Zealots throw another dagger at our oil industry

So-o-o, it's now clear that Canada can meet its original Kyoto targets after all. All we have to do is euthanize a good portion of the country's most important export-revenue-generating industry, ship large numbers of jobs and cash from Western to Central Canada, and levy carbon taxes on individuals and businesses that would make Stéphane Dion's "Green Shift" plan seem benign.

The David Suzuki Foundation/Pembina Institute report advocating this plan came exactly 29 years after the Oct. 28, 1980, announcement of the infamous national energy program by Pierre Trudeau's Liberal government. To those whose jobs and businesses were destroyed in the aftermath of the NEP, there is something surreal about both the dates and the Toronto-Dominion Bank's sponsorship of the report. Why? Because the bureaucrat who led the grand design and implementation of the NEP was none other than TD's chief executive officer, Edmund Clark. While the NEP was a complex, Marxist-style program to re-engineer the economic and social life of the country around energy, its implications pale in comparison with the sheer scale of this new enviro-social master plan.

This so-called ground-breaking study would have us tear up Canada's economic foundations and throw the pieces high in the air, serene in the belief that all-knowing government agencies will catch and arrange them flawlessly into a new utopian order where flowing waters, whispering winds and friendly rays of the sun will keep Canadians warm, mobile and employed.

The study is replete with ideological bias. For example, coal-fired power generation is the largest single source of greenhouse gas emissions. Yet, inexplicably, the study calls for a ban on the growth of nuclear power, the only zero-emissions technology capable of producing reliable electricity on a scale needed to make a real difference. I say "reliable" because the wind doesn't blow and the sun doesn't shine on demand.

Scientists with the UN Intergovernmental Panel on Climate Change (IPCC) have developed models that predict the Earth will warm by 0.2 degrees over the next decade, compared with 0.1 degrees if global greenhouse gas emissions are dramatically reduced. This is not a large difference. During my engineering career, I learned that mathematical models of virtually any natural system are badly distorted by minute changes in the vast array of assumptions, and by factors impossible to accurately account for in the model.

For example, while IPCC models try to account for as many land, ocean and atmospheric effects as possible, there is no reliable way to account for the natural sun intensity variations that many scientists believe are the biggest driver of terrestrial temperature variation. Another challenge for climate modellers is the carbon dioxide absorption effect of the oceans. Even regularly occurring ocean phenomena such as El Nino and La Nina are difficult to model. And IPCC models failed to predict recent temperature data indicating global warming has stalled over the past seven years, leading some scientists to postulate that we are entering an anomalous cooling period.

While scientific climate modelling is notoriously unreliable, econometric models are even more vulnerable to failure, because human behaviour is virtually impossible to predict. The Suzuki/Pembina study relies heavily on econometric modelling by consultant Mark Jaccard, a professor of resource management at Simon Fraser University. The Jaccard models attempt to predict the response of Canada's 33 million people to the massive business and personal disruptions proposed in the study. My business experience tells me that, as frightening as the Jaccard predictions are, the real effects on our already challenged economy would be far worse.

But here's another sobering outcome of the study: Even such a government-imposed economic tsunami wouldn't meet our Kyoto targets. Canadians would still need to send billions of our precious loonies offshore to purchase "emissions credits," supposedly to help developing countries reduce their emissions. A Financial Times study found a long list of carbon-credit projects, such as tree planting in India and solar power in South Africa, that are "carbon cowboy" enriching boondoggles. And some of the countries that would receive our carbon-credit cash are the same ones against which Canadian manufacturers and service providers are playing a losing game. Nothing like hog-tying your domestic businesses, while shipping off taxpayer's money to help the competition.

One key point has been lost amid all the noise and finger-pointing leading up to the Copenhagen climate talks. Canada is one of the only Kyoto target countries that is both self-sufficient and a growing exporter of oil and gas. Yet, when former prime minister Jean Chrétien agreed to our Kyoto targets, no allowance was made for this reality. Almost all of the Kyoto target territories, including Japan and Europe, import their oil and gas from producing countries that have no Kyoto targets. Small wonder that the study concludes that eviscerating our oil and gas industry is necessary, given that our Kyoto targets were set as if the industry didn't exist.

While other Western developed countries run unsustainable trade deficits, Canada has achieved current account surpluses (until recently). Oil and gas exports are the principal reason. The industry creates jobs from coast to coast. If we don't produce our oil and gas resources, countries that refuse to be bound by Kyoto targets will. But apparently the zealots don't believe those reasons should save the industry from sacrifice at the great altar of Kyoto.

Gwyn Morgan is the retired founding CEO of EnCana Corp.