Dissecting what the Throne Speech said about energy

What does polluter pay mean?

Etienne de Malglaive/REA/Redux

There were some interesting nuggets in today’s Speech from the Throne.

We heard that, “directly and indirectly, the natural resource sector employs 1.8 million Canadians, many in skilled, high-paying jobs.”  That’s a big number — more than 10 per cent of the Canadian labour force. In September 2013, Statistics Canada estimated that 382,000 Canadians were employed in the forestry, fishing, mining, oil and gas sectors. The other 1.5 million people are, presumably, employed in support sectors including finance, hotel and food, construction, and utilities. However, in terms of direct employment, our natural resource sectors account for 2.1 per cent of total employment. There is no question that some of these are high-paying jobs — the average hourly wage paid to salaried employees across the economy was $32.92 per hour in July 2013; mining, quarrying and oil and gas saw wage levels of $49.93 per hour. Still, the average hourly earnings in forestry and logging was lower than average, at $25.31 per hour.

We also saw a nod to the government’s push to grant Canadian resources greater market access: “Canada’s energy reserves are vast—sufficient to fuel our growing economy and supply international customers for generations to come. However, for Canadians to benefit fully from our natural resources we must be able to sell them. A lack of key infrastructure threatens to strand these resources at a time when global demand for Canadian energy is soaring.”  This stance is interesting since the industry has recently been seen to downplay the role of new pipelines in enabling oil sands development given the rise of oil-by-rail.  The government’s argument is also a double-edged sword: If infrastructure prevents resources from being stranded, it must also be the case that this infrastructure increases greenhouse gas emissions over and above what they would otherwise be by enabling development. The issue of whether the oilsands would find a way to market has been a key issue in the U.S. State Department’s review of the Keystone XL pipeline.

The government also committed to, “continue to ensure that our natural resource sectors remain open to foreign investment when it is market-oriented and in the long-term interests of Canadians.” But what do “market oriented” and “in the long-term interest of Canadians mean?” The government has so far failed to clarify the standards of its foreign investment review process, which garnered headlines as the government rejected BHP’s takeover of Potash Corp and became even more muddled in the aftermath of the CNOOC/Nexen and Petronas/Progress takeovers. As long as foreign investors aren’t provided with a clear process, and as long as they are unable to take controlling interests in Canadian firms, these muddled rules will likely continue to increase the cost of attracting capital for Canadian resource companies. Nothing here suggests that the government intends to change its approach.

The statement that followed was even more interesting: “Canada’s natural wealth is our national inheritance and our Government will ensure that the jobs and opportunities it brings are available to all Canadians.” This sounds akin to previous comments by the prime minister supporting projects like TransCanada’s Energy East pipeline. Furthermore, the speech emphasized the importance of First Nations’ participation in these benefits — is this perhaps a nod to the ongoing charm offensive in B.C. to persuade First Nations on the merits of Northern Gateway?

Interestingly, many elements of the speech echo positions previously taken by Prime Minister Harper’s rivals. A commitment to enshrine in law the polluter pay principle might make one think that a page from an NDP speech made it into the Governor General’s hands. Polluter pay has been a defining issue for NDP Leader Thomas Mulcair. Quebec’s Sustainable Development Act (PDF), enacted while Mr. Mulcair was Quebec’s Environment Minster, defines polluter pay as the assurance that, “‘those who generate pollution or whose actions otherwise degrade the environment must bear their share of the cost of measures to prevent, reduce, control and mitigate environmental damages.” Mr. Mulcair has used polluter pay as a justification for measures like cap-and-trade and more recently for increased vigilance with respect to reclamation liabilities. Mr. Mulcair would argue that projects like the Giant Mine Reclamation project illustrate the failure of previous governments in this regard, since taxpayers are being forced to pay the costs of cleanup for a now-bankrupt operation. Watch for Mr. Mulcair to ask again exactly what pollution Prime Minister Harper will make polluters pay for, and how. It’s hard to imagine it will be via a job-killing carbon tax.

Finally, near the end of the Speech, we saw significant attention to the aftermath of the tragedy at Lac-Mégantic. In particular, the government pledged to, ”require shippers and railways to carry additional insurance so they are held accountable.” This requirement to carry liability insurance appropriate to their hazardous cargoes is a direct response (and one consistent with the polluter pay principle, one might add) to the bankruptcy of Montreal, Maine, and Atlantic railways in the wake of the disaster. One might ask whether the same attention will be devoted to pipelines, as appropriate compensation for risk was an issue raised in B.C. Premier Christy Clark’s five conditions for support for more oil pipelines in the province.




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Dissecting what the Throne Speech said about energy

  1. Wishful thinking, sheer incompetence and playing to the base is what that is.

  2. This stance is interesting since the industry has recently been seen to downplay the role of new pipelines in enabling oil sands development given the rise of oil-by-rail.

    Well, if analysts at Cannacord Capital in the first week of September say so, it must be thus.

    Regulatory uncertainty, public opposition and limited rail networks to some communities will keep rail as a complementary or secondary mode of transport, not primary.

    Would you be willing to bet your sales/production on a rail line through Northern Alberta, and remote Northern BC that is subject to heavy snowfalls, avalanches, washouts, and unbearable cold etc? And what happens if the Kokanee bigfoot is spotted in the area, or decides to picnic on the tracks?

      • I might not take the CEO’s words at face value though. They do have an interest in appearing non-dependent on successful pipeline development. If they admit to dependency, they give credence to the argument of pipelines increasing greenhouse gas emissions.

        • Someone really should have written about the double-edged sword of those arguments in a Macleans blog about the Speech from the Throne. Oh, wait, see above.

          • And my point is that any industry downplay of a need for pipelines could be a result to the CEOs foreseeing that acknowledging the pipelines’ necessity would give fuel to the no-Keystone camp. I am just pointing out a possible ulterior motive CEOs of energy companies could have when “downplaying the role of new pipelines in enabling oil sands development given the rise of oil-by-rail”

          • Yes, they clearly have that conflict as well – they have to make the case that the pipeline is `needed’ to meet the market test while not allowing that it would change anything from a GHG perspective. My use of this was to refute the comment above that I was cherry-picking an analyst’s opinion which was not reflective of ‘industry’ positions.

          • My use of this was to refute the comment above that I was cherry-picking an analyst’s opinion which was not reflective of ‘industry’ positions.

            Cherry pick is an interesting summary. The bad link you provided to Cenovus (I found it) was from April 25, 2013. Ummm, anything happen in say Quebec since that time? Say July 6th? Remember, you wrote about it like a few days later suggesting it was bad overall for oil?

            And Suncor? Well, the CEO was suggesting Keystone XL would not be a concern, there are alternate means. True enough, I suppose, in this narrow focus on the Mexican Gulf Coast.

            But, this is quite different than seeking alternate (ie Chinese, Indian, SE Asian etc. ) markets which is a focus of the Harper Gov’ts stated efforts through shipments to tidewater in Canada. And the nature of my “cherry picked” comments.

          • Your comment was, “If analysts at Cannacord Capital in the first week of September say so, it must be thus.” One might read that as a suggestion that no one else was saying it at any other point. I addressed your point. Thanks for reading.

          • Well, “Guest” has joined in on some of my concerns about quoting industry and potential bias. I imagine firms involved in finance would be interested in keeping the $$$ flowing.

            But, if there was anything to learn from Enbridge Northern Gateway, it would be that the majority of the “oil patch” still is a bit tone deaf, IMO. Especially on out of province issues.

          • It is always a good idea to indicate “update” when you go back and add to your comments after someone has replied.

            Concerning your point: “if anonymous comments on the Macleans forum…” all you need to do is quit censoring my comments on your FrogBlog where I use my name, and I’d be happy to link to them.

            Thanks for your “reactions”.

          • Derek, there was a minute lag between the two, and was due to accidentally hitting send to early. My apologies if this was confusing for you.

            As for my FrogBlog, you can see my moderating policies very clearly laid out here (http://andrewleach.ca/about/moderating-policy/). I’ve provided you with multiple warnings with respect to your violations of these guidelines which you have consistently ignored. This has led to you being unwelcome to post on my blog.

          • This comment was deleted.

          • Derek, as I have mentioned to you on a number of occasions, your comments are often instructive and informative. It was for this reason which I had provided you a number of additional opportunities to participate in the conversation on my blog. Unfortunately, you were unwilling to abide by the rules of the site, and so your comments have been automatically deleted for some time. should you wish to revisit your permission to post on my blog, I’d be happy to hear from you with respect to your willingness to abide by the conditions I set out for you and other participants. I hope you will choose to do so as I expect you could contribute positively to the conversation.

          • Not interested in any censorship, Andrew. Period. If you can’t handle being challenged, then stick to the classroom.

            I cancelled my twitter account after a constant stream of gratuitous insults from you and others closely related. Unprovoked.

            Blaming technology is lame in the extreme.

          • See my comments above. I hope you will reconsider your approach and re-join the conversation.

          • Not being allowed to post comments is not censorship; you have no right to post on someone else’s site. There’s nothing stopping you from starting your own blog.

  3. It’s that last paragraph that gets to me.. and also illuminates one of the basic reasons why I don’t like conservatism.

    The idea of shippers and railways carrying additional insurance so that they’re held accountable is fine, but to me it would seem a better strategy to take steps to reduce the likelihood of them *needing* to be accountable in the first place.

    Conservatism often seems to me to be reactionary in that it runs with the assumption that everything will generally work out fine, and if it doesn’t, we’ll find/punish those responsible. It works on the idea that you react to problems, rather than thinking about proactive measures to prevent them.

    Think about it. Polluter pays — why not prevent polluters? Mandatory minimum sentencing? How about crime prevention? Requiring additional insurance to compensate for accidents? Even ignoring the issue of how much money does it take to compensate for the loss of a loved one, shouldn’t we be looking instead on measures to prevent these accidents in the first place?

    Yeah, prevention is generally harder, I’ll admit. But that’s why we pay these guys to be thinking about our problems full-time. It’s why we give them such prestige and access that they can easily call upon all kinds of professionals to find the right course of action. Why is it so difficult for us to start demanding that they do their jobs rather than go for the easy route?

    • Thanks for reading. There is certainly an argument for risk mitigation, and some of that will be induced by a requirement to carry full insurance, but expecting that we can eliminate risk is unrealistic. Think of car insurance – whether or not we require drivers to carry liability insurance is separate from the enforcement of (or increasing stringency of) the rules of the road.

      • Of course it is. But you almost never see conservatives, or at very least the particular brand of it that happens to be in our government right now, even considering reduction strategies.

        At least, not unless it happens to be on gathering factual and useful information.Then they come up with all sorts of novel ways to reduce it (see the census, long-gun registry, PBO accounting, etc.)

  4. Andrew neglected the mention the two words that were not in the throne speech: Climate Change. This was an odd oversight since these days they seem inseparable from discussions about energy.

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