Nfld. & Labrador·Point of View

Grudge match in the oilpatch: Decarbonizers versus double-downers

As a debate rages between decarbonizing and increasing oil production, contributor Larry Short writes that neither options end well for N.L.

'The only way to solve the climate crisis is to find a replacement for oil'

Larry Short says oil revenues have significantly helped Newfoundland and Labrador's latest budget. The future, though, should focus on other energy sources. (CBC)

I admit I started writing this article, ran into writer's block, and then the gods blessed me with the recent brouhaha between Roger Grimes and Brett Favaro over oil and its place in Newfoundland and Labrador.

Bringing these two opposing ideas together is exactly what we need to have a proper discussion so lacking in local society.

The most important question to local climate activists is, "What is your plan to save the planet?"

It is a simple question. However, during passionate debates, climate strikes and election rhetoric, no one really seems to have thought through beyond the statement, "We just have to stop Newfoundland and Labrador oil production."

So let's start with stopping.

Canada produces 5.5 per cent of world oil production and Newfoundland and Labrador produces five per cent of that, which is 0.275 per cent of world production. If Newfoundland and Labrador stopped all oil production the price would rise at most by about 0.275 per cent — temporarily — but production would pick up elsewhere, and the price would settle back to where it was shortly thereafter.

When Transparency International ranks the world's countries every year for corruption, Canada ranks consistently near the top.

See, there is a surplus of oil on the planet. This means that eliminating all our offshore production will have no long-term impact.

Carbon emissions would stay the same.

Problem not solved.

One could say that Newfoundland and Labrador would then have the moral high ground from halting oil production, and we could then hope-cajole-plead-embarrass other parts of the country to follow. But let's think about that: what is the likelihood of Alberta and Saskatchewan following our lead?

Even if we shut down all Canadian production, that would only be 5.5 per cent of world production, which again would be replaced.

Corruption links many oil producers

Venezuela ranks highly in corruption. It is also heavily reliant on oil production. (Isaac Urrutia/Reuters)

What would be the likelihood of the rest of the producing countries following?

Consider this. When Transparency International ranks the world's countries every year for corruption, Canada ranks consistently near the top. It also ranks near the bottom end of oil produced by the barrel.

The countries that have the worst ratings for corruption — Venezuela, Iraq, Angola, Nigeria and Russia, among others — have something else in common: oil production.

Most of these countries aren't known for their high moral standards and are not likely to be so impressed by Canada's action they would want to follow suit. These producing countries are almost guaranteed more to be delighted with the increased revenue they would receive from replacing Canadian oil production.

As further evidence of the ineffectiveness of such actions, look at initiatives to cut world pollution in the past. One clear example is when the European countries introduced tighter regulations on diesel engine emissions. The intention was noble: reduce pollution.

Halting Canadian oil production will not solve the world carbon emissions problem.

However, automobiles that did not meet the higher European standards were shipped to poor countries in Africa, Asia and South America, which lacked environmental standards or ones where import rules could be swayed with a bribe.

The net effect was that rich people got cleaner air and poorer people got dirtier air. Net world pollution stayed the same.

Consider as well that the demand for oil is increasing as some of these poorest, most heavily populated countries increase their ability to buy products that contain oil to some degree. Absent our production, Russia — with its ruptured Soviet-era pipelines — continues to discharge on its tundra the equivalent of 30 million barrels of oil per year, or Nigeria, where 250,000 barrels of oil is spilled annually into the waters of the Niger Delta, where 88,000 different plant and animal species and 40 million very poor people live, will see increased demand.

Halting Canadian oil production will not solve the world carbon emissions problem.

Halting Newfoundland and Labrador production won't even register a blip.

As acknowledged by climate activists everywhere, current efforts are either too tepidly enacted by world political powers or so minimally effective that the world continues to topple toward the abyss.

What's needed: an actual paradigm shift

Wind turbines are an example of forms of renewable energy that can potentially replace oil. (David Zalubowski/ Associated Press)

The only way to solve the climate crisis is to find a replacement for oil.

Therefore, we need a true paradigm shift, one that removes the economic advantage of oil, that employs technology in some manner as to reduce oil's advantages to nil.

We are seeing part of the solution with cheaper and longer lasting battery technology, with superconductors that allow better electrical transmission over longer distances, even more efficient solar cells, with wind and water turbines that provide more juice per turn, and with much safer thorium nuclear power plant technology.

But this is not yet enough, and, in the absence of a monumental effort, it won't be enough in time to solve the climate crisis.

And therein lies the opportunity for Newfoundland and Labrador (and Canada for that matter), if we seize the moment and rise to the occasion.

But a big part of rising to that occasion is to have the financial resources to educate our people, to provide the infrastructure to enable companies to locate here, and to continue to provide the social services to maintain our society.

Otherwise we are whistling in the wind.

But wait — there's more!

Now, for the double-downers

The oil refinery at Come By Chance accounts for between five and eight per cent of the gross domestic product of Newfoundland and Labrador. (Bruce Tilley/CBC)

To those wishing for doubling Newfoundland and Labrador oil production: is that your entire plan?

After all we have learned from our history, we must by now see that Newfoundland and Labrador has suffered catastrophic losses by making single, large, one-sided bets.

Churchill Falls assumed the price of electricity would never rise; Muskrat Falls financing assumed that the price of electricity would never fall.

Are we not now betting that the world will always use oil? For heaven's sakes – just a few days ago, Kasper Moth-Paulsen and a team in Sweden announced the creation of a molecule that traps heat from the sun and stores it better than traditional batteries.

We are witnessing highly motivated, passionate young people pleading for someone older than 40 to wake up and smell the partially burnt hydrocarbons.

Are we really going to once again gamble on the potential of another boondoggle in this province?

While this question tickles your mind, consider also that we have our young people leaving the province looking for, ideally, interesting, more meaningful work while we are teaching last-century skills at Memorial University and the College of the North Atlantic while we are wondering how to attract more immigrants here.

In the meantime, we are witnessing highly motivated, passionate young people here and around the world pleading for someone older than 40 to wake up and smell the partially burnt hydrocarbons.

How far is it a stretch to have a vision whereby we hedge our bets as a province, where we tap into those young, eager minds looking to be educated for the jobs of the future in a career that provides meaningful engagement?

Short cites the recent creation of a molecule that traps heat from the sun and stores it more efficiently than a battery as an example of the world moving past oil-based energy. (Colin Butler/CBC News)

Can it be too much to ask that we really diversify our economy away from oil?

But this can't be just words — we need tangible action.

Let's start by doing.

Imagine if the Newfoundland and Labrador government followed the City of St. John's lead and declared a climate emergency.

Imagine a throne speech where we announced the provincial goal to become a leader in alternative and renewable energy.

Just imagine if MUN and CNA were tasked to focus on teaching programs in renewables and alternate energy, and the province directed five per cent of oil royalties for this purpose, while cutting taxes to nil for companies in these fields that locate here.

Who's right? On The Go asked listeners to wade into the divergence of opinions between decarbonizing and doubling down on oil production: 

OTG listeners debate how we should look at NL's oil production with climate change in mind. 10:14

What if we boosted our provincial internet system to increase connectivity speeds to become one of the most highly connected regions in the world so that opportunities can be enabled throughout the entire province?

What if we could make it easier for companies to set up operations by cutting bureaucratic red tape?

Just imagine if Newfoundland and Labrador built on its image of its ruggedness, its clean air and water, and open, relatively cheap land and marketed this not to tourists but to companies developing superconductors, battery storage, solar cells, wind and water turbines and strange, wonderful molecules that capture the essence of the sun.

Meaningful motivation

Short sees Norway's approach to renewable energy as a positive example to follow. (Kristian Helgesen/Bloomberg via Getty Images)

If you want our youth to stay, give them something meaningful to get motivated about right here.

If you want people to immigrate, show them that compared with most of North America they can afford to buy a home here, breathe air no one else has breathed yet, and stretch their arms without hitting the neighbours while helping to solve the greatest threat to humanity.

And if you want companies to locate here, make it easy to do so by merging communities, cutting red tape, speeding up approval times and cutting taxes for emerging industries.

These are the steps necessary to have a "green strategy" and to ensure there is an economy here with a bright future if oil ends.

Let me be clear: this is not my idea. This is Norway's idea. And, yes, Norway has a huge sovereign fund now to help them but they didn't have a sovereign fund to start with.

There has to be the political will to transform our province into becoming not just an oil leader but an energy leader.

They started with nothing but had focus, discipline and vision.

We can start with that.

There has to be the political will to transform our province into becoming not just an oil leader but an energy leader. The odd thing about it is that there is already a groundswell of support for this initiative. The recent federal election had one dominant issue — the climate crisis.

This is not a case where politicians have to lead the people of the province into a new way of thinking. The people of the province are already there. The politicians just have to get in front of this movement to lead it.

Democracy is messy

A vibrant society is not one where participants disagree in an uncivilized fashion, even when there is a common vision of the future, and the path to fulfill that vision is littered with many small mistakes.

It is not one where boondoggles threaten its existence.

The citizens of the province have to hold in their minds the dichotomy of being an oil producer while investing resources to replace that very substance.

In holding such civilized debates, we could be a shining example to the world.

Read more from CBC Newfoundland and Labrador

About the Author

Larry Short


Larry Short is a chartered professional accountant. He lives in St. John’s.


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