While Canadian politicians and fossil executives haggle over national climate and energy policy, a global wave of technological disruption is emerging as a “real threat to Canadian economic health,” analysts Tom Rand and Mike Andrade argue in the Globe and Mail.
“While we bicker about pipelines to tidewater and the effects of a tiny, incremental price on carbon, the cost of solar and wind continue to plummet—driven by the inevitable declining cost curves associated with all technologies as they scale, from cell phones to drones,” Rand and Andrade write . “Batteries are doing the same.”
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“The threat these technologies pose to the status quo is based on (largely Western) innovations brought to industrial scale by an aggressive Chinese state,” they add, and “neither the pace of innovation nor scale of production show any signs of slowing. Indeed, the opposite is true. Fast-forward a decade or two: Cleantech will take down incumbent energy industries that make the same old assumptions about demand for their product.”
Already, analysis shows  oil can only compete as a transport fuel if it’s priced at US$9 to $20 per barrel. “This isn’t a future scenario, but happening right now,” Rand and Andrade note. “Every dollar invested in renewables generates more than five times the motive energy for our cars and trucks than the same dollar spent on gas or diesel. It will take time to build an equivalent scale of infrastructure, of course, since the fossil fuel folks have a multi-decade head start. But as investors make decisions about oilfields and pipelines that rely on decades of production to return capital, more and more will give the thumbs down. Maybe the Saudis can compete in that world, but Canada can’t.”
Already, China alone has enough electric buses to offset 350,000 barrels of oil demand per day, and “China is just getting started. Its planned battery production capacity is three times the rest of the world’s combined. And solar energy keeps getting more efficient, batteries get lighter and more energy-dense, wind turbine blades get lighter and stronger. None of these technological trends can be reversed.”
The economic repercussions for Canada—and for the country’s current political debate over energy and climate—are obvious.
“The economic fragility associated with being the world’s marginal oil producer on cost is clear,” they write. “Contrary to pundits eager to vilify climate policy and a lack of pipelines, Alberta’s oilpatch woes are macroeconomic, and its heavy oil is destined to be uncompetitive. This isn’t a matter of us choosing between cleantech and heavy oil—that choice is being made for us.”
The opportunity for Canada is to grab its share of a growing, global cleantech economic pie. “It’s huge—estimated globally to be more than US$3 trillion annually in a decade,” they note. But first, “we have to stop being distracted by the past. Incumbent industries hold our national narrative on energy in a headlock, defending yesterday’s success stories—not defining or shaping tomorrow’s.”
To break free, “we must reshape that narrative to anticipate a world dominated by low-cost, distributed energy technologies in just a few decades. Decisions we make today define our role in that world. What services and equipment will be needed? How do we leverage existing expertise and technology? What outsized market share might we take, and how?”