Canada West Foundation Blog

Western Canada profits from its abundance of natural resources, however, in the changing global landscape, we need to take action to ensure our future prosperity. The latest research from the Canada West Foundation outlines the main contours of the contemporary energy world and takes stock of the trends shaping energy in western Canada.

State of the West: Energy – 2012 Western Canadian Energy Trends, by Senior Economist Michael Holden and Policy Analyst Robbie Rolfe, provides an overview of the provincial energy systems in western Canada, including the current state of energy production, consumption, and other associated activities and impacts. That information is framed in the context of the energy-related policy issues and challenges facing the four western provinces.

“Western Canada is characterized by a profound diversity of resources, consumption patterns, and economic and environmental impacts” said Michael Holden. “The energy picture in each province is unique, but their strengths are complementary. Through a more coordinated approach to energy policy, the western provinces can become more than the sum of their parts.”

Given the extent to which it permeates our daily lives, energy has come to dominate the economic, social, and political agenda in the region. State of the West: Energy provides a one-stop information resource on energy in western Canada, informing the debate surrounding energy policy in the West, and providing context to both where we are today and where we may go in the future.

State of the West: Energy – 2012 Western Canadian Energy Trends is part of the Foundation’s Powering Up for the Future initiative, which facilitates constructive debate on sustainable energy policy solutions for Canada and promotes the vital importance of western Canadian energy systems in the national, continental, and global economy. Click here to download a copy of the report.

By: Shawna Stirrett

In November 2011 the Canada West Foundation in partnership with the National Round Table on the Environment and the Economy (NRT) conducted a series of roundtables about developing a low-carbon growth strategy for Canada with particular emphasis on the opportunities and risks facing the West.

You can read all about the main themes, policy recommendations, and overview issues in the report (click here to view) but, just for fun, here is a visual overview of the roundtables:

These word clouds were created from my notes, which were typed up during each of the sessions. Words that appeared more often in the conversation appear larger in the clouds and words that were less common are smaller. In a sense, these clouds give a visual overview of what ideas were most prevalent during the roundtables and which topic generated the most interest.

What is really fun is to see how the conversations—which were all structured around the same questions—varied from province to province.

For example, in Saskatoon, one of the main themes was on how to deal with carbon constraints in an environment of economic growth.

Those in Vancouver were most concerned about how carbon should be constrained, should it be a tax or cap and trade?

Calgary roundtable participants were pretty set on the need for a national framework around energy and emissions.

While in Winnipeg the discussion centered on how challenging it can be to put in place carbon policies when power is so cheap and emissions rates are so low in the province.

Of course these word clouds do not tell the whole story, but they do provide an interesting visual overview of what issues were important to roundtable participants and how the conversation varied across the region.

Click here to download a copy of Cautious Optimism: Western Perspectives on a Low-Carbon Economy.

By: Shawna Stirrett

Just prior to Environment Minister Peter Kent’s announcement in December 2011 that Canada had decided to withdraw from the Kyoto Protocol, the Canada West Foundation and the National Round Table on the Environment and the Economy (NRT) wrapped up a series of meetings in western Canada on developing a low-carbon growth strategy for the country. One of the key themes that emerged from these meetings was the role of national and international emission reduction targets such as those in the Kyoto Protocol.

Interestingly, there was consensus among the participants that Canada should not be overly focused on emission reduction targets. Participants argued that reduction targets have a tendency to send the wrong signals to producers and consumers. A focus on targets that are not accompanied by a clear strategy for meeting them can have a paralyzing effect rooted in uncertainty and fear.

For example, did every province under Kyoto need to reduce emissions by 17% by 2020, or was the target meant to be a national average? If it was a national average, did that mean that if some provinces did not meet the target, other provinces would have to make up the difference?

Another reason participants took issue with an emphasis on targets was that they can have the unintended consequence of promoting competition rather than cooperation. Targets can create the perception of a zero-sum game in which, as long as a province or country is doing better than another, it wins.

A final reason participants argued that there should be less emphasis on emission reduction targets is that they often overshadow other environmental considerations such as land management, water quality, protection of biodiversity and so on.

Instead of relying exclusively on emission reduction targets, participants argued that Canada should be setting environmentally quantifiable goals that are holistic in nature. These goals would ideally foster interprovincial cooperation, account for all aspects of environmental protection, encourage energy efficiency and facilitate the creation of a nationally coordinated plan for dealing with energy and environmental issues.

While the consensus of participants was that emission reduction targets should not be the main focus of environmental management in Canada and it’s path to a low-carbon future, this does not mean that they were in favour of pulling out of Kyoto. Nonetheless, there was a clear sense of the limitations of Kyoto-like targets for achieving our environmental goals.

For the full summary report of the western Canadian roundtables on a low-carbon growth strategy for the country, see the Canada West Foundation report entitled: “Cautious Optimism: Western Perspectives on a Low-Carbon Economy.”

By: Dr. Roslyn Kunin

Over the years, I have spoken with many people who were planning on starting their own business. They told me about the great product or service they would offer. They described how they would set up the business. They all told me how much money they hoped to be making once the business got rolling.

What they never mentioned, until they were prompted, were customers. That basic business need, someone willing and able to pay for the good or service provided was, if not totally missing from the mental image of the new business, certainly not in the foreground.

We should not be too hard on these aspiring entrepreneurs for not thinking about who was going to buy their output. For a very long time, governments, policymakers, planners and others interested in economic development did the same thing. Some still do so.

Take western Canada as an example. When we think about advancing our economy, we think about inputs. These include our resources and how we can access and develop them. They include infrastructure; transportation, communication, etc. They definitely include human capital—a workforce with both hard and soft skills and, ideally, some relevant experience.

We think about what we might produce. In the past, the focus has been around the question of how the West can move up the food chain beyond its traditional, resource-based industries and into manufacturing and the newer technologies.

What we have not been thinking about is customers. Who is going to want whatever it is we are or might be producing? For too long, we have had an “if you build it, they will come” attitude. But that only happens in the movies.

Relative to much of the rest of the world, western Canada is blessed with various essential resources, an educated labour force, decent infrastructure and political stability. But we are seriously limited by our lack of customers. We have been, and still are, far too dependent on one customer—the United States.

If you have only one customer, the US is a good one to have. It is close, big, speaks English and has similar laws and customs. But it exposes you to the risk of having all your eggs in one basket. We learned this to our sorrow in the last downturn.

To advance western Canada, we need more customers, and those potential customers are sitting across the Pacific and beginning to creep into our awareness. They want, need and can afford the resources and high level services that we can provide.

So let us adjust our focus to look west as well as south. Let us develop the pipelines and other infrastructure needed to serve new markets. Let us develop and add to our customer base. That is how businesses and economies grow.

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: 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

As the Canada West Foundation highlighted in a study released earlier this year, western Canadian exporters are gradually shifting their focus away from the United States and are increasingly selling their goods in Asian markets.

Early data for 2011 show this trend continuing. Through the first six months of the year, western Canadian exports to Asia were up 23.3% compared to the same period last year, well above the growth rate for exports to the US (11.2%) or other non-US destinations (18.3%). In total, 18.2% of western Canadian exports from January to June 2011 went to Asian markets.

Leading the charge is BC. Through the first half of 2011, BC’s total exports were 14.0% higher compared to the first half of 2010. Exports to Asia, however, have risen at more than twice that rate, owing in part to strong growth in sales to China, Taiwan and South Korea.

This increase has not only helped to cement BC’s status as Canada’s largest exporting province to Asia, but, if the pattern established through the first six months hold true for the remainder of the year, BC will be the first province to reach a significant new milestone: it will export more to Asia than to the United States. From January to June 2011, BC shipped 43.2% of its merchandise exports to Asia, compared to 42.0% of sales going to the United States.

As we’re looking at just half a year’s worth of data, this feat is mostly symbolic at this point, but if the underlying trend continues, it could represent an important structural shift in how we think about the BC economy. What happens in Asia could be more important to the province’s economic outlook than what happens in the United States.

The other three western provinces are in no danger of crossing that threshold in the foreseeable future, but Asian markets continue to grow in importance for exporters on the prairies as well. Manitoba and Saskatchewan have seen increases of 39.0% and 25.4% in exports to Asia, respectively, through the first half of 2011. Both provinces now sell more than 20% of their total exports to that part of the world.

On the surface, Alberta appears to be something of an exception to this general trend. Not only are Alberta’s exports to Asia growing more slowly than any other province (7.6% through the first half of 2011), but the share of total exports going to Asia (7.5%) remains low as well. Only New Brunswick and Ontario send a smaller share of their exports to Asia.

The weakness in growth through 2011 to date is partly due to reduced sales of primary plastics and canola – two of Alberta’s largest exports to Asia. It remains to be seen if that reduction is a temporary dip or evidence of a longer-term trend.

But in terms of overall market share, Asia is far more important to Alberta than the figures suggest. Oil and gas make up more than half of Alberta’s total exports, but based on the infrastructure in place, Alberta oil and gas companies wishing to sell their products abroad have no real choice in where they can go: all roads – or, in this case, pipes – lead to the US.

Removing oil and gas from the equation gives us a chance to see where Alberta exporters sell their products when they have a choice of customer. When you do so, Alberta’s export mix begins to look a lot more like the other Prairie Provinces. In the first half of 2011, 15.7% of Alberta’s non-oil-and-gas exports went to Asia – not as much as in Saskatchewan or Manitoba, but still much higher than in any province outside western Canada.  

On Thursday, September 8, 2011, The Canada West Foundation and the Asia-Pacific Foundation are co-hosting the Canada-Asia Cooperation Conference and Dinner, which will look at the growing web of energy-related trade, investment, strategic and environmental linkages between Canada and Asia. For more details, click here.

Global demand for Canadian energy resources, including coal, shale gas, oil sands and uranium, is on the rise, especially amongst Asia’s largest and fastest growing economies. On September 8, 2011, Canada West Foundation will be collaborating with the Asia-Pacific Foundation to host the Canada-Asia Energy Cooperation Conference, which will be held alongside the 7th Annual Canada-China Energy and Environmental Forum.

The Conference will examine the growing web of energy-related trade, investment, strategic and environmental linkages between Canada and Asia, featuring Canadian and Asian experts and practitioners from a variety of sectors. Opening Remarks will be made by Alberta Environment Minister, the Honourable Rob Renner, with Alberta Energy Minister, the Honourable Ron Liepert, providing the Luncheon Keynote.

That evening, the Canada West Foundation will share our strategic vision for the future of western Canada, and Asia’s place within that vision at our Community Board Dinner. The Keynote presentation by Victor Gao, China Co-Chairman of Daiwa Capital Markets, will explore the growing and complex relationship between Canada and Asia.

Don’t miss out on these exciting events! For more information on the Canada-Asia Cooperation Conference and Community Dinner, please click here.

Two new publications released by the Canada West Foundation examine the current and future state of Canada’s water supply and the impact that market-based instruments in water resources management have on policy innovation.
 
Charging for Water Use in Canada: A Workbook of the Central Principles, Key Questions, and Initial Steps provides a workbook that outlines the questions policymakers must answer in order to build a comprehensive water system from interviews of 42 water policy experts in Australia, Canada and the United States.

Our Water and NAFTA: Implications for the Use of Market-Based Instruments for Water Resources Management determines whether using market-based instruments as a solution for water allocation will impact Canada’s participation in the North American Free Trade Agreement.

“Canadians are some of the heaviest users of water in the world and we also pay some of the lowest prices for that water. Yet, the nation’s current supply of clean and safe freshwater is not guaranteed given the prospect of climate change and our critical water and wastewater infrastructure in many areas of the country is in a clear state of disrepair,” noted Vander Ploeg. “More rational and appropriate pricing strategies for water are one way to resolve some of these concerns.”

Canada’s water supports diverse and significant ecosystems, is essential to almost all aspects of the economy and has great social and cultural significance. With that said, global trends including climate change, population growth and urbanization are creating apprehension about the future of one of our greatest resources. By creating a comprehensive framework for water management, we will be able to successfully manage coming stresses and strains on Canada’s water supply.

Download Charging for Water Use in Canada: A Workbook of the Central Principles, Key Questions, and Initial Steps or Our Water and NAFTA: Implications for the Use of Market-Based Instruments for Water Resources Management.

By: Dr. Roger Gibbins

When the federal, provincial and territorial energy ministers met over the last two days in Kananaskis, Alberta, they faced a surprisingly vocal and concerted call by industry associations, environmental groups, think tanks, editorial commentators and even some of their own members for a Canadian energy strategy.

But, when the ink finally dried on the official communiqué, there was no mention of a Canadian energy strategy, only much softer language around a “collaborative approach” to energy.

As one voice in the chorus calling for the creation of a Canadian energy strategy, I was initially disappointed that the energy ministers had pulled up short. However, the documents released by the ministers outlined a shared vision for greater pan-Canadian collaboration, a guiding set of principles, a comprehensive list of key objectives, and action plans.

In short, most of the components of a Canadian energy strategy are there, albeit clothed in the language of “collaboration.” The ministers have set the stage for an expanded national conversation on energy policy, which is precisely what the advocates of a Canadian energy strategy had hoped to achieve.

To adopt the old cliché, if it walks like a duck...it is probably a duck, or in this case, a Canadian energy strategy. The ministers have delivered, and should be forgiven the awkward language that the realities of Canadian federalism impose on any policy debate. The fact is there is a consensus that a collaborative, pan-Canadian approach to energy should be achieved and although the words may be more subdued, it still sounds like a Canadian energy strategy to me. Good progress has been made.

Read the 2011 Energy Communiqué.
Visit the 2011 Energy and Mines Ministers' Conference page.

Dr. Roger Gibbins is President & CEO of the Canada West Foundation and attended the Energy Ministers’ Meeting in Kananaskis.