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D'Avignon & Finlayson: If we don't supply oil, others will (Vancouver Sun)

Co-authored by
Greg D’Avignon, President and Chief Executive Officer and
Jock Finlayson, Executive Vice President and Chief Policy Officer

It is time for a mature conversation on oil exports, against the backdrop of the economic reality we face in Canada and around the world.  Simply put, the evidence confirms that all of us will continue to need all forms of energy, including oil, over the coming decades.  For Canada, the key question is whether we want to have the option to safely export our oil to global markets other than the United States, currently our only customer, and which pays less than the world market price and requires less of our product each year. In 2013, energy made up one-quarter of Canada’s merchandise exports, of which oil and gas constituted the vast majority.  Finding ways to access the world market for our country’s biggest export industry should be a priority for all governments in Canada.

The International Energy Agency (IEA) projects that, even with strong action to address climate change, world primary energy demand will grow by at least one-third (and possibly by up to 40 per cent) over the next 30 years.  This is true for renewable forms of energy, but also for oil and natural gas.

Of interest, China, India and other emerging markets will account for all the growth in the world’s energy demand going forward.  While the share of renewables in the global energy supply mix will rise significantly, under the various scenarios modelled by the IEA, fossil fuels still account for 60-75 per cent of global energy use into the late 2030s. The IEA further estimates that, even with aggressive policies to accelerate the adoption of clean energy technologies, global oil production will increase by 13 million barrels per day to reach 103 million barrels by 2040.

Who will provide the energy that the world needs?  Canada does an excellent job in regulating the extraction and transportation of energy.  As a result, the Canadian energy sector’s performance continues to improve in the areas of greenhouse gas emissions per unit of energy produced, land impacts, the risk of oil spills, and environmental sustainability.

To keep things in perspective, Canada generates just 1.5 per cent of global greenhouse gas emissions, a share that has been dwindling over time.   Meanwhile, B.C. and now Alberta have adopted by far the highest carbon taxes in North America and the oil and gas industry has invested hundreds of millions of dollars in new technologies to speed innovation.

By any reasonable standard, Canada is a responsible energy supplier with sound independent public policy and regulatory frameworks to manage its energy resources.  If we choose not to participate in helping to meet the world’s growing demand for oil and other forms of energy, we can be certain that Russia, Iran, Venezuela, Saudi Arabia, and Nigeria among others will happily step forward in our stead. We can also include the United States in this list, as U.S. oil production has doubled since 2005.

Given this, how does the world benefit if Canada says “no” to oil production, pipelines and access to global markets?  Others will provide the oil, but Canada will have missed out on the prosperity, jobs and government tax revenues that flow from developing our energy resources.  As important is our reputation. If Canada is unable to offer certain and timely environmental assessment processes, or advance projects with robustly reviewed mitigation plans, we risk earning a reputation as a jurisdiction that does not welcome investment regardless of the sector.

The truth is that B.C. has over 33,000 kms of energy pipelines that serve us well today and meet world-class standards for safety and reliability.  Thirty percent of the fuel for the vehicles, transit, and other modes of transportation that move people and goods into and through B.C. comes from a refinery in Burnaby that depends on oil that is shipped in by pipeline. There are 1,400 oil tankers annually coming down B.C.’s coast from Alaska to the Cherry Point refinery in Washington State, and Vancouver Island would soon shut down if not for the weekly fuel barges that supply Island residents and businesses with refined petroleum products. The existing Kinder Morgan oil pipeline across B.C. has safely shipped product and supported jobs, local businesses and the tax base for over 60 years.  Most environmental groups paid no attention to it until a few years ago.

Kinder Morgan and other pipeline operators must be held to high account.    They need to operate safely, protect the marine environment, and provide benefits to communities and governments.  They should not, however, be held to ransom through a campaign fed by misinformation, and rooted in the fantasy that shutting down oil production and pipelines in Canada will somehow be good for the world, our environment or you personally.

Published in the Vancouver Sun print edition on January 21, 2016