OPINION | The conversation Calgary needs to have: How does an oil city adjust to a new reality?
There are solutions out there, ones that go beyond building more pipelines or electing the 'right' politicians
Editor's Note: This is the second in a two-part series examining the challenges facing the oil and gas sector. Read Part 1 here:
- OPINION | What happens if Albertans keep praying for another oil boom, but God has none left to give?
What Calgary desperately needs right now is an honest conversation about how it will adjust to the new reality it's facing, one defined by finite oil demand and seemingly limitless global supplies.
What it's gotten, unfortunately, is a conversation about how to go back to the old reality — and efforts to attack people who aren't willing to help recreate it.
But Alison Cretney, managing director of the Energy Futures Lab, is trying to change that. The lab, which brings together people from industry, environmental organizations, local government and academia, seeks to create the kind of conversation that's been lacking of late.
"The reason that the conversation has been so limited is in large part because of the polarization, which only seems to be intensifying," she says. "It's us-versus-them stuff, and there's no room in that for a solution-based conversation."
And, believe it or not, there are solutions out there — ones that go beyond building more pipelines or electing the "right" politicians.
Cretney says Alberta is almost ideally positioned to capitalize on the decarbonization of the global economy, both because of the skills and education of its population and the opportunity to apply both to a host of new challenges.
"The core issue isn't oil and gas itself. The real issue at the centre of this is how we've been using them, which is to extract oil and gas and directly combust them," she says. "And we can get trapped into thinking that the way we produce oil and gas today is the only way to do it."
Take the Alberta Zero-Emissions Truck Electrification Collaboration (AZETEC), a $15 million project that is testing hydrogen as an alternative to diesel for Alberta's commercial transportation industry.
As University of Calgary professor David Layzell and Jessica Lof, a research lead at Canadian Energy Systems Analysis Research, noted in an Edmonton Journal story earlier this year, "there is no region in North America that is better positioned than Alberta for cost-effective, large-scale production and distribution of zero-emission hydrogen fuel. Proven technologies already exist for producing hydrogen from fossil fuels. These technologies can be adapted with relative ease and at low cost, to either put the unwanted carbon byproduct back in the ground, or never take it out in the first place."
Better still, if the province produced and exported hydrogen rather than selling equivalent volumes of oil and gas into the U.S., the provincial economy could generate anywhere from three to 10 times as much economic activity.
The same is true of the outputs, from elements like vanadium and lithium, to carbon fibres and asphalts, that could be created using bitumen.
"The economic estimates on that are huge," Cretney says. "By 2030, it could add an additional $200 billion-plus in economic activity. We just need to get beyond that view that when we talk about oil and gas it's extract and burn."
But, Cretney says, the clock is already ticking.
"The world moves on without us. And we'd miss a huge opportunity for Alberta and Canada to lead that change, to lead the transition, rather than it ultimately catching us unaware down the road. It's disrupt or be disrupted."
That message may finally be getting through to some people.
In late August, a new national organization called The Transition Accelerator was introduced to Canadians, with Dan Wicklum, the former CEO of the Canadian Oil Sands Innovation Alliance (COSIA), as its president and CEO.
Its mandate is to help solve "major business or social challenges where significant GHG reductions can be built into the solutions" and it cites the work of AZETEC as "an early catalyst" of its work.
Meanwhile, the province's ample drilling prowess is being put to work on a $10-million geothermal pilot project that's partially funded by government agencies and could help de-risk the province's considerable geothermal assets — and become a model for thousands of other sites in the province.
The Creative Destruction Lab, which was launched at the University of Toronto in 2012 and has since expanded to universities at five different cities, including Calgary, is where that work will be pushed even further.
The lab brings entrepreneurs, mentors, and angel investors together to help develop and de-risk new technology, and in Calgary its work is focused on energy-related ideas.
Judy Fairburn, who co-founded COSIA and Evok Innovations, a partnership between cleantech entrepreneurs and industry, is one of the lab's fellows. She's also someone who, earlier in her career, led the team that developed something called "paraffinic froth treatment", a technology that reduces the GHG intensity of mined oilsands by one-third and has been applied at several mines, including Suncor's massive Fort Hills project.
"Being entrepreneurial is all about thriving on challenges," she says. "And Calgary does that very, very well."
Sense of optimism
And while the transition from a supply-constrained global oil market to a demand-driven one has been tough for a lot of people in the city, Fairburn is optimistic about the space that's creating for new ideas and opportunities.
"Five or 10 years ago, we were on a certain type of growth path," she says. "And now, there is creative energy coming from many different places, and businesses being built in different realms."
Importantly, there's also capital that used to reliably get invested in new wells or drilling rigs that's now willing to flow in new directions.
"Creative Destruction Lab is a perfect example of that," Fairburn says. "You have many of those investors who would have traditionally been in oil and gas at the table. They are complemented by experts in the field, and they're investing in alternative energy or companies in the digital realm that will make our core sectors more productive."
That transition may also create space for people who were often excluded in the past that so many habitually glorify.
Women 'leading the charge'
Women, for example, were grossly underrepresented among the C-Suites and boards of directors of Calgary's energy companies, and little has changed on that front.
Female CEOs are still about as rare as people with Pierre Trudeau tattoos in downtown Calgary, and their presence on the corporate boards of energy companies remains woefully inadequate.
But in the city's emerging tech (and, yes, energy tech) space, 30 per cent of company founders are women — a figure that's double the national average.
That doesn't surprise Emma May, a Calgary-based serial entrepreneur who worked as a corporate lawyer during Calgary's boomiest years.
"I'm not surprised that women are leading the charge in terms of doing something new," she says, "because more women have had to pivot in their careers. More women have had to make different choices, and had to balance competing interests."
And, she says, they're not as burdened by the memories of what things used to be like in the oil and gas industry as the people who experienced it more directly.
"There's that generation of 55 and up who have been the beneficiaries for a long time of something that was super lucrative, and there's an anger and frustration there for them that this isn't continuing," says May. "But when you go down in the demographics, to younger people and women, they weren't necessarily the beneficiaries of the largesse that came from the oil and gas boom, so they aren't as angry. I feel like there's more optimism."
That optimism, she says, needs to be encouraged — something that can be hard to do if you're always talking about how much worse things are today.
"It's great now that there is this opportunity for these other industries to thrive. But we have to make space for them. And to some degree, we have to let go of the anger and frustration that this one industry may not be everything that it was before."
While people like May and Fairburn understand the importance of looking ahead, elected leaders are proving to be a lot slower on the uptake.
And while that's partially a reflection of their political or partisan ambitions, it's also a function of the system in which they exist.
Long-term plans and short election cycles
"Short election cycles don't really allow many politicians to take that 20-year view, or to plan for a future that looks very different than today — because that can be unpopular today," says Blake Shaffer, an economist with the University of Calgary and a former energy trader.
Voters, meanwhile, are naturally drawn more to the past that they remember, than to a future they can't see yet. It's not surprising, then, to see the Premier of Alberta spend far more time attacking his counterpart in Ottawa, and even fanning the flames of western separatism, than articulating a new vision for his province.
But make no mistake: there is a vision out there. It's one in which Alberta's oil and gas companies drive down their costs and emissions, and in so doing are able to fight for space in an increasingly competitive global market.
Crucially, it's also one in which other industries are given the space and support they need to grow, create jobs, and generate prosperity.
"Clean technology has a lot of value, and we can monetize that," Shaffer says. "It's not just an altruistic, hippie view of the world. It's both a sensible risk-management strategy and a huge opportunity to create a lot of wealth — because the world's going to need a lot of technology and know-how to do the decarbonization that we need."
That won't happen, Shaffer says, unless and until Calgary is able to let go of the way things used to be.
"I hope that rather than putting our head in the sand and focusing on where we were 10 or 15 years ago, we embrace the skills and strengths that we have and go forward."
And, as Alison Cretney says, it will require a willingness to bet on new ideas — something that's still difficult for some people.
"We don't get there by simply making tweaks to business as usual. We need some moonshots," she says.
Once upon a time, of course, the oilsands were a moonshot. Calgary has done it before, and it can do it again. But if it doesn't, the city's future may look more like Detroit's present than anyone in the past ever thought possible.