I am always surprised at how the underlying story gets missed. In the case of the global warming tale, the oil sands and pipeline announcements (or lack of same), and so on, what doesn’t get reported is how close to the end of a hydrocarbon-based world we are. Given the Canadian climate — and the fact that it is our commodity exports, particularly oil and gas, that are holding Federal Government revenues “together” by holding up the national economy — one would think we might discuss the current state of economic peril we find ourselves in. Instead, we see crowing, triumphal note after head-in-the-sand note being posted from almost all the blogs, regardless of political affiliation — and no attention being paid to the real situation.
So let’s do exactly that.
Light crude production in Canada is expected to dry up in about a decade. Natural gas production in this country, in slightly less time. We are not building the refineries necessary to actually use the oil sands products. (Why not? Natural gas is a key element in how this sludgy sand yields up its hydrocarbon content: if natural gas has a useful life of less than a decade, the plant won’t pay for itself.)
We refuse to — if we are actually going to “exploit” the bitumen — invest in a cross-country pipeline to replace imports in Eastern Canada. We refuse to — in Alberta, in points East, or wherever — to invest in refining plants that turn the processed bitumen into useful end products. But we will natter endlessly about why we have to have Keystone XL to get the minimally-processed bitumen down to Cushing OK, or a pipeline to the North Coast of BC for exports of the same stuff to Asia.
Does the petrochemical industry think that it would be inefficient to actually meet Canadian needs? Does it believe that the capital invested will never get an adequate return? Apparently so. That says to me that we are not a “petro-power” — or, rather, that we would have to be a state capitalist one, a petro-Leninist state, to exploit the stuff.
With world oil production — particularly of the light crudes for which North America’s now-closing Eastern-based refineries (which depend on imported oil already) — already slipping downward as a share of global production, and, indeed, global total production (including our own) also now less than demand, precisely where will we get petroleum from? Especially considering how we won’t refine “the world’s third or second largest oil reserves” (it depends on how you count and who’s doing the telling).
As for natural gas, we’re not equipped to receive liquid natural gas (LNG) shipments — nor do we have the pipelines built to transport it. Nor is there a particularly favourable source of supply, either: exhaustion of natural gas on other continents lags North America by only a decade or so. Again, not enough to make building the infrastructure a viable economic proposition.
Yes, we could raise the moratorium on development offshore in British Columbia. Yes, we could build the Mackenzie Valley pipeline. Offshore BC is a decade away if we start now. Assuming we ran roughshod over the Dene and just built the pipeline, its economic life isn’t long, either.
Gordon Campbell in BC, of course, pinned his province’s hopes on a “hydrogen corridor” running down the west coast of North America. But what’s the feedstock to produce hydrogen — today? There are two: electrolysis of water, or cracking the hydrocarbon molecules in natural gas. There is an interesting experiment being done in Japan right now to produce a water-supplied fuel cell suitable for both mobility applications (e.g. road traffic) and as a power supply in buildings or for the grid, but it’s not mature yet.
As for building a hydrogen infrastructure supplied by natural gas? What’s the lifespan of that? — certainly no better than the lifespan of using natural gas directly (heating homes in winter comes immediately to mind).
Seems we’re committing that natural gas all over the place. No wonder people are talking about fracking for shale gas!
Except that no one mentions just how capital intensive shale gas is — or how quickly the wells play out — and how shaky the estimates actually are. Yes, it exists. Yes, it can be “mined”. Yes, that process has nasty consequences to water tables (hey, you don’t need clean fresh water to drink, and food’s not important — or so the promoters of fracking say).
Meanwhile, hydrogen is an energy carrier, but it’s not an energy source, unless we’re going to talk about nuclear fusion (which is a problem we haven’t cracked yet). So using hydrogen actually has a negative EROEI (Energy return on energy invested). That’s a key number: it means the only reason we’d do it is because we needed a transportable fuel. (But if I’m going to crack natural gas to create the hydrogen, why not just use the gas itself? Oh, the things they don’t tell you…)
Ethanol has also been proposed. Where’s the capital investment in ethanol plants using scrap wood chips, bits of dead-by-pine-beetle tree, etc.? It’s not happening fast enough. Nor are we doing the pragmatic thing and arranging to buy ethanol from Brazil, where they produce it from scrap sugar cane stalks, cheaply and efficiently.
No, where we’re doing it, we’re doing it from corn. A maize-based ethanol infrastructure has a lousy energy conversion ratio: it requires at least as much hydrocarbon-based energy as inputs, for fertilizer, industrial-scale combines, and to run the conversion plants, as you get out of the ethanol. (Brazilian ethanol converts at a favourable ratio. At the scale required, the energy coefficients for wood chip conversion are not fully worked out yet — it’s important to remember that these operations are likely to be built on a local scale, just as the sawmills and pulp mills of timber country are.)
More than 50% of all the corn grown in the United States now goes to ethanol plants. The ethanol produced offsets 5-6% of the oil requirement for gasoline and diesel fuels. Keep that up and the US will have to stop feeding corn to cows, and shoving corn syrup into all its processed foods. (That would be a very good thing from a public health point of view, but it would cause American food prices to look more like Third World food prices, i.e. 30%+ of income, not <10%.)
We could, of course, make more use of electrical power. We’d better move quickly: dam construction for large-scale outputs, or nuclear plants — even coal-fired plants with carbon sequestration technology — are usually decade-long construction jobs, even when you waive all the environmental evaluations, tell the local First Nations their claims will not be honoured, and pass laws forbidding legal action to delay the project. Heavy construction requires a heavy investment in fuels, too. Eventually we’ll be making choices: get to work and heat buildings, or build things, or feed ourselves (fertilizers, industrial “agriculture”).
We should be building thorium salt reactors. You can get the thorium from coal, and refine the residue into oil and gas using the coal gasification techniques used by Germany in World War II, or South Africa during apartheid. Those resulting liquifuels wouldn’t be cheap, but they’d keep some core transport (remember, we ripped the heart out of rail and committed our transport grid to roads) going — plus construction equipment — and we could use the reactors to power electricity while we electrify rail lines, build more of them, and build a lot more public transport. Happy motoring would be over, but life would go on.
Likewise, too, we can build better. Germans already build new homes (or retrofit old ones) to require no furnace. They were toasty enough during Europe’s deep freeze this winter — this can be done in Canada. Solar hot water (another 1970s technology not dependent on rare earths and complicated manufacturing processes) could also be installed. We’d better start thinking like this, because as the gas runs out we start losing electrical plants that run on it, we start losing pressure in the mains for housing, etc.
Did no one point out a gas well doesn’t “deplete” slowly and for a long time, but that it runs at strength until one day it stops, much like the air coming out of a balloon? No? Well, that’s how it works.
There’s a lot of talk about alternative power. BC, for instance, has many sources: extensive geothermal zones, wind potential on the coast, even solar arrays. The three Prairie provinces could do wind and solar. Ontario’s made a wind investment, but, frankly, it was more a bit of socialist industrial planning than a serious energy policy, despite what McGuinty would have us believe. It’s a pity, isn’t it, that it’s not happening: in BC, for instance, the Independent Power Production [IPP] scheme put forward by BC Hydro in 2003 allows Hydro to buy out the producer after their project is built. (Not that the BC Transmission Corporation has the capability to handle much of this power, for little of it will be base load.) Why would anyone invest in a plant infrastructure only to lose it at cost once it’s been depreciated (and still useful), i.e. why give up the profits? Is it any wonder little is happening?
Actually, all that it did do was kill BC Hydro financially. Here was a Crown Corporation that generated extensive dividends back to the taxpayer that now can’t. And the green power really isn’t there.
So what does this add up to? A sea change in the way we live, like it or not. Yes, Canada has great assets in the energy space. But they don’t make us independent of shortfalls.
When that day comes, our economy takes a nosedive. So do our exports, the vast majority of which still go to the United States, thanks to the unending myopia of Canadian businesses. (There’d be, for instance, no trouble in lumber towns if we could just recognise that the rest of the world does not use American-sized boards — and if we produced the products other countries want to buy. Instead we tell them they have to change, then moan when we don’t get the business.) The USA will be even worse off than we are. They know it there, too: that’s why you’re hearing all the crud about becoming an energy exporter again. One last blow-off to suck in as much capital as possible before the big finale.
It’s been pointed out that we ought to be thinking about these issues. We can anticipate more challenges to NAFTA: “Buy American” and closing the border on any and all things someone whinges to Congress about will be a growing fact of life. We should be prepared to let NAFTA go — Homeland Security has already closed the US border to the point where integrated supply chains don’t work reliably any longer, and they have to work with an ever-sinking US dollar — in order to remove the lock-in that forces us to sell a continuing percentage of our hydrocarbon production to the US ahead of Canadian needs. Failing to do so simply advances the day our furnaces and pumps “go out”.
Eventually, alternatives will bring us back up. Don’t count on them being ready en masse in time. We may well find ourselves back in the 19th century for two or three decades while we sort it out. (If that doesn’t put paid to global warming, what will?)
All of this, of course, strongly suggests that our Governments are about to be put on a starvation diet. Instead of new mass social programmes, any spending should be going on the infrastructure needed to continue Canadian life in a reasonable fashion (the last time I looked, this was still a very cold country with a short growing season). Pruning of existing wasteful spending should also be undertaken. Oddly enough, in recent polls, Canadians want to see over 20% cuts this year — something the Government has no stomach for. Ontarians reacted well to Drummond’s report — neither Government nor Opposition are reacting seriously. The people sense the need to act. The political class is still playing games.
For here’s the rub: without cheap energy and a continuing supply of it, the centre cannot hold. Large-scale anything requires it. When this breaks down, the pieces fall away. Except, of course, that (with the exception of the Maritimes) even our provinces are too large to hold together. (Australia and the United States, to name just two, will experience similar fracturing. And don’t count on the BRIC nations, because Brazil, Russia, India and China are coming apart at the seams, too.)
A North America divided into a hundred plus polities will be a much poorer North America, and a much weaker one.
Any politician who isn’t dealing in these long-term realities is delusional, and leading us down the garden path to a much harder future than is necessary to experience. By that standard, there are no leaders in Canada today.