Cutting Emissions Needn't Kill Jobs, Says Oilsands Labour

[Editor's note: The previous headline for this article, written by a Tyee editor, mistakenly gave the impression that the Alberta Federation of Labour and its president had made a policy pronouncement endorsing a carbon tax. That is not the case. We have changed the headline, and parts of this story, to more accurately reflect what AFL President Gil McGowan told Tyee reporter Geoff Dembicki.]

By the end of this month, Alberta will say whether it plans to make its climate laws stronger. The timing is terrible, according to Alberta Premier Jim Prentice. The recent oil price drop means "it's time for caution."

Even a small increase to the modest carbon tax Alberta enacted in 2007 can cause "immediate" impacts to investment and jobs, he warns.

You might expect the top labour leader in a province of oil and gas workers to agree. But Gil McGowan is tired of hearing warnings that stronger climate action must always come at the expense of jobs. Such a tradeoff, in his opinion, is "a load of bunk."

As president of the Alberta Federation of Labour (AFL), McGowan speaks for over 25,000 oilsands workers. He considers the industry vital to Canada's economy, but opposes a "Wild West" expansion model that puts corporate profits ahead of labour. A more regulated pace of development would be good for workers and the environment, he said. It certainly wouldn't kill the industry.

The AFL is not alone in its thinking. Over the past year, a team containing some of the world's leading climate modelers set out to determine if and how humankind can reduce global temperatures to the two degrees needed for a stable climate. The United Nations-supported Deep Decarbonization Pathways Project concluded it's feasible for Canada to meet this "extremely aggressive and ambitious" carbon target by 2050 -- and at the same time allow its oil and gas sector to potentially double.

To spur those changes, Canada would need to aim for a national carbon price of $100 per tonne by 2020. That's much higher than the $15 per tonne Alberta now charges on oilsands producers, but not so high it'd cripple the industry, suggests University of Alberta research.

So if labour says job loss fears are often exaggerated, then why do leaders like Prentice invoke them?

"It's frustrating," Canadian Labour Congress economist Angella MacEwen said. "The 'jobs' argument seems to be used by those who don't want to take action."

For eight years the federal government has vowed to take action on regulating the oil and gas sector, whose fast-growing emissions are a major reason why Canada is set to miss the 2020 climate target it agreed to at Copenhagen.

In the absence of such regulations, Alberta charges oil and gas producers a modest $15 for each tonne of carbon they emit. The last time there was talk of raising that price, Wildrose party leader Danielle Smith called it "job-killing," and industry groups lobbied against it.

'Pace' is key: McGowan

In the opinion of the AFL, a group speaking on behalf of 145,000 workers, the true impacts to good oilsands jobs for Canadians come from an industry hell-bent on exporting as much raw bitumen as possible with the barest of government regulations.

"We support development of the oilsands," McGowan said. "But that development should be carefully thought out and done in the public interest. Unfortunately none of those things are done today."

Over the past decade oilsands production doubled to 1.98 million barrels per day. But such rapid expansion has driven up the cost of labour and materials. In AFL's opinion it's resulted in a weaker business case for high-value upgrading jobs, more temporary foreign workers and a volatile boom and bust cycle that's bad for job stability -- not to mention Canada's fastest-growing emissions. "The word that has been missing from the development of the oilsands is 'pace,'" McGowan said.

Whenever the word is implied, whether by talk of higher royalties or environmental rules, oil firms warn about threats to "competiveness," and by extension the 12,000 oilsands jobs they argue are added each year. But a closer look at the data suggests direct jobs growth is closer to 4,500 (much less, say, than the 40,000 healthcare jobs to be added annually over the next decade). It's one reason MacEwen says stronger climate laws "shouldn't have to impact a bunch of jobs or destroy the [oilsands]."

Looking to 2050

The team of climate modelers at the Deep Decarbonization Pathways Project concurs. They've set out to determine what sort of policies and technology it would take to stabilize global temperatures at the two degrees needed to avert climate change's worst impacts. In Canada that means a carbon reduction of 90 per cent by 2050. "To be honest it's possible," project researcher Chris Bataille said. "And we still drive, we're still flying, we're still living in reasonably-sized homes."

But to meet the target requires long-range planning beyond anything that's being contemplated now, Bataille said. It means buildings are designed as efficiently as possible and powered by clean energy -- as are factories. Cars run on low-carbon fuels or go electric. And oil and gas production still grows. Potentially it doubles, though with a few caveats. "What we've assumed is the [oil and gas] sector has basically thrown the technological kitchen sink at [reducing] production emissions," Bataille said.

That means oil and gas firms aggressively deploy carbon capture and storage, attain every possible efficiency and totally eliminate methane leakage.

But for such climate investments to start making financial sense, Canada would need a carbon price of $100 per tonne across the whole economy. The basic logic of this scenario -- that carbon pricing helps reduce overall emissions, while still allowing oil and gas production to grow -- was also shared by the National Roundtable on the Environment and the Economy.

You may remember the NRTEE as an arms-length panel of academics, policymakers, businesspeople and environmentalists set up in 1988 to provide expert advice to the federal government. The Conservatives shut it down in 2012. "Why should taxpayers have to pay for more than 10 reports promoting a carbon tax," Foreign Affairs Minister John Baird said at the time. "It should agree with the government. No discussion of a carbon tax that would kill and hurt Canadian families."

Manning's not so 'shocking' carbon tax support

That discussion is now being led by the newly-launched Ecofiscal Commission, a bipartisan panel that includes former prime minister Paul Martin, former Reform party leader Preston Manning and Suncor CEO Steve Williams, leader of the largest oilsands producer.

Canada should use "carbon pricing to reduce greenhouse gas emissions," Manning recently argued. Right-wing commentator Ezra Levant deemed it a "shocking" attempt "to subvert conservative opposition to carbon taxes."

Yet a price on carbon emissions isn't so shocking when you actually study the economic impacts. It's what University of Alberta business professor Andrew Leach and a colleague have been doing for the past year. Of all the ways to meet Canada's climate targets Leach says carbon pricing is the most efficient. That's why oilsands firms like Suncor "would likely continue to meet typical investment benchmarks of a 12-13 per cent rate of return even at carbon prices of well over $100/tonne," he's written.

Yet such a scenario still contains much uncertainty for Canada's bitumen. "The key question for oilsands producers is what happens to oil prices as a result," Leach said. Higher carbon prices can mean higher oil prices, and thus higher costs for gasoline. Consumers will continue to pay those costs so long as alternatives like electric vehicles remain unaffordable.

Yet if the price of electric vehicles were to plummet, as two of the world's biggest investment banks predicted this summer, then demand for oil (as well as its price) could dramatically decline, and with it Canada's oilsands.

Those are just some of the factors Prentice will consider when deciding if Alberta should strengthen its climate laws this month. "Not all the work will be done by that time," Prentice recently told Vancouver reporters, "but we will begin the framework."

Should that framework reflect a belief that we must choose either a high-employment economy or climate action? Add University of Alberta business prof Leach to the list of jobs-minded experts who advise against such thinking. "I don't think that's accurate at all."