The Conversation We Aren’t Having

Posted in The Strategist on October 13th, 2011

The Keystone pipeline debate should remind us of the need for a national energy and economic strategy 

For all of the talk about the Keystone XL pipeline, what interests me is the conversation we aren’t having – but should.  While considerable media attention is being given to the jobs versus environment debate, the real conversation is about perspective.  This is the too often overlooked need to stand outside a particular frame of reference and look at conditions from a wider and/or longer context.  The power of perspective is that it can reveal truths that are otherwise hard to see.  This is especially apt in considering the way in which we consistently situate economic development opportunities in the zeitgeist and play these off against other “competing” interests such as environmental, social, cultural or heritage values.  This is the truest frame within which to consider Keystone because in Canada our economic history has been defined by the “staple theory” advanced in the 1930s by Harold Innis, a political economist at the University of Toronto. 

Innis argued that Canada developed as it did because of the nature of its staple commodities – fur, fish, lumber, wheat, and minerals – that were “harvested” and exported to Europe.  The search for and exploitation of these staples led to the creation of institutions that defined the economic and political culture of our country. And it continues today.  In virtually every province and territory the economic development emphasis is on natural resource extraction: British Columbia wants to open eight new mines as part of a latter day “gold rush”, and is championing shale gas development; Alberta is accelerating the pace of oil sands development; Saskatchewan is leading the country in economic growth on the back of its own oil and gas development; and so on. 

TransCanada Pipelines, the Keystone proponent, has spent millions of dollars lobbying in support of the project – constructing a story of secure energy and jobs and minimizing potential environmental risks – and has been enthusiastically joined in this effort by the Government of Canada.  And through it all, the ghost of Innis haunts the narrative: export of raw materials – in this case, heavy oil from Alberta – can trigger economic growth.  The problem is that this is a relatively short-term proposition; Keystone might protect or create jobs and revenue for Alberta and the federal government, but is this really sustainable?  What happens when the oil runs out?  A passing glance at our own history shows that apparently sustainable industries like cod on the east coast, fur in Central Canada, and forests on the west coast, can be all too readily extinguished.  Why?  In the absence of a long-term perspective, and a commitment to both technical and social process innovation, governments routinely find themselves backed into a corner as resource stocks decline and default to job protection at the expense of other interests.  The rewards are always short-lived; the day of reckoning arrives when the resource is depleted, and after the handwringing, we fail to learn from these mistakes of policy or management and move on to the next “resource” that might fuel economic growth.  It doesn’t have to be this way.  We can do better and we must do better.      

And so it is that I wonder about the broader narrative within which Keystone should be situated.  I am under no illusions; our economy today is largely based on fossil fuels, minerals and oil.  I therefore expect the project to go ahead, but what of our economy and cultural identity in the future?  It seems to me that if Keystone proceeds, it should do so as one component of an overarching energy and economic development strategy that is truly sustainable – and not as a discrete project viewed in isolation at a moment in time.  And the same is true for all of those other resource projects waiting in provincial and federal queues.

For too long we have defined ourselves as a nation that exploited natural resources.  Must that trend be our destiny?  I don’t think so.  I envision a 40-to-50 year transition that sees our relationship to energy, the environment, and our economy evolve such that we become known as much for what we leave in the ground as what we take out.  Our legacy of natural resource extraction can be just that – a legacy that serves as the foundation on which we build a bold “next act” for Canada.  Keystone and projects like it have a place in this narrative, but they do not define it; a portion of the royalties paid and profits earned from these projects should be reinvested in a bold innovation agenda for Canada that includes targeted investments in communication, education and infrastructure.  The future comes knocking and unless we make conscious choices and investments to prepare for that future we will relive the mistakes of our past.  The export of oil and gas looks good today, but it is really not so very different from the export of fish, fur or forests.  So while we quite rightly examine the specific merits of Keystone, we need an equal measure of attention on the intellectual and public policy space within which Keystone properly fits.  What might a truly diverse national energy portfolio for Canada look like, and how do we get there?  What are the implications and opportunities for new forms of economic opportunity associated with a changing energy mix?   

Canada has abundant natural capital assets, but it does not have an infinite supply.  The oil and gas will run out.  And when it does, our reliance on commodity exports will constitute the ultimate economic development trap.  The work to avoid such a trap should start now.  We do not think on a national scale about assets and capabilities in the same way that we think of individual provinces’ assets and capabilities.  As a result, any pretense of Canada having a national energy strategy is more properly viewed as a national oil and gas strategy, which both limits the conversation now, and heightens our national vulnerability to future energy and economic shocks when the oil and gas game has played itself out or moved elsewhere.  It’s time to express energy and ecological worry as economic and social opportunity and paint a picture of how this might be achieved over the next 40-50 years.  This is about looking at energy in a new and bolder perspective.  This is the conversation we aren’t having.