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By Geoffrey Cann
Should cities that are weighted on oil production declare climate emergencies? Why or why not? Please debate.
The Backstory
Calgary’s incoming Mayor has indicated that her first order of business will be to attempt to have the newly elected City Council declare a climate emergency. The Mayor-elect has a background in corporate and social responsibility, including a PhD in Urban Sociology, and has served on council for four years. This provides the Mayor with both a broad understanding of how corporate Canada views its social obligations as well as an appreciation of how a City might respond to a changing climate.
Council has been presented with studies and research about the impacts that climate change will have on the local community and environment in the past, but each time, Council has declined to take action.
In case you’re reading this from outside Canada (and there’s a good chance you are), Calgary is the home office town for Canada’s oil sector. Canada produces about 4% of global oil supply, sells the bulk of it to the US, and has the world’s 4th largest reserves of oil. Canada supplies just two markets (its own, and the US), and so matters relatively little on the global stage. But on the other hand, many nations and companies are interested in Canada’s energy industry knowhow.
In any case, declarations of emergencies do unlock funding from various other levels of government to improve resilience, so there is an economic justification.
My LinkedIn feed and media sources are predictably spinning up to express outrage and alarm about the negative prospects of such a declaration, while conveniently ignoring the new Mayor’s more nuanced view of energy (less emphasis on the end product of the industry, and more emphasis on exploiting Calgary’s expertise in producing energy cleanly, safely, and reliably. More intellectual property, less product).
And in the usual manner to avoid the substantive debate, commentators are instead challenging her legitimacy by focusing on low voter turnout and her share of votes (pursuing the Trumpian fallacy that the election was somehow flawed) declaring that she mislead voters, and calling her names such as autocratic, bait-and-switch, out of touch liberal academic elitist. I have been called a doubt merchant, mother-fracking gashole of toxicity in a man suit. She’s getting off easy.
I strongly encourage schools across the city to hold debate challenges on the Mayor’s plan, and as a service to the students, I present a primer for the debate.
The Argument In Favour
The argument in favour of declaration is easy to make.
ROBUST EVIDENCE OF CLIMATE CHANGE
Calgarians do not need any more studies to tell them that the global climate is showing alarming signs of increasing wonkiness. The upcoming Glasgow conference will hammer that message home with ample scientific evidence.
More locally, a heat dome in June that engulfed the entire Pacific North West left its mark by setting 36 temperature records in Alberta and boosting hospital visits for heat related illnesses. Fires this past summer in the nearby Rocky Mountains made the air in the city toxic for days on end. Agriculture suffered grieviously from the heat, with destroyed crops, parched land, and stressed livestock.
The 2016 fires in Fort McMurray left an indelible impression about the consequences of oil production in the arboreal forests. A flood event from early rains on melting snow in the spring of 2013 overflowed the Bow and Elbow rivers and gutted the downtown core. Calgarians get it.
Fleeing climate change to Saskatchewan isn’t really an option, as all locations share the same global climate, and will merely experience climate change in their own way (sorry Brad).
DISTRICT PREPAREDNESS
Calgary’s building stock, power grid, and water services are not resilient enough in the face of the climate impacts that have already happened. Most of Calgary’s homes lack air conditioning because the city is far north of the equator and sits 3400 ft above sea level. The power grid needs considerable strengthening to cope with the coming fleet of electric vehicles. Calgary released a cautionary note about water depletion during the heat dome.
Calgary’s city facilities, vehicles, and services all likely need some investment to improve their emissions and resilience for the future, and the City at present cannot raise funds from its usual sources because of industry contractions dating back to 2014.
PRECIOUS RESOURCES AT RISK
Calgary has a world class sport fishing resource, the mighty Bow River, slicing through the city. Lately it’s become a magnificent rafting excursion for the adventurous, and even has a standing wave under one of the bridges for surfing enthusiasts. The fate of this resource in a warming world is in question. Sure, it might adapt, but it might not.
Other resources that make Calgary appealing (Fish Creek Park, Nosehill, the Foothills) are also at risk.
CAPITAL MARKET ATTENTION
To attract capital, Calgary’s oil and gas companies (certainly those big enough to need access to global capital markets, including Suncor, Cenovus, Imperial Oil and CNRL) need to have very robust responses to the risks of stranded assets (see Exxon board), the threats of climate lawsuits (see Shell) and the talent crisis (see everywhere). These four are now 50% of Canadian oil production, and they can no longer maintain a viable public position that there isn’t a climate emergency or an energy transition. They’re up against trillion dollar companies in the hunt for investable money, and some (Amazon, Google) are becoming serious energy industry players.
The Mayor will encounter no opposition from those that really matter. There are typically just five executives at each of these companies (CEO, CFO, VP Ops, VP Exploration, VP Corporate Development) who comprise the key decision making team. Just 20 people make all the meaningful big-dollar decisions for Calgary’s upstream oil industry.
YOUTH ANGER
Young people are pretty incensed about the state of the environment being left to them. Fewer and fewer wish to associate themselves with an industry failing to adapt. Kids vote with their futures, and the local University has been forced to shut down its bachelors of oil and gas engineering studies due to lack of enrolment. Calgary’s many companies should be more concerned about the talent pipeline drying up long before the resource does.
The Arguments Against
To find the arguments against declaring a climate emergency, I consulted my newsfeed, but I did find its arguments wanting.
THE THREAT OF MORE ECONOMIC DESTRUCTION
There is a possibility that some oil businesses conclude that under the cloud of a climate emergency, Calgary is suddenly too hostile to the industry, and that relocation of their head offices is the only solution. They might well join a slow parade in progress. Talisman was bought out by Repsol. Shell sold its upstream business to CNRL because of pressures in Europe. Ovintiv fled to Denver. Both US-based ConocoPhillips and Hong Kong-based Husky exited Canada by selling to Cenovus.
And yet, oil production continues to grow in Canada. Oil wants to be produced, after all. Calgarians are good at this job. And there isn’t another city in Canada that even comes close to the range of capability that Calgary offers to produce that oil. Edmonton? Red Deer? Nope, the offices aren’t leaving because of the Mayor or Council.
The real problem with the status quo is that the city’s monochrome brand isn’t yet proving sufficiently attractive to new inbound investment that helps diversify the economy. See Amazon.
OTHER PRIORITIES TAKE PRECEDENCE
Calgary faces lots of other, albeit lesser, problems that are within Council’s remit to address. Parking is expensive. The budget is a mess. The ring road isn’t complete. Hail damage from last summer blights the neighbourhoods. The problem of homelessness and substance abuse is growing.
But there’s money to help deal with the climate. These other problems? You’re on your own. And Calgary doesn’t have any money.
THE TIMING ISN’T RIGHT
With Calgary still struggling with empty office towers, the timing might not be right to tackle the climate right now. It feels like an important problem, but is it urgent?
Up to a billion sea creatures on the West Coast perished in the June 2021 heat dome. Young people say this is now pretty urgent.
CLIMATE CHANGE IS GOOD
There’s no doubt that climate change produces winners as well as losers, and climate change is potentially quite good for Alberta. As the province warms up, its growing season lengthens, and high levels of CO2 in the atmosphere are a positive for plant growth. Agriculture could benefit. Imagine the possibility of growing olives in Alberta.
This is a tough position to advertise to a world that feels like its burning, suffocating, freezing or submerging. Now is not the time to dust off Alberta’s Trudeau branding “let the Eastern bastards freeze in the dark”.
TIME TO CASH IN
As the pandemic recovery kicks in, faster than expected, energy prices are suddenly on a tear. Prices are very high. Of course, the cure for high energy prices is high energy prices, because high prices induce more production, which satisfies the unmet demand and prices then recede. Perversely when prices are high is precisely the time to invest in the future, not to double down on the past.
Conclusions
Cities don’t exist constitutionally in Canada. The constitution allocates decision authority exclusively to the federal government and the provinces. Cities can therefore say whatever they want, because it doesn’t matter. Plus, the Mayor gets only one vote. My only hope is that young people at least have a more thoughtful debate on the topic than my newsfeed.
Check out my book, ‘Bits, Bytes, and Barrels: The Digital Transformation of Oil and Gas’, coming soon in Russian, and available on Amazon and other on-line bookshops.
Look for my next book, ‘Carbon, Capital, and the Cloud: A Playbook for Digital Oil and Gas’, coming next year.
Take Digital Oil and Gas, the one-day on-line digital oil and gas awareness course.
Mobile: +1(587)830-6900
email: geoff@geoffreycann.com
website: geoffreycann.com
LinkedIn: www.linkedin.com/in/training-digital-oil-gas
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