Is British Columbia an Environmental Hypocrite?

[00:00:00] Speaker 1: The political narrative in British Columbia is that B.C. is a clean economy, that clean values, environmental values, climate values are embedded in the culture, in the politics. The evidence, however, says otherwise. B.C. has an electrification rate of only 17%, well below the Canadian average of 24%. It is arguably a dirty economy driven primarily by, or powered primarily by, oil and gas. Stuart, how can a political narrative survive in spite of [00:00:40] Speaker 2: evidence to the contrary? It's a good question. The narrative that you're referencing is very strong in B.C. The sense that the province is all about natural splendor, protecting the environment. It's about these aggressively healthy individuals jogging around Stanley Park on the seawall. This is all part of the image of what B.C. is. But when we think about the province and the environment, there's two competing and almost contradictory narratives. One is that environmental story of protection. The other is environmental dependence on extraction as the backbone of the economy. Since there was a province of B.C., even prior to that, the people settling here were settling for access to resources they could pull out of the ground and sell at a profit. That has been the backbone of the economy. Adding in environmental sensitivity in many ways was a response to that earlier story. And that earlier story still is there and dominates. And British Columbians are quite comfortable with it. They are worried about the environmental impacts of mines, but they're actually pretty enthusiastic about more and more mines and more and more extractive industry. [00:01:51] Speaker 1: Yeah, let's talk about that for a bit. Because the LNG Canada, which is the $40 billion LNG project that just started up production a year or so ago and is already having all kinds of problems, technical problems and belching out way more emissions. It was supposed to be electrified. The liquefaction process turned gas into LNG. That didn't happen. So now they're using gas, which produces far more emissions. And I get press releases all the time from one or two groups that are very vocal about this. But that narrative that the government will sell an extraction process like LNG, it'll sell it. And then the reality is far removed from what the government sold. And that doesn't get traction at all. [00:02:40] Speaker 2: Yeah, we do, I think, get used to this cycle of promises of environmental stewardship. And then the reality is, well, we need this industry to continue to generate revenues to pay for the services that we continually have to short supply. So then people make their peace with that compromise. And we do it over and over again. The LNG is a major component, a growing component of the province's economy. It is one of the areas that the BC NDP is really keen on expanding. And you can see even there being packaged as an environmentally progressive kind of energy source, a kind of halfway house between the sort of the bitumen end of the spectrum and a fully renewable or low carbon emission future. And it's not that it is very much a petroleum product. And it has the characteristics of that. And in some ways, as you say, when the production goes askew, it can be even more intense in terms of the emissions than other forms of oil and gas. And so that is something that is in BC. It benefits the BC economy. So the province is much more inclined to turn a blind eye or at least find compromises to make that go ahead. Whereas the bitumen coming from outside the province is something it can square up and try to oppose as a way to reinforce those environmental bona fides. [00:04:17] Speaker 1: I want to talk for a moment about Adrian Dix, who's the Provincial Energy Minister, NDP Energy Minister, who has floated this idea that BC is going to be like the Norway model. And the Norway model, which gained traction in the mid-70s, Norway has this 100% hydro-powered electricity system, just like BC does. And it's electrified much of its demand. So it's electrifying transportation with EVs. Heat pump adoption for buildings is very high, that sort of thing. At the same time, it has accrued tremendous wealth. The sovereign wealth fund is like $2 trillion now by exporting oil and gas. And so that's the model. Electrify and lower emissions domestically while exporting oil and gas to earn revenue. And that's the model that Dix wants to propose, or is proposing. The problem is, the government just three weeks ago announced a new electricity strategy where it actually cut its electrification strategy, its objectives. And it's apparently backtracked on some of its emissions and climate objectives. So again, we have this narrative where we have a model that contradicts the government, and yet the politics of that never get questioned. [00:05:48] Speaker 2: Yeah, it is a frustrating situation to watch play out. And you can see it play out in different political arenas as well. Here in Vancouver, where I'm based, for instance, the mayor and the governing party, ABC, and Kensim and ABC have repeatedly brought forward the idea of getting rid of a moratorium on LNG to heat homes. So that new builds in the city were banned from using LNG. The city's new builds would all be electrified under a previous council. And ABC has really been relentless in trying to relax that requirement, to bring LNG back into the heating market in Vancouver, which is clearly a step back and a step away from that Norway model. But it is also pretty clearly a reflection of just how powerful the LNG industry is in this province that it can find willing supporters and backers at every level of government. And so as much as Mr. Dix wants to talk about that model, our political system is not really well suited to implement those changes and to impose the pain that is temporary. The long-term effects are quite good. But to impose the short-term pain necessary to get there, we just do not have the political levers, it seems. And there isn't a political appetite for it either. Voters are not holding governments to account for relaxation of environmental standards. We see that at BC. We also see that at the federal level with Mark Carney, who seems to suffer no ill effects from walking away from just about every environmental commitment the country has made. I'm exaggerating, but not by that tongue. The Canada is not really in the business of a progressive environmental agenda anymore. We're back in the Crutchin era of making promises that nobody has any intention of meeting. And that is, in a sense, a well-worn Canadian tradition. Crutchin did it, Harper did it, and now Carney is doing it as well. And it seems like that's the comfort zone for Canadians, even as the rest of the world continues to move in a different [00:07:58] Speaker 1: direction. Let's talk about the BC politics for a moment, because it used to be, you know, when the NDP were first elected in 2017, Andrew Weaver and a few green MLAs held the balance of power, and they exerted that power to push the NDP into a more aggressive climate plan. I think that can be argued quite convincingly. But now that's not the case. They have very little influence now in the BC legislature, and it really is, you know, kind of the NDP versus the Conservatives. And the Conservatives have drifted off in the direction of the, like the Alberta United Conservative Party, very populist, very, you know, lots of conspiracy theories, and it's kind of Trumpian in a way. And what role does that play when you've got, when you don't have an effective opposition that can hold the government to account, propose alternate policies, and be the government in waiting with a different agenda? How does that play into this? [00:09:06] Speaker 2: Yeah, it's a good question. We see that playing out, I think, both provincially and to a certain extent, federally, where the Conservatives are federally have just fallen away and are not really providing a competitive alternative to the Liberals at the moment. And what that means is that we don't have conversations regarding specific policy issues where there is grounds for debate. There is a sense that, within BC, with the NDP opposed to this new version of the BC Conservative Party, we can't afford to have a conversation around the direction of the party, we can't afford to have this internal dissension within that centre-left of centre coalition for fear of opening the door to attacks from this more populous alternative that seems like a kind of political boogeyman. So I can really remove the space for conversation around important political issues because there is so much emphasis on trying to continue to rally the troops and to show no divisiveness in the face of this very different political opposition. And the political opposition, for its part, is not proposing alternatives along these lines that the populist right in Canada tends to be almost pro-oil and gas in the sense of trying to double down on fossil fuel industry, even in the face of the world clearly moving towards or having perhaps passed peak oil. We are at a point where we can see a lower carbon future on the horizon. It is going to get here at some point, but Canada is paying no attention to what's on the horizon. [00:10:40] Speaker 1: I want to talk about an issue that you and I are going to address in a future interview, but we'll just touch upon it here. And that is the lack of analysis coming out of Canadian economists about oil and gas and the energy future. Now, on the one hand, there are many economists, energy economists, and many in Alberta, who are almost oil and gas friendly. And there are very, very few critics that I can think of. On the other hand, so that's one school, those who would criticize what the oil and gas industry wants to do in terms of pipelines and expanding the oil sands and more LNG. Then there's a second school, and I run into this school all the time when I interview experts in the United States, Asia, and Europe, and that is the energy transition, the clean energy transition, if you will, who are steeped in the theory of technology change and the impact that new clean energy technologies like wind, solar batteries, and EVs will have. Very little of that. And one of your colleagues that I interview all the time at UBC, that is Werner Antweiler would be one of the few. And I could probably pick out maybe a handful in Canada. And what role does that play when we don't have the expert analysis to advance these kinds of discussions that need to be had? [00:12:11] Speaker 2: Antweiler Antweiler: It's a good question, and it is kind of a made-in-Canada tragedy in some ways, where we had this moment of a kind of environmental progressivism emerging in the early Trudeau era, building on the sense that Canada needs to move in the same direction of the rest of the country. Antweiler Antweiler: But by and large, there does seem to be a dominant political culture within economics that says, if you don't acknowledge the centrality of the oil and gas industry to the Canadian economy now, and presumably into the future, you're not a serious "economist". Antweiler Antweiler: You're not a serious analyst. And anyone looking at the rate of Canadian exports to the United States in particular and the world more broadly can see that oil and gas is a major component of Canada's exports. There are Canadian dollar tracks, the price of energy to a certain extent. So it's clearly important today. But what's happening today is not the same thing as what is going to happen in the future. And the inability to recognize the need to embrace that change really, I think, does the country a disservice. We are missing out on these conversations. We talk about the transition towards EV vehicles in China. We talk about it as some kind of threat to our manufacturing sector without reflecting on, well, what does this mean more broadly for demand for oil and gas? Those things are connected, but we don't even have that connection being made in the economic analysis. And again, that does a disservice to Canadians and Canadian planning. There is a kind of complacency that the oil and gas industry is central to our prosperity right now, and nobody wants to be seen to be rocking the boat or, what is it, killing the golden goose, or whatever the analogy is that we want to use. Just the fact that things are going okay right now. Prime Minister Mark Carney seems very enthusiastic about the oil and gas sector. It gives everyone a kind of permission not to pay attention to it right now and not to rock that boat, even though that boat is going to be rocked by global forces that we have to reckon with. We simply aren't right now. And the longer that that can persist, I think, the more behind the eight ball Canada will be over the long term. Because, again, other societies are continuing with that transformation. We don't see evidence of it here in North America, but we see it elsewhere. And we can frame it in different ways. We can make an argument that dependence on oil and gas creates national security vulnerabilities. We can see that with the crisis in Hormuz and how that has threatened recession everywhere. Other countries are paying attention to that. They are looking for ways to reduce that dependency, not only for environmental reasons, but for national security reasons as well. And again, Canada, the longer we take to pay attention to those kinds of conversations, the further the behind we will be. One of the great ironies here, and I [00:15:10] Speaker 1: ran into this when I was doing my history graduate work 40 years ago, is that Canada has produced some of the best and earliest economic theory around how commodity-based economies like Canada get stuck in this rut. It's called Staples thesis, and it was advanced by people like Harold Adam Zinnis and Mel Watkins. This is all work that was done in the 30s to the 50s, and then has simply, you know, basically fallen out of favor. So we're in this highly ironic position, I think, of we used to lead in terms of how we think about commodity economies, natural resource economies. And then when it became inconvenient because there was a lot of money involved, a lot of prosperity involved, we just kind of said, yeah, we're not going to do that anymore. We're just going to push that over to the side, and we're just going to go, we'll take the industry narrative, and we're going to run with that. Stuart, thank you very much for this. I think this is a topic we're going to return to again and again in the future because it deserves to be explored. So thank you very much. Really appreciate your [00:16:19] Speaker 2: insights. Oh, it's my pleasure. Anytime. Looking forward to it.