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April 14, 2020 0 Comments

Renewable energy, retrofits touted as job-creating alternative to oil sector devastation

More renewable energy projects could create jobs and economic activity to partly offset the oil industry downturn following the COVID-19 pandemic, say advocates. (Kham/Reuters)

With a barrel of Canadian oil now going for the same price as a cup of coffee, some renewable energy experts say it’s time for a different approach to building Canada’s energy sector.

They say the massive job losses and economic turmoil hammering the oil industry could be at least partly offset by a more aggressive shift toward renewables, energy-efficiency retrofits and other sustainable infrastructure.

“There are very practical reasons it would make sense,” said Martin Boucher, of the University of Saskatchewan’s Johnson Shoyama Graduate School of Public Policy.

Western Canada Select crude oil has been selling for less than $5 a barrel since the coronavirus-imposed travel bans and business shutdowns caused demand to plummet more than a month ago. Even last week’s deal between OPEC and other world powers to cut supply by 10 per cent failed to ignite crude prices. On Friday, WCS was listed at $2.87.

“Only gradual increases in crude oil prices are expected through all of 2020 as these factors persist, which could lead to record levels of expected global oil inventory builds in the first half of 2020,” the U.S. Energy Information Administration said in its most recent forecast.

Simply put, the global demand for oil has plunged and oil producers are putting it in storage in the hope of better prices. It will take a long time for that to change.

Saskatoon energy consultant Jason Praski hopes the health and economic crisis caused by the coronavirus may cause more people to care more about their communities and the environment. (submitted by Jason Praski)

Others believe the price could go even lower, and Canada could soon see negative prices. Oil producers who’ve run out of space to store their nearly worthless product “will be paying people to take away our resources,” Alberta Premier Jason Kenney said this month.

That may seem like good news for consumers filling their cars or trucks at the gas station for 60 cents a litre, but it’s a huge loss for the oil-heavy economies of Saskatchewan, Alberta and Newfoundland and Labrador.

Revenue from non-renewable resources like oil could drop as much as $1.2 billion this year in Saskatchewan alone, according to government forecasts released Friday.

Boucher and others say COVID-19 has caused this most recent price crash, but it’s not the only dark cloud hanging over the industry.

Since the July 2008 peak of more than $110 per barrel, the WCS price has steadily declined. In February, before the COVID-19 restrictions were announced, WCS had already dropped to $27.

Trade wars and production increases by the U.S., Saudi Arabia, Russia and other global powers, and the lack of pipeline capacity in the landlocked Canadian Prairies are combining with labour-saving technology to decrease prices. That will not change in a post-coronavirus economy, they say. These aren’t things anyone in Saskatchewan or Alberta can control.

That’s why those urging Canada to keep tackling climate change say the post-coronavirus economy must include a more rapid transition to renewables and energy efficient upgrades.

“Stimulus and recovery measures in response to the pandemic must foster economic development and job creation, promote social equity and welfare, and put the world on a climate-safe path,” Francesco La Camera, director-general of the International Renewable Energy Agency, said in a statement this month.

Martin Boucher of the University of Saskatchewan’s Johnson Shoyama Graduate School of Public Policy said a more aggressive shift toward renewable energy and energy-efficient retrofits would help ease the job losses caused by the oil downturn. (submitted by Martin Boucher)

Last week, Prime Minister Justin Trudeau announced $1.7 billion to clean up orphan oil wells, in a move that could create up to 5,000 jobs in Alberta alone. He also announced new money for methane reduction from the oil and gas industry, which will help Canada meet its international commitment to reduce methane emissions as well as fostering environmental innovation.

Boucher, who teaches energy transition policy, said this approach will provide far more jobs per dollar invested than investing in the oil industry. He said shifting even a small percentage of the investment and government support currently going to the oil industry would make a big difference.

It could begin with more energy-efficient retrofits of homes and businesses – better windows or thicker insulation, he said. Most of this work would be labour-intensive and done by local contractors and businesses. Profits would stay in the community and homeowners would benefit from lower fuel bills.

“These are simple approaches, but they’re domestic. They don’t put us in a situation where we’re overly exposed to the ebbs and flows of oil and gas,” Boucher said.

Saskatoon energy consultant Jason Praski agreed. Praski and Boucher said Saskatchewan is increasing its renewable energy capacity, but much more could be done. Solar, wind, geothermal and biomass energy from wood and crop waste could all deliver government tax revenue and jobs, they said.

“Saskatchewan’s got so much potential,” Praski said.

Praski said many people have already warmed to these ideas, but the ongoing coronavirus situation could help convince others.

“I think the whole pandemic is helping us pay more attention to each other and look after each other, and the climate change crisis is really a similar problem, it’s just longer term,” Praski said. “As we think about this whole thing, rethinking our lives, you know, it may get us all thinking a little closer toward doing the greener thing if we can.”

No one from the Canadian Association of Petroleum Producers was available for an interview.

Saskatchewan’s Energy and Resources Minister Bronwyn Eyre was not available for an interview but an official sent a written statement detailing more than 500 megawatts of pending wind and solar projects across the province.

It reaffirmed the province’s commitment to reduce greenhouse gas (GHG) emissions by 40 per cent from 2005 levels by 2030 through these projects, as well as other methods such as carbon capture or possible small modular nuclear reactors.

Last week, Eyre announced COVID-19 relief measures for oil companies, including an extension of drilling leases. She pledged more help in the coming days for oil and gas and mining companies. It’s unclear whether that will extend to renewable energy.

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