Monday, March 27, 2023

Calls for ‘ethical oil’ push Canada to become a petrostat

Russia’s continued invasion of Ukraine has brought fossil fuels and geopolitics to the forefront of public debate. In an effort to evade economic sanctions, Russia has armed its energy exports.

In March, President Vladimir Putin said he expected “unfriendly” countries – those that had imposed sanctions on Russia’s war in Ukraine – to pay for gas sales in rubles. In May, Russia halted gas supplies to Poland and Bulgaria after refusing to pay in rubles. The European Union buys a significant portion of its natural gas (40 percent) and imported oil (27 percent) from Russia. Some analysts have said some countries, such as Germany, could see a recession if gas from Russia is cut off completely.

The escalating energy crisis has again sparked calls to increase Canadian oil and gas production and exports to diversify Europe’s energy supply. Pro-bitumen think tanks such as the Canadian Energy Center and the Macdonald-Laurier Institute have made similar arguments in which they accuse opposition to pipelines of condemning Western countries’ energy security.

A Map Showing Lng Terminals And Pipelines In Europe.
Imports of natural gas to Europe from both pipelines and liquefied natural gas (LNG).
(The Associated Press)

In essence, these arguments repackage the ethical oil rhetoric that frames investment in bitumen as morally superior to oil of non-democratic regimes. But the significant expansion of bitumen infrastructure comes with economic uncertainties and contradicts Canada’s COP26 commitment to decarbonization. Moreover, it diverts the public’s attention away from the inconvenient reality that Canada and Russia are petro-states that share numerous similarities in energy policy-making.

Oil trees and petro-states

Political scientist Terry Lynn Karl introduced the idea of ​​a petrostat in her 1997 book, The paradox of abundance: oil trees and Petro states. She developed the petrostat thesis to explain the inability of oil exporting countries such as Saudi Arabia and Nigeria to convert their petroleum revenues into more stable and self-sustaining economies.

Karl’s main insight was that a nation’s dependence on oil exports leads to economic and political problems such as weak economic growth in manufacturing sectors, vulnerability to price shocks, widespread social inequality, authoritarianism, corruption and so on.

During the first decade of the 21st century, rising oil prices significantly changed the global energy supply and demand landscape. This trend has significantly strengthened the oil and gas industry in countries such as Canada, Norway and Russia. In response, scholars began debating whether the petrostatic thesis should include them, given their increasing dependence on fossil fuel revenues.

A Man In A Black Suit Speaks Via Microphone In Front Of Several Brightly Colored Flags.
Russian President Vladimir Putin at a meeting in Moscow on May 16, 2022, shortly before he cut off gas supplies to Finland, after the country refused to pay in rubles.
(Alexander Nemenov / pool photo via Associated Press)

Scientists have noted, for example, that Russia is obliged to prioritize the energy sector over other economic sectors because of the influence of natural gas to generate export earnings and to maintain its geopolitical influence in Europe. This results in an economic structure that is vulnerable to energy market volatility. In 2020, record low oil prices imposed a solid cost on Russia, which contributed to a dramatic depreciation of currency and negative GDP growth for the whole year.

Overcome the petro-state curse

Scholars have debated the extent to which Canada can be classified as a petrostate. After all, energy products make up only 8.3 percent of national GDP, which is significantly lower than typical petro-states. Nevertheless, the Canadian economy and known petrostate economies show similar structural vulnerabilities.

A Multi-Level Oil Platform With Rocky Coastline Behind It.
The Hebron platform, anchored in Trinity Bay, NL, in April 2017.

Canada’s energy sector has struggled with declining demand due to the pandemic. Alberta, Saskatchewan and Newfoundland and Labrador rely heavily on the energy sector, and have been particularly hard hit.

The revival of “ethical oil” narratives that moralize bitumen extraction and demonize critics aims to frame resource dependence as part of Canadian identity. In other words, the bitumen industry and its allies insist on “petro-nationalism,” which celebrates bitumen symbolically while obscuring the unequal distributions of bitumen’s economic benefits and its environmental costs.

Looking for a path to just zero

Days after Russia’s invasion of Ukraine on February 24, Alberta’s Prime Minister Jason Kenney tweeted: “If Canada really wants to help deprive Putin, let’s build some pipelines!”

However, building more pipelines to increase the Canadian economy’s dependence on fossil fuels is not the only option. Norway, whose economy is currently dependent on the oil and gas industry, is a shining example of how to overcome the petrostic curse.

As policy analyst Bruce Campbell wrote, instead of the denial, delay and division that characterize current Canadian climate policy, Norway’s path to net zero is built on climate action, close cooperation with unions and NGOs and strong government leadership in collecting and redistributing energy. -income.

Read more: 5 ways Norway leads and Canada lags behind with climate action

If Canada is truly concerned about becoming a moral energy producer, we need to focus our public discussions on examining immediate policy actions aimed at limiting greenhouse gas emissions from the energy sector and planning their phasing out.

Nation World News Desk
Nation World News Desk
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