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Energy

Energy & the Environment

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Energy & the Environment
Oil and gas.
 
The three letter curse words.
 
Many are calling for the end of oil and gas while promoting the slogan “Build Back Better”.
 
The slogan which originated from the 2015 Sendai Framework for Disaster Risk Reduction in response to Great East Japan Earthquake and Tsunami, has now morphed into the slogan for all things green and socially just.
Liberal Environment Policy
The Liberal Party of Canada’s website outlines their plan for “Protecting our Environment and Moving Our Economy Forward” as follows:
 
  1. Fighting and Preparing for Climate Change
  2. Making Communities Cleaner, More Efficient, and More Affordable
  3. Protecting Canada’s Natural Legacy
 
The document lays out a commitment to achieve net-zero emissions by 2050, plant two billion trees in ten years, provide interest-free loans for retrofits, build vehicle charging stations, set up a camping travel bursary and ban single-use plastics.
 
So what is the problem with the Liberals environmental plan? Simple. It lacks depth, neglects financial implications and worst of all, its not rooted in reality.
Zero Emissions
Net-Zero Emissions by 2050
 
Making a commitment to hit this target through “legally binding” targets ignores the reality that we live in.
 
The Parliamentary Budget Office has indicated that emissions-reductions cannot be met unless the carbon tax is drastically increased.
 
While it may be possible to tax the country into a state of zero emissions, this would significantly cripple the economy, destroy jobs and ruin lives. This is not acceptable.
 
What should the government do?
 
Up to the mid-late 1800s, wood was the primary source of energy for developed nations.
 
What changed from that point to now? Innovation.
 
Government needs to remove red tape, repeal poor policy, end harmful taxation and allow the free market to pursue new technologies.
 
How can we be sure that this will work?
 
The free market is driven to create returns for shareholders. If there is an opportunity to create profits through new technology, free markets will find a way to capitalize.
 
In order to truly implement policies that improve our environment, we need to look beyond our borders and bring leading Canadian technologies to foreign countries.
 
Canada is a significant coal exporter. Coal, when burned, is a much higher polluter than other non-renewable resources such as natural gas and hydrogen. The government should work with foreign countries to promote the use of natural gas as a substitute.
Retrofit
Retrofit Buildings
 
Plans to provide free energy audits, interest-free retrofit loans and grants for zero-emissions homes are the main talking points of the Liberal retrofit plan.
 
First off, nothing supplied by the government is free. All government expenses are bankrolled by taxpayers.
 
In the midst of reduced or eliminated incomes due to the pandemic, the likelihood of home-owners or landlords being willing to take on debt to retrofit homes or office buildings is going to be limited for the foreseeable future.
 
Similarly, the costs associated with building a zero-emission home will not be offset with a $5,000 grant as proposed in the Liberal plan.
 
What should the government do?
 
Canada is already home to stringent building regulations. Regulations that carry significant costs.
 
In order to encourage further “green” building, the market needs access to more affordable products.
 
The government could accomplish this through the reduction of red tape, and the promotion of trade deals that allow for foreign firms to bring their goods and technology to Canada.
 
Competition and innovation ultimately drive down consumer costs and will always be more effective and efficient than government subsidies.
Charing stations
Charging Stations
 
Recently, the federal government announced that it will “invest” $295 million to help Ford Canada upgrade its Oakville assembly plant to begin making electric vehicles.
 
With the increased manufacturing of electric cars, comes a requirement for charging stations.
 
According to a 2015 US Department of Energy study, costs for single port Level 1 stations range from $300-$4,500. For DC fast charging stations, $14,000-$91,000.
 
Level 1 stations add 6 miles of range per hour @ 1.9kW. DC fast charging stations add 90 miles per 20 minutes @ 90kW.
 
Before taxpayer funds are thrown at green projects, a complete analysis of the life-cycle costs should be a requirement. This will ensure that emissions are truly lower and that taxpayers are receiving economic value for their tax dollars.
 
What should the government do?
 
Government subsidies that prop up an industry or product are inevitably harmful to consumers. These subsidies hide costs that the free market would ultimately choose not to absorb.
 
Instead, government should encourage vehicle manufacturers to produce more fuel efficient vehicles, regardless of the fuel system used to power the vehicle.
 
This could be done through the existing Scientific Research & Experimental Development Tax Incentive Program. The specific objective of the project should be to offset the costs of wages paid to research and development staff who are engaged in this direct work.
 
Beyond the direct goal of improving vehicle emissions, this program would create more opportunities for high-paying jobs within the tech sector which would further help to diversify the Canadian economy.
Camping
Trees and Camping Travel Bursary
 
The tree planting program involves two billion trees, ten years, 3,500 seasonal jobs and an overall $3 billion effort to deploy natural climate solutions.
 
If there is a job that meets pandemic guidelines, planting trees in the great outdoors qualifies.
 
The camping bursary was to provide a $2,000 grant to help families go camping in Canada’s national parks. No grants have been provided to date.
 
Additionally, the Learn to Camp program was to be expanded so that every Canadian child could learn how to camp by the time they reached grade eight.
 
What should the government do?
 
The WE scandal resulted in a missed opportunity to create job opportunities for post-secondary students. This can be remedied by expanding the Canada Summer Jobs program in advance of the 2021 tree planting season.
 
If there is little or no interest in the tree planting program for 2021, it should be abandoned entirely. Instead, government should support private sector companies who are consistently engaging in tree planting projects and other environmental reclamation projects.
 
Boutique tax credits and other one-off government programs typically result in creating winners and losers. As such, the camping bursary program should be cancelled.
 
Instead, and in conjunction with a full tax code review, the government could find efficiencies within the tax system that would translate into real results for Canadians.
Plastic
Single-Use Plastics Ban
 
A recent announcement to ban single-use plastics, regulations to be finalized in late 2021, seeks to fulfill a long running Liberal election promise.
 
The ban will remove plastic grocery bags, straws, stir sticks, six pack rings, cutlery and takeout containers.
 
At a time where the hospitality industry is reeling from the impacts of the pandemic, this will be another difficult adjustment for this industry.
 
Smaller Alberta plastic manufactures have expressed concern with the new policy. Although single-use plastics account for a small portion of the plastics market, the costs associated with re-tooling a manufacturing facility can be quite high.
 
What should the government do?
 
Instead of virtue-signalling, the government should focus on addressing the issue of plastic recycling. The slogan of reduce, reuse and recycle can be traced back to the 1970s. Why hasn’t it caught on as hoped? Simply put, there is no money in plastic recycling.
 
Government should focus resources instead to projects that find viable solutions for plastic recycling. One such project is the development of plastic-bitumen composite roads.
 
Adding carbon capture technology to the plastic processing and bitumen mixing process would allow for road materials to be produced in an environmentally conscious manner.
 
Plastic-bitumen composite roads could result in better quality roadways as they are less water absorbent. Due to the temperature swings in Canada, this could save significant amounts of money otherwise spent on maintenance.
Final Thoughts
Final Thoughts
 
Canadians across the country have a strong desire to protect and preserve our environment for our children and future generations.
 
Environmental policies need to be more than exercises in virtue-signalling.
 
Government needs to understand the climate that we live in, the size of our country and the economic implications of the decisions being made.
 
Government subsidies are unacceptable. Subsidies result in expensive infrastructure projects and bloated consumer costs. If we need a reminder of this we only have to look at the recent failing of the Ontario green energy initiative.
 
Government should focus on reducing red tape, encouraging competition and providing targeted tax credits. Policy that focus on tax credits require free market enterprises to undergo the leg work to get new technology to a state where it can be capitalized on. This allows the free market to determine what is viable and how to achieve capitalization in the most efficient manner.
 
Lastly, we need capitalize on revenues from our oil and gas sector in order to further technological advances. Passing legislation to end emissions, create a zero-plastic waste economy or any other lofty agenda neglects the real world implications of these decisions. These policies do not take into consideration the resources required to accomplish these goals. Additionally, many families are being left behind as a result of these policy decisions.
 
We can protect our environment through innovation. In making policy decisions, government must not take better care of the environment than the residents who call it home.
https://www.jaredpilon.com/

I have recently made the decision to seek nomination as a candidate in the federal electoral district of Red Deer - Mountain View. As a Chartered Professional Accountant (CPA), I directly see the negative impacts of government policy on business owners and most notably, their families. This has never been more evident than in 2020. Through a common sense focus and a passion for bringing people together on common ground, I will work to help bring prosperity to the riding of Red Deer – Mountain View and Canada. I am hoping to be able to share my election campaign with your viewers/readers. Feel free to touch base with me at the email listed below or at jaredpilon.com. Thanks.

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Survey shows two-thirds of energy company employers cut labour costs due to COVID-19

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CALGARY — A survey by energy labour market organization PetroLMI shows that more than two-thirds of the employers in Canada’s oil and gas sector imposed labour cost reduction measures in the wake of the COVID-19 pandemic lockdowns, including 37 per cent who enacted permanent layoffs.

The division of Energy Safety Canada surveyed 300 energy industry workers in August and September and interviewed 13 company leaders in September and August for its four-part report looking into industry reaction to lockdowns that slashed global oil demand, leading to rapidly falling oil prices.

It found that 35 per cent of the companies invoked a hiring freeze, 29 per cent cut executive pay, 28 per cent trimmed worker pay, 27 per cent had temporary layoffs and 21 per cent restricted work hours.

Only 32 per cent did nothing to reduce labour costs.

The survey found that only 13 per cent of energy workers worked from home at least one day per week before COVID-19 but that rose to 70 per cent in March, with 57 per cent working from home at least five days a week.

At the time of the survey, 47 per cent were still working from home at least one day per week and 31 per cent were working from home five or more days per week.

“Due to the sudden economic impact resulting from the COVID-19 pandemic after five years of depressed oil prices, energy employers had to find ways to reduce operating costs,” the report notes.

“While nearly four in 10 energy workers surveyed said their company implemented permanent layoffs, many companies were seeking alternatives to layoffs.”

On its website, PetroLMI notes that oil and gas employment increased by 4,450 jobs in October to 164,590 compared with September, but was down 12 per cent or 21,400 from October 2019.

This report by The Canadian Press was first published Nov. 20, 2020.

The Canadian Press

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Alberta

Pandemic resurgence blunts refined fuel demand recovery, says Imperial Oil CEO

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CALGARY — The CEO of Imperial Oil Ltd. says rising COVID-19 infection numbers have stalled a recovery in demand for vehicle fuels produced in its Canadian refineries from the depths of the pandemic lockdowns in March and April.

Brad Corson, speaking at the company’s investor day, says demand for Imperial’s gasoline and diesel have recovered to between 85 and 95 per cent of normal levels but jet fuel demand is still only at about 40 per cent and it is expected to remain at low ebb into early 2021.

Downstream vice-president Jon Wetmore says the company is calling for refinery utilization of 89 per cent and throughput of 375,000 barrels of oil per day in 2021, up from 80 per cent and 340,000 bpd this year.

But he concedes those forecast numbers represent a best estimate that will greatly depend on whether the pandemic advances or retreats over the next few months.

Imperial says it expects capital spending of $1.2 billion in 2021, up from total capital spending of about $900 million this year.

Production is expected to rise to 415,000 barrels of oil equivalent per day from 395,000 boe/d this year, mainly due to output increasing to an average of 255,000 barrels per day from 220,000 bpd this year at the Kearl oilsands mine.

This report by The Canadian Press was first published Nov. 19, 2020.

Companies in this story: (TSX:IMO)

The Canadian Press

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