OTTAWA – Falling global oil prices have sparked a frisson of excitement among opponents of Canadian oilsands developments and major pipeline projects.
The argument, which bounced through social media circles over the past week, is that $80-a-barrel oil makes it a losing venture to develop unconventional crude — and the infrastructure to transport it to market.
“The good news is that lower oil prices will put a damper on the breakneck pace of expansion in the tarsands, creating time and space for the alternatives to take root,” Keith Stewart, a climate researcher with Greenpeace Canada, said in an email.
Major oilsands developments and the multiple pipeline plans currently in the works to get that oil to market are long-term infrastructure projects that Stewart and other environmentalists worry will lock in high carbon emissions for decades.
“At the very least, the recent drop in oil prices highlights the recklessness of the Harper government putting all of our economic eggs in the tarsands basket,” said Stewart.
Clare Demerse of the advocacy group Clean Energy Canada says cheap oil and gas do not necessarily halt investment in alternative energies, noting solar panel costs have fallen more than 80 per cent in the last five years.
Oil and gas volatility highlights the dangers of government reliance on the resource sector and prove the value of renewables, she said.
“It’s less risky, it’s safer for Canada’s economy if we are also making investments in clean energy. That gives us more (economic) resilience,” said Demerse.
But while the rapidly changing global energy market may be shaving the sharp edges off Alberta’s economic triumphalism while kicking the pro-resource-extraction federal Conservative government in its budgetary shins, climate change campaigners might want to curb their enthusiasm.
Economist Mark Jaccard, a professor in the energy and materials research group at Simon Fraser University, said current market conditions may give environmentalists “small victories here and there.”
“It may help some battles to stop some pipelines and some expansion,” Jaccard said in an interview. “Even the industry will say maybe we should delay this a little bit. We’re finding this in British Columbia as the natural gas prices in East Asia start to fall.”
Malaysia’s Petronas is threatening to delay for years a multibillion-dollar liquefied natural gas investment in B.C., while France’s Total and Norway’s Statoil have recently put on hold two planned oilsands projects in Alberta.
But while specific projects will be squeezed, falling global prices can only spur consumption in growing markets such as South and East Asia, Africa and South America.
“It is not good news for the environment,” Jaccard said.
“Environmentalists might say that because they’re overly fixed on the battle in North America to stop unconventional oil and gas and coal.”
Jaccard said the only upside for the environmentally minded is that the price drop “reminds everyone that fossil fuels will continually keep getting cheap.”
Current global market conditions are another nail in the coffin of “peak oil” alarmists, he said.
“You can’t just say we’re going to make renewables really cheap — because fossil fuel prices will fall. There’s a whole bunch of ways to make it way cheaper.
“That’s why you have to have global agreements, or quasi agreements, on greenhouse gas emissions. You have to have strong policies. That’s what you need to keep lobbying for — and I know the environmentalists know that.”
The paradox is that as oil prices fall, illustrating the necessity of regulatory efforts to curb emissions, those market conditions are used to argue against regulation.
New Alberta Premier Jim Prentice did just that last week, telling the Globe and Mail that low oil prices reinforce the need for caution on imposing long-delayed regulations on Canada’s oil and gas sector “because we need to remain competitive.”
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