Canadians and Americans have been putting up an extra abundance of Christmas lights to create some extra holiday cheer in this pandemic year.
News organizations around North America report people homebound by Covid 19 are going all out with lavish outdoor Christmas lighting displays, which bring to mind the increased energy costs contemplated by Green, Clean Energy, and ”Great Reset” plans for next year.
Being announced just a week before Christmas, Canadians have barely been allowed time to consider the ramifications of the New Federal Climate Plan and the April 1st, 2021 carbon tax increase that will impact Christmas next year.
Last week, the Federal government announced the New Federal Climate Plan- a suite of plans designed by the current administration to continue the green initiatives they had in mind before the game-changing Covid 19 pandemic. It has been presented to parliament just one week before Christmas – just as most Canadians are distracted by the loss of their livelihoods, even loss of loved ones, and struggling with increased Covid 19 restrictions to their family celebrations and daily activities.
“Canadians want to do their part – but for Trudeau to disproportionately hit lower-income Canadians is irresponsible and self-defeating,” Peter Julian, finance critic for the NDP party commented to Reuters on Tuesday about the CFS. A Federal Environment department report indicated that single mothers and seniors living on fixed incomes are most vulnerable to energy poverty and are most at risk to be negatively impacted by rising costs due to the CFS. Sabrina Kim, chief spokeswoman for Environment Minister Jonathan Wilkinson, stated that Ottawa has launched initiatives to help Canadians avoid the price impact, such as providing funding to make homes more energy-efficient and incentivizing electric vehicle purchases. However, single mothers and those on fixed incomes often can’t afford to own homes or can’t afford the owner portion of the payment to make their home energy efficient so the energy efficiency funds won’t help them. They often aren’t able to afford new electric vehicle purchases, so Ottawa’s “help” won’t help those most in need.
The rush of announcements last week- the New Climate Plan, the CFS, the Hydrogen plan, the Nuclear plan begs the question- “Are we are being redirected or misdirected away from the pressing need to rebuild the pandemic-damaged Canadian economy, and the need to avoid plunging many Canadians into poverty?” Shouldn’t rebuilding the economy be our primary 2020/2021 focus? To get input on what the 2021 economic landscape may look like and how affordable energy improvements could work, Peter Tertzakian weighs in.
In a recent interview, Tertzakian predicts that in 2021, the market returns of clean energy technology companies will be a self-perpetuating mechanism for attracting investor capital. He says government policies will provide some encouragement, but it will be corporations and their investors that will fund the next wave of decarbonization. He sees the twin challenges of low prices and lack of access to capital as negligible saying,
“Lower commodity prices and reduced access to investment capital remain as accelerants to greater ingenuity and efficiency, not oblivion. The cost of bringing a joule of energy to market, from whichever source (oil, gas, wind, solar or nuclear), is getting cheaper. In other words, primary energy is now a deflating commodity.”
Tertzakian believes that in the post-pandemic energy world, clean energy investments will continue at a robust pace. He says traffic congestion in Beijing and other Asian cities is rebounding and, in some instances, exceeding pre-pandemic levels and remarks that China’s draw on petroleum in 2020, including gasoline and diesel, will close higher than in 2019. Heading into 2021, he predicts the rest of the world won’t be far behind.
Mark A. Stansberry, author of the book, America Needs America’s Energy – has been active in the oil and gas industry for over 41 years having served as CEO/President of Moore-Stansberry, Inc., and The Oklahoma Royalty Company. He is currently serving as Chairman of the Board of Regents of the Regional University System of Oklahoma.
His message from his recent Oilman magazine article is that the Industry has to strive for energy efficiency and environmental preservation. He believes natural gas, will be a strong force in filling global energy needs in the years to come for both power generation and transportation, saying,
“The oil and gas industry for many years ahead will be an important part of the energy mix. It should be noted that renewables, solar, wind and all other forms of energy will also play an important part in the transition of our energy future.”
Stansberry is also aware of the complexity of the geopolitical energy landscape. He is cautious of the aggressive self-interest of energy and economic superpowers Russia and China. He mentions a May 2014 “momentous gas deal” between China and Russia and points out Russia has an abundance of oil and natural gas reserves which China badly needs and cautions,
” Russia was flexing its muscles. It appeared that Russia was working toward world dominance in energy. However, it should not be ignored as to where the final deal between Russia and China was signed. It was signed in Shanghai, China. Through this deal, China was sending a message to the West that it is the real power in its view.”
Stansberry wisely avoids suggesting the US take a climate change crusader role globally. That role has been pursued by the current Canadian administration – a role reported as “climate leadership through global forums, including the next UN Climate Change Conference, the G7 and G20 summits, and the World Circular Economy Forum” as intended with the New Federal Climate Plan. Perhaps this is partly because Stansberry sees problems with global compliance. He sees China as “confronting the U.S. and the entire globe with its assertive behaviour”.” The more powerful China becomes, the more emboldened it becomes.” Stansberry advises the US should instead “focus our attention on research, innovation, and technology, including the areas of 5G, space, cybersecurity, digital transformation, and broadband, to mention a few”.
Another US thought leader worth hearing from is Alex Epstein, author of “The Moral Case for Fossil Fuels.” He recently blogged about “Our need for cheap, plentiful, reliable energy” and clarified the determining factors to be considered when developing an energy strategy as follows,
In other words, Epstein confirms that energy is only valuable to the extent that it is cheap, plentiful, and reliable. He notes that to make it that way, we have to discover cheap, plentiful, reliable processes for generating energy.
Epstein clarifies an idea that the general public has forgotten – Energy is a process. Whether it’s coal, oil, gas, solar, wind, energy forms can be identified as materials, but he reaffirms they are actually processes, and the whole process can include mining, refining, manufacturing, transportation, operation, maintenance, and disposal. He notes that when we see gas, solar, or wind products in the marketplace being cheaper or more expensive – the cost reflects the whole process. We also have to look at the emissions created and energy used in the whole process. He concludes, “The general reason why certain forms of energy are not adopted is because the process to produce them is too expensive or it’s not reliable.”
Another factor affecting the adoption of a form of energy is the power of the story about it. The story being propagated about renewables holds powerful sway with investors but for quite cynical rather than idealistic reasons. According to a recent article in The Petroleum Economist,
“Renewables are attracting investors and delivering spectacular returns—but private equity funds still see opportunities in oil. While investors are increasingly vocal about their concerns over environment, social, and governance criteria – market data from the last decade reveals that investment in decarbonization could have been made for entirely mercenary reasons.”
The article quotes research by the IEA and Imperial College London’s Centre for Climate Finance & Investment stating that a stock market-listed US fossil fuel portfolio delivered 97.2pc over ten years with 25.4pc volatility. Meanwhile, a US renewables portfolio delivered more than double the returns with very similar volatility, at 192.3pc and 28.6pc respectively. It states “Investors are flooding into the story of ‘the new economy’. There are spectacular returns from these investments” according to Bond, Carbon Tracker as referenced in the article.
The timing could not be worse for the New Federal Climate Plan and accelerated carbon tax increases together with added taxation via the Clean Fuel Standard regulations while the Canadian economy is reeling in debt from the Covid 19 response. It will negatively affect the very sector of the economy that has been the key to economic recovery in the past – most recently after the 2008 Financial crisis. As recently reported, the TD Bank expects the GDP in October to be supported by the energy sector, but the momentum is waning.
“Energy will provide a tailwind to the goods-producing sector on higher oilsands output that should help make up for a lackluster performance in manufacturing, while construction should also make a positive contribution. Looking to services, real estate will benefit from resale transactions that were just shy of record levels while wholesale trade provides another source of strength.” according to the report.
As mentioned previously, the New Federal Climate Plan is expected to feature prominently as part of Canada’s climate leadership through global forums, including the next UN Climate Change Conference, the G7 and G20 summits, and the World Circular Economy Forum.
Common sense would indicate that pandemic recovery should take precedence over ambitions of global climate leadership. Canadians surely are questioning the use of their tax dollars in pursuit of global ideals while average Canadians descend deeper into poverty under greater taxation. Average Canadians might question subsidizing electric vehicles for an elite few with their tax dollars, while the same vehicles remain out of reach for average Canadians – especially those who have lost their jobs or businesses due to Covid 19.
Common sense also indicates that we can find ways to reduce our emissions and improve our impact on the environment. But let’s not take the plentiful, affordable energy we enjoy now for granted. Let’s not sign on to multiply the cost of energy by subscribing to theories posited by independently wealthy leaders who will never have to change their lifestyle and feel the effects of energy poverty or poverty brought on by the very policies they propose.
Let’s work in 2021 for a reasonable approach to carbon taxes, and hold the line. Much like Dickens’ “A Christmas Carol” – let’s reference the low- cost energy of Christmas Past rather than chase a high-cost energy Christmas present in 2021.
Maybe we can take the necessary steps to thwart the Ghost of an unaffordable Christmas yet to come.
Maureen McCall is an energy professional who writes on issues affecting the energy industry.