be involved in discussions about a Canadian energy strategy, and ultimately, the future of energy.

Brittany Anderson

Brittany Anderson is VP Events for the Alberta Energy Challenge.

After spending the summer working in the oilsands, Brittany has discovered her passion for the industry stretches beyond the classroom. Having planned all the events for the Alberta Energy Challenge, she was excited to meet and interact with all the delegates and enjoyed watching the competition unfold.

Brittany is entering her final semester of her Bachelor of Commerce degree at the University of Alberta. With a Marketing Major and a Minor in the newly created Natural Resources, Energy and the Environment. Brittany plans to enter the oil and gas sector and to find a career that showcases both sides of her degree.

By: Shawna Ritchie

Developing a national vision for energy can seem like a daunting task. After all, there are so many different ideas, opinions, perspectives and factors that come into play. Should Canada continue to develop the oil sands? Should we be trying to sell more oil and gas to Asian countries or to the United States? Or, should we not be selling it at all? Is reducing our emissions profile the most important issue going forward? Or is protecting Canadian jobs?

These were the kinds of questions that Sheila O’Brien (my co-author) and I were exploring during the first few months of 2011 when we set out to interview 50 of the leading experts in western Canada on energy and the environment. We had an incredibly diverse and thoughtful group of interviewees and heard many different visions for Canada’s energy future.

Throughout the course of these interviews, an interesting trend started to emerge. It became clear that a person’s perspective on the potential for renewable energy has a dramatic impact on their vision for the future. It wouldn’t be too much of a stretch to say that what someone believes about the potential of renewable energy shapes their vision for energy in Canada. And, broadly, there are three different groups of people when it comes to the potential of renewable energy: the optimists, the hybrids and the skeptics.

Those who have unbridled optimism for the future of renewable energy have a vision for Canada that we would fuel our energy and economic needs almost entirely with renewable energies.

They would accomplish this vision by stopping the production of conventional energy and therefore eliminating the need to build new pipelines or LNG terminals. They see a future where governments, individuals and companies would all turn their time, creativity and—importantly—money towards fostering and developing renewable energy solutions. This collective commitment toward renewable energies would enable us to overcome the current technical challenges around renewables like the lack of an efficient storage system and the high materials cost.

These optimists point out that Canada has one of the most expansive renewable energy portfolios in the world with good wind corridors, sunny skies, innumerable rivers, extensive bio feedstock and much, much more. They argue that if we diverted money away from conventional energy subsidies, technologies and investments and into renewables the future would be unrecognizably changed and that would become the bedrock of our economic success.

By contrast, those who believe renewables have potential, but maybe not enough to take the place of conventional energy sources, advocate for a cautious approach. These are the hybrids. Loosely, their vision is that we should continue to develop and sell fossil fuels, but we should strive to sell them around the world while we simultaneously wean ourselves off those carbon-intensive goods by using more renewable energy here at home.

Their vision for the future is one where Canada remains one of the leading suppliers of conventional energy to the world and then uses the wealth generated from that economic export to transform our domestic energy system. The underlying hope of this vision is that in the process of transforming our own system we will develop the skills and expertise in renewable energy technology that with time will become one of our main exports to the world.

At the furthest end of the spectrum are the renewable skeptics who believe that renewable energies have limited use and application in Canada. These skeptics note that if we are going to continue to consume energy in the same way as today, then the only solution is to expand our conventional energy system by building pipelines, developing the oil sands, coordinating government regulations and establishing global energy trade networks and not significantly investing in renewables energies.

For most skeptics, renewable energy may be appropriate for some smaller, remote communities that do not have easy access to the energy grid—such as those on islands—but it is not a viable option for the vast majority of Canadians. They argue that even if we do increase the development of wind and solar energies, for example, they will always have to be backstopped with a conventional energy like natural gas because of the intermittent nature of the sun and wind and our insatiable demand for energy.

This central role of renewables in the energy vision is interesting for two reasons. First, because where a person falls on this renewable energy spectrum can’t be determined by their occupation or their industry. There are environmentalists who are renewable skeptics and oil and gas executives who are renewable optimists. Second, because this trend indicates a possible first step in creating a national vision for energy. If we as a country can come to a fact-based and informed understanding of what the potential for renewable energy is in Canada, it could make the path forward much more visible for us as a country.

Where people stand on the potential for renewables is pivotal in their vision for our energy future. This issue has the ability to cut through many of the other debates and questions that surround our energy future and can restructure the conversation.

So, where do you fall on the spectrum? Are you an optimist, a hybrid or a skeptic? Why?

A vision for Canada’s energy future, based on one-on-one conversations with some of western Canada’s leading energy and environmental experts, is explored in a forthcoming Canada West Foundation publication entitled “Catching a Rising Tide: A Western Energy Vision for Canada,” which will be released on October 12, 2011.

By: Michael Holden

The 2008-2009 recession and the still-fragile economic recovery in western Canada have amplified the urban-rural divide in regional labour markets. That large cities have been responsible for the majority of job creation in the West is hardly a recent development—the region’s nine Census Metropolitan Areas (CMAs) [1]have accounted for nearly 80% of all job growth in western Canada since 1997. However, the gap in employment growth between those nine cities and less populous areas has widened in recent years.

Not only did the West’s largest cities, on average, emerge from the recession relatively unscathed, but they have since posted much stronger job gains as well. From its pre-recession peak (November 2008) to the lowest point of the economic downturn (August 2009), western Canada lost just over 110,000 jobs. Even though our nine CMAs were home to about two thirds of all employment in the region, they accounted for just one third of those losses. Conversely, when the region began to add new jobs, it was mostly in the large cities. Since August 2009, there have been 119,000 positions created in western Canadian CMAs compared to 42,100 elsewhere in the region. In fact, smaller urban centres and rural areas have, on the whole, yet to recover their pre-recession employment levels. Meanwhile, the CMAs collectively did so in August 2010 and have been expanding ever since.

Of course, this is not to suggest that all the region’s big cities have been engines of job creation. Two cities—Vancouver and Edmonton—have been the primary drivers of employment growth, creating more jobs post-recession than all other CMAs combined. Regina and Kelowna have also posted impressive job gains, although their smaller population base means their affect on regional job creation is somewhat muted. At the other end of the spectrum, Calgary, Victoria and Abbotsford-Mission have all seen strong employment growth within the past 12 months, but there are still fewer people working in those cities today than before the recession began. In Saskatoon, there have been only modest job gains in recent months and employment remains well below pre-recession levels.

Even though most new jobs in western Canada are being created in big cities, this does not mean that employment prospects elsewhere in the region are necessarily bleak. In Manitoba, for example, employment growth outside of Winnipeg has been a lot stronger than in the province’s largest city since even before the recession began. Similarly, job creation outside of Alberta’s major urban centres has kept pace with the 4.3% average employment growth rate in Edmonton and Calgary over the past two years.

Moreover, as much as employment in western Canada’s CMAs has been rising, this increase has been counterbalanced by strong population growth; through the combined forces of urbanization, immigration and interprovincial migration, people continue to flock to our cities. Employment gains in our major centres since August 2009 has been just sufficient to absorb the growth in the urban working-age population in western Canada. Meanwhile, while job creation has, broadly speaking, been slower elsewhere in the region, so too has population growth.

These concurrent trends have created a favourable balance in western Canadian labour markets. While there remain pockets of weakness in some areas, the general situation is one where excess labour capacity in the region is moving to our major cities to absorb the growing demand for workers. As a result, the unemployment rate in urban and rural areas in western Canada has been virtually identical for several years.

1. In order of population size, western Canada’s nine Census Metropolitan Areas are: Vancouver, Calgary, Edmonton, Winnipeg, Victoria, Saskatoon, Regina, Kelowna and Abbotsford-Mission.

By: Shawna Stirrett

One of the most challenging issues facing Canada right now is that our economic system and way of life are built on the premise of cheap and plentiful energy.

But the reality is that the world is moving toward a low-carbon future and if we don’t start making changes to how we live and consume energy today, we are going to get left behind economically, environmentally and politically.

Despite this, Canadians are busy buying bigger houses with long commutes from where they work and play. We then fill these houses with electronic devices that require an almost constant input of energy. At the same time, our manufacturing and natural resource industries have been built on the foundation that one of their competitive advantages in the global economy is readily available and cheap energy.

There are many historical, cultural and geographic reasons for why our system was built like this, including the fact that we have a lot of energy resources in Canada, but this plentitude has not made us more appreciative of our energy or efficient in its use.

One of the results of this insatiable demand for energy is that any proposal that could potentially increase the cost of energy is met with fierce resistance from homeowners, business people and, as a result, politicians who are loath to say they support higher prices because of the impact it they will have on average Canadian families and the Canadian economy.

The problem with rallying against anything that increases the price of energy, however, is that it quickly becomes a vicious cycle. If we never do the things that might alter how we use energy—like install smart meters in people’s homes, implement time-of-use pricing and adapt our energy infrastructure—we will continue digging ourselves into a increasingly harder-to-climb-out-of energy hole.

If people are not given adequate price signals, they will have no incentive to change behaviour and there will be no market in Canada for energy-saving technologies and innovations that could stop the cycle from spinning perpetually.

Unless people have a reason to buy a smaller home, invest in energy efficient appliances and take public transportation, our demand for cheap and plentiful energy will continue to grow. This in turn will make the transition away from our current energy patterns even more difficult in the years ahead because the costs will be too high and the impact on the economy too severe.

Is this our vision for the future? Is the continuation of cheap energy the best that we can hope for? Or, can we aim for something better?

Can we envision a future, for example, where Canada leads the world in modeling how to use energy resources more efficiently and with greater care? Can we challenge ourselves to develop new technologies and innovations so that we can alter how energy is used in all aspects of our lives? Can we commit to developing a new energy system that will have a smaller footprint and, at least over the long-term, be potentially cheaper than the one we rely on today?

There are many exciting opportunities for the future of energy and there is no reason why we as Canadians can’t lead the charge toward that future. We have the wealth, the human and intellectual capital and the educational institutions to do this. What we need is the will.

Yes, there are going to be some hard choices to be made in the years ahead. And, yes, the cost of living will likely go up for a period of time. But what is the alternative?

We need a stronger sense of vision around energy than simply keeping costs low. That is not the answer for how to make Canada a stronger and better country in the years to come.

A vision for Canada’s energy future, based on one-on-one conversations with some of western Canada’s leading energy and environmental experts, is explored in a forthcoming Canada West Foundation publication entitled “Catching a Rising Tide: A Western Energy Vision for Canada,” which will be released on October 12, 2011.

The goal of the Water Pricing: Seizing a Public Policy Dilemma by the Horns project is to explore the current state of water pricing in Canada and take a closer look at water pricing in the Canadian context. Although Canada is not facing a national water crisis, some parts of the country are beginning to experience water challenges. Strains on water supply can impact both regional economies and the Canadian economy as a whole. Examining this issue is critical to ensuring that Canada’s water policy is proactive rather than reactive.

The results of the project are summarized in a series of backgrounders and two reports: