Sara Hastings-Simon is a research fellow at the University of Calgary and a member of the board of Emissions Reductions Alberta.
It’s just a fact: An energy transition is definitively under way, spurring dramatic shifts in how the world produces and consumes energy. In Canada, that reality has been met by fears about existing jobs in the oil sands and the future of various resource-driven economies, as well as by debate and policy planning about lowering the carbon footprint of the existing oil and gas production and about what role it can or should play in an increasingly decarbonizing world.
Lost among all that, however, is one important question: How Canada can use its natural resources in new ways to meet the shifting demand?
Forecasts, such as the recent Science paper “Sustainable minerals and metals for a low-carbon future“, show massively growing demand for the metals and minerals that will power the energy transition – such as rare earths in the magnets used to generate electricity in wind turbines, and lithium in the batteries that enable electric vehicles to move. Canada, with its vast natural resource base, has many of the raw materials required to contribute to the growing global demand. This represents a significant opportunity for Canada to carve out a major role in the continuing work to build a resilient, secure and sustainable global supply of these metals and minerals.
Historically, however, governments have not pumped significant investment into developing the technology necessary to extract these resources in a commercially viable way. But as demand grows the opportunity becomes more attractive. To date the economic case for resource development has been challenged by China’s control over a large percentage of the resources. The ability for one supplier to flood the market and depress prices threatens the business case for technology and resource development. Addressing the challenge begins with viewing these metals and minerals as a strategic resource, and putting our money into growing that industry by enabling the development of the necessary technology along with implementing the policies necessary to provide market certainty.
By mobilizing to meet the growing demand for metals and minerals of the energy transition in a sustainable way, Canada can prosper in a low-carbon future through export of Canadian metals and minerals and components made with these resources, along with the export of knowledge around potentially innovative extraction technologies. Moreover, with the development of robust certification protocols, Canada can become a supplier of choice for corporations who have made sustainable sourcing commitments in response to growing demand from both consumers and investors.
This will, of course, draw accusations that the Canadian government would effectively be “choosing a winner” by investing heavily in one industry over the other. However, the history of technology innovation demonstrates how significant direction and investment from governments is vital in enabling natural resource development. For example, government intervention was critical for both the development of the in-situ oil sands production technology in Alberta, as well as the development of horizontal drilling and hydraulic fracturing technologies in the U.S. that unlocked production from shale rock formations. It’s time once again for the federal and provincial governments to use public revenues generated in part from existing higher carbon industries to fund innovation and enable the large capital investment required to prove out new technologies, through an array of tried-and-tested policy and funding tools: direct investment, provision of low-cost capital, along with procurement policies and mandates.
This doesn’t mean that forward-thinking oil and gas companies can’t get involved, too. Globally, oil majors are spending revenue from their core businesses on acquisitions – such as smart grids, renewable energy, energy storage, electric vehicle charging infrastructure – that can enable a strategic shift and can position their organizations to remain competitive in a low-carbon future. Metals and minerals represent another opportunity to do the same, as approaches to developing those resources share many of the same core competencies, and many of them can be found in the same geographical areas in Canada.
We must proceed carefully; prioritizing sustainability across the environment, communities and biodiversity, while ensuring that public investment in innovation translates into public benefit, will require a delicate tightrope walk. Public ownership of natural resources can continue to help enable a straightforward method to capture benefits through royalties – even more so for natural resources than other technology in general.
Developing an industry around the metals and minerals of the energy transition is an opportunity for the federal government to support natural-resource economies across the country as global demands change. The unique skills and resources in the regions can enable an economic development opportunity that is consistent with Canada’s mid-century decarbonization targets. The provinces along with industries can work hand-in-hand by investing revenue from the existing higher carbon industries into the development of these new resources. In doing so, Canada can position itself as an international leader in powering and moving the world sustainably for many decades to come.
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