Time to diversify our economic structure

September 27, 2010
by Will Kimber

The shift to renewable energy and low-carbon technology will take decades, according to a parade of energy experts, including CEOs and presidents of many of the world’s top energy-producing companies.

The experts, who met at the recent 2010 World Energy Congress held recently in Montreal, also said that the world will remain addicted to the current mix of fossil fuels, including coal, oil and gas, for the “foreseeable future,” that is, 2050 or later. In fact, they said, the world’s energy demand is set to double in the coming decades because some two billion people worldwide currently have no or very limited access to electricity and because millions more are set to enjoy rising incomes in developing nations such as China.
However, the general view at the World Energy Congress was somewhat different: there was a belief that renewable and alternate energy technologies will enjoy a greater proportion of the global energy mix in the future.

As a keynote presentation by Lester Brown, director of the Earth Policy Institute, made clear, the consequences of continuing on the current approach, Plan A or business as usual, to energy production and consumption are dire. Brown indicated there will have to an 80% cut in greenhouse gas emissions by 2020, not 2050 as envisioned by the energy company experts, to avert catastrophic climate events such as the complete melting of the Greenland ice sheet and a rise of seven-metres in the sea-level.

Brown further estimated the level of investment and mobilization needed to achieve such a switch in the global energy system is without precedent, comparing it to the cost of both World Wars. By some estimates $25 trillion in investment will be needed to meet the demanded energy growth to 2020 alone. These are staggering numbers but no more so than the potential consequences of failure in terms of the planet’s ability to support us, and our collective security and prosperity.

Major fossil fuel exporting regions like western Canada face a complex situation. On the one hand, rising energy demands over the next decade will continue to drive higher world oil demand and prices. On the other hand, reputation and regulatory headwinds in our major export markets —their strength and timing hard to predict—are likely to blow stronger.

So what’s the best strategy for western Canada, with its heavy reliance on fossil fuel exports and energy? The most obvious short-term strategy is to remove the brakes on resource development so these fuels can be produced and sold as quickly as possible. In other words, “get in while the getting’s good,” producing and selling as much as we can, as quickly as possible, to as many different markets as want to buy it. But such a strategy is also likely to hinder our transition, both in the time it will take and the cost in achieving it, to becoming a clean-energy superpower in the future.

We could also make public policy choices, at the local, provincial and federal levels, that provide incentives for business to begin making the transition to achieving the outcomes we want. The key is to start making those policy choices now.

If Canada is to sustain its prosperity it needs to begin to identify opportunities to diversify its economic structure and better leverage its huge endowments of renewable and non-fossil energy resources. In the meantime, if we achieve greater energy efficiency and less waste in our transportation system, the more petroleum we can export for a profit.

Will Kimber is the vice-president of research with the Canada West Foundation, which explores public policy issues related to Canada’s west. Distributed through Troy media. E-mail