A sumo wrestler emerged from my car’s tailpipe last week and floated into the air. His topknot appeared first, then his head, and then his great body squeezed out of the opening. I watched him in his loincloth as he rose into the sky, bowing deeply to his sumo colleagues who were already up there in the millions.
At least that is how I imagine it, how I make the invisible into something I can see, weigh and feel. In this case the invisible is carbon dioxide. A typical sedan produces the weight of a sumo wrestler in carbon dioxide with each tank of gasoline it burns, about 136 kilograms. Every hour, humans pour four million tonnes of carbon dioxide into the atmosphere. I also picture this as sumo wrestlers—27 million more of them every hour of the year.
Carbon dioxide can absorb thousands of times more infrared energy than nitrogen or oxygen, and when it does, it warms up. So, while carbon dioxide is a tiny portion of the atmosphere, it has a big role in setting the atmosphere’s temperature. Infrared energy comes down from the sun, and radiates up from the earth. This energy wrinkles the air above hot asphalt and melts the first snowflakes that land in autumn. The more carbon dioxide the atmosphere holds, the more infrared energy it absorbs and the higher the atmosphere’s temperature rises, especially near the surface of the earth. The physics is inevitable.
From 1959 to 2015 the level of carbon dioxide in our atmosphere climbed 29 per cent. Most of the increase came from burning fossil fuels. With more people using more coal, oil and natural gas, the carbon load keeps climbing. By late this century, unless we take aggressive action to eliminate man-made emissions, the carbon in the atmosphere will more than double the pre-industrial-age level. We will be living in an atmosphere that traps heat like a winter sleeping bag.
Carbon dioxide is not the only cause of climate change, and it isn’t the only gas in the air that absorbs infrared energy. But two things put it in a category of its own: we are producing it in vast amounts by burning fossil fuels, and when it is released into the air, most of it stays there for thousands of years. Even small increases in emissions can accumulate into big problems. Other causes of climate change will continue, including volcanic activity and variations in the earth’s orbit around the sun, but they are now happening on top of a rising baseline of heat.
The consequences will be grim. There is a consensus across groups as varied as the Royal Society/National Academy of Science in Britain, the National Oceanic and Atmospheric Administration in the US, NASA and the Intergovernmental Panel on Climate Change that the world will face more severe droughts, more intense storms and unprecedented heat waves and floods. Glaciers will melt and oceans will rise. Food supplies will be threatened and entire ecosystems will disappear, including the high Arctic, which is already in retreat. In fact, all these trends are underway now.
Western Canada’s prairies and forests will get hotter and drier. Late-season river flows that depend on glaciers will diminish. Extreme storms will cause more damage as the heat-stoked atmosphere lashes down. Droughts such as the prairies experienced from 1999 to 2004, wildfires like the one that charred the town of Slave Lake in 2011, and floodwaters like those that thundered down the Bow and Highwood rivers in 2013—all will be more frequent.
The global transition away from fossil fuels has begun and its fulfillment is inevitable.
In Alberta these problems will be compounded because we will also be dealing with the decline and fall of the business that has lifted our provincial prosperity to global heights: the fossil fuel industry. When the 2015 UN Climate Change Conference convenes in Paris in November, world leaders won’t just be talking about slowing fossil fuel emissions, they’ll be talking about eliminating them. This message has been building for a long time.
In January 2014 Angel Gurría, the secretary-general of the Organisation for Economic Cooperation and Development, called on governments to work toward “zero net emissions from the combustion of fossil fuels” by the second half of this century. He wasn’t addressing a Greenpeace convention; he was speaking to the World Economic Forum at Davos, Switzerland, a prominent annual gathering of business and government leaders. A similar message came a year earlier from Christine Lagarde, managing director of the IMF, who emphasized her call for action this way: “Unless we take action on climate change, future generations will be roasted, toasted, fried and grilled.” The World Bank, G7, US President Barack Obama and NATO are all calling for the phasing out of carbon dioxide emissions.
To date, Alberta has mostly ignored this message, but internationally the race is on to replace coal, oil and natural gas. Corporations and governments around the world are investing billions of dollars to make Alberta’s treasure—fossil fuels—obsolete. They are having success, and the rate of change will accelerate. From Google and IKEA to Tesla Corporation, and from the wind turbines of European utilities to the low-cost manufacturing of solar panels in China, a global shift is underway to eliminate net carbon emissions within one lifetime. Coal, oil and natural gas will be replaced with alternative energy sources. It won’t be a smooth shift but it has started and it will succeed.
In 1936 Alberta was the poor cousin of Confederation, the only province in Canadian history to default on its public debt. One lifetime later, Alberta is Canada’s richest province and among the wealthiest places in the world. Alberta exports more oil to the US than does Saudi Arabia or anyone else, and we’ve been the largest foreign supplier of natural gas to the US for many years. With the oilsands, the Alberta government owns more oil than Russia, Iran, Iraq or the US. Our oil and gas resources per capita are staggering. And don’t forget coal: Alberta’s coal resources contain twice the energy of all our oil and gas reserves combined. In a world that wants fossil fuels, it doesn’t get better than living in Alberta.
Which reveals the problem: When the world stops wanting fossil fuels, the province will be in serious trouble. Petroleum production accounts for 30 per cent of Alberta’s economy and 70 per cent of its exports. In turn, other sectors depend heavily on the petroleum industry. The manufacturing sector includes such activities as bitumen upgrading, crude oil refining and drill rig construction.
Petroleum money is the lifeblood of the construction and financial industries as well. Even in agriculture, many farmers supplement their income with royalties and rents from oil and gas wells on their lands. Virtually everything in Alberta’s economy is directly or indirectly lubricated by fossil fuel money.
So while Alberta has been wonderfully prosperous, our economy is brittle. Advances in renewable energy and shifts in the moral acceptability of using fossil fuels—both driven by public awareness of climate change—have the power to fracture the province’s economic foundations.
The province has been repeatedly warned of the fragility of its economy. In 1990, seven years before the Kyoto Protocol, the Alberta Department of Energy produced a discussion paper acknowledging the science of climate change and laying out a plan to reduce emissions while still growing the economy between 1990 and 2005. This was an attempt to have Alberta take charge of its future. But the plan was buried after Ralph Klein became premier in 1992, and the office that wrote it disbanded. The Klein government campaigned against action on climate change. Instead of declining between 1990 and 2005, Alberta’s carbon dioxide emissions rose 37 per cent.
Klein’s successor, Ed Stelmach, commissioned the Premier’s Council for Economic Strategy to chart Alberta’s future. The council’s report, issued in 2011, was clear-eyed: “…We must plan for the eventuality that oil sands production will almost certainly be displaced at some point in the future by lower-cost and/or lower-emission alternatives. We may have heavy oil to sell, but few or no profitable markets wishing to buy.”
This report was lost in the political windstorm that engulfed Stelmach and his successors, Alison Redford, Dave Hancock and Jim Prentice. Whether or not Alberta finally responds sensibly to the economic challenges of climate change rests on the shoulders of Rachel Notley and her NDP government.
Warning signs are everywhere. Growth of Alberta’s oil industry requires pipelines, and the resistance to new pipelines is fierce. Opposition began with the planned Keystone pipeline to the US and spread to the Northern Gateway pipeline, which was proposed to carry Alberta oil to the west coast. Possible expansions of existing pipeline routes to Vancouver and to eastern Canada are also being fought.
The campaign in Europe to categorize the oilsands as “dirty oil” came within a hair of succeeding.
On the financial side, pension funds and banks that provide petroleum and coal companies with the money to build their infrastructure are under pressure to pull out of fossil fuel investments. The moral arguments to divest are reinforced by financial reasons. About half the share value of major fossil fuel companies is determined by the size of the long-term oil, gas and coal reserves the companies own for development in the future. A company with large long-term reserves is assumed to have a better future, which boosts its share value and its capacity to raise capital.
A growing number of analyses, however, report that development of long-term petroleum reserves would cause carbon in the atmosphere to spike catastrophically. A Nature report from January 2015 suggests that 99 per cent of Canada’s unconventional oil reserves and 98 per cent of our hard coal reserves are “unburnable” if humans are to limit average global warming to 2°C above the pre-industrial average. If these assets are stranded, the value of the companies that own them will drop. Investors are getting wary.
All these forces, plus carbon taxes and cap-and-trade schemes to reduce emissions, are creating problems for fossil fuels at the very time that engineering and manufacturing breakthroughs are reducing the cost of renewable energy alternatives: solar, wind, geothermal and so on.
The people of Alberta must read these trends for what they are: the beginning of the global transformation that leaders in science, politics and economics have been calling for since the Rio Earth Summit of 1992. Alberta’s rise to fossil fuel prosperity has been a roller coaster ride of thrilling peaks and stomach-churning valleys. We became richer because each economic peak was higher than the valley that preceded it. The future will be different. The long-term trend will be downward, with deeper valleys and smaller peaks.
Futures are not controlled; at best they are managed. There are too many factors beyond reach, and that makes it crucial for the Alberta government to control the few things it can. A good place to start, says economist Mel McMillan, is the government’s own budget. McMillan was chair of the economics department at the University of Alberta, 1987–1997, and takes a keen interest in provincial government finances.
A Nature report suggests that 99 per cent of Canada’s unconventional oil reserves and 98 per cent of our hard coal reserves are “unburnable” if we are to save our species.
“We must think ahead to a time when oil and gas are no longer Alberta’s economic engines,” he warns. “The big question is how do we protect ourselves?” Already, resource revenues are becoming a smaller and less reliable source of provincial government revenues. Years of poring over government accounts have shown him that “Alberta is not a big spender on public programs.” Studies that claim spending is high compared to other provinces are almost always distorted or incomplete, he says. Because recent Alberta governments have cut programs and frozen wages, the scope for cutting expenditures while meeting public expectations seems limited.
In recent years the Alberta government has borrowed money to maintain expenditures, but that is only a temporary fix. McMillan says that to restore a truly balanced budget the government needs to update its tax system. This likely involves increases to corporate taxes (already underway from the Notley government), income taxes, royalties and maybe even a sales tax, which he, like most economists, supports. McMillan would also consider a carbon tax such as already exists in British Columbia.
Equally important is building a contingency fund to fall back on during downturns. “Volatile government revenues lead to volatile government spending,” he says. “In contrast, the need to educate children, care for sick people and provide roads and other public services are steady.” Providing these services is part of the social contract of a modern society, regardless of the price of oil. With a balanced budget and a contingency fund for economic downturns, the province could save for the future by building up the Heritage Fund.
It’s not important that Alberta always lead the country in economic growth, says McMillan. “It’s more important to invest in people, to give them the skills they need to succeed, even if some of them move away.”
Investing in people is the kind of thing Michael Lounsbury, the Canada Research Chair in Entrepreneurship and Innovation at the University of Alberta, thinks about. Lounsbury serves as director of the Technology Commercialization Centre at the Alberta School of Business, but his deepest thoughts aren’t just about getting specific technologies to market; they are about people, communities and societies. “We need a diversified society to enable a diversified economy,” he says, and he sees that society emerging in Alberta. “Alberta has changed dramatically in the blink of an eye,” says Lounsbury, who moved to Edmonton from New York a decade ago.
Lounsbury works with a cluster of organizations that incubate start-up enterprises and work to keep them in Alberta. They are nurturing an “entrepreneurial ecosystem” in which ideas and information engage people in a crossflow among universities, businesses, technical programs, theatres, galleries, governments and beyond. If it sounds gimmicky, go to a PechaKucha event in Calgary or Edmonton and feel the energy among hundreds of people presenting and discussing ideas, or check out networks such as Make Something Edmonton. In rural Alberta are places such as Daysland, where people in the community support farming, run a theatre and own and operate a successful short-line railway.
These are the kind of places where Alberta’s post-carbon future is developing, where the attitudes the province needs to encourage already exist. Lounsbury is clear: “We have to get people to want to stay here for the long term if we’re going to continue to prosper.” This will require more than just an economic advantage. “We must think about the kind of community where people want to live—a community with good schools and strong theatre and arts.” We can’t want only to be wealthy, he says—we need “a society we love.”
The global transition away from fossil fuels has begun and its fulfillment is inevitable. Albertans need to adjust, fast. Nurturing new businesses, balancing the provincial budget, rebuilding the Heritage Fund and improving education are not revolutionary goals, but they would provide a stronger footing from which Alberta could respond to change. The facts in 2015 are that the provincial budget is far from being balanced. The province is descending rapidly into debt. The Heritage Fund is shrivelling. We must get these basic things right. Change comes from unexpected directions and at unpredictable speed, but if we have a solid footing we are less likely to be thrown off balance.
Renewable energy will never replace the wealth of the petroleum industry in Alberta. The economics of the businesses are different. The petroleum industry is a resource industry, and the commodity leaves Alberta by our permission and according to our terms. Equally important, for decades OPEC has influenced the forces of supply and price in favour of producers, so the profit margins generated from petroleum production are far greater than from most industries. Norway could never have built up its immense savings fund from its cod or lumber exports. Only petroleum, with its unique economics, produced such vast wealth. Norway managed to capture that wealth for its citizens; Alberta did not.
The renewable energy industry is a manufacturing industry in which giant corporations from Asia, Europe and the US sell solar panels, wind turbines and other products into cutthroat markets in which it will be very difficult for Alberta to compete. The world after fossil fuels will be much different from the world today in ways that are unpredictable. Lounsbury expects that new energy technologies will rearrange social power, and that new moral debates will arise as the limits of nature force people to consider the rights and wrongs of material consumption. He points out that moving to a world beyond fossil fuels will bring a social transformation as well as an economic one.
Many people would like there to be an easier solution—so would I—but the credible facts do not support it. The only way for earth’s environment to sustain us is for us to change our whole concept of wealth and invent an entirely new economy. If there’s good news, it’s that a life lived much more locally and frugally might be a better one by a host of measures.
A good way to begin healthy change is to speak openly about it. Albertans would do well to have conversations marked by assertions such as “global warming caused by burning fossil fuels is deadly serious” and “the world is moving to replace fossil fuels, as it should,” and “we need to adapt, starting today.” The next decades will see the end of the reign of fossil fuels, and a few decades after that we will cease burning them entirely. Albertans have a choice to make: change now on our terms, or have change forced upon us.
Kevin Taft has spent most of his career working on public policy in the non-profit and private sectors and in Alberta’s government.
