Killing the Energy Goose

Aesop’s Fable of The Man and the Golden Eggs

A man had a hen that laid a golden egg for him each and every day. The man was not satisfied with this daily profit, and instead he foolishly grasped for more. Expecting to find a treasure inside, the man slaughtered the hen. When he found that the hen did not have a treasure inside her after all, he remarked to himself, ‘While chasing after hopes of a treasure, I lost the profit I held in my hands!’

The Moral: People often grasp for more than they need and thus lose the little they have.

Energy is the Golden Goose of Modern Society

Poverty and energy scarcity are obviously tied together.

Access to cleaner and affordable energy options is essential for improving the livelihoods of the poor in developing countries. The link between energy and poverty is demonstrated by the fact that the poor in developing countries constitute the bulk of an estimated 2.7 billion people relying on traditional biomass for cooking and the overwhelming majority of the 1.4 billion without access to grid electricity. Most of the people still reliant on traditional biomass live in Africa and South Asia.

The relationship is, in many respects, a vicious cycle in which people who lack access to cleaner and affordable energy are often trapped in a re-enforcing cycle of deprivation, lower incomes and the means to improve their living conditions while at the same time using significant amounts of their very limited income on expensive and unhealthy forms of energy that provide poor and/or unsafe services.  Energy, Poverty, and Development

The moral of this modern story is very clear. Where energy is scarce and expensive, people’s labor is cheap and they live in poverty. Where energy is reliable and cheap, people are paid well to work and they have a better life.

Golden Eggs Aplenty in the US

From Shale Revolution Keeps Growing, Sept. 12, 2016, Corpus Christi Caller Times

Consider that in the near blink of an eye natural gas has overtaken coal as the country’s largest fuel for electricity generation. Coal generated more than 50 percent of U.S. power just a decade ago. Today, it produces just a third of our electricity and is poised to fall further.

Second, our same supply of low-cost gas is leading a manufacturing resurgence. Along the Gulf Coast and in shale fields in Pennsylvania and Ohio huge manufacturing facilities — be they steel or chemical plants — are now either entering production or are under construction. Chemical producers who use natural gas as the building blocks for their products can now make the same products here for a fraction of what they can overseas.

The American Chemistry Council, the trade association for the nation’s chemical companies, now reports that nearly 270 new chemical projects are in play, totaling $170 billion in investment. Roughly 60 percent of that investment is coming directly from overseas. Affordable, abundant natural gas is proving decisively positive for U.S. manufacturing. Jobs and investment that once slipped away are now returning. (my bold)

And last, but not least, we are on the verge of becoming one of the world’s largest natural gas exporters. Just a few years ago, America was poised to become a major natural gas importer. It has been a remarkable turn of events.

The Illusory Treasure of Fighting Climate Change

Meanwhile in jurisdictions grasping for the moral treasure of reducing CO2, governments are starving or poisoning the Energy Goose and the suffering is only beginning. Exhibit A is oil-rich Alberta Canada where provincial policies have halved business investment in just 2 years.

Barry Cooper explains in this article published today in the Calgary Herald NDP climate policies are bearing their inevitable poisoned fruit

Contrary to what many NDP supporters, and many of my colleagues believe, businesses are more likely to respond to government policies than to set them. One of the responses to egregiously irresponsible policies is to invest elsewhere.

The Birn report did not discuss the scientific premises of anthropogenic climate warming, nor the prudence of attempting to regulate GHG emissions. What matters are the consequences of policy choices by Canadian and U.S. governments for Alberta and Saskatchewan.

Here are some pertinent facts.

The interdependence of North American economies and the familiar 10-to-one ratio between the two countries means that Canada must always adjust its policies to American realities. That ratio applies to global CO2 emissions (16 per cent for the U.S.; 1.7 per cent for Canada, of which the oilsands’ contribution is minuscule) as well as to GDP and much else. Canadian CO2 emissions are comparable to those of Texas. The big difference is how that CO2 is generated.

Coal is the largest source of American CO2, mostly from electricity generation, followed by transportation and industry. In Canada, industry — from fertilizer manufacturing to mining, smelting and pulp production — is the largest emitter, followed by transportation and then electricity generation. The main reason for this difference is that in B.C. and Laurentian Canada, hydroelectricity is the chief source of power. Prairie rivers furnish great fishing opportunities, but few electrons.

Since CO2 from American coal plants alone are double those from the entire Canadian economy, they have been the focus of U.S. policies. Replacing coal-generation with natural gas has been made easier by low natural gas prices, partly the result of innovative shale-gas exploitation.

In Canada, things are different. Because more than 80 per cent of Canadian electricity is generated by non-emitting sources, other sectors must be targeted to achieve levels of emission reductions comparable to the Americans’. The cost, however, is bound to be higher: here, cheap gas hardly matters.

This is what makes carbon taxes so attractive to Canadian governments. They can’t go after coal plants, because there are so few left, so they go after the entire economy. Alberta’s carbon tax and Ontario’s cap-and-trade policy mean that over two-thirds of Canadian emissions will be covered by next year.

Big-government Liberals, socialists and members of the green cult will rejoice that we are saving the planet. However, the costs of the new NEP — the national emissions policy — achieved by carbon-tax harmonization, will introduce more incentives for investment in places where anthropogenic climate change is not an unquestioned public policy dogma.

Because the Prairie petroleum industry competes globally for both capital and markets, parochial Canadian climate policies add to costs and induce investors abroad. And they make no difference at all to global GHG emissions.

That is one reason why energy investment in Alberta is half 2014 levels. No wonder Finance Minister Joe Ceci is sad. The consequences of his own policies are bearing their inevitably poisoned fruit.

Barry Cooper is a professor of political science at the University of Calgary.

Footnote:

Former Canadian PM Stephen Harper (from Alberta) based his climate change policy on the realities mentioned in the article.  His administration was committed to matching US energy policies on a sector by sector basis.  Since the US went after coal, so did Canada.  The US has not done anything about oil and gas, so neither should Canada.

The ruling NDP party are on thin ice because Albertans are mostly skeptical of global warming claims.  A recent Canadian survey shows the % of people whose beliefs would support what the administration is doing.  That’s right: Alberta is the dark blue province in the map.

More on survey of Canadian attitudes toward global warming:      https://rclutz.wordpress.com/2016/02/25/uncensored-canadians-view-global-warming/

More on toxic effects from Green energy policies:  https://rclutz.wordpress.com/2016/08/01/electrical-madness-in-green-ontario/

Background on Alberta oilsands:  https://rclutz.wordpress.com/2015/11/07/brer-canada-and-the-tar-baby/

Postscript:  Alberta is ahead of Ontario in the Golden Goose Killing Race, with electricity rates now among the highest in North America.  But Ontario’s rates are rising faster.