Ken Coates and Sean Speer look beyond the short-term doom and gloom to find reasons to be hopeful in the long-term about Canada’s energy sector.
This op-ed is based on their recent MLI commentary.
By Ken Coates and Sean Speer, Feb. 18, 2016
There is plenty of doom and gloom about Canada’s energy sector these days. Global prices have fallen and led to a sharp cut in investment and jobs in energy-producing provinces. The former Alberta premier has lamented that dithering governments, pesky environmentalists and obstinate First Nations have conspired to landlock our energy resources. And, of course, the Prime Minister has talked about shifting Canada’s economy from “resources” to “resourcefulness.” The mood is about as dark as a barrel of Alberta crude.
Yet there’s reason to be more positive. The current drop in global prices will eventually reverse itself and the long-term picture of worldwide demand for Canadian energy resources is projected to be significant. Progress on building support for resource development among aboriginal communities continues and new ideas – such as the potential for First Nations equity – present an opportunity for the first real prosperity-sharing in Canadian history. And, investments in new technologies and processes are leveraging Canadian resourcefulness in maximizing the economic and environmental benefits of our resources. The future ahead is bright if we make the right choices. As the Minister of Natural Resources has said: “That future is our responsibility.”
The mood is about as dark as a barrel of Alberta crude.
The energy sector has taken a big hit in the past several months as global commodity prices seem to fall lower and lower. Many workers and their families affected by the downturn are facing real hardship. Government programs such as employment insurance should be available to the workers experiencing short-term unemployment.
But it would be a mistake to flinch from resource development as a major source of investment and jobs in Canada. Consider, for instance, that natural-resource industries represented nearly 20 per cent of overall economic activity in 2010. This translates into 14 per cent of national employment and nearly two-thirds of overall investment and exports.
And these are more than mere economic statistics. Resource development represents opportunity for Canadians and their families in every province and every region. This is particularly true for aboriginal communities.
Resource development is already a major source of direct and indirect employment for aboriginal communities but that only scratches the surface of its potential benefits. It can be the centrepiece of aboriginal economic development and long-term self-sufficiency. Consider there are now more than 300 impact and benefit agreements between aboriginal communities and mining companies alone that provide jobs, training and social investments.
There is enormous upside to this economic partnership. Data from the federal government show that there are hundreds of major resource projects under construction or planned in Canada over the next 10 years. Virtually every one of these projects touches at least one aboriginal community. And new models of consultation and collaboration have the potential to get these projects moving and unlock substantial economic benefits for aboriginal communities.
Resource development is already a major source of direct and indirect employment for aboriginal communities but that only scratches the surface of its potential benefits.
As an example: A proposal to extend equity stakes in resource projects to affected communities is building growing support among aboriginal, business and political leaders. The concept requires further work, but it shows the type of goodwill and novel thinking that’s occurring.
As for cutting-edge innovation, Canada’s resource sector is proving to be a world leader. Resource development is a technologically and environmentally sophisticated process. Consider that between 1990 and 2011 greenhouse-gas emissions per barrel from the oil sands were reduced by more than one-quarter and are expected to decline over the coming years. This is a direct result of the ingenuity and brilliant engineering present in the sector. Advanced science and technological innovation is how we’ll stay ahead of the competition and control our carbon footprint into the future.
Canada’s energy sector is going through a rough patch. Some are dubious about its prospects. Not us. The Minister of Natural Resources has said that “developing our resources is truly a nation-building exercise at a critical moment in Canada’s history.” We share the minister’s optimism.
It means making the right policy choices with regards to taxes, regulations and environmental processes but we can and must do this. It’s in the national interest. Now and in the future.
Ken Coates and Sean Speer are senior fellows at the Macdonald-Laurier Institute and co-authors of the recent essay, ‘From a Mandate for Change to a Plan to Govern: Defending the National Interest in Energy Resource Development’