Contributed by Robert Lyman © 2017
Robert Lyman is an Ottawa energy policy consultant and former public servant of 27 years; a diplomat for 10 years prior to that.
During my long career in the Canadian federal government, a common instruction to policy advisors and managers was that we should “speak truth to power”, that is, to advise Ministers of all the implications of proposed policies whether good or bad or whether or not they aligned with the political preferences of the decision maker. This was sound advice to officials in a democracy, but following it sometimes involved risks to one’s career prospects. I was reminded of this when I read the recent (September 9, 2017) report of Abacus Data Inc. about Canadians’ opinions about oil, energy, pipelines and climate change.
On a wide range of issues, an increasing number of Canadians are simply wrong. The reasons are not obvious. They may be misinformed or misled, or they may just never have taken the time to find out about energy issues beyond what they have read on social media. When I say “wrong”, I mean that the facts about what is now happening are different from their perceptions or that the probabilities about what will happen in future according to the most authoritative sources differ from their perceptions. In this article, I will try to “speak truth to power”, the power being the general public, who ultimately are the decision makers in our democracy.
Because of the complexity and number of issues, I cannot give each the attention it deserves. I will try to offer certain key facts, considerations or references to important documents, in the hope that people will consider the points and follow up on each, depending on their interest.
While Abacus posed several questions during their surveys, there were seven main issues on which a large portion of the views were, in my judgment, incorrect. I will deal with them in the order that Abacus did in its press release.
As a general comment, Abacus asked people to respond to two types of questions, one concerning what will happen and the other about what should happen in future. No one knows with certainty what will happen, but there are some authoritative sources of energy market analysis that are far more likely to come true than those that do not address these questions in a systematic way. The two sources I will use mainly here are the National Energy Board’s report entitled Canada’s Energy Future 2016: Energy Supply and Demand Projections to 2040, and the United States Energy Information Administration’s International Energy Outlook to 2040.
The NEB report can be found here:
The Energy Information Administration’s report can be found here:
The Gorilla in the Room – The Global Warming Hypothesis
It seems clear that many Canadians are influenced by those who believe the hypotheses that humans are the main cause of climatic changes and that this will result in catastrophe. This view is accepted with almost religious fervor by a whole generation of people based on Al Gore’s movies and the constant reinforcement this view receives from an uncritical media. For those who still have an open mind, and want to understand whether, indeed, “the science is settled”, I recommend that they read the recent testimony of Dr. Judith Curry, an eminent climatologist, before the U.S. Congress. It can be found here:
Even if they continue to believe the science and the model projections, people should understand and question what governments are proposing as a policy response. The United Nations claims that, to reduce the risks of global warming, the world’s people must stop using fossil fuels (oil, coal, and natural gas) as soon as possible, with a target of a 60% to 80% emissions reduction in the wealthier countries by 2050 and a 100% emissions reduction by 2100 for all countries. Fossil fuels constitute 85% of the energy used in the world today, and there simply are no scientifically proven and commercially viable alternatives for many of those uses. Accepting the global warming catastrophe thesis and the policies now proposed thus means not just adopting a few low-cost energy efficiency measures, but imposing extremely high taxes and intrusive regulations on people’s lives and believing that governments can manage, through central planning, to achieve an unprecedented revolution in the energy system – all in 33 years. In an address that I gave to the Friends of Science in May 2017, I explained why this is not even possible. I invite people to read it here:
The Abacus Survey versus Issues and Facts
Abacus Survey: Oil demand will fall significantly.
Issues and Facts:
- Oil demand in Canada is closely related to the growth in the needs of the population to transport people and goods. There is likely to be significant improvement in the fuel efficiency of light duty personal motor vehicles due to current regulations out to 2025, which will probably be sufficient to offset an increase in the number of these vehicles. However, oil use in transit vehicles and aviation for passenger transportation and in trucks, rail, and marine vessels for freight movement will continue to increase.
- The NEB projection is that, overall, Canadian transportation demand will grow from 2653 petajoules (PJ) in 2013 to 2858 PJ in 2040.
- Global oil demand is growing at the rate of over one million barrels per day per year due to increases in use in the less developed countries, and especially in Asia. The EIA projection is that global oil demand will grow from 90 million barrels per day in 2012 to 121 million barrels per day in 2040.
Abacus Survey: Oil demand should fall
Issues and Facts:
- This is a “values” opinion based, I can only assume, on people’s belief that the disadvantages of oil to people’s lives will outweigh the advantages.
- One might have received a different response if the question had been whether the person responding was willing to stop using all oil-fueled transportation now.
- Today, oil products meet over 98% of transportation needs. Electric vehicles constitute little more than 1% of total cars in Canada and in the world and they are more expensive and limited in range than the vehicles run on gasoline and diesel oil. There are no technologically available and commercially viable alternatives to oil in the trucking, rail, marine or aviation modes. The only way to curtail oil use is for governments to restrict people’s choices of how to move or transport goods.
- Current vehicles emit less than one per cent of the air contaminants that a 1970 model vehicle did. They are remarkably “clean”.
- Even if you believe that humans are causing catastrophic global warming, Canada accounts for only 1.6% of emissions in a world in which rapid emissions growth is occurring in the less developed countries and especially in Asia. Whether Canadians use more or less oil will have no effect on whether global emissions rise or on global temperatures.
Abacus Survey: There should be more solar and wind energy in the energy mix 20 to 30 years from now
Issues and Facts:
- To say which energy sources should be produced or which energy services should be demanded by consumers substitutes a moral judgement for the free choices that producers and consumers make in competitive markets. It means, in effect, that people think governments should decide which products and services are supplied and demanded, without regard for the preferences of the generation utilities or the electricity consumers.
- If solar and wind energy sources are the lowest cost and most reliable sources of electricity generation, there is no reason why they would not grow in use. If they are not, then they will only grow when governments substitute their judgements for what people and business would freely choose, as in fact has happened in all the countries where solar and wind energy have gained market share.
- Both solar and wind energy are today more expensive than traditional energy generation sources like coal, hydroelectricity or natural gas. The jurisdictions that have built a significant amount of solar and wind capacity like those in Germany, Denmark and Ontario have among the highest electricity rates in the world, with hundreds of thousands of people suffering from energy poverty. See: https://www.fes.de/de/index.php?eID=dumpFile&t=f&f=7772&token=146b5f8683f107dc36becf4aa5c6a1c703e8ef0b
- Solar and wind power are intermittent energy sources, meaning that they only produce electricity when the sun shines or the wind blows respectively. In contrast, the demand for electricity varies depending on the time of day and the season. Because renewable energy sources cannot be relied upon to provide electricity when it is needed, and electricity in bulk (i.e. large scale production) cannot be stored, utilities must build entire backup systems based usually on natural gas or coal to provide electricity supply when the renewables are not available. Consumers pay for both systems. Until the storage problem is solved (and it is nowhere close to being solved), solar and wind are too expensive and unreliable.
Abacus Survey: Should new pipeline capacity be added in Canada?
Issues and Facts:
- This question can be interpreted as either a normative (i.e. values-related) or analytical one.
- The values-related question is often cast in terms of global warming as discussed previously, although the linkages are very weak. Adding a major new oil pipeline system in Canada, like the proposed Energy East project that would cross the entire country, would not add even one one-thousandth to current global emissions, so logically it is irrelevant.
- I addressed many of the concerns that people might have about the likely effects of pipeline construction in a brief entitled, Moving Oil by Pipeline – Examining the Facts. Please read it here:
- The analytical question concerns what will be the market benefits if Canada builds more pipelines and what will be the costs, or disadvantages, if more pipeline capacity is not built. Oil and natural gas pipelines typically are multi-billion dollar energy infrastructure projects. In addition to providing the transportation capacity needed to move energy from where it is produced to where it is needed, pipelines have extremely large direct, indirect and induced economic effects of their own. During the construction stage, the main benefit is the income provided to the companies that supply and build pipelines and the materials needed for them, right across Canada, as well as the significant employment during the construction years. During the twenty-five or more years that a pipeline operates, it provides billions of dollars in revenues to the investors, the companies who supply it (and their employees) and to federal, provincial and local governments.
- Asking whether building a new pipeline is a good idea is like asking whether it would be a good idea to build a new port to allow more goods to be transported and traded.
- When there is not enough oil pipeline capacity, the production capacity that companies add has limited access to markets, so it sells at a discount in the markets that it does reach, thus reducing by hundreds of millions of dollars per year the revenues that come back to Canada. Producers and the refiners that need the oil find other ways to transport the oil, whether by railroad tank cars or barges, which is more expensive than pipelines and entails a higher risk of spills.
- The “bottom line” is that pipelines offer the cheapest, most reliable and safest way to move oil to market, and that stopping oil pipelines will only slow down oil development in one region, not stop it altogether.
Abacus Survey: Reducing emissions is better than adding pipelines
Issues and Facts:
- By phrasing the statement this way, Abacus offered a false choice. Greenhouse gas emissions, whether in Canada or the world, are growing inexorably because the world’s demand for energy is growing and fossil fuels remain the lowest cost and most accessible sources of energy supply. The EIA International Energy Outlook made the following projections to 2040.
- First, worldwide energy use will grow continuously over the next three decades, led by strong increases in non-OECD areas and especially in Asia. In the EIA reference case, consumption grows 48 per cent from 2012 to 2040.
- Fossil fuels will still account for almost 80 per cent of energy use in 2040.
- Use of petroleum and other liquid fuels will grow from 90 million barrels per day in 2012 to 121 million barrels per day in 2040, while natural gas use will grow from 129 trillion cubic feet in 2012 to 203 Tcf in 2040.
- Energy-related carbon dioxide emissions will grow from 32.3 GT tons in 2012 to 43.2 GT in 2040, a 34% increase.
- 91% of the emissions growth will take place outside the OECD.
- None of this depends on whether Canada builds more pipelines.
Abacus Survey: Do pipelines receive rigorous government oversight in Canada?
Issues and Facts:
- In the previously mentioned paper entitled Moving Oil by Pipeline – Examining the Facts, I described the elaborate system of pipeline regulation currently in place in Canada at both the federal and provincial levels. Again, I urge people to read it.
- Sadly, many environmentalist organizations in Canada have attempted to undermine the reputation and credibility of the National Energy Board, Canada’s federal regulator of oil pipelines. The NEB was established in the 1950’s following a major public controversy over a pipeline. The government of the day judged rightly that decisions about whether and where to build pipelines should not be treated as political footballs. Instead, they should be decided, in the first instance, by an independent, professional regulatory body operating at arms’ length from the partisan political process. The National Energy Board was thus established to ensure that all public interest considerations – economic, environmental, safety, financial, and engineering – were considered on the record through public hearings and detailed technical review by experts. It has served this function well.
- Many environmentalists have unjustly attacked the NEB because they want decisions on pipelines to be made on partisan grounds, and they think climate change considerations should take precedence over all other public policy considerations.
Abacus Survey: The pace of innovation in new forms of energy is quick, and Canada must be part of this new energy revolution, not fall behind because of a reliance on oil
Issues and Facts:
- It should be obvious to any reader that, by phrasing the statement this way, Abacus injected a biased expectation into it. That alone should cause people to discount the validity of the poll answers.
- This statement grossly over-simplifies two separate questions, and implies a causal relationship that does not exist between use of oil products and the pace at which new energy services enter the marketplace.
- Science and technology involves five different stages: research, development, demonstration, dissemination and commercialization. There is no way to predict when a scientific discovery will be made in the laboratory and how long it will take to proceed through each of the following stages. The rapid pace of change in the information technology area is often falsely assumed to apply to all other areas of technology; it does not.
- If one examines the history of the use of energy and the rate at which new energy technologies have been able to penetrate the market to the point at which they fulfill at least 15% of a society’s needs, the average duration has tended to be at least thirty years, and much longer to achieve broader dissemination. Part of this is due to the inertia involved in replacing existing energy-using infrastructure: cars and trucks last about 10 years, residential and commercial buildings 50 to 75 years, and much of modern transportation infrastructure like highways and bridges up to 100 years.
- The real question is not whether new technology will penetrate the marketplace, but rather whether the pace of transformation will be driven by government subsidies and regulations that attempt to favour some technologies over others, picking “winners and losers”, at immense financial costs.
- Governments historically have been terrible at centrally planning economies, as demonstrated by the failure of the former Soviet system. It is not clear why governments should be considered any better at picking the energy sources of the future.