Against the backdrop of the deadly, devastating inferno engulfing northern Manitoba and escalating belligerence from the U.S., a lively debate is playing out over the future of domestic economies and potential nation-building projects in the province and beyond. Some have argued that the province needs more fossil fuel infrastructure to expand Canadian export markets and profit from remaining oil and gas demand.
But a provincial economic strategy based on increased fossil fuel exports would do nothing to address crises of affordability and resilience, and would instead likely worsen them. The dire realities of the climate crisis and trends in global energy transition have changed dramatically in the last few years, undermining claims that doubling down on the status quo is realistic and practical. Investments in climate solutions like upgrading building energy efficiency and heating offer an alternative to resource extraction and export with potential to create more local jobs while adapting our indoor spaces for a more volatile climate.
Investing now in new fossil fuel infrastructure for growing exports is a risky gamble. The International Energy Agency, far from a radical voice, forecasts that global oil and gas demand will peak by 2030, in large part due to China’s rapid and unprecedented electrification which has accelerated dramatically in the last three years. There are now major concerns about looming oversupply and potential price collapses for both oil and gas, which would undercut marginal high-cost producers first, leading to stranded assets and public bailouts.
The idea that fossil fuel exports could significantly boost the province’s economy is unfounded. Almost all fossil fuel infrastructure requires substantial public subsidies. The Trans Mountain Expansion and LNG Canada typify this, requiring tens of billions of dollars in support with tax breaks, loan guarantees, discounted electricity and much else.