During President Trump’s recent visit to China, bilateral agreements worth $250-billion were signed between the United States and China. From the raft of agreements signed, the following deals caught my attention:
The above mentioned agreements seemed to be a sort of kick in the gut to convey an urgent reminder: in the 21st century, the Canadian economy just can’t seem to be invigorated or provided steady momentum through a ‘one-size-fits-all’ approach.
It should be clearly understood by the planners and politicians in Canada that 30% part of the GDP (i.e. goods producing industries) requires one set of planning and approach (like the Americans and Chinese are adopting) whereas the other 70% part of GDP (i.e. service producing industries) requires a different type of planning and approach (e.g. municipal bidding for Amazon’s HQ2).
Approach for boosting the 30% part of the Canadian economy
To harness the bounty of natural resources Canada has been blessed with in abundance, the federal and provincial governments need to work collaboratively, rise above political ideologies, and proactively collaborate to develop and implement strategies to deal with the various stakeholders (First Nations, local communities, businesses) towards removing potential road blocks. Only then can Canada as a whole arrive at s win-win solution to ensure natural resources projects move forward.
A prime example is the development of an LNG industry in Western Canada. The demise of the $30-billion Petronas’ LNG project still reverds in many Canadian’s minds. The proponent company (Petronas) finally dropped the project issuing a statement stating they were not proceeding with the project due to business reasons – obviously, they were not stupid to state the actual reasons. The politicians ran with that statement to hide their embarrassment.
Questions in the context of an investment exodus
In the context of Petronas’ exit (and deferment of final investment decisions of other companies), a question that should likely arise in public’s mind is: if an LNG project in Alaska, that has environmental and wild-life challenges akin to the Canadian west coast can be found to be attractive by investors, why couldn’t similar challenges be addressed in regard to LNG projects on the west coast of Canada and a favourable outcome be achieved?
Just to put the above in perspective, investors (French energy giant Total) feel confident in investing roughly $5-billion in a gas field in a highly geo-politically risky area (Iran) but investors don’t find the west coast of Canada attractive enough for investing in LNG.
And, if someone was to say that LNG is no longer attractive due to low gas prices, they should be informed that companies are investing in LNG projects all over the globe, including a second wave of projects in Australia, that would involve billions of dollars of investment. And then of course, you have the US LNG projects which are steaming ahead.
Other questions include: Why do the politicians in Canada not comprehend the importance of natural resources and therefore put all effort into making sure road blocks are removed, and investors feel welcomed? Why do the concerned administrations at provincial and federal levels not understand that issues can be resolved through technical solutions? And, why are such concerns not addressed at the inception of the project, suitably dealt with and then put to bed?
Lack of proactive planning in Canada’s natural resources
The current Alberta government decided to phase out use of all coal fired power plants by 2030. This would result in the loss of hundreds of jobs working in the coal mines and coal-fired power plants. Recently the Alberta government announced a $40-million fund for the affected coal miners. Obviously, this money would come from the budget which is already getting crushed under the weight of billions of dollars of deficit.
Now, contrast this with the agreement China entered with USA. Anticipating that use of coal would need to be phased out eventually, the Chinese have decided to use their coal to generate syngas which can be further processed to manufacture petrochemicals, fertilizers and other value-added products.
The approach adopted by China is a commonsense approach to deal with coal. If this approach is/was adopted in Alberta, the coal miners could re-train in the new technology and remain gainfully employed without much disturbance to their lives.
Did Alberta think it through and develop a proper plan before rushing to phase out use of coal? What was the hurry? Was some prize waiting to be won in an international competition?
What is ruining the Canadian natural resources’ advantage?
Canada has all of the ingredients to be an energy superpower as well as powering its economy through harnessing its abundant natural resources. But something is standing in the way to accomplish this. To me, it is a combination of ‘confident idiocy’ and zombie-like implementation of political ideologies by the folks running the show at provincial and federal levels.
It seems these folks think that money falls from sky or grows on trees without any need for capital investment. They don’t seem to be aware that Canada operates in capitalist model and that investments are a must for ensuring our nation’s prosperity.
So, what can be done?
It would seem a waste to not utilize the natural endowments, bequeathed to Canada, for the well-being of all Canadians. Natural resources can be harnessed in the most responsible manner – in fact, Canada is a pioneer in this regard. It seems clear that entrepreneurs and well-meaning Canadians would have to join hands and make headways on their own without expecting much help from government folks that have unfavourable attitudes.
There is still an opportunity for exporting LNG from the east coast of Canada. Some Canadian entrepreneurs are working to make this happen. They should be given all the support in this regard. As well, entrepreneurs, and technical organizations need to come together to make use of coal in a value-added manner.