Bending COVID-19 to the Green Agenda

cv-greenAccording to CBC contributor Lori Lee Oates, a “well-known voice on gender and women in politics” who is seeking a Liberal Party nomination, COVID-19 is hastening the green economy, and we are far behind. I agree with some of her ideas, but not her emphasis on more government spending.

This week [Newfoundland] Premier Dwight Ball, Minister of Natural Resources Siobhan Coady, new Memorial University president Vianne Timmons and two industry associations held a news conference. They called on the federal government to provide subsidies for oil companies in the Newfoundland and Labrador offshore. Their message demonstrated a fundamental misunderstanding of what has to happen to meet Paris Accord emission reduction targets for 2030.

Are they misunderstanding the Paris Accord, or do they see bailing out the oil companies as more important? I guess the latter. Politicians, as a rule, do what will keep them in power.

It also ignored the research on where the global economy is going, as other nations prepare green economic stimulus packages.

The fact that other nations are pouring tax dollars into the “green economy” doesn’t mean that that is where the economy will go. Government funding is great at wasting money, but in the long term, companies will go where the money is. Green technologies that are inferior will fail, no matter how many tax dollars are poured down the drain.

In May 2018, the International Labour Organization released a report which estimated that 24-million new jobs would be created in the move to a green economy, by 2030.

Labour organizations are even less credible than economists.

It also predicted a loss of six million jobs in the oil sector. However, that represents a net gain of 18-million jobs that will be created by this fundamental shift. Green energy is simply more job intensive than the fossil fuel energy sector and a far better bet for the economic future of this province.

What will cause this contraction in the oil sector? Electrification? Not with the current high prices and limited range of electric vehicles. Since roughly two thirds of oil consumption is for transportation, reducing it anywhere else (e.g. for heating houses) would require massive reductions to make a significant difference. Assuming electrification does gain wide spread adoption, which I think is likely in time, will it benefit Newfoundland’s economy, or will the benefits go to the locales where electric cars and infrastructure are manufactured?

What this means for Newfoundland and Labrador is that we need to take steps immediately to ensure we take full advantage of the green economic recovery. We also need to increase training opportunities.

What steps? Will training bring green jobs?

Like any revolution, those who get there first will seize the high ground and become the new centres of excellence. Green energy services are a product that we will be able to export globally, and they will be in high demand for decades to come. This is an opportunity for us to fully enter the global service economy for the first time in our history.

Presumably “green energy services” include generation and distribution of electricity, and excess electricity generated in Labrador would continue to be exported to neighboring Quebec. How much can this grow the economy? How does it provide entry into the global service economy? Will Newfoundland become a leader in distribution for electrified vehicles, and export it’s technology to the world? This seems ambitious.

For some years now, financial analysts such as former Bank of Canada governor Mark Carney and the International Monetary Fund (IMF) have warned of the dangers of ignoring climate change in financial planning.

Of course one should not ignore the impact of climate change, but one should also not overestimate it.

The COVID-19 pandemic has hastened the move to a green economy. This is likely the best opportunity we will ever have, as a planet, to get on track to meet greenhouse gas emission reduction targets, as outlined by the 2015 Paris Accord.

How has COVID-19 accelerated the move to electrification? I would argue it has done the opposite. If the move to telecommuting is semi-permanent, one could argue that it has helped reduce emissions, but that is not a move toward ‘green’ energy.

Even before the pandemic, the IMF was warning against subsidizing the oil industry. A 2019 paper maintained that we must factor in the cost of external factors like natural disasters and health care to calculate the true cost of fossil fuel subsidies. Furthermore, the IMF found that there was a net economic gain to ending oil subsidies.

I agree 100% that taxpayers should not be subsidizing the oil industry.

Experts have been pressing for jurisdictions that are heavily dependent on oil to diversify. That includes scholars and analysts in this province.

Again, this is wise. Living in a one-horse town is always risky.

In the absence of an economic update from the provincial government so far this year, best estimates are that Newfoundland and Labrador will run a deficit of $2-3 billion.

Yikes.

In Newfoundland and Labrador, we immediately need both jobs and training for workers who want to transition out of oil. We must insist that the federal and provincial governments prioritize workers over oil companies and their major global contractors.

Again, I agree.

Prof. Jeff Colgan of the Watson Institute at Brown University has argued that high-priced oil jurisdictions such as Canada will be wiped out of the global industry as part of the post-coronavirus oil shock. Colgan, who is Canadian, also predicted a high level of bankruptcies and mergers in the sector.

This may be a short term problem. It remains to be seen how much commuting will return to ‘normal’.

While the oil industry has long depended on subsidies, some experts are now urging nations to invest in green energy, rather than recover jobs that will have to be replaced in a few years to meet 2030 climate goals.

I would rather the government simply end subsidies to the oil industry. The government is not competent to invest in green energy. It would be better to use the savings from cancelled subsidies to pay off debt or reduce taxes to stimulate innovation in the private sector.

Oil subsidies largely do not go to supply and service companies that are home-grown and based in Newfoundland and Labrador. These are also companies that could easily transition into supplying lower carbon energy sectors, with fairly minimal supports.

Tax money shouldn’t go to any oil company, but I agree that the fact that small operators don’t benefit make these subsidies even more egregious.

The fact that the oil sector is in such desperate need of subsidies to survive demonstrates that it is not nearly as lucrative as it claims it to be. The data that proponents present on the economic benefits of oil never factors in the total costs of oil subsidies.

The oil industry didn’t anticipate the COVID-19 pandemic. Who did? That is the dominant factor in their calls for more subsidies.

Oxford Dictionaries chose “climate emergency” as its word of the year for 2019. We can expect massive shifts in energy sectors globally during the coming decade.

We will see how electrification progresses. If the prices of electric vehicles become competitive with gasoline powered vehicles and the infrastructure to charge them becomes ubiquitous, I would agree that we could see a rapid shift.

In 2019, 11,000 scientists across the globe signed off on an article in Bioscience, based on climate data from the last 40 years. They recommended … Replacing fossil fuels with low-carbon renewables and cleaner sources of energy. For them this meant that existing fossil fuels should be left in the ground.

See my post World Scientists Warn Humanity, then Undermine Themselves.

It has become increasingly clear since the Paris Accord was negotiated in 2015 that keeping an increase in global warming to 2 C is not enough. We also now know that we must keep global warming to 1.5 C above pre-industrial levels in order to prevent irreparable damage to the natural environment. Last year ended with a global average temperature of 1.1 C above pre-industrial levels.

See my post Global Warming: Crisis? What Crisis? for a summary of Moody’s Analytics analysis that shows global warming will actually benefit Canada and decrease use of heating oil, and that the larger the temperature increase, the better it is for Canada.

Canada, notably, is a signatory to the Paris Accord and has ratified it at home.

The Paris Accord, by giving China and India a free pass on curbing emissions, is a poor compromise that we should never have agreed to.

Increasingly, there have been calls for green energy stimulus spending since the economic downturn caused by COVID-19.

If stimulus spending on the oil industry is a waste of money, doing the same for ‘green energy’ is sending good money after bad.

The Oxford Review of Economic Policy has accepted a study which surveyed 231 financial experts across central banks, finance ministries, and economics experts throughout the G20. These experts identified five areas of economic stimulus which could displace the fossil fuel intensive economy, rather than entrench it.

Many of these so-called ‘experts’ likely couldn’t find their asses with both hands. Let’s look at their recommendations.

Building efficiency retrofits

Spending tax money retrofitting old buildings is a waste because it makes little difference. Building owners already have financial incentive to do the obvious, like switch to low power LED lighting. I’m OK with building regulations that ensure poor practices aren’t being followed in new building, as long as they aren’t onerous.

Investment in education and training

I’d be OK with some amount of taxpayer funding for new trades programs. For example, we will need mechanics able to service electric vehicles and electricians who can install charging infrastructure.

 Natural capital investment

Governments don’t do “natural capital investment”. We should not be spending tax money to subsidize investments in ‘green energy’.

 Clean research and development (this is NOT oil R&D)

Having worked in many companies that took advantage of R&D tax credits, I can say that these are effectively a subsidy, and that the bureaucratic complexity of these government programs means they primarily benefit large companies.

Notably, our government is cutting post-secondary education, in both the university and college systems, at a time when we need to be re-training people for the green economy.

Most government funding to universities is not targeted at specific programs like engineering. Much of the tax money used to fund these institutions is wasted on ideological social sciences. Unless this changes, I’m against throwing more tax money at them.

The study also found that without a green recovery, it will be nearly impossible to meet the goals of the Paris Accord. However, if the world comes together on green stimulus, this will be nearly sufficient to mitigate the most disastrous impacts of climate change that are predicted within the next 10 years.

If China and India don’t do their part, no amount of tax money will let us meet the goals of the Paris Accord. It is a flawed accord.

The European Union is now poised to announce the world’s greenest economic recovery package.

Let’s look at their proposals.

 Up to 80-billion euros to boost electric vehicle (EV) sales

Subsidizing the wealthy to by non-cost competitive products. I understand trying to bootstrap an industry, but I think these programs are ineffective.

Doubling investment in charging networks

This is something I do think deserves some investment by tax-payers. Like transit, public charging infrastructure may be needed, at least for buses, police vehicles, fire and ambulance, and city maintenance trucks.

an option to exempt EVs from value-added taxes

Again, I like this idea.

91-billion euros a year to seal up drafty buildings

Will the return on this investment be worth it?

Plans to offer homebuyers green mortgages (for energy efficient homes)

The government will subsidize banks to make buying energy efficient homes cheaper? Since, in the long term, and energy efficient home is cheaper, I don’t see why such a subsidy is needed.

An annual 10-billion euros to support renewal energy and hydro infrastructure.

I’m OK with the government funding and operating large power generation infrastructure, as long as tax money is being spent wisely.

Governments and oil companies should have been retraining and transitioning oil employees for some years now.

The government doesn’t train people. They can fund technical training for the trades. Haven’t they been doing this? Why would the oil companies train their people to leave them? That makes no sense.

In Newfoundland and Labrador, we immediately need both jobs and training for workers who want to transition out of oil. We must insist that the federal and provincial governments prioritize workers over oil companies and their major global contractors.

Governments don’t create jobs. If you don’t have jobs, you don’t need training. Reducing taxes, not spending more, is the best way to stimulate entrepreneurs to create jobs.

In their stimulus response, they must also prioritize the green economy over the oil economy, as many nations are already doing. If we do this right, we can become a green energy centre of excellence in the global environment.

Canada is lucky to have massive resources. There are things that can be done in the oil industry to help reduce emissions. For example, Ontario buys oil from Saudi Arabia (with all the extra emissions required to ship it half way across the world) because the pipeline from Alberta was blocked by environmentalists. It will take time to move from oil to electricity in the transport sector, and it will take even longer before home heating without oil or gas is cost effective. Until then, we need both oil and electricity.

However, for that to happen, we must act on building the green economy right now.

Then stop wasting money and reduce taxes. The government has a roll in creating policies that help direct industry, but tax dollars should not be funding it.

About jimbelton

I'm a software developer, and a writer of both fiction and non-fiction, and I blog about movies, books, and philosophy. My interest in religious philosophy and the search for the truth inspires much of my writing.
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2 Responses to Bending COVID-19 to the Green Agenda

  1. jimbelton says:

    This post received a nice “hate comment” from a troll account “Fuck Yourself”. I delete such mindless ad hominem crap. If you have a serious criticism, bring it on. Stick to the facts, and I’ll approve your comment and reply. If not, take the advice of this troll user’s name.

    • My reaction was kind of the opposite. But for decades I have considered Canadians polite and nice almost to a fault, but understand it is a cultural thing and it no longer surprises me. Then again, it does not surprise me that mindless looters are rude in the opposite extreme. I’ll just assume it was a fellow American causing embarrassment.

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