Canada: Emerging Energy Super-power?

Prime Minister Stephen Harper likes to tout Canada as an emerging energy superpower. However, I would argue that – in fact, I did argue that – in many ways, the country’s current approach to energy is more reminiscent of a declining power. Follow the link for the full essay, posted over at The Mark.

[UPDATE: The Mark News seems to have mothballed its entire archive, so I’ve reposted the essay in its entirety here]

Declining Superpower: The Vulnerability of Canada’s Energy Policy

By Stewart Prest

Prime Minister Harper has taken to Canada, “emerging energy superpower,” for instance during a foreign mission to China earlier this year. The language has sparked debate about both whether Canada is an energy superpower, and whether it should actually strive to become one.

Before weighing on either question however, it is worth spending a moment to understand what the analogy really implies, before deciding whether it applies to Canada, and whether it ought to.

Credit for coining the term “superpower” in its present usage generally goes to the Cold War by American W.T.R. Fox, an American professor of international relations who used the term to describe the world’s preeminent military powers at the close of WWII.

As the Cold War emerged, it became clear that the world’s two true superpowers, the USSR and US, were distinctive in a number of ways.  First, both countries possessed an enormous industrial capacity relative to the rest of the world. They similarly had massive natural and human resources to draw on.

Second, the superpowers were unique in their ability to project force anywhere in the world, and by any means necessary. Beyond military capacity on land, sea, and air, both also invested in diplomacy, espionage, cultural exhibitions, scientific research, and international prestige. They were relentless in their pursuit of power.

In addition to these two qualities however, the US defence community also displayed a third distinctive quality, a critical component of its ongoing ability to maintain superpower status: it has exhibited relentless willingness and ability to improve, to remain the undisputed leader in every field that mattered.

Just as the USSR was entering its period of terminal decline in the 1980s, the US began laying the theoretical and organizational groundwork for the so-called Revolution in Military Affairs (RMA). It invested heavily in new techniques and technologies, and reduced investment, or abandoned outright others considered obsolete. It did not matter how expensive the old methods had been to develop, or how reliable they had proven in the past.  All that mattered was their value going forward.

The result of that revolution is that the US can now project force with a precision and efficiency unimaginable even two decades ago. Its predominance is such that nuclear deterrence, once a central pillar of US defence strategy, is now an increasingly an after-thought. As a result, the country is well positioned to remain a global superpower for decades to come, and in doing so, no longer even needs to rely on its expensive and increasingly obsolete nuclear deterrent.

To summarize, we have three core elements associated with successful superpowers: 1) a tremendous resource and productive capacity; 2) the aggressive pursuit of a diversified portfolio of capabilities, along with the ability to deploy those capabilities abroad; and 3) a relentless commitment to innovation and improvement including, when deemed necessary, through costly and highly disruptive change.

So, how does Canada measure up to such standards? Is it really an energy superpower?

With regard to capacity, the answer might be a qualified yes. According to the CIA World Factbook, Canada has the third-largest proven oil reserves in the world. The country likewise focuses a significant portion of its economic and human capital in fields related to energy.

On the second and third superpower characteristics – diversified projection (i.e. export) capacity and a commitment to robust innovation – Canada falls far short of superpower status, however.

Simply put, Canada’s claim depends almost entirely on its continued production and export of petroleum products. This production in turn depends on the continued centrality of oil to the global economy; indeed, it depends on continued demand for historically expensive oil.   The country has emphatically failed to diversify its export energy sector, and shied away from any innovation not related to the production and export of expensive oil and gas. In our superpower analogy, it is clinging to the comfort and reliability of an increasingly outmoded nuclear deterrent, even as its competitors are embracing a new Revolution in Energy Affairs (REA).

This is, quite simply, not how an emerging energy superpower would operate. Indeed, it more closely resembles a declining superpower, one with significant capacity, but without the strategic vision to understand the changes occurring in the world around it.

Conversely, and existing or emerging superpower would guard against the possibility that global demand for its oil might one day collapse, whether due to competition came from increasingly an increasingly robust global renewable energy industry, or indeed from a decrease in the price of oil due to, for instance, a sudden increase in domestic production in the US.  Instead, it would aggressively pursue a diversified export portfolio, one capable of withstanding any shift to the market.

The true emergent global energy superpower – China – realizes this and is acting accordingly. China is interested in buying up a share of the oil industry in Canada and many other countries.  It is also, however, a massive domestic producer of coal-fired energy and the largest producer of solar cells and wind turbines in the world.

Some of these choices will undoubtedly prove less sustainable than others in light of what we now know about climate change, but no matter what the future holds, China will be a dominant energy player in global energy markets, not only as a consumer but increasingly as a producer as well.

In short, to truly be an energy superpower, Canada must become relentless in its diversification and commitment to innovation. Most particularly, it must focus not just on how power is generated today, but also on how it will be generated tomorrow. It needs to take seriously the REA currently underway.

This is harder than it would have been 10 years ago.  A globally competitive green technology industry cannot be created overnight. Nonetheless, it is still possible with the right incentives at provincial and federal levels.

A good start would be, as Chris Turner has argued persuasively elsewhere, to emulate German policy and commit to a feed-in tariff, one that pays a higher fixed rate for energy produced more cleanly. Such a move will shape the marketplace for energy, without the unproven complexity of a cap and trade system or the ugly politics of a carbon tax.

If it is to work however, that commitment must be on a large scale and over a long period of time. More modest experiments, as Ontario has unfortunately found, simply do not exert sufficient influence on producers’ decisions to significantly influence the marketplace.

Oil is polluting. It is expensive. It is unpopular. It is also increasingly replaceable. One day, it will be replaced completely. Those who don’t anticipate this in time will find themselves, sooner or later, alongside other failed superpowers on the scrapheap of history.

photo credit: Mark Witton via photopin cc

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