To the chagrin of more than a few, I’m generally not interested in picking up my club to go after politicians. They have enough problems; can you imagine getting up every morning to go work in those pits of manufactured animosity and gamesmanship and influence-peddling? After a full day of such debauched maneuvering, I’d feel like a plumber’s snake.
Thankless job though it may be, they volunteered for it for whatever reason, and as our representatives, it is fully our right to point out things they could do better. I can’t be bothered to challenge them from an ideological perspective; that is a pointless task because such arguments never sway the other side. But it is important to challenge them from a practical one.
A practical place to start then is to analyze how the current system of environmental progress is playing out in a way that can safely be described as a debacle. Political posturing has created at least one false premise that is doing irreparable damage.
On the energy front, I can quite comfortably say that, though I know an awful lot of people in the business, I don’t know of any that are against gains in efficiency, or against reducing emissions, or against enhancing environmental performance. No one likes to see unnecessary emissions filling the air, or spills of anything on the land or water, or to see flagrant waste. The fact that there is room for improvement in many of these areas is not that people don’t care. The problem has always been that the petroleum sector is a tough business. It may not look like it when times are good and receptionists are Porsche-shopping (this hasn’t happened recently), but over the long run it is a very capital intensive, challenging, and hard-fought business. As such, cutting edge efficiency projects or environmental enhancements may not rise to the top of the to-do list when competition for capital is scarce.
At this point, when governments decide to tackle the issue of reducing overall emissions from the upstream petroleum sector. A noble goal, and there are two ways to go about this. The difference between the two though is monumental – one way could transform western Canada’s economy into a modern powerhouse, and the other could pretty much lead to civil war in sleepy old Canada. One way could create a true national success story and the other a polarized nation with an angry and wounded industry that is incentivized to do a bare minimum.The worst part is that much of the difference is largely in the framing, and in a failure to grasp the difference between incentivizing and threatening.
The federal government has chosen a dominating tactic to reduce emissions – through the use of a carbon tax. While I don’t necessarily disagree with the effectiveness of that strategy – it will have an impact on emissions – consider the way it was delivered. You might raise an eyebrow or two to hear that delivery matters, but hear me out.
The federal government brought forth the carbon tax as part of a blistering campaign to combat climate change (and NO, in the most recent election, Canadians did NOT emphatically vote for urgent action on climate change; had they done so the Greens/NDP would have received more than 20% of the vote – more people voted for parties that approved the TMX expansion than otherwise). As part of the fight against climate change, the government subscribed to the narrative pushed by the extreme forces of the climate industry – that fossil fuels are to blame, and that the only way to win the climate war is to eradicate their usage. So when the government, in the same breath that it declares a climate emergency (and implied necessary annihilation of the fossil fuel complex) also implements a carbon tax…what on earth did they think the response would be in the hearts and minds of the hundreds of thousands that are involved in providing these life-giving fuels to not just the nation but the world? And be most assured that that statement is true – 7 billion people will not survive for more than a few days without fossil fuels and no one should pretend that is not the case, and if they say it is they should be held accountable. Yet our federal government would rather have been photographed in a brothel wearing nothing but a baby-seal-skin fur coat than admit the undeniable value of fossil fuels in public.
So what is the other strategy that the, or a, government could have used to reduce emissions, one that would have been as positive as that strategy is negative?
Well, how about using incentives properly? Rather than hammering companies for not doing something, why not reward them for doing something?
What if every petroleum company, or pipeline company, or oil trucking company, or refinery or whatever, was given a tax credit for finding not just emissions solutions, but broader and more revolutionary ways to achieve the objective? What if substantial tax credits were given to anyone who finds a way to use waste heat or waste energy to create value? For example, a pet peeve of mine is that so many vegetables and other produce come from California or some warm clime when we have such ridiculous amounts of nearly free energy here. Instead of shutting in gas wells because they are uneconomic (or walking away from them as Trident Exploration did), why is there not an incentive to use that gas or waste heat to create a huge greenhouse industry? Why not give companies tax credits for every dollar of produce they produce, or three dollars of credits for every dollar, or credits for every job created, or whatever? And it doesn’t have to be just vegetables. Why are there no incentives to have portable metal recycling burners that travel around from town to town, hooking up at the inevitable natural gas well, and each of these businesses pays no income tax for 5 years, or whatever? Why not give a tax break of some kind for every bit of CO2 reinjected into the ground? Why not think in terms of building something rather than simply further hindering an industry that is already on its knees?
Why not create some sort of incentive for fugitive emissions, whereby companies fight to earn credits because they can make money at it, rather than fight to avoid penalties? Do governments not see the difference? Do they not understand that creating an incentive for people to run towards something generates a profoundly different outcome than an incentive to run away from something? One leads to building and creation; the other leads to hiding and achieving minimum acceptable standards. And, there can be corollary benefits – consider what would happen to Alberta’s orphan well problem if new ideas like Proton Technology’s hydrogen-producing technique takes off, and re-energizes countless spent oil reservoirs? What is the benefit to the province of incentivizing that sort of progress?
And if pipelines can’t be built, why not step in and make sure that products can be transformed here at home? Give credit where it’s due – the incentives for Inter Pipeline and Pembina Pipeline to create multi-billion-dollar petrochemical facilities that add value to petroleum products worked exactly as envisioned. Instead of leaving it at that though, at attracting multi-billion-dollar projects, why not design programs that incentivize ones a fraction of that size?
The petroleum industry, like any other, can work miracles when the incentive is aligned with the profit-seeking motive. Avoiding a penalty is not the same thing as seeking to earn a profit – avoiding a penalty has a finite and well-understood payoff – the cost of the penalty. Creating a new business line has unlimited potential. Which is the better motivator?
Next time you see a government official, cut them a bit of slack – they work in a repugnant environment where the word “politics” is the goal and not an insult. But don’t cut them too much slack; the power they wield in those buttery-soft hands is substantial, and they need to be held accountable to use it wisely.
Energy literacy is more critical than ever. Luckily, help is available! Pick up a copy of “The End of Fossil Fuel Insanity” at Amazon.ca, Amazon.com, or Indigo online. These Amazon reviews may be the wisest material you’ll find on the internet (except that one loser).
Read more insightful analysis from Terry Etam here. or email Terry here.