Canada’s oil and gas industry provides Canada with declining royalty revenues, jobs

Earth scientist David Hughes argues that Canada cannot possibly meet its national GHG emissions targets while expanding exports in the oil and gas industry, building pipelines, and developing liquified natural gas in a new report, Canada’s Energy Sector: Status, evolution, revenue, employment, production forecasts, emissions and implications for emissions reduction, released on June 1.   Hughes documents the declining health and importance of the sector with economic statistics: “The energy sector’s contribution to Canada’s GDP, currently at 9 per cent, has declined over the past two decades, and government revenues from royalties and taxes have dropped precipitously. Despite record production levels, royalty revenue is down 45 per cent since 2000, and tax revenues from the oil and gas sector, which totalled over 14 per cent of all industry taxes as recently as 2009, declined to less than 4 per cent in 2018. Direct employment, which peaked at over 226,000 workers in 2014, was down by 53,000 in 2019 although production was at an all-time high due to efficiencies adopted by the industry.”

Combining statistics from the Petroleum Labour Market Information office with industry projections from the federal Canada Energy Regulator, Hughes concludes that energy jobs have peaked and previous levels of employment are unlikely to return.

“Jobs are often cited by industry proponents as a reason to support expansion of oil and gas production. Yet despite record production levels, jobs in the oil and gas sector are down from their peak in 2014 by 23 per cent …..Thanks to technological advances, the sector has become more efficient and is able to increase production using fewer workers….This jobs scenario is particularly true in the oil sands, where much of the production growth is expected. Oil sands production per employee is 70 per cent higher than it was in 2011 (production per employee has increased by 37 per cent in conventional oil and gas and by 50 per cent in the sector overall since 2011). In Canada’s overall employment picture, the oil and gas sector accounted for only 1 per cent of direct employment in 2019 (5.5 per cent in Alberta).”

At the same time, oil and gas production accounts for the largest portion of GHG emissions in Canada, at 26 per cent of the total – and Canada‘s GHG emissions have actually increased by 3.3 per cent since the Paris Agreement was signed in 2016 – the highest increase of any G7 country.  With such limited benefits and such serious negative consequences, Hughes argues against expansion of oil and gas exports – especially LNG in British Columbia and the TransMountain pipeline expansion, and Line 3.

Canada’s Energy Sector: Status, evolution, revenue, employment, production forecasts, emissions and implications for emissions reduction is summarized by the National Observer, here. Author David Hughes has written substantive reports previously, for example: A Clear Look at B.C. LNG (2015); Can Canada increase oil and gas production, build pipelines and meet its climate commitments? ( 2016); B.C’s Carbon Conundrum: Why LNG exports doom emissions-reduction targets and compromise Canada’s long-term energy security (2020); and Reassessment of Need for the Trans Mountain Pipeline Expansion: Project Production forecasts, economics and environmental considerations (2020).

The full report was published by the Corporate Mapping Project, a project of the Canadian Centre for Policy Alternatives in British Columbia and the Parkland Institute in Alberta. The report was co-published with Stand.earth, West Coast Environmental Law, and 350.org.

A study of Canadian manufacturing plants demonstrates the economic damage of extreme hot or cold weather

Researchers at the Sustainable Prosperity Institute at the University of Ottawa released a Working Paper on November 24,  forecasting how manufacturing productivity will be affected by weather extremes. Based on longitudinal data from 53,000 manufacturing plants across Canada, the authors find that the productivity of the plants is reduced in extreme weather – both hot or cold. They highlight the importance of labour input as a main contributor to the productivity loss.

The authors’ summary appears in a blog, Estimating the impact of climate change on the Canadian economy,  which explains that the typical manufacturing plant in Canada currently experiences 4 extreme cold days and 14 extreme hot days per year, but under a scenario of high GHG emissions by the end of the century, that typical plant would experience one extreme cold day, but over 80 extreme hot days each year. They state: “Using medium and high greenhouse gas scenarios for 2050s and 2080s, we find that the annual losses of manufacturing output due to extreme temperature would go from 2.2% today to 2.8-3.5% in mid-century and to 3.5-7.2% in end of century.”  The authors claim to be the first to estimate the effect of extreme temperatures on establishment performance in Canada, and the first to estimate the potential economic impact of climate change in a cold environment. The full results and discussion appear in a 50-page Working Paper, “Manufacturing Output and Extreme Temperature: Evidence from Canada” by economists  Philippe Kabore and Nicholas Rivers.

The Lancet measures the impact of climate change on public health, productivity and more

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The Lancet Countdown: Tracking Progress on Health and Climate Change is a global, interdisciplinary research collaboration which has published an annual review since 2016.   The Lancet Countdown’s 2017 Report  tracks 40 indicators across five areas, and concludes that the human symptoms of climate change are unequivocal and potentially irreversible. Of particular interest, Indicator 1.3 states that  “global physical labour capacity in populations exposed to temperature change has decreased by around 5.3% between 2000 and 2016.”  Other alarming statistics:  between 2000 and 2016, the number of vulnerable people exposed to heatwave events has increased by around 125 million; without further action against climate change, over 1 billion people may be at risk of become climate change migrants by the end of the century.  The full report is available here (registration required, free).

In addition to the global report,  the Lancet Countdown produces country-specific reports;  the Briefing for Canadian Policy-makers was  written in partnership with the Canadian Public Health Association.  It  makes several  recommendations for Canadian action, including • Phase out coal-powered electricity in Canada by 2030 or sooner, with a minimum of two thirds of the power replaced by non-emitting sources, and any gap made up by lowest-emitting natural gas technology. Track and cost the health benefits of the transition in Canada and globally; • Develop a National Active Transport Strategy for Canada to coordinate improvements to walking, cycling and transit environments. This should receive priority funding, with healthcare cost savings calculated in order to demonstrate the cost offset of the investments. • Enhance support for telecommuting and telehealth options. Within health systems, gather and analyze data on kilometers, greenhouse gas emissions, air pollution and costs saved by telehealth in order to help drive systems change. • Increase funding for research into the local health impacts of resource extraction, with a focus on impacts on Indigenous populations.• Integrate Health Impact Assessments as a core component of the federal Environmental Assessment process.Lancet_twitter_card_5

Pollution cost Canada $2 billion in Lost Labour Output alone

The June 2017 report, Costs of Pollution in Canada: Measuring the impacts on families, businesses and governments reviews and synthesizes existing studies to produce the most comprehensive assessment of pollution and its costs  in Canada to date. Some quick facts: the cost of climate change-related heat waves in Canada is estimated to have been $1.6 billion in 2015; Smog alone cost Canadians $36 billion in 2015. But the report also provides detailed estimates, organized in three categories: 1.  Direct Welfare Costs: (Harm to health and well-being such as  lower enjoyment of life, sickness and premature death); 2.  Direct Income Costs – (Direct out of pocket expenses for families (e.g. medications for asthma), businesses (e.g. increased maintenance costs for buildings) and governments (remediation of polluted sites); and 3. Wealth impacts.

Direct Welfare Costs of pollution, the most studied and understood,  are estimated as at least $39 billion in 2015, or about $4,300 for a family of four.  The Direct Income Costs   that could be measured amounted to $3.3 billion in 2015, but the study cautions that this many important costs could not be measured, and full impacts on income were likely in the tens of billions of dollars.  In this category, the study estimates  Lost Labour Outputs, using a metric derived from the 2016  OECD study,  The  Economic Consequences of Outdoor Air Pollution.  The OECD estimates outdoor air pollution to cost 0.1% of national GDP, which, when applied to Canada’s  2015 GDP of approximately  $1,986 billion, implies a costs of about $2 billion in lost labour output alone. And finally, Wealth impacts, or costs on value of assets , are said to be the least understood of pollution costs, about which, “We simply do not know how much pollution costs us in terms of lost wealth”.

Costs of Pollution in Canada: Measuring the impacts on families, businesses and governments was prepared by the International Institute for Sustainable Development (IISD), with funding from the Ivey Foundation; the full report is available in English- only. Summaries are in English  and French.Short  videos were derived in cooperation with the Conference Board of Canada to focus on key topics:  e.g. extreme weather, contaminated sites, and smog .

Productivity Loss due to Workplace Heat Stress: an Issue for North America, too

In an article appearing in Our World, a publication of the United Nations University, author Tord Kjellstrom argues that economists need to consider the impact of the physiological limits of people exposed to ambient heat when they work.

His article reviews the literature to date on this issue, and contends that climate change is resulting in huge financial losses because of reduced labour productivity: estimated in 2012 as approximately US$2 trillion globally by 2030. High temperatures are already having an impact in tropical and sub-tropical countries, as well as the southern U.S. and Europe, and Australia.

How relevant is this to North America? In 2014, as part of the Risky Business project, the American Climate Prospectus included a chapter on labour productivity, which projected that heat-related losses of labour productivity in 2050 and 2090 in the United States would be the largest actual economic cost of climate change – amounting to approximately 0.2 percent of GDP in 2050. And in October 2014, an article in the Journal of the American Medical Association found that “By 2050, many US cities may experience more frequent extreme heat days. For example, New York and Milwaukee may have 3 times their current average number of days hotter than 32°C (90°F)…The adverse health aspects related to climate change may include heat-related disorders, such as heat stress and economic consequences of reduced work capacity”. The article continues to list many other adverse health outcomes and the implications for physicians. Wor

LINKS:

“Productivity Losses Ignored in Economic Analysis of Climate Change” in Our World (September 23, 2014) at: http://ourworld.unu.edu/en/productivity-losses-ignored-in-economic-analysis-of-climate-change

American Climate Prospectus: Economic Risks in the United States (June, updated August 2014) at: http://rhg.com/reports/climate-prospectus

“Climate Change Challenges and Opportunities for Global Health” in the Journal of the American Medical Association (JAMA) at: http://jama.jamanetwork.com/article.aspx?articleid=1909928

For more, see the Hothaps website at: http://www.climatechip.org/. Hothaps = High Occupational Temperature: Health and Productivity Suppression, an international research program which studies “the effects of heat exposure on working people (including gender aspects and effects on pregnant women and on children), to quantify climate change-related increases in workplace heat exposures and the impact this will have on human health and productivity”.