It has been a historic year for natural resource providers. As we enter 2022, Stewart Muir looks back on 2021.
It has been a historic year for natural resource providers – those who toil to provide for the material needs of humanity.
The pandemic brought forward predictions that a "great reset" was coming in which demand for commodities would stay at reduced levels through unquantifiable but miraculous interventions.
That hasn't happened. In fact, the very opposite occurred.
In May 2020 when crude was $30 US a barrel, Bloc Québécois Leader Yves-François Blanchet declared oil is "never coming back," an echo of then-Green Party leader Elizabeth May's "oil is dead" remark. Today, oil is trading at nearly $77. In the year ahead, global daily oil use will once again top 100 million barrels a day.
Another prediction was that the use of coal to make electricity was on the way out. In fact, there was a 9% increase in 2021 towards a new annual record for coal worldwide. Lumber prices soared with unexpected demand and short supply. Copper prices grew in part because of growing use in clean energy technologies from wind turbines to electric cars, while other industrial metals including zinc and aluminum rallied.
In Europe and Asia, demand for natural gas sent LNG prices skyrocketing. At December prices, it was calculated that one major LNG export plant operating in Canada would mean over $200 million a day in sales.
What is driving this demand? No doubt, global consumer trends have a role to play. People are living healthier, longer lives amid plenty. Over the past decade, global life expectancy at birth increased from 67 years to 73 years, with healthy life expectancy up from 58 years to 64, according to the World Health Organization. In 2017, the global adult literacy rate surpassed 90 percent for the first time in human history. Human hunger for knowledge and connectivity ever increases, with smartphone sales on track this year to top 1.3 billion, an increase of 5% over 2020.
We know that this shift to longer, healthier, linked living is far from complete because it is what many residents of the world's most populous nations still lack and will continue to demand.
Many of us wonder how these trends can continue alongside a healthy natural environment. It’s a good question.
In recent years, some governments have outdone themselves to curtail some of our best opportunities – in energy, mining, forestry, aquaculture and even agriculture – in the apparent belief that urban voters are so out of touch that this is the way to win their votes. At Resource Works, we don’t see it that way. People are much smarter than that, but they do need help connecting the dots.
Some movements that seek to change the trajectory of consumption are gaining traction with a public that seems to want both more and less at the same time. Achieving these conflicting goals is much easier said than done. Indeed, given the fact set we have it's a total mystery how it can be accomplished. Inevitably, one-sided solutions will only create political backlash and serve to empower tyrants.
Those who truly care about both people and the environment know there is a better way. What if the solution was already under our noses? One where better, more sustainable consumption is achieved that recognizes consumers will continue to demand, and receive, more?
In countries like Canada, it's clear that climate-positive policies and social values such as the reversal of the effects of colonialism can only be accomplished through economic health and the equitable distribution of resources.
Achieving this means freeing our best companies to do what Canadians do best – surpass ESG investment targets while staying competitive. If we are to be serious about net-zero by 2050, and about Indigenous reconciliation, there is no room for empty rhetoric when only results matter.
We don’t need to accept that the natural resource sector is to be slowly squeezed out of existence in Canada, which is what some parties blithely call for. Such an outcome would hardly be a sign of progress. Indeed, it would surely take us in the opposite direction. If Canada and Canadian know-how are out of the picture, rising global demand simply means that commodities will be supplied instead from the worst performers, with unnecessary environmental impact.
Every caring person should prefer the alternative scenario in which balanced regulatory systems protect the environment while preserving the quality of human life. That’s what is needed for a compassionate green revolution.
When that happens, it is possible to achieve social goals. Companies that do all of these things should be rewarded with encouragement, not the threat of ruin. Decision-makers who are willing to take the necessary steps should be empowered and applauded when they get results. The mission of education could not be more important and that is what Resource Works is all about.
Stewart Muir is the founder and executive director of the Resource Works Society.