PM Trudeau’s White Elephant

The Guardian: Canada’s tar sands landscape from the air – in pictures

So, Keystone XL will be PM Trudeau’s White Elephant gift from the USA. We literally cannot afford to say no … but we cannot afford to agree to it, either.

As a result of a decade of systemic decline in the Canadian economy of almost everything -except- resource extraction, the nation had no “airbag” to soak the impact of a collapsing global oil market.

For example, the lower Canadian dollar would have been a boon to our manufacturing sector … save that the manufacturing sector had atrophied in the previous decade. 

This, in turn, did remarkable damage to the over all fiscal liquidity of the nation.

To fix house that hasn’t had repairs in ten years, you have to go to the bank and get a loan. That’s just the way it is. Metaphorically, that’s the situation we are in.

President Trump’s Executive Order last Monday means KSXL is back on the table. With it, the potential for a short-term kick of cash that the nation needs to be able to afford all the work that has to be done to catch up those “lost” ten years. By fixing the economic issues for Alberta, it means there is more money available to move to other areas that need it.

At the same time, voters are inherently short-sighted and prone to vindictiveness. The current Liberal government can really only enact lasting improvements in Canadian trade and infrastructure if they can get elected for a second term. If Western Canada has to suffer a poor economy for too long, regardless of the origin of the fault, it will be the Liberal government that is taken to task at the ballet box.

On the other hand, for the good of the world in the long term, what is in the ground in northern Alberta needs to stay in the ground. We already know that the climate scientists are being proven wrong — they have been too conservative in their estimates of how fast and how extensive the damage will happen. The long game means Canada needs to get out of the resource extraction game and get into design, technology and development; to get there, the nation needs to transition through a revitalization of manufacturing, via automation.

The problem, of course, is that traditional wisdom says we cannot do both at the same time. That’s bollocks, of course. We can. What we need is to make calculated compromises to keep the economy paying for the transition. We were forced to go “cold turkey” on our addiction to bitumen extraction and the effects have been brutal.

I’ve been asked if Canada was not in a good place to develop renewables.  The truth is just the opposite.

“Canada is a world leader in the production and use of energy from renewable resources. Renewable energy sources currently provide about 18.9 per cent of Canada’s total primary energy supply.” —
That’s not the problem. The problem is that the previous government, over it’s 10-ish years, put all it’s eggs into making Canada a resource extraction economy. When the oil market collapsed, cash going into provincial and federal coffers plummeted.
So, now we don’t have the money required to transition into 100% renewable energy in the time scale we need. So the paradox is that the only fast cash available — other than mortgaging the future — is selling fossil fuels in the short term.
However, the future is very bright for renewables here in Canada:
“Renewable energy has experienced big growth in Canada in the last five years, so much so that employment in the sector outstrips employment in the oilsands.” —

The hard part, for any policitian of any stripe, will be explaining to a voter why they made the wrong choice on KSXL. And there will be a lot of explaining to do, because one is the wrong choice for the short term, and the other is the wrong choice for the long term.