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Trevor Tombe: Careful—an oil and gas emissions cap won’t just hurt Alberta

Commentary

Ottawa’s plan to cap greenhouse gas emissions from the oil and gas sector—largely in Alberta—has prompted no shortage of debate and analysis.

As I’ve written previously for The Hub, I think such a policy is dangerously counterproductive and unnecessarily costly. But that’s just my view. There are thoughtful arguments on the other side worth considering carefully, to be clear, such as this one by my University of Calgary colleague Professor Sara Hastings-Simon and co-authors.

But within the public discussion, I can’t help but observe that what seems to motivate some, including some political leaders, is a narrow regional view of Canada. 

Climate policy isn’t cheap, so it’s natural to want others to pay for it. Excess burdens on Alberta’s oil and gas sector are far away, as the thinking may go, and can therefore be safely ignored.

This neglects an important truth: Canada’s provincial economies are deeply interconnected. Shocks to one spillover onto others. And decisions we each make every day are tied to activity thousands of kilometres away.

To see this most clearly, consider the volume of interprovincial trade.

Many sectors purchase significant amounts from outside their own province. In 2019, I estimate residential building construction, for example, purchased nearly $12 billion across provincial boundaries. Banks and other financial institutions, about $15 billion. And the resource sector, including mining, nearly $18 billion.

This matters. Housing market developments in Vancouver and Toronto have cascading effects across the country. B.C. home builders bought nearly $3 billion in goods and services from other provinces, just behind their Ontario counterparts, who imported $3.3 billion from elsewhere. 

Add all this up, and the scale of each province’s economic footprint elsewhere can be considerable. I find that B.C.’s purchases from and sales to Ontario, for example, are equivalent to nearly 14 percent of its entire economy in 2019. For Quebec, their trade with Ontario is equivalent to over 21 percent.

Even small economies can matter elsewhere. PEI accounts for about $1.2 billion in sales by Ontario firms and another $2 billion from firms in other provinces.

In the West, I find that B.C.’s purchases from and sales to Alberta are equivalent to nearly 12 percent of its entire economy in 2019. For Ontario, their trade with Alberta is equivalent to nearly 7 percent. 

Oil and gas is a big part of this story—with magnitudes that might surprise many.

In 2019, for example, I estimate Alberta’s oil and gas extraction sector bought about $8.8 billion in goods and services from companies outside Alberta. Add in refined product producers, and this rises to $13 billion. Of this, almost $5.5 billion came from Ontario alone. Suppliers cover a broad range of sectors, including over $1 billion in banking and insurance services, nearly $900 million in manufactured goods, $460 million in computer system design, and much more. 

These purchases are large. For comparison, Ontario’s entire auto sector purchases just under $2.7 billion from suppliers in other provinces. 

Why does all this matter? Trade is an important channel for shocks, both positive and negative, to ripple throughout the Canadian economy.

So consider again the oil and gas emissions cap. Soon, this sector will be required to lower emissions at higher costs than what could be done elsewhere in the economy. If this lowers productivity in that sector, as it almost surely will, then it won’t just be Alberta that feels the strain.

I estimate that a 10 percent hit to productivity in the oil and gas extraction sector shrinks Canada’s economy by approximately 1.2 percent. That’s equivalent to roughly $35 billion per year, or nearly $900 per person per year.It’s too soon to know what the emissions cap might actually mean for productivity in the sector; I use 10 percent only to illustrate the point.

Much of the decline is in Alberta and Saskatchewan, of course. But I estimate over 40 percent of the economic costs are borne by other provinces—and nearly one-quarter by Ontario alone. In fact, every single province is negatively affected. A 10 percent productivity hit to oil and gas, for example, lowers Ontario’s overall productivity by over 0.6 percent and shrinks the Atlantic provinces by roughly 0.5 percent.

This doesn’t imply oil and gas should receive special treatment. Not at all. But if the goal is to single it out for special burdens, hoping to avoid the cost, that is unlikely to happen.

The cheapest approach for the country as a whole is a uniform one, where all regions and sectors are treated equally. Instead, Quebec still lags behind the rest of the country while the government ratchets up costs for a single sector concentrated in Alberta. Canada’s productivity will further suffer as a result.

While the emissions cap is merely the most recent example of inefficient and regionally targeted federal policies, it’s not the only one. Nor will it be the last. And it’s certainly fair enough if such policies aim to achieve other important objectives. But in the case of the cap, it is not clear what those are. It seems instead that at least part of the political appeal is a desire to shift the burden elsewhere.

But narrow regional approaches can still lead to unintended consequences right across the entire country. Even if people don’t realize it.

Patrick Luciani: We need more than civility to defend civilization

Commentary

In the latest Hub book review, Patrick Luciani reviews The Soul of Civility: Timeless Principles to Heal Society and Ourselves by Alexandra Hudson (St. Martin’s Press, 2023) and argues that while maintaining civility in society is all well and good, it will take more than that to push back against the forces determined to undermine our civilization.

More civility could help heal our broken world. That’s what Alexandra Hudson argues in her new book, The Soul of Civility. We should go beyond our selfish nature so that our social nature can flourish. For those who think civility and politeness are the same thing, they aren’t. 

Politeness is the appearance of looking good and has little in common with the gentle virtue of kindness. Politeness comes nowhere near repairing a world divided by political conflict. It just smooths over our differences. Civility, on the other hand, forces us to be good by respecting others as individuals. As Hudson says, politeness is easy. Civility requires effort.  

For the author, civility is essential for a civil society and a healthy democracy. Here, she draws on the wisdom and inspiration of thinkers and philosophers from Homer and Erasmus to Martin Luther King and Robert Putnam. The Soul of Civility isn’t so much a political book as a meditation on keeping an open mind while recognizing the dignity of others. There is little to disagree with as far as it goes. 

When confronting others who hold to different politics, we should respect their “personhood.” Yet, such tolerance and understanding are hard, especially after the tragedy of October 7th in Israel and the following wave of antisemitism, much of it on college campuses. How greater civility might change that reality is hard to understand, particularly when higher education institutions have subordinated notions of civility to other values. 

As a consequence, Hudson’s book seems out of step with the march of postmodernism and postcolonialism through our universities. Hudson never mentions these two ideas in her book, which is odd given their immeasurable damage to the practice of civility. 

In the House of Representatives congressional hearing on December 5, the presidents of Harvard, MIT, and Penn cited their version of free speech as justification for not acting to punish or condemn those who advocate killing Jews, an incomprehensible stance given their duty to protect all students under their care. When Congresswoman Elise Stefanik asked whether advocating the genocide of Jews is hate speech, the presidents qualified their answers with the cryptic mantra—it depends on the “context” of the threats. 

As postmodern ideas have come to dominate political ideology on campuses, the answers by the three presidents were not very surprising. A fundamental tenet of postmodernism is that the meaning of words and the use of language are slippery concepts without fixed definitions: any words’ exact meanings need to be contextualized and, therefore, subject to perpetual deferment. 

The presidents blundered, thinking they were addressing a university faculty meeting or graduate seminar. They were at a congressional hearing open to the public, of whom most are unfamiliar with how academics understand language. 

There is another reason the presidents were trapped. Postcolonial studies, as taught at universities, divide the world into victims and victimizers. It is asserted as fact that the main reason we have poverty between and within countries is the inequality of power among races caused by discrimination and exploitation. 

When Hamas ventured out of Gaza to kill over 1,200 Israeli citizens, the question of guilt was certain to be “contextualized” based on the relative power of Jews and Arabs. As Palestinians are cast as poor and vulnerable, they are, by definition, blameless. Any retribution by the Israelis will be seen as disproportionate and illegal to the point of negating Israel’s right to self-defence. 

The three presidents seemed more intent on not offending aggrieved groups and DEI constituents than on defending the rights of Jewish students. One would think that students should be kept physically safe but intellectually exposed to “dangerous” ideas, not the other way around. The presidents mistook the vacuous virtue of politeness as a substitute for harder requirements of truth and civility. Then again, Truth—which is Harvard’s motto—is an unstable concept that shifts depending on the “context.”

The blowback has already begun with the resignation of Liz Magill, president of the University of Pennsylvania. Others may follow as alums and members of Congress have their say and demand accountability. Words may be slippery in the academy, but in the real world, they have consequences. (The day after the hearings, Harvard President Claudine Gay has already repented and has now seen the Truth, or perhaps what she saw was her position slipping away.)

The Soul of Civility is a well-meaning contemplation on the need to get beyond our anger while respecting those we disagree with. But in today’s political climate, we are required to do more. We cannot allow the attributes of politeness to be a substitute for integrity, even when there is no easy comfort in confronting hard truths, judging intent, and taking up the responsibility to protect.