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Alberta Needs a Plan B Before Fossil Economy Collapses, Globe and Mail Columnist Warns

Alberta’s lack of a Plan B to prepare for the looming collapse of the fossil fuel economy received a stern response last week from Globe and Mail national affairs columnist Gary Mason.

In contrast to the mostly overheated coverage [1] and rhetoric [2] around the crisis Alberta faces due to crashing oil prices, Mason cites a recent study in the journal Nature Climate Change that shows clean technology beginning to kill off fossil fuel demand over the next 15 to 20 years. “Crucially, the findings suggest that a rapid decline in fossil fuel demand is no longer dependent on stronger policies and actions from governments around the world,” National Observer reported [3] at the time. “Instead, the authors’ detailed simulations found the demand drop would take place even if major nations undertake no new climate policies, or reverse some previous commitments.”

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In his column, Mason brings home the impact for the Alberta tar sands/oil sands industry, and for the province that is still overly dependent on it. “It suggests that oil-exporting countries, including Canada, will see a steep decline in their output and consequently will experience massive layoffs,” he writes. “Canada, and the oil sands in particular, are especially vulnerable because production costs are relatively expensive compared to other energy-exporting jurisdictions such as Saudi Arabia. That means those countries with the highest production costs are likely to be the first affected when demand begins slowing, as it will.

What differentiates Mason’s analysis from most any other is that he sees those realities as a backdrop for Alberta’s future, rather than a side show.

All anyone is talking about is the need for more pipelines, as if that alone will solve the province’s problems,” he writes. “Sure, another pipeline will alleviate some of the economic misery Alberta is experiencing. But that is not going to happen for a while, if at all. Meantime, no one is talking about what is happening around the world, and the implications these changes have for the province.

Even if “no one in Alberta, certainly among its political leadership, wants to even broach the subject,” he asks, “what’s Plan B when oil prices collapse permanently? Well, there is no Plan B. The government, meantime, is facing a grave economic threat. The province’s financial picture is an ugly mess,” with economist Trevor Tombe projecting annual provincial deficits of C$40 billion by 2040.

“No political leader wants to talk about what happens when the demand for the province’s oil dries up,” Mason writes. “No political leader wants to talk about the need for a sales tax to increase revenues, or the massive public sector cuts that will be required to balance the books in the absence of one.”

Which means that “one pipeline is not going to fix all that ails Alberta. And someone needs to have the courage to begin a grown-up conversation about the new reality taking place outside the province, one that is changing its future by the day.

2 Comments (Open | Close)

2 Comments To "Alberta Needs a Plan B Before Fossil Economy Collapses, Globe and Mail Columnist Warns"

#1 Comment By Rene Ebacher On November 26, 2018 @ 4:18 PM

In the meantime, the Alberta government has approved Imperial’s Oil Ltd. $2.6 billion Aspen oilsands project that will add 75,000 bpd of bitumen production to the current output of about 300,000 bpd. Another larger project headed by Teck Resources, if approved, will produce more than 260,000 bpd. Teck Resources estimates the strip mine project will cost about $80,000 per flowing barrel of oil, which is much higher than the $40,000 to $50,000 estimated to build a new steam-driven thermal oilsands project.The total estimate cost could reach $20.6 billion and have a mine life of around 41 years.

#2 Comment By Mitchell Beer On November 26, 2018 @ 4:26 PM

…and yet Mason points out, as have various others, that a 41-year mine life really translates into a project going bankrupt within a decade.

At one point, we were picking up suggestions that Teck never plans to build its mine. That based on the Kinder Morgan experience, they just want to get enough *public perception* of a viable project to qualify for a taxpayer bailout. As far as I know that was speculation, not based on anything more than inference. But the idea is out there…