A Just Plan to wind down B.C.’s Fossil fuel industry by 2050

Winding Down_report cover_CCPA-BC_1  Winding Down BC’s Fossil Fuel Industries: Planning for climate justice in a zero-carbon economy   was released on March 4  by the B.C. office of the Canadian Centre for Policy Alternatives, as part of the Corporate Mapping Project.  Authors Marc Lee and Seth Klein begin with an overview of the province’s  fossil fuel industries (including locations, production and reserves)  noting that all fossils produce one-quarter of B.C.’s GHG emissions, (most of which is from Liquified Natural Gas (LNG)). Calling the government’s current strategy of promoting LNG production through clean electricity “untenable”, the report proposes a four-point phase-out plan for all fossils over the next 20 to 30 years, including: 1. Establish carbon budgets and fossil fuel production limits; 2. Invest in the domestic transition from fossil fuels and develop a green industrial strategy; 3. Ensure a just transition for workers and communities; 4. Reform the royalty regime for fossil fuel extraction.

To design a Just Transition plan, the authors cite as “helpful” the examples of the Alberta coal phase-out and the 2018 coal phase-out agreement in Spain, as well as the existing Columbia Basin Trust example of community transition.  In the long time frame of 20 to 30 years, they see the retirement of many existing workers, so that attrition will accomplish much of the job shedding. Although they say that Just-transition strategies “must include efforts to maintain employment in areas where jobs are likely to be lost” – implying reinvestment in resource-based communities – they also recognize the built-in gender bias of such a strategy and advocate investment in  public sector jobs – such as child care and seniors services.

To secure Just Transition funding

The report states:

“ ….BC should aim to invest 2 per cent of its GDP per year … or about $6 billion per year in 2019, an amount that would grow in line with the provincial economy. Assuring such levels of investment should give comfort to workers currently employed in the fossil fuel industry. Revenues from higher carbon taxes and royalty reforms (described below) would be an ideal source of funds, and/or governments could borrow (through green bonds) to undertake high levels of capital spending on decarbonization initiatives. In contrast, the 2019 BC Budget lists total operating and capital expenses for CleanBC over the next three years at, cumulatively, only $679 million, less than one-tenth of a percent of BC’s GDP.”

Managing Income loss for transitioned workers:

The authors state: “On average, fossil fuel workers make 28 per cent more than workers in the rest of the economy, although this includes gasoline station workers who earn  comparably low wages. Replacing more than $5 billion of income over the course of the wind-down period is therefore a central challenge”…. By assuming a 20 to 30 year time frame, they calculate a job substitution of 500 to 700 jobs per year, and state: “ There is no reason to believe that such a transition should be a problem if the right policy supports are implemented and a proactive green investment strategy is pursued to create alternative employment options.”  Earlier in the report, the authors estimate that, assuming the province invests 2 per cent of its GDP annually (about $6 billion in 2019) in green job creation, at least 42,000 direct and indirect jobs would be created  in a range of opportunities.

The CCPA offers an 8-page Executive Summary of the report, and an even briefer version , written by co-author Marc Lee, was published in the Vancouver Sun on March 8.

Phase-out, not expansion of fossil fuels – some recommendations for Canada

Oil, Gas and the Climate: An Analysis of Oil and Gas Industry Plans for Expansion and Compatibility with Global Emission Limits was published by the Global Gas and OilGas-ReportCoverOil Network (GGON) in December 2019.  The report analyzes the expansion plans of the oil and gas industry in relation to the global Paris climate goal of a 1.5C warming limit, and concludes that “if the world uses all the oil and gas from the fields and mines already in production, it will push us beyond 1.5°C of warming. This is true even if global coal use were phased out overnight, and if cement emissions were drastically reduced.” This report is the latest to sound this alarm: for example, Oil Change International, part of the GGON , began to publish such warnings in 2016 with The Sky’s Limit: Why the Paris Climate Goals Require a Managed Decline of Fossil Fuel Production , followed by Drilling towards Disaster in 2019.

Oil, Gas and the Climate states that from now until 2024, oil and gas companies are set to invest a further $1.4 trillion U.S.  in new oil and gas extraction projects – with 85% of that expansion in North America, and with the impact of the U.S. alone putting a 2 degree warming target out of reach.  Further, it states that over 90% of U.S. expansion would be shale production dependent on fracking.  It highlights that the Permian Basin (west Texas and southeastern New Mexico) would account for 39% of new U.S. oil and gas production by 2050. “It holds the greatest risk for new oil and gas development in the United States and in the world.”

Projected Canadian investment is a distant second to that of the U.S., but even so, the report states that “new oil and gas development in Canada between now and 2050 could unlock an additional 25 GtCO2 , more than doubling cumulative emissions from the sector.” The report highlights the approved Exxon Aspen Oil Sands project and the pending Teck Frontier Mine, but warns  “…Shale gas extraction, particularly the Montney Shale Basin in British Columbia, is a major focus of the industry…From 2020 to 2050, new gas projects could be responsible for as much CO2 as new oil projects.” (For a recent overview of the extent of Canada’s LNG infrastructure, see The New Gas Boom, published by Global Energy Monitor in June 2019).

“A better future is possible”, and here’s how to get there:

Despite the grim projections, Oil, Gas and the Climate  argues that “a better future is possible” and calls for “the launch of a well-planned phase-out of oil and gas production that addresses the needs of workers and communities impacted by fossil fuel developments. ” The report recognizes the impact of recent civil society actions such as Fridays for Future and Extinction Rebellion, and calls on governments and investors to catch up with such leadership.

Based on the findings of the report, Environmental Defence makes the following recommendations to support Canada’s phase-out:

Clear new federal rules under our environmental assessment law that review possible expansions of oil and gas projects against our commitment to climate goals. If we cannot credibly demonstrate how investing in a fossil fuel project is consistent with a 1.5C warmed world then the project should not be permitted to go ahead.

Institutional investors should apply a similar screen that will guide their decisions regarding whether to provide financing for new projects.

The federal government must invest in research and development of new energy technologies like geothermal electricity that have huge employment and energy production opportunities in places like Alberta and northern British Columbia. At a minimum, the government should make available an amount equivalent to the billions in subsidies that have been given to the fossil fuel industry through tax breaks or direct investment in pipeline infrastructure (e.g. Trans-Mountain) – subsidies that should be phased out rapidly. Success will create skills-linked jobs and massive supply of electrical energy for export to a North America that must replace the energy of fossil fuels.

Domestic demand for fossil fuels must be rapidly driven down through improved efficiency (e.g. buildings, appliances, manufacturing), electrifying transportation and home heating and increased renewables generation and storage.

The Oil, Gas and the Climate report is a project of the Global Gas and Oil Network , supported by Oil Change International; 350.org; Center for Biological Diversity; Center for International Environmental Law; CAN-Rac Canada; Earthworks; Environmental Defence Canada; Fundacin Ambiente y Recursos Naturales:FARN; Global Witness; Greenpeace; Friends of the Earth Netherlands (Milieudefensie); Naturvernforbundet; Observatorio Petrolero Sur; Overseas Development Institute; Platform; Sierra Club; Stand.Earth.

European Investment Bank stops fossil funding; Bank of Canada acknowledges the dangers of stranded assets

european investment bank energy_lending_policy_enThe long-awaited decision came on November 13, when the European Investment Bank (EIB) issued a press release announcing that “ We will stop financing fossil fuels and we will launch the most ambitious climate investment strategy of any public financial institution anywhere.”  Also, “…..The EIB will work closely with the European Commission to support investment by a Just Transition Fund. The EIB will be able to finance up to 75% of the eligible project cost for new energy investment in these countries. These projects will also benefit from both advisory and financial support from the EIB.”  The Guardian summarizes the policy here ; details are in the full document, EIB Energy Lending Policy: Supporting the energy transformation.

The decision ends a long and contentious review process which received more than 149 written submissions and petitions signed by more than 30,000 people.  National members of the EU negotiated and compromised – the German government had been expected to abstain from the vote but ended by supporting the measure.  A press release from WWF-Europe  is generally supportive, stating “All public and private banks must urgently follow suit” – while pointing out that the decision postpones the end of financing for gas projects until 2021, and allows for further financing for any gas infrastructure that could potentially transport so-called “green gas”. A summary in Clean Energy Wire quotes Claudia Kemfert, climate economist at the German Institute for Economic Research, who calls the EIB decision “a game changer”, and says, “Even if there’s still a backdoor for fossil gas included, this is an important and necessary step in the right direction.”

Bank of Canada acknowledges climate change risks to the economy

On November 19, the Bank of Canada published its most complete statement to date about the transitions and risks which climate change will bring, in Researching the Economic Effects of Climate Change , a report prepared by Miguel Molico, senior research director at the bank’s Financial Stability Department.  On November 21, the Governor of the Bank of Canada followed up on this by raising the issue of climate change and the risk of stranded assets during an address to the Ontario Securities Commission .  The National Observer summarizes the development in “Bank of Canada warns of stranded assets and an abrupt transition to clean economy” (Nov. 23).

Also in Canada, on November 19, the Institute for Sustainable Finance was launched Housed at the Smith School of Business at Queen’s University, Kingston Ontario : “ The Institute for Sustainable Finance (ISF) is the first-ever cross-cutting and collaborative hub in Canada that fuses academia, the private sector, and government with the singular focus of increasing Canada’s sustainable finance capacity.” A more formal statement comes in the Institute’s launch report:  Green Finance: New Directions in Sustainable Finance Research & Policy  which states: “the Institute will span a continuum of expertise from across varying disciplines, including finance, economics, environmental studies, political science and others, in order to foster innovative research, education, external collaborations and partnerships. The Institute’s mandate is threefold:

  •  Generate innovative and relevant research on sustainable finance and effectively communicate this research to all pertinent stakeholders.
  • Serve as a platform for collaboration between government, academia and industry.
  • Provide educational opportunities and develop capacity in the field of sustainable finance.”

The Green Finance report summarizes the discussions by financial experts at a conference by the same name, held on June 14-15, 2019, following the release of the Report of the government’s Expert Panel on Sustainable Finance – Mobilizing Finance for Sustainable Growth.  To help readers who are not financial experts,  the Institute website offers useful “primers” to explain some fundamental concepts in sustainable finance, including  Climate-Related Financial Disclosures, Divestment, and Transition Bonds. Not to be confused with Just Transition funding, the primer explains that “Transition Bonds” are corporate financing tools, and the companies who issue them must use the proceeds to fund a business transition towards a reduced environmental impact or reduction in carbon emissions. ( The example given is that a coal-mining company could issue a  transition bond to finance efforts to capture and store carbon.)

Institute for sustainable financeAs one of its first actions, the ISF established the Canadian Sustainable Finance Network (CSFN)  an independent formal research and educational network for academia, industry and government to bring together a talented network of university faculty members and relevant members from industry, government and civil society.  A list of members, here , includes multiple faculty from twelve Canadian universities, one from Yale in the U.S., and other individual academics from universities which are not institutional members (including UBC, HEC Montreal, and Memorial University).

 

Will the fossil fuel industry hijack energy policy in Canada’s election?

As the Canadian federal election campaign counts down to October 21, The Narwhal’s Explainer from September remains one of the most readable and interesting overviews of the parties’ energy and environmental platforms;  the survey responses from a consolidated questionnaire from the major environmental advocacy groups remains the most complete.  Climate activism has been a backdrop to the campaign: according to Fridays for Future Canada, over one million Canadians in 245 communities participated in climate strikes between September 20 to September 27 (a summary from Energy Mix gives more details).  On October 7, Extinction Rebellion began their demonstrations, blockading  bridges in Vancouver, Victoria, Toronto, Edmonton and  Halifax –  and according to the Vancouver  Star, pledging to escalate actions.

New publications regarding the fossil fuel industry:

Canada’s relationship with its oil and gas industry was the subject of a country profile of Canada published by Carbon Brief on October 8, providing the basic facts and figures.  The Narwhal published an Opinion Piece highlighting  the issue of fossil fuel subsidies:  “Canada’s fossil fuel subsidies amount to $1,650 per Canadian. It’s got to stop.” The article is based on a May 2019 report from the International Monetary Fund  which estimated Canada’s fossil fuel subsidies at close to $60 billion in 2015, despite the government’s G20 commitments to phase out “inefficient” fossil fuel subsidies. A related report by Environmental Defence and the International Institute for Sustainable Development in February, Doubling Down with Taxpayer Dollars , examined $2Billion in fossil fuel subsidies in Alberta.

The Canadian Association of Petroleum Producers (CAPP)  Energy Platform – essentially  a “wish list” from the fossil fuel industry – calls for expanded production for oil and gas and Liquefied Natural Gas.  In report released on October 7, Environmental Defence estimates that the CAPP proposals would increase  oil and gas emissions by 60% from 2017 to 2030.  The report,  The Single Biggest Barrier to Climate Action in Canada – the Oil and Gas Lobby, documents the two types of barriers created by the oil and gas lobby: 1. the actual carbon emissions of the sector, which are responsible for 27% of Canada’s greenhouse gas emissions and for 80 % of the increase in Canada’s overall emissions; and 2. Industry campaigns and lobbying to block or weaken climate change policies.

env diefence re Oil-Lobbyin electionRegarding the economic benefits which the oil and gas industry claims, Environmental Defence states:  “… job creation in oil and gas is far from guaranteed even as the industry expands and reaps significant corporate profits. Despite growing production since 2014, almost 30,000 jobs (10 per cent of the workforce) have been axed in the oil patch in the following four years, with another 12,000 expected to be cut in 2019. That’s because oil and gas companies are moving increasingly towards automation, with the stated goal to “de-man” the industry. Meanwhile, the CEOs of companies such as Suncor, Encana, TransCanada, and CNRL rake in salaries north of $10 million per year.”

The report concludes: “ Canada is bigger than oil. The opportunities that are available to Canadian businesses, citizens, and governments get shortchanged when one industry is able to hijack public policy on energy development and environmental protection.”  Or, as Richard Heede wrote more bluntly in a new series in The Guardian called  The Polluters: “It’s time to rein in the fossil fuel giants before their greed chokes the planet” . Heede’s Opinion article is based on the latest research about the global fossil fuel industry by the Climate Accountability Institute.  The research found that “chiefly from the combustion of their products, the top 20 companies have collectively produced 480bn tonnes of carbon dioxide and methane since 1965 – 35% of all fossil fuel emissions worldwide in that time.”  The press release names the top 20 polluters, led by Saudi Aramco, Chevron, ExxonMobil, GazProm, and BP. All research and data is here .

With progressive policies, Canada’s clean energy sector will provide over 500,000 jobs by 2030

Two new economic studies project the potential for growth in the clean energy sector to 2030 in  Canada and in Nova Scotia.

fast laneOn October 3, Vancouver-based Clean Energy Canada announced  its new report, The Fast Lane , which predicts that “ Canada’s clean energy sector will employ 559,400 Canadians by 2030—in jobs like insulating homes, manufacturing electric buses, or maintaining wind farms. And while 50,000 jobs are likely to be lost in fossil fuels over the next decade, just over 160,000 will be created in clean energy—a net increase of 110,000 new energy jobs in Canada.”  That translates into a job growth rate of 3.4% a year for clean energy from 2020, compared to an overall job growth rate of 0.9% for Canada as a whole and a decline of 0.5% a year for the fossil fuel sector.

missing the bigger pictureNavius Research conducted the economic modelling underlying The Fast Lane, as well as a May 2019 Clean Energy Canada report, Missing the Bigger Picture  , which reports on clean energy investment and jobs from 2010 to 2017.  The more detailed economic modelling reports by Navius are available as  Quantifying Canada’s Clean Energy Economy: A forecast of clean energy investment, value added and jobs  , and Quantifying Canada’s Clean Energy Economy: An assessment of clean energy investment, value added and jobs (May).

The message for policy-makers is made clear in the introduction to The Fast Lane by Merran Smith, Executive Director of Clean Energy Canada: “The sector’s projected growth is modelled on policy measures either in place or announced in early 2019 at both federal and provincial levels. If climate measures are eliminated—as we’ve recently seen in Alberta and Ontario—our emissions will go up and Canadians working in clean energy could lose jobs.”

An article in The Energy Mix summarizes  The Fast Lane . It quotes Lliam Hildebrand, Executive Director of Iron and Earth , a worker-led non-profit which promotes upskilling and retraining for fossil fuel workers:  “It’s really important for people to know that most fossil fuel industry workers are really proud of their trades skills and would be excited—and are excited—about the opportunity to apply those skills to building a sustainable energy future …. But they need support in making that transition.”

A similar message comes through in “After oil and gas: Meet Alberta workers making the switch to solar”  , an article in The Narwhal which profiles three workers who have transitioned from jobs in the fossil fuel industry. The article also summarizes the policy environment in Alberta, where according to Statistics Canada, roughly 1 in every 16 workers in Alberta is employed in the category described as “forestry, fishing, mining, quarrying, oil and gas.” The Narwhal quotes  Rod Wood, national representative from Unifor, who states that the global energy transition “is going to happen in spite of Alberta…You’re either part of the conversation or you’re lunch. It’s just going to steamroll over you.” And  Mark Rowlinson of the United Steelworkers Union and BlueGreen Alliance Canada states: “ The market tends to move with its own feet. If the market sees that the future of the fossil fuel industry is not looking great, it will move quickly… And it will move without a plan. That means there will be wreckage left behind it, and that’s what we need to try to avoid.”

Clean economy policies could bring 180,000 jobs to Nova Scotia by 2030:

Nova Scotia’s Ecology Action Centre submitted what it calls a “Green Jobs Report” to the province’s consultation on its proposed Environmental Goals and Sustainable Prosperity Act, just ended on September 27.  EAC proposed six policy choices, including supplying 90% of the province’s electricity from renewables by 2030, with a summary  here.  A detailed report, Nova Scotia Environmental Goals and Sustainable Prosperity Act: Economic Costs and Benefits for Proposed Goals  was prepared by economic consultants Gardner Pinfold and estimates the benefits of each proposal,  with the conclusion that the proposed policies could create over 15,000 green jobs per year in Nova Scotia, for a total of just less than 180,000 job-years between now and 2030.