Notes from the coming energy crisis, by Stewart Muir and Margareta Dovgal.
It’s been obvious for months that a global energy crisis was coming. Then on Monday, just when we thought things couldn’t get any worse, the chief executive of Shell predicted that Europe is headed for a multi-winter energy crisis, with consequences that cascade around the world.
The situation is drawing attention to humanity’s intensive reliance on energy. In the Financial Times, economics writer Philip Cogan said that despite an extensive programme of renewable energy production called energiewende, the share of fossil fuels in Germany’s primary energy supply has only declined from about 84 per cent in 2020 to 78 per cent today. It’s the same story everywhere.
Even after all the international protocols and summits, global fossil fuel consumption rose by 45 per cent in the first two decades of the 21st century, thanks largely to China’s economic growth.
Even if the technical challenges of converting to new forms of energy could be overcome, the capital investment required will be enormous. There is also an ongoing debate over whether new energy sources will be more efficient than the old ones. In short, the economic impact of an attempt to shift to net zero carbon emissions could be much bigger than expected.
Might Canada offer some relief by sending its natural resources to Europe to stave off economic collapse? Alas, it is too invested in the anti-petroleum narrative to be of any use.
The late August Trudeau-Scholz meeting in Canada produced nothing of short-term value, including no progress on the single most effective thing Canada could do to challenge Russia’s grip on European gas consumers: firm commitment to deliver LNG to Europe.
After the Russian invasion of Crimea in 2014, Canada received expert advice to get to work on LNG because it takes multiple years to build these complex projects. A couple of attempts were made but came to nothing.
Today, LNG is an even more commonly used gas product. Import facilities are proliferating globally. Sellers have the upper hand at the moment. In current crisis conditions, it is said that a single shipload can be traded for up to $200 million US. When Prime Minister Justin Trudeau went so far as to question the business case for LNG last week, experts everywhere were flummoxed.
Why would he make such a statement? A revealing claim from anti-fossil-fuel campaigners followed Chancellor Olaf Scholz's visit to Canadian shores.
“The fact we did not see any LNG deals [out of the meeting] is the result of tireless mobilizing by land defenders and civil society that pushed for a rapid, clear-sighted and climate-safe response to Europe’s energy needs,” said Caroline Brouillette of the Climate Action Network Canada (CANC). “This mobilization will continue, to ensure this moment marks the beginning of a real just transition, rather than superficial change.”
The braggadocio of this claim comes across as delusional. It ignores the role of LNG as an explicitly green fuel under European Union rules. Yet it’s quite possible that this group has the prime minister cornered.
A poll we conducted at Resource Works this spring showed that nearly half of British Columbia residents think fossil fuels will vanish from our energy system in 20 years or less. It’s an absurd belief if you consider the hard evidence, but (at least up until our looming Winter of Energy Reality) has been a source of votes for political candidates taking up the banner of radical energy transition.
The CANC reference to “tireless mobilizing by land defenders” will resonate deeply with First Nations in Canada that have been subjected to the sudden appearance of environmental pressure groups wherever an opportunity arises to weaponize Indigenous concerns – usually legitimate ones that deserve attention – too often resulting in the loss of sizeable economic benefits.
The Wet’suwet’en conflict – an LNG-related story on the other side of the country from last week’s ill-fated LNG encounter – is the best current example of how pre-existing issues that might be resolvable through negotiation can be whipped up into high-conflict, media-friendly campaigns that polarize communities, even contributing to lateral violence between members of the same nations, clans and families.
The term “land defenders” is commonly referenced in the same breath as “settler colonialism”, a phrase that feels inherently divisive. For non-Indigenous Canadians who might trace their Canadian lineage through many generations, it’s a radical new idea that society is to be divided into settlers and non-settlers. “Great-great-grandpa was a settler, but I’m a Canadian” is passé, now we’re told it should be: “Great-great-grandpa was a settler colonialist and I am too.”
Indigenous peoples have constitutionally protected rights under Section 35. There is no need to invoke a polarizing construct like settler colonialism if the goal is to ensure that rights are preserved and true reconciliation between nations takes place. The more one tries to understand this term, the less clear is its meaning. Light was recently shed on the mystery when journalist Jonathan Kay provided further revelations to “the insane story of Laith Marouf, a vicious anti-semite who used hyper-woke gibberish as a smokescreen for hatred” while on the payroll of the Canadian Heritage ministry.
To Kay, the Trudeau years have proved fertile ground for apocalyptic descriptions of Canadian society with Justin Trudeau himself “spending much of his latter tenure instructing Canadians to ruminate on their country’s genocidal sins”.
Writes Kay: “It’s a trend that very much played to Marouf’s advantage. Since all of the vicious campus slogans he’d perfected in regard to Zionists victimizing Palestinians were now part of the vocabulary that doctrinaire progressives use to describe white Canadian settlers preying upon Indigenous and black communities, it was just a question of replacing one country’s name with another when he switched over from his Twitter diatribes (Israel) to his funding applications (Canada).”
Suddenly, a bunch of things make sense. Transplanting a radical vocabulary spawned by Middle East conflict into Canadian politics has proved to be a very effective strategy for environmental activists. All it takes to win an argument now is to accuse a person of being a settler, ergo, a land-stealing racist.
Unwary members of the news media are quick to adopt the polarizing language. If a convincing story with compelling imagery and simplistic rhetoric drawn straight from the West Bank is served up when pipeline construction is being protested or highways obstructed, heck ya they’re ready to throw shade on those settlers.
Weaponized disinformation is used in other ways, to create confusion about straightforward facts and derail legitimate processes. Recently, in two different British Columbia courtrooms, the type of indoctrination required to recruit “arrestables” for polarization-fueled protest actions was on display.
In Richmond, Judge Laura Bakan lambasted a group calling itself Save Old Growth for preying on a hapless individual she described as “unsophisticated,” “sincere and without guile.” Ian Schortinghuis, a 30-year-old protester who was arrested after blocking key Metro Vancouver thoroughfares and bridges in three separate protests in April and June, appeared to the judge “to be the type of person these groups entice and basically use as sacrificial lambs for their causes.” In Vancouver, the court heard the story of teenage foreign student Olivia Mary Howe stating she was bullied into climate change protest roadblocks organized by another student visa holder.
“I find this conduct reprehensible as they hide behind from the persons who have come before me, good people and people such as Mr. Schortinghuis who says that he was given a sense of purpose and belonging by these groups,” stated Judge Bakan.
Further signs of something being different emerged when Canada’s finance minister Chrystia Freeland was accosted and threatened at a rural Alberta stop, and Conservative leadership contender Pierre Poilievre revealed he had felt compelled to hire private security to protect his family. Despite partisan attempts at blamecasting, it feels like some kind of anger that we didn’t have before has been loosed on the land.
With each passing day, fresh evidence emerges of a rapidly changing world order. Ottawa is abuzz with stories of how Canadian allies in Europe are starting to panic over energy, with entreaties to Canada to do more and even wondering if such an unreliable friend belongs in the G7. It must be incredibly frustrating as these countries face a humanitarian disaster this winter to see their requests for help be airily dismissed by politicians hemmed in by radical political strategies, unable to acknowledge even the most fundamental truths about our energy needs as a civilization.
“It's hard not to look around as a student of energy and not feel like the world is disintegrating before my eyes,” commented energy specialist Robert Hefner, offering the phrase “megacity ignorance”, evoking the overwhelming voting power of urban places where anti-knowledge campaigns are at their most influential.
The world could be on the brink of a deadly global famine. The Economist estimates 250 million are already at-risk today. Partly this is because of soaring energy costs, but also because of climate policies that might look fine on paper. Sri Lanka’s catastrophic decision to ban fertilizer began with a paper from an NGO recommending it plunge into organic farming. Given that synthetic ammonia used in fertilizer comes from fossil fuel, if climate policy requires eliminating such fuels, inevitably less food will be grown.
In a world where physical systems have grown increasingly interconnected, disruption in one place sets off a chain reaction. As energy commentator Doomberg puts it: “By continuing to increase the interconnected nature of these seemingly unrelated sectors, we create tunnels through which the contagion of crisis in one market bleeds directly into the other.” Russia’s invasion of Ukraine is Germany’s gas shortage which becomes America’s ammonia shortage which becomes the road transportation sector’s dearth of a critical ingredient for running today’s high performance, environmentally improved diesel engines and the next thing you know the supermarket shelves are bare.
As we move into the chillier northern hemisphere season, the full weight of what numerous commentators point to has not yet been acknowledged. There seems to be a curb on absorbing the very alarming incoming data from abundant sources. Is it at least in part because the climate movement has weaponized ideas like settler colonialism, to systematically vilify the very industries that we rely upon for everything?
Those who have been watching for years the growth of an urban-rural divide will derive only cold comfort as it becomes evident just how fully detached our DoorDash fueled large cities are from the realities of how the world really works.
There is a role for Canada to play in how all of this resolves at the global level. Over the past several decades, the Alberta mantra was simple: “How do we supply increasing global demand for hydrocarbon products?” Over half a million Canadian jobs were created getting oil and gas from the ground, benefiting Alberta the most but also contributing 5% of the Canadian economy and accounting for a tenth of the combined value of Canadian publicly traded companies.
At the same time, climate change could not be ignored though there were those in the oil patch who tried. The Calgary of 2022 is, when one looks close, a far different place than its critics claim. Alberta’s energy patch is leaner today and the legendary Calgary swagger is hard to spot, replaced by determination to succeed in the new, low-emissions world. Oil companies are going into the carbon-management business. The upside of success is long-term commitment across a large part of the economy to ensure that the benefits continue. Not just companies but also governments, small business owners, workers and First Nations with their own economic aspirations are seeing the writing on the wall: only with greatly improved environmental performance can this story continue.
Carbon technologies applied to proven reliable energy feedstocks will provide solutions, if only we let them. It’s not just talk. Ample evidence is emerging that the trend is real. The truth of the matter is that oil, gas and food are the only reason Canada is ever "in the room” on global matters.
It's certainly not our middling cultural exports, our provision of reliable real estate investment opportunities or our invention of peacekeeping 80 years ago. If we fail to meet the world's demand for commodities, we are irrelevant on the world stage. Being America's “hat”, so long as it’s the world's superpower, is the only thing protecting Canada from invasion by a state willing and able to exploit our land base for production.
Hydrogen truly is a promising opportunity. (We ourselves are part of a team developing a project to produce competitively priced green hydrogen using a pioneering, proven process.) Nonetheless it remains the responsible development of existing, commercially-deployable-right-now, high-value assets in energy that positions Canada to invest in clean tech.
Capital formation for innovation and decarbonization requires real commercial viability and an enabling regulatory regime. Why would anyone ever invest in building these (speculative) things in Canada when we can't even get the existing goods to market? Why invest in Canada's energy future, when we can't even project confidence on the present opportunities?
A rules-based international regime only works on our behalf when we supply the commodities on which the world runs. If our strength in energy, agriculture, mining and forestry wanes, so does our greatest safeguard for Canadian security, prosperity and wellbeing.
A poor, weak, irrelevant country can't reduce emissions, adapt to climate change, defend its borders or invest in healthcare, education and reconciliation.
Clean streets, thriving local economies and the reality of abundant socio-economic mobility require exports and trade.
If you believe that a Canada that is economically sterilized has anything to offer the millionaires parking their wealth in our residential real estate, you are sorely mistaken. Natural resources are not incidental to our exceptional quality of life. They are the foundation. They are the way to ensure a future for Canada where we all thrive, combat climate change, develop high-impact science and technology exports, and make a better world possible.
Stewart Muir is executive director of Resource Works and Margareta Dovgal is managing director.