On Monday, as Canadians got back to work following the holidays, the price for crude oil dipped below $50/barrel for the first time since 2009, offering a glimpse of the profound changes in store for the country in 2015. With some $60 Billion in oil/tar sands projects now in peril – harkening back to “dark days” of decades past – this federal election year promises to put the fossil fuel-dominant economic vision of Canada’s political leaders to the test.

Good news, bad news

If 2014 was the year of the pipeline protest, 2015 may advance the cause of environmentalists and First Nations even further, without a single placard being waved or arrest made. In a country where the economy increasingly drives political policy and media commentary, something as simple as the halving of oil prices will likely do more to reshape the future than years of ardent protests. Cynical but true.

Yet these changes are complex and fraught with contradictions. Lower oil prices stall new oil/tar sands projects and pipelines while chilling investment in LNG projects. Yet they also drive consumer demand through lower prices at the pump.

And although this setback for Canada’s fossil fuel sector should be a wake-up call as to the need to diversify our economy and energy options, in some ways it hampers renewable energy development, by eroding recent gains in cost competitiveness for clean technologies. When oil costs over $100/barrel and natural gas is $8/unit, increasingly cost-effective wind and solar look pretty good these days. Cut those fossil fuel prices in half, and not so much.

Another important contradiction to note is the benefit to Canada’s economy from a weakened fossil fuel sector. As a new study from RBC reminds us, lower fuel costs to consumers free up cash that can flow into our economy through other avenues. More importantly, lower oil prices mean a lower Canadian dollar and lower energy costs to manufacturers, both greatly benefitting Canadian exports.

In other words, the jobs we lose in Fort McMurray may be replaced – and then some – by a strengthened manufacturing sector in places like Ontario.

What this moment – and potentially extended period – of depressed fossil fuel prices offers Canadians is the opportunity, in a pivotal election year, to rethink our economic future. And this applies at both the federal and provincial level – from BC’s proposed LNG industry, to the Yukon’s debate over fracking, to Alberta’s oil/tar sands, to several pipelines planned to carry dilbit eastward.

To get the conversation started, here are a few big ideas we should be considering in 2015:

1. Invest in renewable energy

First of all, let’s get something straight. Government intervention exists in virtually every economic sector – especially the oil and gas industry. In BC, we’ve seen everything from half a billion dollars a year in royalties returned to gas companies to the slashing of proposed LNG export taxes and the planned construction of a $9 Billion dam, which, at various times has been justified to power the LNG industry.

Estimates of government subsidies for the oil and gas industry range from a billion and a half dollars a year to as much as 6 billion, depending on how you calculate them and whom you listen to. So to those “free marketeers” who would balk at subsidizing clean tech innovation, just be sure to apply the same standards to the fossil fuel sector, which, we’re frequently threatened, would up and walk away if we didn’t maintain the lowest royalty and tax regimes in the world.

As our contributor Will Dubitsky has documented over the past year, Canada is the exception when it comes to major industrial nations investing in clean tech. While Stephen Harper cut our only federal clean tech innovation funding in 2013-14 (which stood at a paltry $82 million), China invested $68 Billion in clean tech in 2012, with the US not far behind. Both countries, along with Germany, Denmark, Spain, Brazil, and many others, have reaped the rewards with millions of  new green jobs. Canada’s tax incentives and subsidies for clean tech lag far behind these other nations.

Even in Canada, despite a wildly unfair balance of public investment in fossil fuels compared with renewables, the employment balance is shifting. Trying to assess the real job benefits of the oil and gas industry is a tricky business, because so many different numbers and definitions are thrown around (“direct”, “indirect”, “related”, Canada, Alberta, etc.). The Alberta Ministry of Energy, for instance, pegs “oil sands related direct employment in Alberta” at 146,000; whereas a 2011 study by the the Petroleum Resources Council of Canada acknowledged just 20,000 jobs in the Alberta oil sands sector, with 130,000 total oil and gas jobs across Canada.

Renewable energy proponent Clean Energy Canada subscribes to the latter measurements and made headlines with a report last year suggesting we now have more jobs in clean tech than we do in the oil/tar sands. The comments on this Globe and Mail story discussing the report range from skeptical to apoplectic at the audacity of these dimwitted eco-pinkos. But the key take-away is that clean tech jobs are growing in Canada – and rapidly – with very little help; whereas the future of oil sands construction jobs is suddenly looking pretty bleak.

If you believe the derision of oil sands boosters, these green jobs pose no real threat to their sector, so what are we waiting for? What are we not seeing that China, America and Germany are? If jobs are the name of the game, then it’s high time we got behind these sustainable alternatives.

And that doesn’t just mean wind and solar. As we’ve learned from a number of recent reports, Canada – particularly these western provinces doubling down on fossil fuels and big, antiquated dams – are sitting on top of huge geothermal potential. This is a clean, renewable energy source which, unlike wind and solar, is as predictable and consistent as coal or natural gas – without the wild market fluctuations.

While lower oil and gas prices may inhibit investment in clean tech and consumption of renewables, as noted above, that’s precisely what government intervention is for. This is where a government with long-term vision can step in an catalyze private sector investment and job growth for the future, laying the groundwork for an economy that is not strapped to the roller coaster of fossil fuel prices.

2. Take advantage of lower oil prices

As I noted earlier, lower fossil fuel prices can be a very good thing for Canada’s economy. There is strong evidence – from the likes of Industry Canada, no less – that higher oil and related currency prices have cost our nation more jobs than they’ve created.

As contributor Mark Taliano explained in a must-read piece from last year:

[quote]…from 2000-2011, the oil and gas sector created about 16,500 jobs, while, at the same time, Canada lost 520,000 manufacturing jobs. Much of the manufacturing losses are tied to the rise of the petro-dollar which tends to rise and fall with the price of petroleum…Even Industry Canada acknowledges the problem. Their report notes that between 2002 -2007, from 33-39 per cent of Canadian manufacturing job losses were due to “resource-driven currency appreciation.”[/quote]

“Resource-driven currency appreciation”: that’s code for the “Dutch Disease”, a concept that has been necessarily ridiculed by Harper Conservatives, but is nevertheless widely accepted amongst global economic thought leaders, like the OECD.

Sure, many Canadians will feel the pinch in their stock portfolios as our overly energy-bound TSX falters, but the opportunity for benefits to Canada’s economy from lower oil prices is significant – reinforced by a recent report from RBC, which notes:

[quote]Our current Canadian forecast assumes that both consumers and exporters will respond to these incentives that will slightly more than offset the expected weakening in oil-sector investment.[/quote]

What this all boils down to is a choice: Either export raw, unrefined bitumen and syncrude – generating few local jobs – or export finished goods, manufactured in Canada. Since the latter brings more jobs and value-add to Canadian resources, shouldn’t that be a no brainer?

3. Pull the plug on pipelines

Keystone XL, for both political and economic reasons, appears less and less likely by the day. Even an expected bill from a dual-majority Republican congress can and likely will be vetoed by Barack Obama. Clinging to this vision will only further strain diplomatic relations with our southern neighbour. It’s time for Stephen Harper to throw in the towel on Keystone.

As for Enbridge and Kinder Morgan, on top of all the law suits, the widespread public opposition – culminating in highly effective civil disobedience at the end of 2014 – and the well-justified environmental concerns, these plummeting oil prices mean the demand for increased export capacity is simply not there. Many oil/tar sands projects can’t make a buck at $50 oil (which is substantially lower when you factor in the Western Canadian Select discount on bitumen) – evidenced by the cancellation of numerous expansion projects in recent months.

According to a Financial Post story from a four days ago:

[quote]Canadian oil and gas projects worth a total of $59-billion may be deferred during the next three years as the  ‘collapse’ in capital investment in the global oil industry echoes the dark days of 2009 and 1999.[/quote]

The same thing is happening with risky, expensive shale oil from the Bakken in North Dakota, with production and train shipments plummeting in recent months. These unconventional fossil fuels are the first to lose their lustre in low-price periods. Upstart American shale oil producers are a victim of their own success – flooding the market with too much supply. Now, with OPEC  unwilling to back off with its cheaper, light crude supply, it is forcing these more costly new sources out of the market.

Meanwhile, controversy is heating up over Enbridge and TransCanada’s eastbound pipeline proposals, which are also subject to the same economic challenges as the BC projects. A slew of mounting headaches for TransCanada’s Energy East project – from endangered belugas to the Quebec government’s long list of tough conditions – prompted Alberta Premier Jim Prentice to travel east in December for a round of palm pressing and damage control.

Added environmental hurdles and calls for increased provincial benefits and reassurances, piled on top of a weakening business case, spell trouble for these projects – once considered a cake walk compared to getting through BC.

Times change, new facts emerge. Canada needs to evolve its thinking accordingly. If Stephen Harper wants to hang onto his majority – even stay in power with a minority government – he should rethink his dogmatic devotion to pipelines unpopular with many voters and for which the economic justification is simply no longer there. The oil/tar sands isn’t the only avenue to create jobs and be strong on the economy.

4. For God sakes, abandon LNG

Christy Clark’s LNG vision is the biggest loser of them all.

With most Asian LNG contracts tied to oil prices, the current climate has scared away even the most intrepid LNG proponents. That includes Malaysia’s Petronas, which cited this reason for further waylaying its final investment decision (again) last year. (Let’s remember too that even if it did go ahead with its pipeline and plant, Petronas has indicated that it would import Malaysian workers to build them – while the BC government signs deals with India and China to supply foreign temporary workers for the LNG industry…so there goes the whole “jobs” argument!)

Petronas’ stalling comes on the heels of many other big players getting cold feet, including Encana, EOG, Apache, and BG Group.

And with good reason. Even after Clark gave away the farm to these companies – slashing down to nothing the export tax at the root of the Liberals’ grand “$100 Billion Prosperity Fund” promises in the last election – this dog still won’t hunt.

Here’s why: With all the added costs to produce and ship LNG to Asian customers, the break-even point is between $10-13/unit of gas. When Asian prices momentarily spiked to $16-18 a few years ago, it seemed like BC exporters could make some real money exporting LNG. But as we and other pundits correctly predicted, this price bubble wouldn’t last. Now, with spot prices hovering at or below $10 – and expected to continue falling throughout 2015 – that Asian price premium is gone, taking BC’s LNG pipe dream with it.

Sure, oil prices may pick up and with them LNG prices, but the lesson here remains: LNG is expensive and volatile – not characteristics that make big energy companies likely to fork out the tens of billions of dollars and half decade in pipeline and plant construction required to get this industry up and running. Which is why the sooner we abandon this delusion and start focusing on real, sustainable economic alternatives for the province, the better off we’ll all be.

“It’s the economy, stupid.” That’s the refrain environmentally-minded folks are browbeaten with, their pipeline and climate change protests patronizingly brushed aside by wise economic pragmatists.

But in 2015, with $50 oil, we should all be on the same page for once.