//It’s the Consumption, Stupid!

It’s the Consumption, Stupid!

A Modest Proposal to Shift the Debate on Energy and Climate Change

Three events of deep significance to the Canadian energy industry awkwardly coincided recently to demonstrate, through sheer juxtaposition, that a large chunk of our economic fate has been taken out of the hands of Canadian industry and investors, turned over instead to regulators, courts and activists. The first event was a Nov. 8 U.S. federal court ruling in Montana that once again put the judicial brakes on the Keystone XL pipeline project, which came on the heels of a Canadian Federal Court of Appeal ruling in August that forced the Trans Mountain pipeline expansion project back to the regulatory review process, despite prior approval by the National Energy Board (NEB). These are but two of a number of recent pipeline-denying decisions by regulators, courts and, ultimately, anti-energy activists.

Second was a low-profile and otherwise routine industry presentations last week in Alberta about Canadian oil price discounts, at which researcher Vivian Krause argued that anti-pipeline activists – whose irrelevant and unfounded arguments are increasingly finding receptive audiences among lawmakers – are largely being funded by foreign industry players in a bid to keep Canadian energy out of the global marketplace. As a result, it was argued, Canadian crude oil is currently shipping at very deep discounts – record low prices – and, to an increasing degree by rail rather than pipeline, while U.S. production reaches record high volumes, increasing by 1 million barrels per day (mb/d) since May.

And then, on Nov. 14, the International Energy Administration (IEA) released its World Energy Outlook 2018, which showed, among other sobering insights, that despite the strong growth of renewable energy sources, global oil demand is set to increase from 95 million mb/d in 2017 to 106 mb/d in 2040. Demand for natural gas is also expected to increase significantly in that same period, with coal demand not far behind. In short, fossil fuels will not be replaced by renewable energy sources for a long time to come, given the fact that the world population is expected to grow from 7.6 billion today to 9.8 billion by 2050 and renewable energy sources will not meet the need.

Of particular note in the IEA’s Outlook was a warning that policymakers around the world “need to ensure that all key elements of energy supply … remain reliable and robust,” noting that in the decades to come, government “policies and preferences will play a crucial role in shaping where we go from here” as the world struggles to meet energy demand, while also trying to address climate change through reduced greenhouse gas emissions.

What these events reveal most poignantly to Canadian observers is that we have allowed the energy policy debate to be hijacked by outside economic interests and self-appointed environmental guardians who push false narratives about what’s really to blame for climate change.

In short, to borrow and reform a political mantra from a previous era, it’s the consumption, stupid!  It’s time to shift our energy and environmental policy debate to the demand side of the supply-and-demand equation.

It’s disingenuous, at best, and dishonest, at worst, for activists to argue this planet can afford to shut down fossil fuel production in the foreseeable future. And it’s cowardly for governments and policymakers to not push back on that argument with the truth about energy demand, which is, quite simply the fact that our consumption is growing far faster than our ability to supply it with renewables.

Until policymakers acknowledge those facts with policy that rewards smart consumption habits while also developing a fair and balanced regulatory process that recognizes the need for a reliable energy mix that stimulates investment in all forms of energy, Canada’s economic and environmental performance will continue to stagnate.

And until we stand up to the false prophets of the activist movement and recognize the truth about runaway consumption, stupid will out. Every time.

 

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