Category Archives: Tar Sands

Judge blasts Alberta government for silencing oilsands critics

October 2, 2013Energy and Resources, Politics, Tar Sands, Western CanadaCanadian Press

tarsands industry-kris krüg — Oilsands infrastructure near Fort McMurray (photo: Kris Krüg)

EDMONTON – Alberta’s Environment Department has been rebuked by a judge for working behind the scenes to silence groups that question the effects of oilsands operations on the environment.

“This is a black mark for the government of Alberta,” Simon Dyer of the Pembina Institute, an environmental think-tank at the heart of the dispute, said Wednesday.

[quote]Alberta needs to walk the talk and be judged on its actions both in terms of environmental performance of the industry and its actions in terms of the regulatory process.[/quote]

In a ruling filed Tuesday, Court of Queen’s Bench Justice Richard Marceau said a provincial director who in 2012 refused the Oil Sands Environmental Coalition standing into a review of a proposed oilsands project was adhering to a 2009 internal department policy memo.

The coalition includes a number of environmental groups, including the Pembina Institute and the Fort McMurray Environmental Association.

That memo, said Marceau, made it clear that the coalition was to be thwarted because its member groups refused to work with the government through such initiatives as the Cumulative Effects Management Association.

Marceau said the director then “breached the rules of fundamental justice” by beginning from a place of bias.

See no evil, hear no evil

Nowhere in the law, wrote Marceau, “is there a suggestion that promoting Alberta’s economic growth in an environmentally responsible manner permits the director to reject statements of concern from those persons or groups who voice negative statements about proposed oil sands development.”

The 2009 memo made it clear that the Oil Sands Environmental Coalition, or OSEC, should no longer be given standing at regulatory hearings into oilsands projects on the grounds it was not directly affected by the impact of the operations.

Up until that point OSEC had been routinely granted standing.

The memo, sent to the deputy minister, the top bureaucrat in the department, singled out the Pembina Institute, noting that the institute, “as reflected in (its) recent publications about the oilsands, are less inclined to work co-operatively.”

Marceau noted that the department’s director of the northern region, who is not named, then used that exact reasoning in June 2012 to reject the coalition’s application to be allowed to speak on a proposed Southern Pacific Resource Corp. (TSX:STP) in situ oilsands mining operation on the MacKay River in northeastern Alberta.

“The reasons provided (by the director) are so close to being identical (to the memo) they seem to have been cast from the same template,” wrote Marceau.

He noted OSEC was not made aware of the 2009 memo at the time and therefore could not respond to it.

Environmental coalition must be heard

In his decision, he quashed the decision to exclude the coalition from the hearings.

OSEC has argued it is directly affected by the project, given that it has a licence to occupy land for recreational purposes downstream. It argues there are larger environmental concerns, given that the project would require up to 1.7 million litres of fresh water every day. It says air quality could also be affected and says the project would be in the middle of the habitat for a threatened caribou herd.

Environment Minister Diana McQueen was not made available for comment Wednesday. She is in Europe meeting with leaders to try to head off a European Union directive that would label oilsands oil more environmentally harmful than conventional oil.

Government denies policy against environmental groups

Department spokeswoman Jessica Potter said no decision has been made on whether to appeal Marceau’s ruling. But she said there will be a review of the decisions on who gets to speak on the Southern Pacific proposal.

“As a result of the ruling we are preparing a new assessment for this project,” said Potter.

She declined to discuss the 2009 memo or whether McQueen was aware of it, but stressed, “We don’t have a policy towards the OSEC. There’s no specific policy against a specific group.”

“Banana Republic stuff”

NDP critic Rachel Notley said McQueen needs to cut short the European trip and return immediately to address the issue.

“This government has a law on one hand that they publish, and secret policies on the other hand that they implement behind closed doors,” said Notley.

“If that’s not bad enough, it turns out the secret policies that they’re implementing behind closed doors are designed to punish and to silence those who might disagree with their policies on the oilsands.

“This is banana republic stuff.”

Notley said if McQueen knew about the memo and didn’t act to stop it, “we need to talk about whether she should be in that position any longer.”

Notley also said Jim Ellis, the deputy environment minister at the time of the 2009 memo and now the CEO of Alberta’s new energy regulator, should resign.

Wildrose Party chimes in

Wildrose environmental critic Joe Anglin said the memo is further proof of a Progressive Conservative government that in its zeal to clamp down on dissent makes it even harder to prove to the world it is serious about reducing pollution in the oilsands.

“The worst thing we have ever done to our oilsands is we’ve gone out and created this story about how wonderful we are, but then we don’t practise it,” said Anglin.

“It does the industry a disservice and it does the public a disservice.”

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First Nation says CNRL up to 6 leaks in Cold Lake, Alberta

September 16, 2013Energy and Resources, First Nations, Oil&Gas, Tar SandsCanadian Press

Alberta's own Gulf of Mexico crisis? Tar Sands operation leaking for 6-plus weeks — One of 6 leaks believed to be coming from CNRL’s Cold Lake operation (Chester Dawson/WSJ)

COLD LAKE , Alta. – A First Nation says it is concerned about two other leaks at an oilsands project in northeastern Alberta, bringing the total in recent months to six.

Chief Bernice Martial of Cold Lake First Nation said Monday that she is worried about the safety of drinking water, animals and vegetation in her region.

1.5 million litres recovered already

In July, Canadian Natural Resources Ltd. (TSX:CNQ) said a mechanical failure at an old well was behind ongoing bitumen seepage at its oilsands project on the Cold Lake Air Weapons Range.

About 1.5 million litres of bitumen has since been recovered from bush and muskeg in the area.

The band said in a news release that it recently learned of two additional leaks of bitumen, but the Alberta Energy Regulator says they both involved produced water back in May and June.

Spokeswoman Cara Tobin said the waste water from the two sites, about 8,000 litres in total, has since been cleaned up.

Company spokeswoman Zoe Addington confirmed there have been no further bitumen discoveries.

“Each location has been secured and cleanup of bitumen at the four other sites is ongoing,” she said in an email.

Animals dying

The last report posted by the regulator tallies dead wildlife from the leak at two beavers, 46 small mammals, 49 birds and 105 amphibians.

“Our future generations will not be able to enjoy what once was pristine Denesuline territory,” Martial said in a news release.

[quote]Animals such as wolves and bears are now migrating through our community, which is a safety risk and precaution. The environment is changing and definitely not for the positive.[/quote]

CNRL has been ordered to limit the amount of steam it pumps into the reservoir while the regulator investigates.

Financial leakage

Gerry Protti, chairman of the regulator, said that the spill has significantly affected the company’s finances.

“We’re working extremely hard to come up with the cause of the issue and resolution around it. But when you’re taking 40,000-plus barrels of production out of their cash flow, that has a direct impact,” he said Monday in Calgary.

“But that shows the importance that the province is attaching to development occurring with the minimum environmental impact.”

Last month, company president Steve Laut said he didn’t expect the ongoing spill would have a long-term impact on production.

He said he’s confident the company can either repair problematic wellbores or adjust its steaming strategy to work around them.

Neil Young: ‘Fort McMurray is a wasteland’

September 10, 2013Energy and Resources, Pipelines and Supertankers, Tar SandsCanadian Press

Singer comes out swinging against Keystone Pipeline.

OTTAWA – Neil Young is singing a new tune, claiming he’s seen the pipeline and the damage done.

The Canadian music legend has waded into the debate over the Keystone XL pipeline with inflammatory comments that compare Fort McMurray, Alta., to the scene of an atomic bomb strike.

Young declared himself “against the Keystone pipeline in a big way” as he described a recent driving visit to Fort McMurray, home base to northern Alberta’s oil sands development.

“The fact is, Fort McMurray looks like Hiroshima,” Young, 67, said at an event Tuesday in Washington hosted by Democratic Senator Harry Reid and the National Farmers Union.

[quote]Fort McMurray is a wasteland. The Indians up there and the native peoples are dying. The fuel’s all over, there’s fumes everywhere. You can smell it when you get to town.[/quote]

“Fort McMurray is a wasteland. The Indians up there and the native peoples are dying. The fuel’s all over, there’s fumes everywhere. You can smell it when you get to town.”

His comments came the same day that Natural Resources Minister Joe Oliver was in the American capital talking up Canadian environmental policy and TransCanada’s Keystone project, which is designed to carry Alberta oil sands bitumen to refineries on the Texas gulf coast.

“This is truly a disaster and America is supporting this,” Young said of the oil sands.

“It’s very unfortunate that this is where we get the majority of our fuel from.”

Oliver, through his office, issued a short email response Tuesday.

“I am a fan of Neil Young’s music,” said the minister.

“But on this matter we disagree because Keystone XL will displace heavy oil from Venezuela, which has the same or higher greenhouse gas emissions, with a stable and secure source of Canadian oil.”

Young’s graphic description of Fort McMurray also left some locals scratching their heads.

“I’ve lived here nine years. I’ve raised my kids here,” said Will Gibson, a spokesman for Syncrude, who related how his morning jog Tuesday included a fox sighting. “It’s a beautiful community.”

Air-quality readings are better than most metropolitan cities, said Gibson.

“I would have loved to give Mr. Young a chance to see the Fort McMurray I know,” he said.

[quote]Young, in his address, likened the jobs that will be created by the $5.4-billion Keystone pipeline project to digging a bottomless pit.[/quote]

Young, in his address, likened the jobs that will be created by the $5.4-billion Keystone pipeline project to digging a bottomless pit.

“I’ve seen a lot of people that would dig a hole that’s so deep that they couldn’t get out of it, and that’s a job too. And I think that’s the jobs that we are talking about there with the Keystone pipeline,” said Young.

Young, who has lived in the United States since his early 20s but remains a Canadian music icon for songs such as Helpless, After the Gold Rush and Heart of Gold, has a long history of wading into politically sensitive territory.

He’s been involved with Farm Aid, an organization to save family farms, for decades.

In 1970 he wrote and recorded a raging ode to four students shot dead by National Guardsmen at Kent State University during protests of the Vietnam War. The song, Ohio, hit the airwaves within three weeks of the shooting, further inflaming an already impassioned U.S. debate.

His songs Southern Man and Alabama, about racism in the American south, prompted a blistering musical riposte from the band Lynyrd Skynyrd, Sweet Home Alabama.

His 1975 song Cortez the Killer was banned in Spain by Gen. Francisco Franco because of its dark depiction of Spanish imperialism.

Young recorded a tribute single in 2001 to the doomed passengers aboard United Airlines Flight 93 following the terrorist attacks of Sept. 11.

His 2003 album Greendale was a folksy indictment of environmental degradation, government corruption and the news media, and in 2006 his Living With War album took aim at the continuing military morass in Iraq, including the less-than-subtle song, Let’s Impeach the President.

Young said he drove his hybrid 1959 Lincoln Continental, which runs on ethanol and electricity, up to Fort McMurray while traversing the continent from his California home to Washington over the last two and half weeks.

“That’s a long way, I still feel it,” he said of the long detour north.

Beaver Lake Cree case reveals environmental review flaws

August 28, 2013Energy and Resources, First Nations, Oil&Gas, Tar SandsDr. David Suzuki

Beaver Lake Cree case reveals flaws in environmental review process — Fort McMurray, Alberta (photo: Kris Krüg)

In the 1980s, oil companies looked to the Arctic and made plans to drill in ecologically sensitive areas like Lancaster Sound. The sound is icebound for much of the year, but during its brief summer months, it offers near-constant sunlight, providing habitat for birds, fish and mammals to flourish. Fossil fuel exploration and development would threaten that entire web of life.

For a Nature of Things television episode called “Arctic Oil”, I interviewed a spokesman for Panarctic, one of the companies that wanted to drill in this unforgiving environment. Pressing his pencil onto a map of the projected site, he said the environmental consequences of a single test well were insignificant, less than the impact of the dot. He was probably right.

For a program on the proposed Great Whale Dam in Northern Quebec, Hydro Quebec’s CEO showed me a map and offered a similar argument: Although the dam would flood thousands of hectares, considering the massive size of the largely uninhabited north, it was a small area. Again, he may have been right, in a limited sense. But while the human population was sparse, I saw the area as fully occupied by countless plants and animals that had evolved to thrive in that specific location, and people who had lived there for millennia.

This illustrates a fundamental flaw in the environmental assessment process: It focuses on each proposed development as something that stands alone. But an individual well or dam is not separate or isolated from its surroundings – air, water, plants and animals pay no attention to our imposed, artificial boundaries.

We only have limited understanding of the exquisite ways in which everything on Earth is interconnected. Suppose environmental assessments had been conducted before we sprayed DDT onto open fields or topped up spray cans with CFCs. We didn’t know about biomagnification or chlorine degradation of the ozone layer until long after these technologies were approved. This is a fundamental problem. We can’t anticipate long-term consequences of any major technology if we are ignorant of how the world works and too impatient to invest the time and effort to learn more through scientific research.

A second defect in the EA process is the case-by-case examination of projects as if there were no collective impacts. In Alberta, energy review boards rubber-stamp proposals to drill wells. Again, each individual well might have a tiny effect on surroundings, but wells drag a lot with them, including seismic lines, electrical wires and roads that later entice hunters and adventurers in four-wheel-drive vehicles.

A lawsuit launched by the Beaver Lake Cree Nation, described by Carol Linnitt in a DesmogBlog article, illustrates the problem. The Beaver Lake people are suing the federal and provincial governments for failing to uphold indigenous rights, guaranteed by treaties and the Constitution, to fish, hunt, trap and gather plants and medicines. The BLCN contends that “cumulative impacts” of the Alberta tar sands are destroying activities governments are legally bound to protect.

BLCN lands cover an area the size of Switzerland and overlap the tar sands. The territory now yields 560,000 barrels of oil a day. Industry wants to raise that to 1.6 million. BLCN land already has 35,000 oil and gas sites, 21,700 kilometres of seismic lines, 4,028 kilometres of pipelines and 948 kilometres of road. Traditional territory has been carved into a patchwork quilt, with wild land reduced to small pieces between roads, pipes and wires, threatening animals like woodland caribou that can’t adapt to these intrusions.

As Alberta scientist David Schindler and others point out, provincial and federal government programs monitoring the impacts of tar sands development on air, water and land are so desultory that the data they collect are essentially meaningless. This echoes the federal government’s evasive approach to climate change. The idea seems to be that if proper studies aren’t conducted, we won’t learn what’s happening, so we can ignore any problems. That can’t go on.

The BLCN court case makes us look at the impact of development in a cumulative, holistic way. As BCLN lawyer Jack Woodward said, the case “is based on protection of the entire ecosystem.” If we don’t take that perspective, our hacking away with small cuts will destroy the underpinnings of the whole system.

With Justin Trudeau, Canada now has two Conservative parties

July 30, 2013Canada, Oil&Gas, Pipelines and Supertankers, Politics, Renewables, Tar SandsWill Dubitsky

With Justin Trudeau, Canada now has two Conservative parties — Christinne Muschi/Reuters

With so many Canadians eagerly awaiting the end of the anti-democratic, unaccountable Harper regime, some seem to be inclined to support any alternative that may stand a chance for replacing the Cons in 2015, after the next federal election. But maybe we should take a pause to think this through just a little more. Canadian Idol Trudeau, though he hasn’t said that much so far, has already shown that he shares many of the policy positions of Harper. This is where things get scary.

With Duffy, Wallin, Wright and Harb making the news, it might seem that now is a good time to call attention to Trudeau not believing in a need for changing the Senate status quo. For Trudeau, it’s just a matter of choosing good Senators – that is to say, the Senate would be improved if Trudeau got to choose Liberal senators instead of Harper choosing Conservative ones. But these are merely small distractions from the frightening resemblances between Trudeau and Harper.

Indeed, there are extraordinary similarities between Harper and Trudeau on:

Tax fairness
Trade
Guns
Health
Sustainable development and participation in the global migration to a green economy (or lack thereof)
The Tar Sands
The Kinder Morgan and Keystone XL pipelines
Employment insurance

Consider the following:

The Middle Class, Corporate Taxes, Health Care and Trade with China

Justin Trudeau claims to be a champion of the middle class. Sound good so far?

Well, never before in the history of Canada have inequalities between Canadians been more pronounced. Thanks to the corporate tax cuts initiated by the Liberals and accelerated by the Conservatives, those with power and money – especially the petroleum industry and the banks – are sitting on $600 billion in liquidity. The Conservatives tell us we must tighten our belts, that young people have to accept low wages and precarious jobs. Meanwhile, our cities are clogged for lack of investment in sustainable transit alternatives, etc., because the Conservatives tell us the cupboard is bare.

Yet, Justin Trudeau, self-proclaimed champion of the middle class, has said he will not raise corporate taxes. When push comes to shove, Liberals like Conservatives, always seem to cede to money and power.

Justin Trudeau thinks there are no money problems associated with health care, just management challenges. This position is necessary because Trudeau would lead a government short of revenues, thanks to the lowest corporate taxes among G8 nations! Conservatives couldn’t agree more. The Cons plan on cutting health care funding within 3 years. So much for caring about the middle class!

But there is much more middle class stuff that makes the celebrity Prince Trudeau a scary prospect. A case in point is Justin Trudeau favoured the sale of Nexen to state-controlled Chinese interests because he said it would pave the way to free trade with China, which would in turn pave the way to more prosperity for the middle class. The Conservatives have said the same thing. Yet the North American Free Trade Agreement has been around for a long time and middle class revenues/wages are stagnating or going down. The middle class is being hollowed out. The required fixes are internal/domestic.

Regarding the aforementioned, proposed Canada-China trade agreement, in response to massive dumping on global markets by China’s clean tech industry, the US has imposed trade tariffs running from 31% to 250% on solar tech imports from China, along with tariffs of 45% to 71% on imports of Chinese wind turbine towers; 2) the European Commission is considering tariffs averaging 47% on solar tech imports for China; and 3) Canada is the only country dumb enough to accept, under the proposed China-Canada agreement, a guaranteed exemption for environmental technologies from commercial barriers.

Guns: an integral part of Canadian culture

Justin Trudeau thinks that guns are an integral part of Canadian culture and that the gun registry was ineffective. Stephen Harper has similar views. This, despite the fact that the Canadian Association of Police Chiefs supported the gun registry as: 1) an effective tool for police in the line of duty; 2) regarding the development of evidence related to judicial proceedings.

Environment, submission to the fossil fuel Lobby, Tar Sands, Kinder Morgan and Keystone

Then there’s the matter of the environment. Trudeau and Harper say they favour sustainable development but the legacies of both of their parties suggest otherwise. Prior to their defeat, the Liberals had several climate change action plans. They all failed to do the job, because when you got down to the details, their plans were concessions to money and power. Jean Chrétien promised the petroleum industry that, in the event of a price on carbon, there would be a very affordable ceiling on the price of carbon. Stéphane Dion came out with his billions for a Climate Fund just before the Martin government was defeated, a fund that would have the government pay the largest emitters to reduce their respective emissions or invest in carbon offsets. In other words, the more one emits, the more the government would subsidize – a pay-the-polluter principle rather than the polluter pays. No wonder Canada’s emission levels spiked upwards during the Liberal reign!

Thanks to Conservatives’ narrow focus on accommodating the fossil fuel lobby, Canada is one of the rare developed nations that is not a full participant in one of the greatest job creation areas of our time, the clean tech sectors. China had 1.6 million jobs, and Germany 372,000 jobs in clean tech sectors in 2011. Today, there are over 500 wind tech manufacturing facilities in the US; wind energy was the largest source of new electrical power generation in the US in 2012; the US solar sector employed 119,000 Americans in 2012; and 20% of US venture capital activity in 2011 and 2012 went towards the US clean tech sectors. Yet Canada is barely participating in green economy and, the few advancements that are being made, are thanks to provincial policies

What can we expect from Trudeau on environmental matters? Don’t get your hopes up. Justin Trudeau has already ceded to power and money by being very vague on environmental matters so as not to offend anyone. Following the Jean Chrétien model, Boy King Trudeau supports the Keystone pipeline and the expansion of the Kinder Morgan pipeline to Vancouver (to export tar sands oil to Asia), while saying he is a champion of the environment – even though the emissions associated with tar sands-related production for these pipelines would negate any of the Trudeau’s nebulous motherhood notions of being on the side of the environment.

Poor Sense of Priorities: Pot Over the Lac-Mégantic Tragedy

More recently, Trudeau has shown his true colours on priorities, with the July 2013 refusal of both the Conservatives and Liberals to interrupt their summer break for the purpose of holding sessions of the Parliamentary committee on Transport to look into the Lac-Mégantic rail disaster that left an estimated 47 people dead. One doesn’t need to await the report of the Transportation Safety Board to figure out that the Transport Canada approval of the Montreal Maine and Atlantic Railway request to have only one person operate a train with 72 wagons of dangerous cargo was a stupid decision.

Former Transport Canada employees have said that, under the Harper regime, safety has taken a back seat to corporate profits. The odds of the tragedy ever happening with 2 people in charge of the train would have been very minimal. But Trudeau thinks the top message for the lazy, hazy days of summer is about legalizing pot. Glad to see he has got his priorities right.

Employment insurance

It was the Liberals who started gutting Employment Insurance and the Conservatives have merely followed through. Justin Trudeau must be counting on the short memory of Canadians.

Wrap-up

Wrapping up, juggling complex issues such as taxation fairness, equal opportunity and participation in the global migration to a green economy, health care, day care etc., requires well-thought-out, synergistic policies with real depth. But both Stephen Harper and Justin Trudeau prefer to operate in sound bites and clichés on such matters. Harper answers all tough questions with, “but it’s the economy.” As for Trudeau, he simply repeats his aforementioned mantra that he is for the middle class without any references as to what he would do now that income inequalities have reached an historic high and corporate tax revenues aren’t sufficient to do anything meaningful for the middle class.

Unfortunately, you won’t see much of the above-mentioned criticisms in the media. With very few exceptions, journalists are not interested in the policy details or comparative analyses. The majority of English newspapers in Canada are partisan and represent, first and foremost, corporate Canada, money and power. Canadians have been criticized by some journalists for falling for a superficial Justin Trudeau brand, but the reasons for this can, in part, be found in the lack of depth by the journalists making such criticisms.

Once again, the Liberals are presenting themselves as the best option to address their own poor legacy.

With Trudeau at the helm, Canada now has two Conservative parties.

The Bitumen Cliff

March 30, 2013Climate Change, Energy and Resources, Tar SandsRay Grigg

Bitumen is the current subject of much discussion in Canadian economic and energy policy. Getting Alberta’s version of this carbon-intensive crude from the tar sands to market by pipeline is the cause of considerable concern, study, frustration and tension. The proposed Northern Gateway to BC’s treasured West Coast is laden with controversy, as is the Kinder-Morgan expansion to Vancouver.

The Keystone XL pipeline that would send bitumen south to be refined in the US Gulf Coast has become more complicated than the “no brainer” envisioned by those promoting bitumen exports. Now a report released jointly by the Canadian Centre for Policy Alternatives (CCPA) and the Polaris Institute (PI) is casting doubt on the wisdom of the federal government’s avid promotion of resource extraction as its primary economic strategy (Shawn McCarthy, Globe and Mail, Feb. 2/13).

Alberta may be the best example of this economic folly. The so-called “bitumen bubble”, the hollowing out of Alberta’s oil prices, has left the seemingly wealthy province with a staggering budget deficit of billions. With an economy now mostly dependent on the value of its bitumen, the province is vulnerable to price fluctuations determined by international market forces.

Now, with new extraction technology flooding the market with oil and gas from shale deposits, Alberta is cornered and in financial crisis. The federal government’s attempts to establish Canada as an “energy superpower” is now in doubt. The report by the CCPA and PI refers to this situation as the “bitumen cliff”.

As Tony Clarke, director of the Polaris Institute explains, “Canada’s current bitumen strategy is not only damaging to the environment, but is leaving our economy highly vulnerable to shrinking markets for bitumen as the world moves to less polluting fuels” (Ibid.).

The problem is the intensive energy required to extract bitumen from the tar sands. As climate change advances and the international community becomes more sensitive to carbon emissions, the preference for cleaner fuels will rise and the demand for bitumen will fall. In an age of growing environmental concerns, bitumen becomes a sunset fuel.

But the “bitumen cliff” is expressed in more serious structural effects. As a primary economic strategy, resource extraction offers a questionable future. One of Canada’s famous economic historians, Professor Harold Innis, succinctly identified the danger of relying on resource extraction as the source of national wealth. In summarizing Innis’s thinking, the CCPA report notes, “As staples are exported in raw form to more industrialized trading partners, Canada is left to buy back processed, value-added products and services at a much higher cost. The combined outcome is a self-reinforcing staples trap (a phrase borrowed from Professor Innis), whereby the faster Canada exports its latest staple, the less diversified and capable the economy becomes and hence all the more dependent on finding more staples to export” (Ibid.).

However well-intentioned, a strategy of resource extraction drifts a country downward in status, sophistication, wealth and stability.

A lack of economic diversity means a lack of economic resilience and greater economic vulnerability. Not only do boom-and-bust cycles become more common but a country’s economic health is wholly dependent on the needs of other economies. Bitumen is a classical example. It seemed like a good idea when the world was facing peak oil — the federal plan, in concurrence with Alberta, was supposed to make Canada an “energy superpower”. Now that other oil and gas is flowing freely from multiple shale deposits around the world, bitumen is in danger of becoming an expensive burden.

As well as the environmental risks and costs associated with the production and distribution of bitumen, such a resource comes with other consequences that are not so obvious. Economies that are dependent on a single resource are compelled to safeguard its production, to cater to its interests and to those who control it. The inevitable result is a deformation and erosion of democracy.

Saudi Arabia is an extreme example. But the economic power of oil almost invariable comes with a politically corrupting influence. Economic diversity invariably creates better government, greater resilience and more social stability — and broadly educated societies that are healthier and happier.

The most valuable resource in a modern society is its people. They are nourished and developed by schools, universities, health care, open inquiry and the free-flow of information. Informed people invent their own wealth. A country such as Canada has the raw resources that are best used by Canadians. Professor Innis’s “staple trap” is an economic cliff to be avoided.

Short term political objectives are inclined to exploit the immediate cash of raw resource extraction. But the best and most enduring investments are made in the people themselves. They, after all, are the real substance of nations.

And finally, at the bottom of the “bitumen cliff” is environmental mayhem. In Alberta, it’s open pits of toxic wastes, and an endangered Athabasca River which flows northward to expansive valleys and deltas ecologically rich with fish and wildlife.

In adjacent places, it’s pipelines, tankers and trains with the certain threat of disastrous spills. For the planet, it’s greenhouse gas emissions, a polluting process with unfolding consequences that science describes as being catastrophic to both natural ecologies and to human societies.

So the “bitumen cliff” also comes with a moral dimension. Is it strategically wise to develop a resource that comes with a suicidal component? Shouldn’t our human energy and ingenuity be applied to avoiding weather extremes, rising oceans and the plethora of other environmental disasters awaiting a hotter planet?

The most important discussions today are no longer about the economy and oil but about the fate of future generations. Bitumen belongs in this broader and deeper conversation.

Keystone XL: Massive Civil Disobedience is Next

February 22, 2013Canada, Climate Change, Oil&Gas, Tar SandsMark Brooks

Last weekend’s rally in Washington, D.C. is being called the largest climate change rally in history. At least 35,000-40,000 people from all over North America came out on what was an unseasonably cold and windy winter day to demand that U.S. President Barack Obama deny approval of the Keystone XL pipeline and make good on his stated intentions to take serious action to address the climate crisis.

The rally included speeches by Bill McKibben of 350.org, who told the assembled crowd, “For 25 years our government has basically ignored the climate crisis: now people in large numbers are finally demanding they get to work…We shouldn’t have to be here – science should have decided our course long ago. But it takes a movement to stand up to all that money.”

Sierra Club Executive Director Michael Brune, who was arrested a week earlier protesting the Keystone XL pipeline in front of the White House, said, “President Obama holds in his hand a pen and the power to deliver on his promise of hope for our children. Today, we are asking him to use that pen to reject the Keystone XL tar sands pipeline, and ensure that this dirty, dangerous, export pipeline will never be built.”

Canada was well represented by a number of indigenous leaders, including Chief Jacqueline Thomas of the Saik’uz First Nation. “The Yinka Dene Alliance of British Columbia is seeing the harm from climate change to our peoples and our waters,” said Thomas, Yinka Dene Alliance co-founder. “We see the threat of taking tar sands out of the Earth and bringing it through our territories and over our rivers. The harm being done to people in the tar sands region can no longer be Canada’s dirty secret.”

Will any of this make a difference? Even while the demonstration was underway, self-proclaimed environmentalists such as New York Times Dot Earth blogger Andrew Revkin was criticizing the demonstrators, writing that “a tight focus on Obama’s decision over the pipeline could be counterproductive if the hope is to build policies that might someday reduce the need for oil, whether the source is Alberta oil sands, the floor of the Gulf of Mexico or the Niger River delta.”

Many climate activists did not take kindly to Revkin’s comments, with journalist-turned-activist Wen Stephenson tweeting, “50,000 people come out to fight for our kids’ future, and you dump on it. You are what we’re fighting.”

Grist columnist David Roberts noted:

We can sit around and fill our blogs with reasons why this or that solution is the wrong one, inferior to some better one that we’d already have, goldarnit, if those meddling pushers-of-other-solutions weren’t ‘distracting’ from ours. We can fall in love with the ineffable intellectual tangle, as Revkin has, and accept that anything specific enough to build an activist campaign around will be meaningless in the context of global energy demand and emissions…But some people want to fight! Some people actually haul themselves out from behind their keyboards, call a bunch of friends, put on warm clothes, and go stomp around in public yelling about it.

Tensions are running high, as is often the case when so much is at stake. But is Revkin right? Is fighting Keystone the best strategic move or should we be directing our energies elsewhere? I was at the protest in D.C. and had the opportunity to speak with a number of climate activists about what lies ahead for the movement. From what I garnered from my discussions, I think Roberts has captured a sentiment that most of us have yet to fully realize, even those of us engaged in this struggle.

Yes, Keystone is a symbolic fight and stopping the pipeline will not fix our climate problem, not by a long shot. But for many people (and the numbers are rising), climate change represents one of humanity’s defining challenges, on par with the abolition of slavery, universal human rights and defeating fascism during the Second World War. It is the sine qua non issue of the 21st Century – no matter what else we might do, if we don’t get this one right, we’re in for an extremely rough ride.

This sentiment is becoming widespread in climate activist circles witnessed by, among other things, the Sierra Club’s recent decision to advocate and engage in civil disobedience for the first time in the organization’s 120-year history. The route of international negotiations and treaties has led us no closer to arresting climate change so many are now rightfully asking: If not now, when? If this is not the issue to get us out of our chairs and into the streets to fight, then what is? New pipelines represent a tangible symbol of our continuing addition to fossil fuels, locking us in to many more years of oil consumption at a time when even the International Energy Agency is telling the world that most of the world’s fossil fuels need to remain just where they are: in the ground.

Canada’s federal government is notorious for its intransigence and lack of interest in the climate change file. In the wake of the ongoing Idle No More movement and massive opposition to the proposed Northern Gateway pipeline, one wonders what climate activists in this country might be planning next. After all, Stephen Harper’s government appears hell bent on getting tar sands crude out of Alberta to international markets. If not Keystone, if not Gateway, Harper is determined to find some other way and other plans are surely in the works.

Following the protest, I had some time to visit the National Museum of African American History at the Smithsonian Institute where I came upon a quotation by the abolitionist Frederick Douglass. “Power concedes nothing without a demand. It never did and it never will.”

Whatever you may think of the campaign to stop Keystone XL, it would appear that climate change activists around the world are beginning to wake up to the cold reality of Douglass’ words. We may well look back upon last weekend’s protest as only the beginning of a long, bitter and increasingly hostile battle.

Oil, China and why David Emerson wants Alberta to start paying taxes

January 30, 2013Canada, Economics, Energy and Resources, Oil&Gas, Politics, Tar SandsKevin Logan

Alberta Premier Alison Redford recently took the unprecedented step of holding a “State of the Province” Address. This hauntingly American-style public relations stunt came about as a result of the longstanding work of behind-the-scenes chief architect of Canada as an Energy Superpower, David Emerson.

Here at the Common Sense Canadian we have tracked in some detail the efforts of former Harper Government Trade Minister David Emerson and his role as Chair of the Energy Policy Institute of Canada (EPIC). We have noted that while Mr. Emerson garners little coverage in mainstream media, his fingerprints can be found on every aspect of Canada’s evolution into a petro state. The corporate-driven policy “think tank” EPIC is the instrument of Emerson’s work.

This, we demonstrated, was evident when premiers took centre stage in Nova Scotia last summer to talk up Canada’s “National Energy Strategy”, while exploring “what was in it for every Canadian.” A central talking point dictated by Emerson and his EPIC communications shop in the exhaustive National Energy Strategy package he provided to all of the nation’s premiers, energy ministers and the PMO/PCO.

We underscored how this was just the tip of the iceberg in a longstanding trend where Emerson and EPIC drafted, promoted and delivered every recent development we have seen on the energy file. From the National Energy Strategy, through the raft of legislative changes we have seen since Harper came to power, including the paradigm shift in environmental policies dictating resource exploitation contained in the recent Omnibus Bills.

We undertook an exhaustive campaign, which grew exponentially in response to the secretive processes surrounding the establishment of the FIPA treaty, and we pointed to Emerson’s time in office as Minister of International Trade and Minister for the Pacific Gateway (before returning to the private sector in 2008 to work for the China Investment Corporation) where he claimed that establishing the Chinese FIPA was his “ultimate goal.” And we did our best to stop it.

Today we are going to explore Emerson’s role in what is being billed as a “once in a generation” restructuring of the Province of Alberta,establishing a New Normal, while the Province prepares to ratchet up Tar Sands production to meet the five-fold increase the Harper government and industry outlined as their shared goal early in the Conservative mandate.

For decades the Alberta Advantage defined that Province as the apparent envy of the nation. No Provincial sales tax, capital tax, payroll tax or health premiums was the “advantage” Albertan’s enjoyed as a result of their oil bounty. This was the foundation of a mountain of oily rhetoric that promoted self-reliance, hard work, small government, no taxes, cheap fuel and lots of toys – all of which defined “freedom” in the public psyche of Alberta.

Enter David Emerson.

Albertans have come to accept that oil wealth does not translate into cheap gasoline for their huge trucks. They have come to understand that small government means less service, but are proud to dig deep for the services they want, because they are “self-reliant”. They know first hand the environmental impact of a massive exploitation agenda and are aware of the “myth” of climate change. But, can they accept that much like death, provincial taxes are inevitable?

Can they accept that not even a massive escalation in oil production can balance budgets?

Massive escalation of Tar Sands production is the undercurrent that drives the entire Albertan frame of mind. You can feel it in the streets, at the coffee shops and on the “highway of death” that leads to the EPIC undertaking of the internationally-renowned Tar Sands, the largest industrial activity known to man.

It is therefore widely known that much of the Alberta advantage is oil-driven cultural myth, however the one thing no one can deny is there are no provincial taxes. This is evident in every purchase Albertans make, and apparently this daily reminder is enough to perpetuate the advantage myth and condition the average Albertan to accept foreign interests infiltrating their natural resource bounty, running off with the profits and leaving them to hold the environmental and fiscal bag.

Clearly the real Alberta Advantage falls in favour of foreign investment and almost entirely at the expense of average Albertans. Redford’s whole “State of the Province Address”, while predicated on myth, does forecast a 6 Billion dollar deficit in the March budget. Yes, thats right, oil rich Alberta, at a time when production rates have never been as high, is filing a SIX BILLION dollar shortfall in oil royalties.

So what does David Emerson have to do with all of this? We have established that Emerson and his shop are the architects of the real Alberta Advantage, steeped largely in favour of foreign interests – and now Albertans are experiencing first hand how he operates.

But what might come as a surprise to even Albertans is Emerson’s role in “reshaping” their future.

As appointed chair of the Alberta Premier’s Council for Economic Strategy (thanks to former premier Ed Stelmach who leaned hard on Emerson to get him through the battle over Royalties), Emerson has skillfully guided the policy fix – once again from the behind the scenes and on behalf of the largest most powerful companies on earth – and the Chinese Government.

His intention? The end of the Alberta “no taxes” advantage with a “broad based long term approach,” for which they have been priming the pump for years.

The reason? The corporate fabricated Bank-Backed Bitumen Bubble.

Former ICBC CEO and respected independent economist Robyn Allan skillfully analyzes this most current myth-making that EPIC puppet Premier Redford has put at the centre of her “once in a generation” restructuring. In a recent piece, Allan bursts the Bitumen Bubble the EPIC-affiliated propagandists have blown way out of proportion, which sets out Alberta’s “New Normal.”

Industry and government talking heads are singing from the Bitumen Bubble song sheet, and Allan rips it to shreds in her in-depth, rock-solid analysis, proving that much of the current fearmongering surrounding the finances of oil exports is indeed a bubble of hot air. “The narrative goes like this,” she writes. “Resistance to oil pipelines like Keystone XL, Northern Gateway and Trans Mountain’s twinning means an ever increasing supply glut in the U.S. Midwest, forcing the price of Western Canadian crude oil downwards as compared to the North American crude oil benchmark West Texas Intermediate — WTI.”

The implication is that oil sands operators would get more value if they could just access new markets via new supply routes. Allan demonstrates this is hogwash, built on some very fuzzy math and ignoring the fact that Alberta bitumen is a low-quality, expensive-to-process product which has and always will fetch bottom dollar compared with more favourable alternatives.

The bottom line of Allan’s analysis, is that we are being misled and that lack of access to new markets is not the real problem contributing to Alberta’s gargantuan debt, nor will access to new markets via BC fix it. Only reasonable, responsible royalty rates can balance Alberta’s budgets, protect and secure the Alberta Advantage and avoid a complete restructuring of the province.

Here is the hot air EPIC’s propagandists are using to restructure the Alberta Advantage. By blowing up the Bitumen Bubble and handing the advantages of oil to his corporate colleagues, Emerson’s fix is to dump the disadvantages onto average Albertans.

Instead of simply fixing budget shortfalls by establishing responsible royalty rates on massively escalating production rates, Albertans will be treated to a sleight of hand, by funnelling puny royalties into a new fund called “Shaping Alberta’s Future”. A two year-old Emerson recommendation now topped off with his shafting of Albertans by exploring the “expenditure side of the ledger.” I.e. deep cuts and reduced services. But the kicker, of course, the end of “no taxes.”

How does Emerson think he is going to strip Albertans of the last modicum of the Alberta Advantage that has long been the pride of Alberta? Can his propagandists shift the public psyche and alter the longstanding reality Albertans have clung to as their one distinguishing factor?

Here is Emerson in his own words:

The culture of Alberta has been built around low or no taxes for many decades. It’s not going to be an overnight psychological shift for the people of the province. My own view is you have to start first on the expenditure side and be fairly broad-based and multi-year in your approach.

In other words, start by cutting services, then phase in taxes over several years so people don’t get quite so hopping mad.

Redford parrots Emerson’s view. “It’s about this being a new reality and us having to face that,” she said in a recent interview.

In a conference call Monday with more than 5,000 members of her Conservative Party, Redford confirmed the province will borrow to pay for new infrastructure, such as roads and schools, and did not rule out the possibility that Albertans will one day be subject to a provincial sales tax.

So Alberta, looks like you have won! The race to the bottom that is, and with EPIC’s Emerson as your jockey. And you all thought it was Alberta telling British Columbians what to do!

But don’t worry, he has been “shaping the future” of BC for decades, as onetime chair of the BC Progress Board – not to mention CEO of Canfor, the BC Transmission Corporation, the Western Bank of Canada, the BC Trade Development Corp and a directorship at BC Gas…to mention just a few significant BC-specific posts Emerson has held.

Just look at the shape we are in! Our oil and gas deficits are merely a third of what you are looking at. Relax and enjoy the ride. It will be EPIC.

2012: The Year of Energy Politics

December 21, 2012Canada, Energy and Resources, Fracking, Oil&Gas, Pipelines and Supertankers, Politics, Tar Sands, Western CanadaAlberta Tar Sands, BC Oil Pipelines and Supertankers, Enbridge, FIPA, fracking, Oil and gas, Politics, Stephen Harper, Water and EnergyDamien Gillis

CBC’s Power and Politics has chosen “energy politics” as the top Canadian news story for 2012 and we at the Common Sense Canadian couldn’t agree more.

Energy is the current which runs through a diverse array of issues presently reshaping our country – from omnibus budget bills that have slashed environmental regulations, to foreign trade deals, changes to our labour rules and, perhaps most significantly, the growing mobilization of First Nations, supported by non-aboriginal Canadians, to oppose many of these initiatives.

2012 was a year that began with Conservative Natural Resources Minister Joe Oliver dismissing opponents of the proposed Enbridge Northern Gateway pipelines as “radicals” and ends with the Idle No More rallies sweeping the nation – with support coming in from as far away as Buckingham Palace (or just outside its gates, anyway).

It was a year when two very different visions for the future of Canada and its place in the world collided headlong with each other. One seeking to curb the Tar Sands and new arteries essential to its growth, the other striving to make Canada into a new Saudi Arabia – provider of oil, gas and coal to emerging Asian markets.

Each policy piece from the Harper Government was part of a bigger puzzle, designed to bring its new vision to fruition.

There was the first omnibus budget bill, C-38, which gutted the Fisheries Act, watered down environmental assessment processes and slashed ministry staff in monitoring and regulation. The Common Sense Canadian published retired senior DFO scientist and manager Otto Langer’s first warning of these intended changes to the Fisheries Act, which unleashed a media firestorm and spate of denials from senior Harperites.

We also published the sad farewell letter from one of the world’s top marine pollution experts, Dr. Peter Ross, who lost his job when the Harper Government essentially canned our entire ocean monitoring program. Even one of the world’s top monitoring stations for climate change and arctic ice melt, PEARL, could not escape this government’s ax (for a savings of a whopping million and a half a year).

Clearly, these changes grew out of and helped to further a “see no evil, hear no evil” approach to climate science that is critical to the Harper Government’s hydrocarbon expansion agenda – which also demanded the smoothing of those pesky regulatory hurdles for resource project development.

But one of the Harper Government’s pet projects, the Northern Gateway pipeline, made defending its agenda more challenging, with an unrivaled string of public embarrassments. There was the damning US report on the company’s 2010 disaster in Michigan, then more spills in Canada, a badly bungled PR campaign, the infamous “missing islands”, and repeated blunders at the National Energy Board hearings into its proposal.

Yet, even with these public blemishes on the star of its new energy vision and with mounting evidence of catastrophic, fossil fuel-driven climate change, the Harper Government’s attitude remained unchanged, especially on the international stage. In 2012, we became the first country to formally pull out of the Kyoto Protocol (not that we ever took our commitments serious in the first place). At the same time, Canada was caught by the Guardian, through a leaked memo, working to block a resolution to end to public subsidies for fossil fuels at the Rio+20 summit.

Back in Ottawa, the latest omnibus budget, C-45, picked up where its predecessor left off, slashing the age-old Navigable Waters Protection Act – one of the main beefs of the Idle No More movement.

Provincially, energy politics have dominated the agenda too – from the well-publicized spat between BC Premier Christy Clark and Alberta Premier Alison Redford over revenue sharing from the proposed Enbridge pipeline, to Redford’s new alliance with Quebec Premier Pauline Marois over alternate plans to move bitumen East.

The media and public discourse in BC was particularly infused with with energy – beginning with the NDP and Liberals jostling for positioning on Enbridge, to the emergence of KinderMorgan’s proposed pipeline and tanker expansion for Vancouver as a major urban issue in the lead-up to next May’s election. Add to that natural gas fracking, proposed pipelines and the plan to build multiple Liquified Natural Gas (LNG) terminals on the coast – all of which are increasingly on the media and public’s radar and sure to be election topics. The movement against the proposed Site C Dam, which would power gas and mining operations, is building momentum too.

The NDP has been all over the map on these issues, initially getting behind fracking, new pipelines and LNG plants with few reservations, then, recently, showing signs of feeling some of the public pressure building around these issues. This was evidenced by an op-ed in the Georgia Straight, co-penned by Energy Critic John Horgan and Environment Critic Rob Flemming, promising “a broad public review of fracking” and “immediate changes to protect B.C.’s water resources”.

The party appears caught between the growing concerns about fracking and LNG and a desire not to appear to be too “anti-business” or ignore an opportunity to reboot the BC industry and close the budget gap with increased royalties and related revenues. It will be very interesting to see where the NDP goes on this file in 2013.

Christy Clark, for her part, has left no doubt about her bullish outlook for natural gas and LNG, comparing BC’s potential with this resource to Alberta’s Tar Sands. Some of the nation’s top independent energy experts have poked big holes in Clark’s plan, though, suggesting that her numbers simply don’t add up.

Federally, the NDP’s selection of Thomas Mulcair shook up the political scene and energy debate. Unlike Harper’s former Liberal Opposition challengers, Mulcair seemed to have a firm grasp of energy and economic issues and was prepared to take on Harper on topics others would shy away from.

Take Mulcair’s rendering of the “Dutch Disease” into a Canadian household term. The concept, supported by the OECD and other highly reputable economic institutions and economists, holds that the downside of a petro-state economy is artificial currency inflation, which leads to the hollowing of a nation’s manufacturing sector. New jobs in Fort MacMurray mean layoffs in Hamilton. The fact Mulcair was able to get the traction he did with this discussion and to lodge it – even a little – in the national consciousness is a testament to his oratory skills, political sensibilities, and willingness to take some risks to differentiate himself from Harper. Mulcair also helped to re-frame pipeline politics, opposing Enbridge but getting behind the notion of shipping bitumen East (the source of another emerging public energy debate).

But the reach of energy politics extended far beyond provincial and national borders this year, as the Harper Government negotiated a new trade deal with China, ostensibly to stimulate investment in Canadian energy resources. The Foreign Investment Promotion and Protection Act (FIPA) came under great scrutiny – particularly in these pages – for eroding Canadian sovereignty and enshrining much diminished environmental protections as the law of the land for years to come.

Harper seemed caught off guard by the backlash generated by this deal and several concurrent foreign buyouts of Canadian energy companies – which seemed to be the very purpose of FIPA. When he finally approved the $15 Billion purchase of Nexen by Chninese state-owned CNOOC and Canadian gas company Progress Energy by Malaysian giant Petronas, it was late on a Friday afternoon, to avoid the media glare that had been focused on these deals. He promised then, surprisingly, that this marked the “end of a trend and not the beginning of one” with regards to such foreign buyouts of Canadian energy assets (PS we aren’t buying that line here).

Compounding the public and media pressure around FIPA and these energy company buyouts was the controversy that erupted from a coal mine in northeast BC. When it emerged the company, HD Mining, was hiring all imported Chinese workers for its Murray River mine, a heated back-and-forth ensued between the United Steelworkers’ Union and a Chinese worker who has filed a complaint with the Human Rights Commission, alleging the union is “creating contempt for Chinese people”.

In the midst of this fracas, an embarrassed Immigration Minister Jason Kenney promised to review the labour rules that allowed this situation to happen. And yet, it was Human Resources Minister Diane Finley, with Kenney’s support,who just recently made the changes to the Canadian labour regulations that enable companies to hire foreign temporary workers for lower wages than they would pay Canadians.

The Harper Government’s labour policy seems designed precisely to encourage situations like the one at Murray River, directly undermining the government’s “jobs” rhetoric around resource development.

Likely as a result of all this scrutiny, Harper has delayed on ratifying the Chinese FIPA. A campaign led by social media-driven public advocacy groups Leadnow.ca and Sumofus.org generated over 80,000 petition signatures and thousands of letters and submissions to government officials protesting the proposed FIPA.

But the biggest story in 2012 has been the unprecedented coming together of aboriginal and non-aboriginal Canadians to jointly confront these hydrocarbon projects and the Harper Government’s vision for Canada’s future. Even in the waning days of 2012, we saw another victory by First Nations and environmentalists working together to secure a long-term ban on coal bed methane fracking in the Sacred Headwaters. That the Clark Government saw this as politically expedient – or necessary – is interesting in and of itself.

It remains to be seen where the Idle No More movement goes from here. Will its intensity subside in the new year like the Occupy Movement of last year, or will it be forged into a formidable political force, crystallizing the burgeoning sense of discontent amongst many Canadians with the direction our political leaders are taking us?

2013 holds the answers to many other burning energy questions, like how the Enbridge pipeline hearings will conclude or when KinderMorgan will formally file its plans. Will this American company’s experience be smoother than that of Enbridge, or will an unprecedented urban environmental movement rise up to block its path? What role will natural gas will play in BC’s provincial election? Will this new energy alliance between Alberta and Quebec and the vision to pipe the Tar Sands East pan out? Perhaps most interesting, will Harper ratify or abandon FIPA and will he keep his word on nixing future foreign buyouts of Canadian energy assets?

Stay tuned to the Common Sense Canadian in the New Year to find out. Or maybe the evening of December 31st. Knowing the Harper Government, that’s when all the really important changes to our national fabric will be announced.

Despite PM’s Assurances, Floodgates Open to Chinese Govt as Encana, PetroChina Partner

December 16, 2012Canada, Energy and Resources, Fracking, International, Oil&Gas, Pipelines and Supertankers, Politics, Tar Sands, Western CanadaAlberta Tar Sands, BC Oil Pipelines and Supertankers, China, FIPA, fracking, Oil and gas, Politics, Stephen HarperKevin Logan

“For the right price, anything is for sale” -Anthony Lambert, President and CEO of a Canadian arm of Chinese state-owned Sinopec, known as Sinopec Daylight Energy

Canadians are seeing red this week after a series of announcements reinforce concerns about the loss of Canadian resources and sovereignty.

The focus has been the Alberta Tar Sands, but natural gas plays are also in the mix. Four days after Stephen Harper boldly stated that the CNOOC/Nexen and Petronas/Progress takeovers marked the “end of a trend and not the beginning of one,” one of Canada’s largest oil and gas companies, Encana, announced a joint venture in a 4-plus billion dollar gas play in which PetroChina will have a 49.9 percent stake. A “minority” position such as this is seemingly an end-run on the “new,” yet unexplained criteria dictating the level of Chinese/foreign investment the Harper government would support.

CNOOC’s Nexen bid was a full takeover of a Canadian-based company with international holdings, however its mainstay is the Alberta oil patch and part of that takeover also includes a percentage of Syncrude. These companies have enjoyed years of Canadian taxpayer subsidies and support to make them profitable. The benefits of that multibillion dollar effort will now accrue to a Chinese “SOE”, or State Owned Enterprise, turning Canada into what the Alberta Federation of Labour’s recent detailed report describes as “China’s Gas Tank”.

Those supportive of foreign SOE investment in Canadian resource plays dismiss the concerns raised as unwarranted paranoia. A sort of “Reds under the bed” fear being mocked by folks like Bob Rae, outgoing liberal leader and supporter of Chinese investment. But this dismissive attitude shared by the supporters of such investment neglects the heart of the matter.

Joseph Stalin once said, “When we hang the capitalists they will sell us the rope we use,” which is in keeping with the Sinopec President’s view that “anything is for sale at the right price.” This point is pivotal. Chinese investment by SOE’s seems counter-intuitive to a “free enterprise” approach – a central plank in the ideologically driven agenda of Stephen Harper. So why does he abandon such principles along with his base and run far from the centre over to what many view as the extreme left?

It is largely due to the fact that SOEs have deep pockets and are paying real, serious, above-market premiums to snatch up Canadian oil and gas assets, which is enriching longstanding players in the patch and their investors. And it is true that they are doing so because there is profit to be made, and not simply in owning Canadian resources raw and sending them home to China.

But it’s really about the age-old geopolitical game of control over the world’s resources, exploiting them elsewhere while leaving one’s own in the ground, as United States has historically done (however, now you will note that they too are falling prey to exploitation and export of their “Homeland” resources.) All of which will fuel the growth of China’s economy into what people are proclaiming will be the world’s largest economy in as soon as a decade or two.

China has a stake in many nations around the globe and the forces that historically “nation build” are at work once again in boosting China to the forefront of the world, unfortunately their model has even less trickle down to the Chinese people, as they often live in squalor and cities that could house millions remain empty.

To accommodate this agenda the Harper government has created a very attractive investment “climate” in the Tar Sands. A much-reduced royalty rate, heavy subsidies, a gutted environmental regime, paralyzed environmental assessment processes. All this while accruing decision making to the top. Cabinet (read Chairman Harper) will decide cross-border pipelines, terms of trade and investment deals, criteria for foreign investment, and he has taken measures to lock in the new legislative framework dictating resource development and exploitation for decades to come.

During the minority reign of the Harper administration, he oversaw the single largest divestiture of a “public asset” in our nation’s history when he constructed the offloading and privatization of Petro Canada. The result was a gift to industry, a huge loss to Canadian taxpayers and it closed the public window we had on this industry from well to pump. Which is why Harper was so precise with his language when he approved the CNOOC/Nexen and Petronas/Progress takeovers.

Indeed, the first thing out of his mouth at the press conference announcing the approvals was, “To be blunt, Canadians have not spent years reducing the ownership of sectors of the economy by our own governments, only to see them bought and controlled by foreign governments instead.” However that is precisely what is occurring, no matter how you slice it.

But Harper ignores this reality and doubles down on his bold misrepresentation of the facts, “It is not an outcome any responsible government of Canada could ever allow to happen. We certainly will not.” And they should not, Harper realizes its not what Canadians want, which is why he takes to the mike and says these things. So why does he do the exact opposite?

Foreign investment is already a serious issue in the oil and gas industry in Canada. Forest Ethics recently released a brief explaining how Canada’s major oil and gas players are on average 71% “foreign owned.” In fact, the major players in the patch are almost entirely foreign owned; it is only the Canadian-based companies that bring that percentage down from fully foreign ownership. But even those Canadian-based companies are owned by foreign interests in the majority. All of this equals an exodus of cash from the country, only outdone by the flow of oil, gas and other raw resources.

If Canadian companies cannot find the money to invest in the oil and gas patch, despite outgoing Bank of Canada Governor Mark Carney’s criticism that corporate Canada is sitting on over 600 billion dollars of “dead money” and Canadian “SOEs” needed to be sliced, diced, demonized and sold off, why are Chinese SOEs all the rage?

Jim Stanford, a highly respected, independent-minded Canadian economist, suggests the notion that Canada cannot capitalize its own resources and must therefore rely on foreign investment is balderdash. Moreover, the Conservatives still boast that Canada and its banking industry are a pillar of stability in a sea of insecurity and crashing economies. All of which runs counter to the oft-repeated cliché that “we need” this foreign investment, and is instead looking much like a foreign takeover of not only our resources but our sovereignty.

This is where the Canada-China Foreign Investment Promotion and Protection Act (FIPA) comes in. This government continues to claim that somehow FIPA is good for Canadian investment in China, yet there is no evidence of that. Preeminent Canadian economist Diane Francis, a polar opposite to Jim Stanford, would probably agree with him on this one, as she has suggested the FIPA should be ripped up. Meanwhile, even Canada-US free trade architect Brian Mulroney states that we are still at least a decade away from free trade with China.

So why FIPA? Why now? In corporate parlance this amounts to a “Friendly Takeover”, as both entities agree there are “synergies” with the syncrude and are supportive of the entire notion, therefore it’s not a hostile takeover.

In promoting this deal, the Harperites will tell you that we have dozens of other FIPAs and this one is simply just another one. However that too is very misleading. The others are largely with countries where Canadian-based companies, typically mining companies, are operating.

Once again, these companies maybe Canadian-based, but they are largely foreign-owned, and they base themselves in Canada because our legislative environment is accommodating to their agenda. Canada is to mining what Switzerland is to banking and the FIPAs we negotiated are in most cases as draconian for the less-developed nations as the Chinese FIPA is for us.

These FIPAs guarantee the exploitation of mineral rights in less developed countries, for Canadian-based mining companies, and ensure the governments are removed from the equation, unable to protect the environment or increase royalty rates. In fact, the governments are reduced to cheerleaders on the “promotion” side of these agreements. Any move to regain sovereignty, charge respectable royalties, protect the environment or impose any restrictions on unbridled exploitation is met with severe financial penalties, meted out by a new corporate judiciary established by these agreements, which works in secret and is entirely profit-motivated.

This is exactly what is happening to Canada with the Chinese FIPA.

However, a huge push back has occurred and Harper seems frozen in his tracks on this one.

After having restructured the very fabric of the nation with two omnibus bills – the largest we have ever seen – he has still not ratified the agreement. Ironically, Omnibus bills have been used very sparingly in history. In 1971 Liberals used the practice to establish the “Department of the Environment,” and then again in 1982 to establish Trudeau’s infamous “National Energy Program.” The Conservatives fought it then and had the bill divided into eight different sections. On the other hand, Conservative governments have used the practice more. They used it once to enact NAFTA, and now twice since Harper obtained his majority – for the opposite purpose of omnibus bills of old, which established our internationally-renowned environmental practices and the nation-building, sovereignty-securing laws of Trudeau’s NEP.

As we pointed out in painstaking detail here at the Common Sense Canadian, the recent Omnibus bills run contrary to the FIPA treaty process and, in our opinion, render it null and void. This could be at the very heart of the delays we are now experiencing. There were many petitions and expressions of outrage, however, the argument we forwarded was indisputable and has put the Harper Cabinet in a box. And now we have an opportunity to follow up and here is why.

If FIPA is ratified, it will mark the end of Canadian sovereignty in the oil and gas patch. It will also ensure that China becomes the major driver of activity in both oil and gas. The terms are so favourable for “Chinese investment” that it will force partnering with them on resource plays as evidenced in the recent PetroChina/Encana joint venture announcement. The FIPA offers such attractive terms that partnering with any other private companies or SOEs would put one at a disadvantage. This essentially makes the draconian FIPA terms the new de facto law of the land and not simply a bilateral investment agreement. Can you imagine the Harper government or any other government making laws – or restoring those recently stripped away – which apply to everyone but Chinese companies?

I raised these points and many others in my submission to the FIPA environmental assessment process and we encouraged you to do the same. The campaign was picked up by savvy internet politicos who run Leadnow and similar organizations. The end result was thousands of submissions to various levels of government on this issue, on top of the 100 thousand-plus petition signatures these groups garnered against FIPA. Others chimed in as well, and the result so far has been positive.

However there is still an opportunity to communicate once again our adamant disapproval of the FIPA agreement. It is important we do so in order to send a message loud and clear that we do not approve locking in subsidies, much-reduced royalty rates, much-diminished environmental processes and reduced protection for over thirty years – an eternity in terms of the timeline required to liquidate our oil and gas resources.

It may have made sense in the beginning to give the resource away and subsidize its growth, in an effort to get a capital-intensive exercise on a solid economic footing, but at a time where balanced budgets elude us, debt is racking up at any amazing pace and our standard of living is eroding, we cannot afford to allow these conditions to persist so long into the future. It will spell our demise.

So take the time and visit this link related to the Chinese FIPA and share these concerns with them. At this point the Minister of Industry has stated uncertainty around the ratification of FIPA, therefore we need to continue to apply pressure in order to at the very least delay, if not entirely avoid, ratification of this treaty. Our future and our kids depend on it.

You can visit this link and copy and paste the letter there, as it is still relevant and they invite more comments to that final FIPA Environmental Assessment, despite the closing of the public window for submissions.

Comments on this report may be sent by email, mail or fax to:

Environmental Assessments of Trade Agreements
Trade Agreements and NAFTA Secretariat
Foreign Affairs and International Trade Canada
125 Sussex Drive, Ottawa, Ontario K1A 0G2
Fax: (613) 992-9392
E-mail: EAconsultationsEE@international.gc.ca

The Common Sense Canadian

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