The oil price boom from 2003 to 2013 fueled rising prosperity in Saudi Arabia, which became the world’s 19th-largest economy. The business-as-usual camp says that the scientific consensus is wrong about climate change, or that climate scientists have exaggerated the risks, which can be tackled if and when they become apparent. To some in the environmental movement – the “deep greens” – it seems pointless to expect politicians to do anything meaningful about climate change: they are obsessed with growth for its own sake, bend the knee to fossil fuel companies when they demand tax breaks and subsidies, and are reluctant to back the potential of renewables. The second is the transitionary bit: the only serious way in the next 15-20 years to bear down on coal is to switch from coal to gas. Even if the world called a halt to economic expansion now, he adds, carbon emissions would continue rising and the world would be looking at an increase in global temperatures of 3-4C. Tracy: OK, so let's get right into that, then, when we're talking about Canada's economic recovery, what that could look like. Tracy: And marketing on a global scale is what you're talking about. The lessons from the anti-apartheid and debt-relief campaigns is that divestment can be used to put pressure on governments to act. Because I expect the amount that has to get replaced is going to be much larger than the reduction in demand, even in an aggressive transition scenario. Without question, Africa’s energy consumption is going to rise. Either way, it would suggest that governments had started to take seriously what Stern calls one of the greatest market failures in history: the failure to take account of the damage caused by burning fossil fuels. There is no evidence that we want fewer of them. One of the challenges faced by those who wish to curtail fossil fuel use is that there is no political consensus on tackling climate change. “It’s pretty obvious that we can’t both burn fossil fuels and limit the damage from climate change. We could be living through the green technological revolution, in which energy has been decarbonised. Nevertheless, he is certain, “solar and wind will be two major sources th… And, you know, for example, and I know some people have trouble hearing this, but we could go out and we could spend hundreds of millions of dollars planting trees. The answer is that it will be hellishly difficult, but it is just about feasible if we make the right choices – and start making them now. And, you know, I'll tell you, Tracy, when we look around the world, that other resource developing countries and specifically energy producers around the world, we're hard pressed to find the level of polarization and hostility that exists in Canada. Mac: Well, one of the things that I just want to emphasize is that what I have found in my discussions with people, one point of understanding that kind of separates people in terms of their strategies and their policies, is this issue of how long it's going to take for the industry to go through the transition. In reality, only the deepest greens are opposed to all forms of growth. The problem is that there's such a negative overlay and those who are opposed to the industry are almost ignoring the whole ESG story and just focusing on one factor, which you would be aware of, and that is the CO2 emissions and climate risk. Again leaving South Africa to one side, the average person in sub-Saharan Africa consumes the same amount of energy in a month as the average Briton does in a day, according to Kevin Watkins, director of the UK’s Overseas Development Institute. The image of Iran's economy as oil, carpets, and pistachios was always flawed, but has now become badly dated. And it's like there's almost a reluctance or an embarrassment or an unwillingness to look at our resource potential truly as a strategic asset for Canada. Even if you do so more slowly, it will still go into the atmosphere and cause climate change.” Jacobs adds that, in the past quarter of a century, when countries could have been putting in place the infrastructure for a new green economy, they have been going in the opposite direction. The past three centuries of progress have been powered by coal, oil and gas. And so, we do have many problems, but we're making progress. It is hoped that if oil prices keep rising, alternatives will be developed and this will enable a smooth transition. He's a corporate director, a private equity investor and a philanthropist. This is an uncomfortable thought. Several of the lines carrying that crude are in the midst of expansions. vast majority of fossil fuel reserves are unburnable, Investment in clean energy is growing at a double-digit rate, Atlanta’s carbon emissions are 10 times those of Barcelona. This is one of the reasons why the deep-green approach to climate change is fraught with difficulty. But what's important to see about the oil and gas sector is that the economic value created relative to, in a sense, the inputs and specifically relative to labour, which gets to the whole thing about labour productivity, which is one of the key drivers for any country in determining economic growth so that the value created from the sector in economic terms, is very significant. We want technical change, for example, to build new solar technologies. Canada’s economy has faced a double hit, from both COVID-19 and collapsing oil prices, economists note. The energy needs of a bigger and richer global population have risen sixfold in the past 50 years. > Proved oil reserves: 560 million barrels. Almost 90% of that energy is provided by fossil fuels – coal, gas and oil. This magazine website is published by the Canadian Association of Petroleum Producers as part of an ongoing dialogue with Canadians. It's a huge value creator. You know, why isn't our ESG enhancing those advantages? Carney believes climate change is the medium-term issue of our age, but talks about the “tragedy of horizons”. And with the contraction that has occurred, you can, and with ultimately, as we come out of it, you can reasonably anticipate that there's going to be a deleveraging that occurs to some extent. And this unfortunate thing about, you know, the different political representation in different regions. And I find that shocking. And so, we have so much policy and regulatory uncertainty and political uncertainty slash controversy, sometimes hostility directed towards the industry --the Western Canadian energy-based industry -- that it has been a factor. Today there are more than 7 billion. To have a realistic prospect of preventing global temperatures from rising by more than the previously recognised danger threshold of 2C, scientists say it is not possible to burn all the proven fossil fuel reserves owned by companies and governments. It's our political institutions as well. But when you look through it all and you try to parse it out, there's also no question that adverse policy, hostile politics in Canada has really hurt the industry. Tracy: Well, Mac, when we're talking about investment in the industry, then, why is it so important that we turn to that? Nor would there be much support for a return to the days before fridges, gas cookers, washing machines and vacuum cleaners. Mac: And the usual response is just a smile, a smirk and, 'oh, of course, it would be different,' that kind of thing. That is because the real growth in energy demand from now on is going to come from the developing world. There are those who might argue otherwise, but life in the world before the industrial revolution really was nasty, brutish and short. Politicians move when they know votes are at risk. It's not just the industry marketing. Like, I was looking at one study just this morning and it's saying that, 'well, yeah, oil, the oil industry, that's it now it's done. Nigeria can plan economy without oil, says Agusto. In order to avoid ecological suicide, they argue, we must first recognise that capitalism is an insuperable obstacle to any reduction in our fossil fuel consumption. Cuba, subject to a US economic embargo, was one such country. And private sector spending, of course, is going the other way. The size of the global middle class has increased, and consumers in Shanghai and Mumbai have been able to afford cars and fridge-freezers. It's about the same size, interestingly, as the entire banking and financial services business in Canada, which is always a surprise for people to hear. It is hard to explain the consumer-led recovery in the euro area without assuming a positive impact from lower oil prices. The economy of the State of Texas is the second largest by GDP in the United States after that of California.It has a gross state product of $1.887 trillion as of 2019. Given the dreadful air quality in Delhi, the government led by Narendra Modi is well aware of the threat of climate change and has announced ambitious plans to increase solar power. Would our politics be different? Fossil fuels are used to make and power mobile phones, tablets and laptops. Protecting this balance of nature is therefore one of the great challenges of the late 20th century.”, It was, though, just one speech at a time of great global upheaval: China was liberalising its economy; apartheid was in its death throes in South Africa; above all, the cold war was coming to an end with defeat for the Soviet Union. Can we imagine a future that is cleaner, greener and sustainable – one that avoids climate armageddon – without abandoning the idea of growth and, thus, forcing living standards into decline? You can't see it. And if it's not Canada producing these resources, the resources will get produced in other jurisdictions and these other jurisdictions do not have the same quality of governance oversight that Canada has and ESG standards. Mac: Well, it's certainly right across Canada in terms of suppliers to the industry and services to the industry, employment levels. But we have to bear in mind that -- and you create jobs because people are going out and planting trees and all the related work. Would our policy be different? And as a strategy, as a government strategy and governments all over the world are doing this, I can see that it made sense for them. Building up the necessary infrastructure is going to be a long and expensive process, which should be encouraged through public procurement, tax incentives and a big increase in R&D budgets. And it's my opinion and people disagree with me on this, that we won't have a shift in the investment climate until we have a shift from our political leaders. It is not just a question of supply, but also a question of demand, which is why many people now have more than one smartphone and lust after the Apple watch. Its carbon footprint is tiny. In 2017, Texas grossed more than $264.5 billion a year in exports—more than … And, you know, it's almost every other day some headline from a reporter written generally by people who are advocates on the renewable energy side that are calling for the death of the oil industry, it's gone, it's done. Burning much of what’s left will lead to environmental and economic catastrophe. “We have started too late, and it doesn’t matter how much solar and wind power there is – you are still burning all the coal, oil and gas. Washington could then invite other nations to sign on to the same commitment. We spur economic growth through hundreds of billions of dollars investing right here at home every year. Mac: Well, I think the most important thing that Canada could do right now is apply criteria of economic value and productivity to the post-COVID recovery plan. That problem is us. The talk at meetings of the International Monetary Fund and the G20 is whether the next financial crash will be caused by the pricking of the carbon bubble – the idea that the stock-market valuation of fossil fuel companies has been inflated by overestimating the worth of reserves of oil, coal and gas that could only be exploited by putting the climate at risk. That message would be reinforced by putting a price on carbon. “We’re seeing very rapid change”, says Stern, “but we’re going to have to accelerate the arrival and installation and use of renewables, from hydroelectricity and wave power through to the various types of solar. In part, that is because investors will probably move slowly. It certainly has hurt investor confidence. > … Here at the Guardian, we want to sell more newspapers, and more ads to companies selling their own goods and services to readers. And the corporate sector is also, the debt levels are among the highest in the world. So what will the world look like in 2043? There might be a little bit of an indirect link on the investment side that institutions and banks would say, 'well, Canada's really got its act together there and they have all these progressive initiatives regarding climate,' but it's minimal. Obama could do his bit by making climate change a mission for the US – similar to the way that John F Kennedy vowed to put a man on the moon in the early 1960s. “Achieving universal access and a tenfold increase in power generation will take huge domestic investments and a big international financing effort.”. Let's start with ourselves. What do you see as the role of Canada's energy sector and of the resource sector? Over the years, the idea that all growth is good became embedded. We will have to! Tim Jackson of the University of Surrey, author of Prosperity Without Growth, says we need fewer resource-intensive activities that damage the climate, but more of the services that improve the quality of people’s lives. And the question for Canada is, what is our strategy in that kind of an environment of deep, potentially and most likely declining demand as we go into this transition? Content is edited by CAPP Communications; questions on editorial content may be referred to context@capp.ca. Would it surprise you that Canadian oil and gas benefits virtually every region and community in Canada? Unless it is, there will be little point in saying that someone in sub-Saharan Africa can get all the power he or she needs via a solar panel costing as little as $200. And so, I look at these dilemmas really through that kind of lens. The market model spread quickly to parts of the world that previously it could not touch: to China, where the reforms begun by Deng Xiaoping were accelerated; to India, where the idea that the world’s biggest democracy could go it alone was abandoned; to the Soviet Union and its former satellites, which received a strong dose of economic shock treatment. If oil is no longer in demand, these countries would face a rapid period of readjustment; they are likely to face a fall in wealth, unless they could create growth in other sectors. Dieter Helm, professor of energy studies at Oxford University, says: “It’s not clear we’re very serious about climate change. Mark Carney, the governor of the Bank of England, does not believe it either, which is why he went public at the 2014 annual meeting of the World Bank with his view that the “vast majority of fossil fuel reserves are unburnable” if we wish to keep the increase in global temperatures below 2C. Life expectancy was 40 at best, the working week was long, disease was rife and diets were poor. And the enormous amount of attention and debate relating to demand rolling over and the industry moving in to some kind of a state of total decline. Mac, thank you for being on the podcast today. John Lewis commissions expensive ads to encourages us all to spend more at Christmas. The IEA is right: further delay will be costly. And so, I'm not criticizing that. This is not just about carbon taxes. It's kind of -- it's right across the country. We need more Barcelonas and fewer Atlantas, because that will encourage us to change the way we live: walking more, using public transport more, sharing cars, cycling. Tracy: Right. So if reducing living standards is a political non-starter and repression is spurned as a way of controlling population growth, that leaves reducing the carbon-intensity of growth. But the economics of more, together with a rapidly rising population, have created problems unforeseen at the time of James Watt’s steam engine. The role of oil in Iran's economy is declining, undercutting Western efforts to press the regime by reducing its oil export revenue. And this, notwithstanding the corporate sustainability reports and the greenwashing, remains the case for even the most right-on companies. We need to market ourselves that way. Who is going to supply that 70 million barrels a day and there are still going to be declines, natural reservoir declines. Atlanta and Barcelona have the same number of people and share the same per-capita incomes, but Atlanta’s carbon emissions are 10 times those of Barcelona. India provides another example of the policy choices facing countries in the emerging world. “If we say the only way to handle this is to stop growing, we will be factually wrong, because if we stopped growing but didn’t break the relationship between activity and emissions, we wouldn’t be tackling climate change.”. Cuba, subject to a US economic embargo, was one such country. The first is that the balance of power in the workplace has tilted decisively in favour of capital over labour: with an abundance of cheap workers to choose from, employers can be mean with pay. Well, according to Betsey Stevenson and Justin Wolfers, economists at the University of Michigan in the US, the evidence is that wellbeing rises with income, and that the satiation point has yet to be reached, even in the richest countries. The average sub-Saharan African consumes the same amount of energy in a month as the average Briton does in a day. It's very possible. Slowly, those in power are beginning to understand what is at stake: that if we carry on growing the global economy at its current rate, and continue to rely on fossil fuels to power that growth, the planet is going to cook. GDP doubled, household income rose by 75 percent, and 1.7 million jobs were created, including jobs for a growing number of Saudi women. Tracy: If we look at Canada's natural gas and oil sector, we can see all kinds of ways where the industry has been innovating, continues to do so and has a track record in doing so. If we really want the fossil fuels to be left in the ground, it is about us. But do you think that industry is responsive enough and able to adapt quickly enough? What one has to appreciate at the end of the day, what we will have, even if the economy comes back 100 per cent, is what we will have is an extraordinarily high level of debt and new debt that was created to deal with the COVID problem and the loss of income. Italy. The Cuban government responded by creating urban farms: agriculture went local, small scale and – by necessity – organic. We can't really see it anywhere else in the world. But is there anything else that you would like to add at this point before we wrap up the podcast today? Well, before I ask this question. Firms have to depend on costly generators, which makes goods more expensive. Businesses that did not expand were viewed as failures. Calorie intake fell by a third. https://context.capp.ca › interviews › 2020 › podcast_mac-van-wielingen Watkins believes western governments and environmental NGOs would be better off mobilising finance for a programme of carbon capture and storage in India than offering Modi advice about the perils of climate change. After the crash, when the developed world was struggling to emerge from the deepest slump since the Great Depression, it was China and India that acted as the engines of growth. And so, we need that positive orientation. Mac, you're also involved in the Real Jobs Real Recovery Task Force. Let's talk about that. And so, is that not, does that not give Canada some competitive advantage to attract investment? And it's the highest in Canada of all subsectors. The fossil fuel companies are in business because we want the products that fossil fuels make and power. Even without Keystone, however, the United States now relies on Canada for more than half of its imported oil. It's how can you be the best barrel? If the denouement of Mitchell’s novel presents one frightening future, Cuba provides another sketch of what could be in store if the transition from a fossil fuel world to one running on renewable energy does not go according to plan – less apocalyptic than The Bone Clocks, but with considerable drawbacks. But the risk is now out there – and growing – because policymakers have now woken up to the risks of climate change. Or, even for a household, putting money into the house for repairs and maintenance, those can be at least partially explained by or looked at as investments, and you've got an enhanced asset. So the government is ramping up efforts to diversify the economy. And just given the breadth of your experience, I thought it would probably be of benefit to the listeners if you could take just a minute and talk a bit about Canada's natural gas and oil industry in terms of its size and its actual impact on Canada's economy. The stone age did not end because of a shortage of stone. We are ultimately the consumers of those carbon-based products, and when we elect politicians, what’s worrying is that we’re not prepared to say: ‘Make us pay for the damage and the pollution we cause.’”. And so, I would just end with that Tracy, and just say I appreciate this opportunity to have this conversation with you. It is not just about divestment. It's multiples greater than a lot of other sectors in the economy. He's a veteran energy executive. Because there is an enormous opportunity for Canada to maintain this vital sector of our economy, even if it's not growing, maintain it and ensure that it maintains, that it's stable and profitable and protected in a sense by policy and not attacked, not torn down. “Delaying action is a false economy: for every $1 of investment in cleaner technology that is avoided in the power sector before 2020, an additional $4.30 would need to be spent after 2020 to compensate for the increased emissions.” Fossil fuels are not going to disappear overnight, but the phasing-out process needs to start immediately, and that process could be hastened if governments used the opportunity provided by the recent halving of global oil prices to remove the $1tn annual subsidies for fossil fuels. It does cut across the whole economy and it's a very important part of the sector. In part, it is because the reserves of the big western fossil fuel companies make up only a small chunk of the global total, and it is hard to see Vladimir Putin being too troubled by a divestment campaign. Our Reporter . Most growth is the result of innovation – the development of new products, new techniques and new ways of doing things that are an improvement on what went before. And how dominant it will be in economic terms has to be seen because there are offsetting areas of positivity and growth that are still present. Within five years, the reach of the market economy had been extended to an additional 3 billion people. ... and sink with the price of oil. Mac: Well, quite frankly, it's a hard question to answer because the role and the contribution of our energy and resource sectors is going to be driven very much by policy and politics. Growth rates in the developed world, however, were dwarfed by those in some of the bigger emerging economies. It is easy to see why governments, especially those in poorer parts of the world, want to help citizens with their energy bills. Investment in clean energy is growing at a double-digit rate. And so, my point is that we need to think synergistically across a number of fundamentals and the economic fundamentals should always be there. Most of the world has gone in a different direction. Mac: Well, I've been shocked at how some opponents of the industry have this view that the industry is not innovative. There's no question that markets’ supply and demand, certainly with the COVID impact, has really impacted the prices of oil and natural gas. Tracy: Mac, I really enjoyed this discussion and I hope I get to talk to you again. Alberta Can Transition from Oil and Gas and Have a Strong Economy. But the critical point is that there's no offsetting productive asset relative to that debt that is now on the public balance sheet. There was an acute shortage of fuel for tractors. That is incompatible with the climate change projections made by the International Energy Agency, which thinks fossil fuels should make up no more than two-thirds of the energy mix. Enbridge Inc’s Line 3 replacement project is in the process of doubling its capacity, which will allow it to deliver about 760,000 bpd of crude from Alberta to Superior, Wisconsin, by the end … Historical evidence shows there is a link between income and population: as people become richer, they have fewer children. And when I talk about economics, I talk with ESG and I'm trying to encourage people to look at, to broaden the concept of ESG to E-ESG or what I sometimes describe as double 'ee'-s-g. And it's, we have to see these aspirations across those four cornerstones. Mac founded ARC Resources and ARC Financial, which is Canada's largest energy focused private equity firm. 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