Canada’s Inflating Economic system & Inhabitants Dwarfs Coming Collapse Of Oil & Fuel

Like Australia, though a bit much less so, Canada is a rustic with an enormous fossil gasoline trade which has far an excessive amount of affect within the corridors of energy. And like Australia, makes an attempt to develop its economic system run headlong into the looming decline of two% to five% of its economic system. However there are some notable variations.

Australia, as I’ve famous lately, exports 4 occasions as a lot major power because it makes use of in its personal economic system. Per a latest Worldwide Institute for Worldwide Improvement (IISD) report, Canada’s in an identical place, exporting 80% of the oil it produces. Nearly all of that oil, 94%, goes to the USA. At the very least Australia’s exports are diversified. Peak oil demand, looming by the top of this decade by an rising variety of credible analyses and projections, goes to trigger manufacturing drops, nevertheless it gained’t be even throughout crude oil areas. Canada’s crude oil might be extra in danger than every other nation’s, for a number of causes.

Canada’s crude oil is heavy, which suggests it’s actually tar blended with sand. It must be processed so much regionally, requiring quite a lot of power largely from pure fuel, one thing that drives up prices, and by the way, greenhouse fuel emissions. Alberta has no carbon worth of its personal, and so the federal carbon worth applies, besides to Alberta’s major export. That’s coated beneath Alberta’s TIER program, which applies a trivial value to its carbon emissions for extraction, processing, and distribution, after which provides the businesses the cash again so long as they spend it on inexperienced initiatives, like carbon seize for blue hydrogen for his or her refineries. In fact, the provincial and federal governments are ponying up much more money for that blue hydrogen past TIER. Can’t let the oil sands firm pay for their very own enterprise bills, in spite of everything.

Hydrogen is required, as a result of along with being very heavy, Alberta’s product is bitter as nicely, which is to say it’s very excessive in sulfur. Desulfurization of crude oil is likely one of the largest makes use of of hydrogen. If we don’t desulfurize it, it causes acid rain once we burn it, together with harming human well being. That makes Alberta’s product dearer to refine, which is one other strike in opposition to it. However hydrogen isn’t low-cost at the moment and might be dearer sooner or later. At current grey hydrogen from pure fuel is usually what’s used, however sooner or later, carbon seize expertise with sequestration should be bolted on and used at important capital and working expense (with restricted probability of great carbon emission reductions) or inexperienced hydrogen should be used.

Blue hydrogen will possible be double the price of grey hydrogen when all the things is claimed and performed. Inexperienced hydrogen will most likely be double the price of blue hydrogen. Meaning desulfurization goes to turn out to be 2-4 occasions as costly, and that’s one other financial strike in opposition to Alberta’s product. When there’s quite a lot of oil on this planet that’s candy and light-weight, why pay extra for oil that’s heavy and bitter?

Alberta’s product is a good distance from water too. Tripling the quantity capability of the Trans Mountain Pipeline the federal authorities purchased for Alberta has quadrupled in worth to over C$30 billion and climbing. The idea was that Alberta’s product can be loaded onto crude oil tankers and shipped off to China to be refined. Besides that China has already stopped importing Alberta’s product, is electrifying transportation quickly and doesn’t refine heavy, bitter crude. In a world awash in low-cost, gentle, candy oil that’s near water, China will merely purchase the cheaper higher product for its declining wants.

And the Trans Mountain Pipeline terminates in a port that may’t handle large oil tankers. Port Metro Vancouver can solely deal with Aframax tankers with a capability of 120,000 tons. Very massive and extremely massive crude carriers with double and triple that capability needn’t apply. And oil tankers are as large as they’re as a result of the larger the ship, the cheaper the delivery prices per ton. China’s not fascinated by paying large delivery prices for its crude when it doesn’t need to. In fact, the tankers might sail right down to the Panama Canal and as much as Houston, however that may be a 13,000 km journey for a mid-sized ship with Panama Canal charges tacked on. Not a lot of a financial savings, if any.

However right here’s the subsequent drawback. Why would the USA need Canada’s crude oil sooner or later? For a little bit of historical past, across the OPEC oil disaster of 1972, the USA forbade exporting any of the USA’s valuable crude oil. It began investing in fracking and shale oil applied sciences and strategies. Quick ahead to the mid-2010s, and it was clear that the USA was going to go from an enormous oil importer to a web oil exporter. That was with out electrification. And so in 2015, the Democratic members of Congress brokered a take care of the Republican ones, extending the wind power manufacturing tax credit score (PTC) and taking away the export ban. The Cristal flowed in Houston like a 1930 wildcatters first strike that yr.

However, peak oil demand. And the US Inflation Discount Act. The USA is lastly getting severe about decarbonizing gentle automobiles, and meaning batteries, not oil (and positively not hydrogen). About 50% of oil within the USA goes into gentle car fuel tanks. Whereas the USA is a laggard, large funding and federal subsidies are accelerating uptake of EVs. And each EV offered drops US home demand. One other large chunk of oil goes into buses and vans, and they’re all going to affect too. It’s already began.

China’s approach forward of the USA on electrification, with 40,000 km of high-speed electrified freight and passenger rail in operation and one other 10,000 km deliberate or in building. It has round 1.1 million electrical buses and vans on its roads. It now manufactures and buys two-thirds of all electrical gentle automobiles on this planet, and inside combustion car gross sales have collapsed. It’s manufacturing electrical ships, with a 1,000 passenger cruise ship within the Three Gorges and inland container ships plying the Yangtze. The USA’s refineries, whereas environment friendly, gained’t have many overseas clients, and might be compelled to purchase home crude just for the home market.

Each time I take a look at the economics of Alberta’s product, issues simply worsen. As I famous in my evaluation of the steeply rising prices of Canada’ Trans Mountain Pipeline, it’s by no means going to be full. It’s most likely going to be bankrupt by 2040. I’m very comfy with that projection, and if something assume it’s doable it’ll occur sooner.

The way forward for Alberta’s product is a Nationwide Power Program — undecided why, however that has a sure ring to it — the place all areas of Canada are required to purchase domestically to assist Alberta’s economic system. However bear in mind, that’s 20% of Canada’s complete manufacturing at the moment. And Canada has sturdy EV insurance policies as nicely, so home demand might be plummeting. Alberta is in deep trouble economically.

However is Canada? Again to the IISD’s latest report. It says a lot of what I’ve been saying for some time, however provides that pure fuel is in the identical sinking ship. And it says that the fossil gasoline trade just isn’t ready in any respect for this, and that the federal authorities has to step in with a wise, science-based transition plan for the trade and provinces which can be dominated by oil and fuel. That’s very true, but additionally remarkably difficult given Canadian politics. The federal authorities retains giving absurd numbers of billions to Alberta, together with shopping for and tripling the aforementioned pipeline to nowhere, and in return Alberta retains loading up its shotgun with rock salt, capturing the federal authorities within the face, and threatening to make use of buck shot subsequent time.

Headlines began crossing my display screen in regards to the IISD report, together with ones that say that it’s not the oil area that’s unprepared, it’s Canada. However is that true?

Let’s take a look at another headlines.

Wait, what? Canada’s an financial powerhouse that’s powering away from its hewer of wooden and drawer of water economic system? It’s quickly rising its inhabitants with gifted, strategically minded, self-supporting, extremely educated immigrants, drawing 1,000,000 of one of the best from world wide in 2022 alone? (Canada introduced in as many immigrants because the USA final yr, by the best way.)

Even via the challenges of the Trump and COVID years, the Liberals beneath Trudeau have been diversifying Canada’s economic system in order that it gained’t be impacted by the top of oil and fuel? And if Canada continues to diversify and develop its inhabitants with one of the best and brightest on this planet, its economic system may very well be a lot bigger in 17 years?

That’s proper. The present administration’s insurance policies since first gaining energy in 2015 have handled a number of the worst challenges of this century, introduced in probably the greatest carbon costs on this planet, diversified and grown the economic system considerably and are bringing a river of deep abilities and expertise to the nation. They’ve saved Canadians’ lights and warmth on via COVID, even when giving cash to Alberta’s oil and fuel trade was the unpopular worth in the remainder of the nation and so they acquired zero thanks from the province or oil firms. And they’re positioning Canada to assist Alberta as oil and fuel disappear from our economic system.

The IISD and the doom and gloom headline writers missed that the Canadian authorities is throughout this file, strategically creating the circumstances beneath which they can assist the folks of the oil and fuel areas, and making certain the cash to close down and clear up the messes that the trade is forsaking. Whereas the oil and fuel trade is in denial, the Canadian authorities is performing. That appears a bit completely different than what’s taking place in Australia.


I do not like paywalls. You do not like paywalls. Who likes paywalls? Right here at CleanTechnica, we carried out a restricted paywall for some time, nevertheless it at all times felt incorrect — and it was at all times powerful to resolve what we should always put behind there. In idea, your most unique and greatest content material goes behind a paywall. However then fewer folks learn it! We simply do not like paywalls, and so we have determined to ditch ours.

Sadly, the media enterprise remains to be a tricky, cut-throat enterprise with tiny margins. It is a endless Olympic problem to remain above water and even maybe — gasp — develop. So …