Why environmentalists should be open-minded about the oil sands

The question is: do the extra benefits from oil sands production outweigh the costs?

by Stephen Gordon

Pop quiz: What is the socially optimal level of pollution? (Hint: the correct answer is not ‘zero’.)

This is from environmental economics professor (and blogger) Tim Haab :

Each fall, I start my undergraduate environmental economics class by asking students “What is the socially optimal level of pollution?”  The class consists of about 1/2 economics majors and 1/2 natural resource/ecology/treehugging (a joke!) majors.  Inevitably I get a critical mass of students that think zero pollution is optimal.  I tell them “If you learn one thing in this class, learn that zero pollution is not an option.” Well, I gave the final exam in that class yesterday and asked “What is the socially optimal level of pollution? Explain.”

Here’s an answer that received full credit (read the post for examples of answers that did not):

From an economic perspective the socially optimal level of pollution occurs when the marginal benefit of the last unit of pollution exactly equals the marginal cost of pollution.  At this level the net benefits to society are maximized.  If all of the externalities of pollution are accounted for, the resulting level of pollution will be optimal.

Environmentalists don’t need to be reminded that pollution generates costs—although some do seem to need to be reminded from time to time that pollution is not actually a mortal sin. But sometimes they forget that polluting activities also bring benefits. If the gain from an extra unit of pollution is greater than the environmental cost, then society is better off with the extra pollution.

The marginal benefit equals marginal cost condition applies to a very broad set of problems. But the presence of externalities complicates things. An activity generates a negative externality if part of the costs of production are borne by third parties who don’t benefit from and who didn’t participate in the exchange. If people receive all of the benefit of an extra unit of pollution but only bear part of the extra cost, there will be too much pollution.

So the issue isn’t that pollution is costly—every activity has a cost. The problem is that when people weigh the costs and benefits of pollution, they don’t take into account all of the costs of their actions. The simplest solution is to make sure that the prices individuals face actually reflect the costs faced by society—and the simplest way to do that is to impose a tax that reflects the externality. If prices reflect the true costs, then markets will produce the social optimum.

Which brings me to the oil sands.

Like almost all resource extraction activities, the oil sands operations pose risks to the local environment. What makes them a reason for global concern is their role in the climate change file. The oil sands are a significant source of greenhouse gases, but I’m not sure it’s widely understood just why they are. It has little to do with the fact that they produce oil (or synthetic crude or diluted bitumen) per se, it’s that the available technology for doing so requires enormous amounts of energy—and producing that energy creates greenhouse gases. Producing oil from the oil sands creates costs that are not fully borne by those who purchase it.

But producing oil also creates benefits – high oil prices generate higher incomes for all Canadians (see here for an explanation for how and why the benefits extend well beyond Alberta’s borders). So the question is: do the extra benefits from oil sands production outweigh the costs?

I don’t know the answer to that question, and I’m pretty sure that the people who want to shut down the oil sands—or even those who would target them for special treatment—don’t know either. But the great thing about markets is that no one has to make that decision. As Andrew Leach once put it,

Supporting carbon pricing means that you hand control of who wins, who loses, and where emissions come from in the economy to the market.  True carbon pricing also likely means, sin of sins, that environmentalists might have to give the oil sands a pass.

Pricing carbon will mean that certain GHG-generating producers will shut down—but not necessarily the ones that are attracting the most attention. Low-value GHG-emitting activities will be most vulnerable, and it is by no means obvious that the oil sands produce the lowest value per tonne of GHG. As Andrew says,

if you believe in carbon pricing, you also have to accept that it is not a market failure when the activities you do not like keep going in the face of a carbon charge.




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Why environmentalists should be open-minded about the oil sands

  1. ” But the great thing about markets is that no-one has to make that decision.”

    Well why should WE take responsibility for something we’ve done when that good ole ‘invisible hand’ is available to do it for us…..?

    The ‘invisible hand’ is also known as a crystal ball, a coin toss, reading tea leaves, a throw of the dice… or God’s will depending on your inclination….because they’re all the same thing.

    • Do yourself a favour and pick up a copy of “Wealth of Nations” and actually read it. You don’t understand the meaning of Adam Smith’s “Invisible Hand” reference at all. What Smith was talking about was that the culmination of numerous self-interested decisions by individuals lead to an optimal decision as if an invisible hand were acting on the market. That’s not a crystal ball or a coin toss.

      • Adam Smith’s ‘Wealth of Nations’ was written in 1776….for a country of farmers and merchants….before the Industrial Revolution even took hold.

        If you think that is in any way relevant to the 21st century and the Knowledge Age….YOU need a whack upside the head from your ‘invisible hand’

        • The validity of a principle is not determined by when it’s discovered. I’m not surprised that you don’t understand its applicability. It’s obvious that you don’t understand the fundamentals in the first place.

          • You are over 2 centuries out of date….the principle no longer applies

          • “You are over 2 centuries out of date….the principle no longer applies”

            Whoa – what? What superceded it?

          • Capitalism was the ideal kind of economy for the industrial age….and socialism was the eventual reaction to it.

            However we are no longer IN the industrial age….we have moved on to, first….the service economy, and now the knowledge age. Neither of them deal in ‘product’…..so those systems no longer apply.

            The world is developing a new kind of economics….one that doesn’t revolve around factories….and certainly not around the even earlier resource base. It involves the use of knowledge….brain not brawn….and globalization, not nationalism and protectionism.

            It’s going to take awhile to sort it all out, and it’ll cause a huge amount of disruption and chaos….but we won’t get anywhere if we keep trying to stretch capitalism to cover things it was never meant to. We are having more recessions, and bigger ones, plus massive debt problems and dumber ‘official’ ponzi-type schemes….the current system is breaking down. No amount of dusting if off, bandaids and stimulus is going to fix it. At best they are temporary reprieves. Meantime we are having riots, and war is always possible.

            Keynesian economics was just another effort to make capitalism work….capitalism is now loaded up with such fixes…..but when all is said and done….it’s a ‘horses and bayonets’ approach to the world we now live in.

          • Did you know that (apparently) the US Army actually has more bayonets today than it did a century ago?

          • LOL Explains why they’ve lost every ‘war’ since WWII

            Oh wait….they won Grenada…but then Grenada didn’t know it was at war.

        • “Adam Smith’s ‘Wealth of Nations’ was written in 1776 …. ”

          WSJ ~ Why Americans Hate Economics:

          How did modern economics fly off the rails? The answer is that the “invisible hand” of the free enterprise system, first explained in 1776 by Adam Smith, got tossed aside for the new “macroeconomics,” a witchcraft that began to flourish in the 1930s during the rise of Keynes. Macroeconomics simply took basic laws of economics we know to be true for the firm or family—i.e., that demand curves are downward sloping; that when you tax something, you get less of it; that debts have to be repaid—and turned them on their head as national policy.

          As Donald Boudreaux, professor of economics at George Mason University and author of the invaluable blog Cafe Hayek, puts it: “Macroeconomics was nothing more than a dismissal of the rules of economics.”

          http://online.wsj.com/article/SB10001424053111903596904576514552877388610.html

          • More invisible stuff….you guys have turned simple commerce into a state religion…..and now you’re arguing about angels on the head of a pin.

  2. At least for me anyway, I would like to see it very simply put in terms of how much it costs to extract (in the absence of all subsidies and whatnot), and how much it costs to have that environment return to its original state with active effort (over a fixed period of time, say 20 years).

    To me, the simple fact that the energy required to extract is enormous versus the amount of energy gained from that amount of synthetic crude, quite simply means that there very little economic benefit (energy = money) unless some kind of shell game is going on. Factoring in redevelopment costs just makes it untenable.

  3. Oh puhlease! Like this is the issue we face in society; that environmentalists aren’t weighing all the costs properly. Environmentalists have no power to decide ever and frequently lose their campaigns to prevent economically stupid (as well as environmentally destructive) activities that go ahead because everyone from CEOs to small town mayors to cabinet ministers ignore their warnings.
    It wasn’t environmentalists who put people out of work by overfishing the cod stocks in Atlantic Canada and degrading the forest regeneration potential on dozens of Vancouver Island mountainsides; that was the economically and environmentally stupid corporate and government leaders who liquidated resource potential for their own short term “interests.”
    Decisions that allowed those economic travesties were made despite the interventions of in shore fishermen and small scale loggers as well as environmentalists, but everyone would rather pretend that each and every development decision comes down to a conflict between jobs and the environment.
    Let us know when the high grader mining companies that drain lakes to see if there is any gold underneath have become too focused on ecological impacts. Or give us a heads up when we get an Environment Minister who knows where the ozone layer is. Until then environmentalists are the ones supplying a bit of balance to some very tipped decision making scales. Everyone else is too focussed on perceived economic concerns. Maybe you could tell them about that in an upcoming blog?

    • Always encouraging to see a call for open-mindedness being received in this way.

      • The unthinking mind finds to easy to be ‘open’; the critical mind is less forgiving. This mindalso ‘open’ open, but open to searching for appropriate solutions to a given problem. An open-minded person need not be vacuous…

      • There is a difference between calling for an open mind, and calling for an empty one.

        “If prices reflect the true costs, then markets will produce the social optimum.”

        What, exactly, is the true cost of of a people losing a good portion of their culture because their food source is mutated through carcinogens dumped into the Athabasca River. Can you put a dollar value on that for us, Mr. Gordon?

        How much does it cost when a family loses its mother through MS due to being located in proximity to sour gas wells? How many generations does it take before that kind of event stops having some sort of effect on the lives of a family?

        What formula tells you the cost of a disrupted ecosystem? I mean, you’ve obviously got one, if it’s this easy, yes?

        Quite simply, there are some things that are irreplaceable, and some of those may even be vital to our survival as a species — this means the costs are therefore infinite, and the socially optimal level really IS zero. But the really scary part? We really don’t know enough to say with any surety that all of the things we’re busily destroying aren’t both vital and irreplaceable.

        Beyond that, it also seems funny to me that, as an economist, you’ve forgotten that value is a subjective measure. That’s what makes the markets work, after all: What I want from you is of more value to me than what I’m giving you for it, and vice versa. If it wasn’t that way, we wouldn’t trade in the first place. Given that, how can there be a “true cost” on anything? At best, what you have is a “socially accepted cost”.. well.. guess what.. that gets us right back to the optimal level perhaps being zero.

        So “if prices reflect the true costs..” when speaking of the oil sands is a load of crap, it’s like saying “If automobiles were powered by unicorns..”

        • Infinite cost of pollution implies one solution: extermination of humanity. So obviously the cost is not infinite.

          • Note the word “some” and think on what that might mean. If it’s still giving you trouble, add the words “of those things” between “costs” and “are” in the sixth paragraph and hopefully understanding will dawn.

            However, beyond that, you’re correct, if there is some sort of pollution or environmental destruction going on up there with an infinite cost, then yes, it does imply the extermination of humanity. Not as a solution, however — as a result.

            That’s why it’s so important.

    • Another thing to consider is that this whole environment vs. economy dichotomy is a false one. When countries impose green regulations (e.g. carbon pricing) this actually creates new business and job opportunities and more GDP growth.

      For example, if a company can pump raw waste into a river this does not create any jobs. But if it is forced to process its waste it creates new process-related businesses and jobs.

      As for increased costs, the reality is the market place is competitive so the costs are not fixed. Businesses have to continuously adapt to a fickle marketplace, so they are used to adapting to rules that society imposes on them to find ways to bring costs down.

      Harper’s position that green regulations “kill jobs” is a false one. Some of the world’s strongest economies are in northern Europe and they are also the greenest. When neo-cons talk about “creating jobs” they are really talking about boosting corporate profits claiming the wealth will “trickle down” to the little people. It’s really no surprise their plan to create “jobs, growth and prosperity” produces the opposite.

      • The irony being that Harper’s choice to regulate GHG emmissions will still cost the consumer in one way or another. But it makes a dandy political fig leaf eh!

      • Excessive green regulations create unneeded jobs in that the costs exceeds the benefits.

        Funny you mention Harper, in that he is the one who is forcing Victoria to treat the raw sewage they dump into the ocean and supplying most of the funds. And it is the Liberals who are saying no sewage treatment is needed.

        • Funny you mention another example of Harper ignoring the science.

        • Canada is going nowhere becoming a dirty-energy superpower and environmental freeloader. All commodities booms turn to busts and eventually responsible countries will start imposing green tariffs on the leeches…

  4. I’m open minded about pollution. But there is a second question about which kinds of pollution we want to pay for, and which kinds we want to prevent. So not all of the pollution questions have economic solutions – some are – but we should be careful not to collapse this distinction since for some kinds of pollution the socially optimal level may very well be zero.

    • Exactly.

      • This point does not contradict Stephen’s.

    • Perhaps. But that determination can’t be made by assuming that there are no benefits. You still have to show marginal cost > marginal benefit for *all* levels of pollution.

      I don’t doubt that there are some extremely dangerous compounds for which this is evidently the case. But the same rule still applies.

      • It seems strange to declare ex cathedra that we have to show marginal benefits. That assumes a fairly closed position – one where *all* pollution problems reduce to economic ones. So what I am driving at here is the socially optimal level may include a broader set of metrics than indices of economic optimality measure.

        • “Costs” and “Benefits” can be defined as broadly as you like. Same principle applies.

          • That is not true. Costs and benefits can be considered through many different principles. I’ll not push it too far because of the nature of these forums. I do thank you for the thought provoking piece – my perspective is more along the lines of Sagoff’s work in Price, Principle and the Environment. I believe it superior.

  5. http://northword.ca/june-2012/green-mining

    But Mr G, how is the market alone to handle stuff like this? There are so many variables, not least the intransigence of the mining company. I was out there this summer and not an incosiderable number of locals [not at all lefties, greenies or whatever] are truly pissed at what the BC govt is trying to pull with little or no responsible back up from the federal govt.
    It’s not like there aren’t other mountains around, but they want this mountain – and they mean to get it, no matter the externalities. Bit like the NGP quite frankly.

    As the article makes clear it boils down to a mining company wanting to do things the way it has always done them – for good reason, it has a lot invested in doing it that way. But clearly there is an alternative. Could the market and or carbon pricing alone fix this? Remember i am in favour of pricing carbon, but i am also in favour of not rewarding rank stupidity just because that’s the way it has always been done. Just how do you put a price on stupidity, obstinancy and frankly venality combined with bullying?

    • In the same way that the market handles the decision about how many snow shovels to make in a given winter.

      Abandon your inner central planner.

      • I quite like my central planner actually. It may be slow and cumbersome at times but overall it’s designed to reflect the common good. It’s your faith in the market that’s troubling me right now. Markets may seem rational but people sure aren’t, including business people.

        • So how many snow shovels does the Quebec City area need? Montreal? Rimouski? Saguenay? The public good depends on you!

          Oh yes: we’ll also need to know how many loaves of bread. And Baguettes. Bagels. Croissants. You get the idea.

          • Quick everyone! Short straw investments now while there’s all this upward pressure!

          • Actually i was talking more in the line of socially responsible decision making.

            Please tell me how blowing up a mountain with potentially catastrophic downstream knock on effects – not merely on the environment but on on the many local mostly tourist related businesses that depend upon it ; a mountain that has a rare stone sheep sanctuary already approved and funded by BC [ now put at risk] is going to be resolved merely by the market?

            This is requires more surely than the dead hand of the market deciding it?

            Having said that, any market mechanism that compelled this company to consider a less intrusive way of mining the mountain, or simply deciding it wasn’t worth it would be welcome.

            You have me pegged wrong, i’m a local control guy. To that degree alone i suppose i’m a bit of a central planner??
            Same for the oil sands. if AB’s want to develop it at the rate it is currently online for – so be it on their heads. But it isn’t just in their hands is it. If they say slow down and be more environmentally responsible, lets keep the refining jobs here [which they do] the so called free market rules otherwise. So, who is really being served and listened to there really?

        • The “central planning” angle Gordon is putting forward is nonsense. If one looks at the economic spectrum, 100% left is communism (full government control of the economy — “central planning”); 100% right is economic anarchy/libertarianism (no government involvement in the economy). Most people are in the center of this spectrum. So this issue is hardly black or white. Society develops social and economic laws/regulations on a case-by-case basis.

          Both our social and economic systems are very complex and we need a sophisticated approach to manage them. Ideologues believe they have all the answers. Unfortunately, most of them are wrong.

      • If we are to embrace economic anarchy, why not social anarchy along with it? Instead of wasting taxpayer money on traffic cops we could have speedsters ticket themselves. Instead of having libel laws let the offended fight fire with fire. Instead of wasting time and money on courts and prisons, let mobs of people mete out their own justice!

        If one stacked up all the laws and precedents that make up the legal system it would probably be more than 20 phone books high. Time to deregulate the bloated legal system. Clearly society can better regulate itself!

        • BTW, what is the reason people are not quick to embrace anarchy? They feel it will lead to disaster. Well, society recently embraced banking anarchy (deregulation) and guess what? It caused a second global economic meltdown (in 2008.) Yet the economic anarchists keep preaching the same old gospel as if nothing happened…

          Why is it neo-cons want economic anarchy but at the same time want to impose even more restrictions on people’s personal freedom and wage wars against victimless crime? (Social authoritarianism.) Given that their nihilistic economic philosophy is predicated on unfettered greed I guess sheer hypocrisy is not the most corrupt element of their belief system…

  6. I think it’s the politicians that need environmental/economic education.

    The perception I have developed is that oil sands supporters are the ones claiming economic Armageddon if any form of a carbon tax is implemented. And it appears that this is driving the provincial and national policies that have consisted of taking a hands off approach through successive gov’ts.

    So, put a price on carbon and see where the chips may fall. It would take one hell of a carbon tax to shut down this industry. And having marginal projects fall by the wayside or delayed may not be such a bad thing.

  7. Me, i”m gonna sit back and watch another addie with a pretend
    geologist in a plaid shirt telling me how the oil industry is almost
    like Greenpeace (three in the past half hour).
    Does “market” and “marketing” come from the same root or entirely
    different languages ? Compare and contrast.

    • It’s people like you that cause unrest.

      • Nah … if ya wait for the tranquility market to trickle down
        then peace .. and sleep.. will come.

        • And in the long run we’re all dead.

  8. I actually care little about the greenhouse gas costs. But there are other costs. I care enormously that the boreal forest ON TOP OF the oil is being decimated at a massive rate. Like decimating the Amazon forest, decimating Canada’s boreal forest is a cost that can not be repaid.

    Not everything is a commodity to be bartered. I think many people in BC feel as I do about the proposed pipeline as well — there is NO amount of money that can repay endangering Canada’s northwest watershed, so the response by local people is “not at any price”.

    • Really? *Any* price? What if it made everyone in BC a multi-billionaire? Still no?

      • If it wasn’t environmentally viable – which it isn’t – yes, any price.

        • Saying that costs are infinite is a lazy way of avoiding hard questions.

          • I believe it’s called having principles.

          • What is it worth to save humanity? Infinity? How about a billion people? Still infinite? What is the minimum number of lives that could be sacrificed to avoid that unit of pollution at a price of infinity?

            Saying costs are infinite is lazy in the extreme.

          • How high of a standard of living do you want? Does it always have to be on an upward trajectory? Isn’t this basically the underlying philosophy of most economics?

            How many cars in the driveway is enough? How many days of vacation, sabbaticals, flights to foreign countries?

            I think Canadians have the good fortune and luxury of limiting exponential growth or curtailing development of its non renewable resources until better means of production are developed. It doesn’t necessarily have to be all eggs in one basket, crammed to overflowing, now.

            That approach is the intellectually lazy one, in my opinion.

          • Now you’re calling them greedy…the gloves are off. Over to you resource industry.

          • Actually no. If you follow my overall arguments on this topic, I would characterise my position more along the lines of: industry is working hard, not working smart.

            Greater wealth comes from the latter.

          • Claiming benefits are infinite is equally lazy. Maybe you should tell that to Enbridge so they can tweek their ads a bit?

          • One of the ways you address hard questions is by having NEB joint reviews such as is occurring in BC/AB right now.
            I wont touch the economic question [much better left to guys like you] but i have lived on reserve on the central coast, and it doesn’t at all surprise me that the coastal FNs are doing everything in their power to make sure the pipeline doesn’t happen. For them it is a desparately hard choice – unemployment among the young is sky high, as are social problems. They don’t have the easy choices of environmentalists like me, or oil execs in Calgary [ or economics profs in Laval?] They have tough choices. Frankly i’m surprised they are going with no. But they are; because they know the risks are too high[ risks yes] whereas the benefits are likely there, but only short lived. Quite simply they are unwilling to gamble what they know and need [ the bounty of the oean and their way of life] for a few baubles and meaningless promises and guarantees that all will be well.
            They don’t and perhaps shouldn’t have an absolute veto, others will benefit from oil exports off the coast no doubt. But i sure do respect those folks, who seem to still know the difference between cost of everythiing and the value of nothing.
            If all politics is local that pipeline aint happening because the risks outweigh the benefits period.
            As Dot says, it’s a matter of principle.

          • Not impressed by that sort of rhetoric. There are a lot of incredibly silly – and sometimes downright dangerous – things that people say are a matter of ‘principle’.

            The whole point of the post is to keep an open mind, to be willing to balance costs and benefits, and to not insist that your instinctive gut reaction – sorry, ‘principles’ – must override everything.

          • At what price point would you consider the benefits of selling your children into slavery to outweigh the costs?

            Remember to keep an open mind and not be lazy!

          • People *have* sold their children into slavery. Ask yourself why.

          • Extreme desperation.

            The vast majority of the rest of us don’t exist along a spectrum of price points at which we’d sell them.

          • Not impressed by that sort of rhetoric.

            It varies from individual to individual. I personally agree with your argument on this issue – but I’ve been, amongst other things, a PM on pipelines. Still, I’ve seen, heard firsthand and respected other opinions. Why perhaps we see it differently.

          • Speaking of pipelines, Lunch with Al Monaco: Putting the pipeline business on a new track , new CEO of Enbridge:

            But if Enbridge is to dip deeply into that, it has to convince the world it can do it without fouling rivers and killing salmon and sickening neighbours. So this is the face Mr. Monaco wants to present: an Enbridge that doesn’t push its projects down the throats of angry landowners and past nervous native reserves. Ask him how he is different from his predecessor Pat Daniel. Ask him what stamp he wants to leave on this company. Ask him how he gets a project like Gateway built. He will tell you he is orchestrating change at a place that, he acknowledges, did not pay as much attention to safety or the environment in the past….

            It is also changing internally. Roughly 40 per cent of executive bonuses are now tied to safety and environment – up from about 25 per cent before. And Mr. Monaco is himself deliberately waving a safety banner, making a zero-spill push part of his investor mantra. “Sure, we’ve taken a hit from this reputationally,” he says. “But we’re going to get that back.”

            http://www.theglobeandmail.com/report-on-business/careers/careers-leadership/al-monaco-putting-the-pipeline-business-on-a-new-track/article5175668/

            Change is underway industry wide due to externalities that are being internalized.

          • At the risk of appearing less than open minded that answer is tosh. I am not just making a gut instinctive reaction, i’m presenting an argument – albeit an anecdotal second hand one. And i’ve already acknowledged the hard question will be addressed at the joint review hearings. But i concede it isn’t a matter or pure principle because that abrogates being absolutely right to my side of a debate…your point sir!
            But any case, as i said i’m not talking about my principles but providing anecdotal evidence of the view point of one of the principle actors in this case. [ there are of course those within these groups who think the risks are acceptable, but as far as i know they are in the minority] So, yes weighing the case for possible gains of an unknown quantity against possible loses of a known quantity is another form of balancing costs and benefits. IOWs they are making hard headed choices, not at all just gut instinct reaction.

            Interestingly my wife [ she taught there] wondered if your: what if we could make them all millionaires theoretical, was valid for our reserve. Certainly they would weigh it. She felt they might take the money on the basis of it would give them the financial means to ensure their traditional territory received all the protection money could buy.But meanwhile in the real world that kind of money isn’t on offer. My feeling is the elders would argue money couldn’t guarantee they would remain there for another 10,000 years,and what’s the point if they risk being no longer able to follow any of their traditional lifestyle? So the point would be moot.

          • Same could be said about saying that everything boils down to dollars and cents.

          • This.

          • Actually presenting an argument that has no stops between zero $ and multi -millionaires is a wee bit lazy itself. Presume you were exaggerating for effect, but it’s still not kosher really.

      • Then it wouldn’t be economically viable, would it?

  9. I guess the question the optimal level of pollution depends on who you ask. For producers and consumers with little stake in the future the answer is “lots”. For Bangladeshis or People in the Maldives who receive no benefits from the oil sands, the answer would be “none”. The problem is not just one of economic trade-offs but also one of social and political justice: the Canadians have a say, the Bangladeshis don’t.

    Polluters should pay and third parties should be compensated, then, we can talk about optimums.

  10. A cost to consider, and one that environmentalists have fibbed about, is the price of shifting to so-called green energy.

    We can shift to solar and wind if we like. But it is well past time for enviros to be straight up and tell folks it will cost average Canadians at least 500% more for their energy needs which will result in a substantially lower level of living.

    Solar is very expensive, wind even more so and costs will not go down much as economies of scale and technology for both of these power sources have already peaked.

    Greens try to peddle the myth that there is a free lunch in shifting energy sources. There isn’t.

      • If only. Truth is, where solar is installed, owners all find it to cost a LOT more then coal, gas and nuclear.

        • Solar is new, and costs money to set up…..long-term cost is much less.

    • I’d like to see some hard evidence for that. I suspect cost have come down a lot. It’s the intermittent nature of green energy that is the real sticking point, not simply the cost.
      I don’t see Germany declaring bankruptcy or Denmark on the soup line.

      • Germany pays massives subsidies for its solar. And unless you can make the sun shine more, solar will never be as cheap as natural gas and coal and hydro.

        • Everybody subsidizes everything. You almost have to be an economic wizard to figure it all out – and cost should not be the only metric.

  11. How come the environmentalists never have a word to say about immigration and the endless urban sprawl that it causes in our large cities? Have they not noticed the Greater Toronto Area turning into a giant concrete parking lot? Do they think this is good for the environment? They don’t understand that endless population increase means more cars on the road, more emmissions, more demands for energy of all kinds, more use of water….what don’t they understand?

    • 90% of Canada is uninhabited.

    • Good point! Because, as we know, the immigrants Canada receives arrive from other planets.

  12. “But producing oil also creates benefits – high oil prices generate higher incomes for all Canadians”

    This argument is nonsense. The fact is the best job and business opportunities come from selling value-added goods and services on the world market. For the tens of thousands of jobs the oil sands produce, we have lost hundreds of thousands of good-paying export-related jobs (because the oil dollar is overvalued by 25% making our value-added exports and labor costs too expensive.)

    A dirty-energy economy is a dead-end economy in the 21st century. I don’t suggest the oil sands should be shut down; but if they were for some reason (the price of oil drops below $80/barrel making production too expensive) we would be better off environmentally and economically. It’s better to earn a living (like Germany, e.g.) than dig holes in the ground and live off resource welfare checks.

    • I actually explain at length and in great detail why that view is wrong. All you have to do is click on the link.

      Someday I have to do a post on the whole “value-added job” meme. People keep using it as a synonym for “high wage”, when it’s not.

      • The strength of the value-added sector is that it is diverse and the potential is limitless. It provides opportunities for all kinds of jobs in all sizes of businesses all across the country. It is utter folly to throw all that way to sell dirty energy to the world. Canadians want real jobs; they don’t want to get shipped off to the middle of nowhere to work in a filthy open-pit mine.

        • Create your own value added then. Nobody is stopping you. But we’re not going to devalue the dollar to bail out your uncompetitive and hidebound sectors. You might want to address your huge deficits and massive debt too, something most other provinces did years ago.

          • Clearly you don’t understand the concept that a dollar overvalued by 25% is the same as slapping a 25% tariff on exports. That is a huge burden to the value-added sector in Canada. It also hurts tourism.

            BTW, ON lost hundreds of thousands of good-paying export-related jobs and all the economic spin off that comes with them. Yet AB is collecting big bitumen welfare checks and it still has a whopping $3B deficit, almost as bad as ON’s (by pop.) If Harper’s economic action plan — which is to build a firewall around AB — is not working for AB, that just goes to show what an abject failure it is.

            So maybe you want to take the mote out of your own eye before telling others how to remove the speck in their own…

    • No, you’ve lost hundreds of thousands of export jobs because the Chinese will build the same products for a fraction of what you demand in wages. And Americans in southern States

      If you can learn to be a first rate manufacturer like Germany, then yes, you can keep your manufacturing jobs but there is no built up demand for overpriced union labour to be building mediocre vehicles like Grand Caravans or Impalas.

      The ROC won’t give up their prosperity to bail out the uncompetitive and overly expensive manufacturing sector.

      • We’ve lost hundreds of thousands of jobs because the dollar has become overvalued by 25%. This has nothing to do with union labor. What ignoramuses don’t comprehend about a high dollar is that there is no free lunch. The higher purchasing power must be equalized out somewhere and that somewhere will be wages. In order to restore our competitive position, wages will have to be busted by 20%. Of course, debt will still remain 25% higher.

        When the Liberals were in power, Canada’s car plants were the most productive in North America. We had an economy that allowed all provinces to prosper.

        What prosperity are you talking about? By, the ROC do you mean Alberta? They are supposed to be reeling in the resource welfare checks. Yet this year their deficit tripled to $3B. That’s almost as bad as ON when you factor in population. If the tar sands are not benefiting AB they sure aren’t benefiting the ROC.

        BTW, Harper turned a $26B trade (current account) surplus to a $50B trade deficit. According to the “twin deficit” theory, this will produce big budget deficits in Canada. That’s what happened to all the bankrupt US PIIGS…

  13. This is one of the stupidest and most short sighted positions I have ever read on a related subject. NYC is looking at spending over $50b on protecting itself, via the construction of barriers, from storm surges directly related to climate change, warmer oceans, and so on, alone. If the ice sheets of Greenland melt we can expect 7 meters (21 feet) of sea level rise – that’s just Greenland. The majority of the world’s most populace cities are coastal. What would it cost to protect them or to relocate hundreds of millions or billions of people (not even taking into account the costs of impacts to food production)? Hundreds of trillions of dollars? Quadrillions? Give me a break. Go back to bean counting.

    • Against stiff competition, I think I can declare this to be the comment that misses the point by the widest possible margin.

      • You are suggesting that the free market should dictate policy and that it is sufficient to cope with this crisis and/or that the benefits to the Canadian economy might outweigh the environmental impacts. I am stating that the true “externalities” of this industry (and others like it) are not even remotely taken into account (yet).

  14. You must have very little knowledge of the West Coast Of BC .

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