For six years now Prime Minister Stephen Harper has been referring to Canada as “an emerging energy superpower.” It is a very ambitious goal that comes with significant geopolitical clout, the likes of which this country has not enjoyed in decades, if ever. And it will not be achieved without considerable public policy action, especially from the federal government
While the idea of a “national energy strategy” has been rejected by the Harper government, this government has, nonetheless, taken two steps over the past year to facilitate achieving its energy superpower objective.
The first step has been to open the door to more foreign investment into the oil and gas sector so that this capital-intensive resource can be developed. This was symbolized by agreeing to a Foreign Investment Protection Agreement with oil-thirsty China. Enter the Chinese National Offshore Oil Company (CNOOC), which promptly walked right through that door with a takeover bid for Nexen. If this transaction is approved by the feds, we can expect much more investment from China in Canada’s oil and gas sector in future
Ottawa’s second step has been to take an unambiguously supportive position on the building of pipelines to get Canada’s oil and gas into global markets. Earlier this year, Mr. Harper said: “Our government is committed to ensuring that Canada has the infrastructure necessary to move our energy resources to those diversified markets.”
These are the first two steps of the government’s energy superpower plan: attracting capital investment into the oil and gas sector from abroad and building pipelines to deliver product to market.
Both are important but turn out to be rather academic because the third step – ensuring we have the skilled labour pool to execute on these projects – has yet to be taken.
Put bluntly, we simply have nowhere near the skilled trades labour force to satisfy even today’s demands, let alone to fulfill our lofty aspiration to become an energy superpower.
The Construction Sector Council estimates a skilled trades deficit of nearly 160,000 people over the next seven years (which, according to the Canadian Energy Research Institute, is still five years before projected peak oil sands capital investment). Labour force growth is slowing to a crawl, as the country ages, while demand for skilled labour is skyrocketing. This is particularly true in the energy sector (including electricity generation and distribution) where a capital investment spree is under way, the likes of which has not been seen since the 1950s.
It is naive to think Canada can become an energy superpower given the labour market constraints we face and lack of public policy action to address this.
So what might a labour market fix look like?
First, Ottawa should play a greater role in co-ordinating the efforts of provincial governments, industry and educational institutions. It should place a particular focus on apprenticeship training needs. According to Statistics Canada, the graduation rate from skilled trades apprentice programs has been stagnant since the early 1990s, when skilled trades demand was vastly lower than it is today. Apprenticeship systems need to be reformed to meet today’s demands. Ottawa can play a direct role in this through tax incentives to encourage employers to hire apprentices and by doubling the Apprenticeship Incentive Grant. The federal government could also consider providing assistance to employers who train and certify the work force of the future.
Second, the federal government should hold provinces more accountable for the billions of dollars transferred in Labour Market Development Agreements to ensure we get the outcomes industry needs.
Canadians deserve value for money in Labour Market Development Agreements.
Third, it is time to assist Canada’s regional work forces to get to where the work is. A tax credit or an Employment Insurance grant that covers travel to seek employment will improve labour market efficiency. The existing provision in the Income Tax Act that offsets costs of permanent relocations does not apply – this would be to assist shorter-term labour mobility as is required in construction.
Fourth, skilled trades workers from the United States, most of whom are already trained to our standards, should be granted special status to enable them to work on large energy projects in Canada.
The idea of becoming an “energy superpower” is bold and ambitious, characteristics not normally associated with Canadian governments. But let us be clear: You do not become a superpower in anything – in military prowess, in economic might, even in Olympic achievement – without significant public policy action. The federal government seems to realize this, and has taken two important steps by attracting investment, and delivering product to market. But all of it – all of it – hinges on whether or not Canada’s labour market is prepared. On this, the federal government can and must show leadership.
Two steps are good; it is time to take the third.
Month: December 2012
The carbon conversation we’re ready to have
Last Friday, I attended the Economic Club of Canada’s ‘first annual’ Energy Summit – a gathering of government and industry leaders for an all-day session at Calgary’s swanky Petroleum Club.
(That’s 2 layers of club-hood, for those counting.)
The purpose of the event was to have an insightful, forward-looking discussion about the state of Canada’s energy resources, with a particular focus on implications for Canada–U.S. relations (read: pipelines). Approximately 200 industry leaders and observers gathered to hear what government officials – MPs, Ministers, MLAs, regulators and even Ambassadors – had to say about the future of Canadian energy.
Throughout the day, some universal truths coalesced:
- Canada and the United States are in this (whatever this is) together;
- North America will be energy independent by… sometime in the future;
- Growth in the oil sands can, should and will continue;
- Pipelines = good; and
- ‘Extreme environmentalists’ = bad.
Not entirely breaking news for those keeping even a cursory eye on our energy debate. I’m reasonably sure my mom could have rhymed each of those off over breakfast.
But what was interesting – and ultimately very sad and disappointing – was the carbon conversation that bubbled beneath the surface of each panel, flaring every so often only to be promptly extinguished by the artful dodge of government talking points.
We live, rather unfortunately, in an era of Canadian politics where there are a multitude of non-traditional ‘third rails’ – political no-fly zones that are non-starters for policy discussions. In some cases this can be for the best (e.g. no one is well served by reopening the abortion debate), but in others it is very much for the worst: nowhere is this problem more pronounced than with the carbon debate.
So thoroughly did the idea of a carbon price get eviscerated in 2006 that it has been portrayed as scorched earth ever since – a dead policy from a dead party leading to a dead end. Dead.
But it’s not, really. About half-way through the summit, two things clicked for me:
- Industry is ready to talk about carbon pricing – and has been for some time; and
- The federal government is not – and that’s a problem.
As a think tank, we simultaneously try and do two things: first, we advocate certain policy positions to decision-makers operating in the here and now, and second, we attempt to think beyond governments entirely. If I were to be a bit folksier about it: we try and skate to where the puck is going.
Harnessing market forces to reduce emissions is where we are headed. It is the inevitable solution to a long-standing, and increasingly pressing environmental catastrophe. The federal government may anecdotally rely on the perception that big business is against a pricing carbon, but this is simply not true. Many of Canada’s biggest energy producers already operate with an internal “shadow” price on carbon. Read that sentence again.
And what’s more, many are actively advocating one be put in place. The Canadian Chamber of Commerce’s Energy and Environment Committee has a standing policy ask on a market-base carbon pricing scheme. And, as linked above, the Canadian Council of Chief Executives has been calling for a ‘unified national policy’ on carbon pricing since 2009.
This does not sound like the cracked and barren wasteland of a dead debate.
Ultimately it boils down to this: last Friday, a series of government officials were placed on stage in front of a room full of oil and gas industry leaders, and each and every one of them told the crowd what they thought they wanted to hear: that this government will not move on a carbon price – or any market distortion – that hinders the growth of the oil sands.
It may very well come to pass that a carbon price is not the most efficient means by which Canada should reduce its GHG emissions. While generally acknowledged as one of the most economically efficient methods for doing so, we know other jurisdictions (see: Australia, British Columbia, pockets of the Eurozone, etc.) have experienced frustrating routes to implementation.
But these experiences should not preclude talking about a carbon price. We need to talk about it, consider the options and think about what will work best for Canada. It’s why we are convening a panel entitled ‘How to sell carbon pricing to Canadians’ and it’s why we believe closed doors have no place in a policy dialogue about a concern as grave as the very future of our planet.
A report from PwC UK released this week is pretty forthright in suggesting that, globally, we will not meet our emissions reduction targets and thus that we will be unable to stick to a 2 degree target for warming. The question is where we go from here.
During the last session of the day at the Economic Club meeting, Conservative MP and Parliamentary Secretary for the Environment Michelle Rempell said she hoped the environmental debate would become less political – that the terms ‘Big Oil’ and ‘Environmentalist’ would cease to be pejorative. I support this, I really do, and I so wish that her colleague, the Honorable Joe Oliver, had stuck around to hear it.