Liars, Damned Liars and the Conservative Party

    The Toronto Star /  Canadian Press Service are reporting that despite repeated claims that the Canadian government would address global warming and GHG emissions in step with the United States, Environment Minister John Baird has stated that this will not happen.
    With the failure to institute cap and trade in the US, the Obama administration has announced a "Plan B," passed by executive order, that strengthens the EPA regulation over greenhouse gasses. To quote the article:

    The first step tightens rules for existing facilities planning any expansion that would increase emissions. Then, starting in July, the rules will be extended to include newly constructed facilities.
    The EPA says its regulations target operations that produce nearly 70 per cent of U.S. greenhouse gas emissions from stationary sources.
    The agency estimates the more stringent rules will require first-time permits for about 550 sources between 2011 and 2013. It also expects an additional 900 permits for new and modified projects each year.

    Although the EPA regulations are national, Texas has announced that the state will refuse to meet the federal guidelines. Baird offers the excuse that because of this refusal, this makes the US regulations "not national."
    Frankly, this position is absurd. It is the equivalent to suggesting that because Alberta has argued with, and been in contravention of, aspects of our national healthcare program, that this invalidates Medicare. It was not true in the case of Medicare, and it certainly isn't true in the case of the new EPA regulations.
    The Conservative Party has been relying on the American Republicans tactics of lies, denial, and fear to keep any meaningful change in American policy on GHGs from being enacted. With the strengthening of EPA regulation by the White House, this claim that "when the Americans do something, we'll do something" has been rendered moot. The Americans have done something-- and, importantly, something that could make a difference here in Canada. They have targeted GHG emissions from stationary sources. In Canada, that means only one thing; the Alberta tar sands projects.
    If the Conservatives were to actually harmonize Canadian environmental regulation with the US, this would force greater efficiencies on the tar sands projects, possibly restricting their (currently a cancer-like unrestrained) growth. It would do nothing to address the appalling waste handling in the tar sands, nor would it do anything to deal with tailpipe emissions (a 1970s problem addressed by a Conservative proposal to harmonize Canadian regulation with American earlier this year).
    The Conservative Party under Stephen Harper has made it abundantly clear that they will not, under any circumstances, do anything that might slow the exploitation of the tar sands, or that would impose any kind of regulation on them. This does, from their point of view, make sense; any regulation of the tar sands would raise, in Alberta, the spectre of the hated National Energy Program. Which, of course, would mean political suicide for the Tories in Oilberta. The Tories have recognized that opposing corporate interests, particularly in the oil patch, particularly in Alberta, is a non-starter. This despite the fact that most Albertans couldn't have told you what the NEP was about in the '70s, never mind now.
    In our current irony-impaired environment, Baird made his comments while preparing to attend the United Nations Climate Change Conference that begins this week in Cancun, Mexico.

Some American Numbers

But can Canada be far behind?

Statistically SPEAKING

Because we’re rarely far from a well-stocked supermarket or convenient drive-thru, many Americans aren’t aware of the worrisome trend toward monoculture in our agricultural ecosystems. But the loss of diversity in the plants we eat should give us all food for thought.

Our food supply by the numbers:
Approximate number of plants that are edible:
30,000
Of those, how many have people consumed throughout history:
10,000
Of those, how many make up the basis of our diets today:
150
Of those, how many provide 80 percent of the world’s food:
12
Of those, how many provide 60 percent of the world’s food:
4*
Percent of genetic diversity lost in agricultural crops over the last century:
75 percent
*(Note: You get extra credit if you guessed which four crops these are: Wheat, rice, maize and potatoes.)
Statistics courtesy of: Dean Bill Chameides’ blog, The Green Grok, thegreengrok.com

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Post-Copenhagen

So what did Canada get from our little trip to Copenhagen? Well, our PM made it clear that when it comes to photo opportunities, he's your guy--witness all the shots with various heads of state on his carbon-intensive journey pre-Copenhagen. But when it comes to facing up to the results of his beliefs and actions, he's really not so ready to get in front of a camera (well, to be fair, with the exception of his trip to China where only the sight of him crawling would really satisfy the Chinese leadership. But I think back to a year ago when Harper wouldn't face parliament after a major miscalculation either. Not really good at owning up to mistakes, our PM.). So poor old Jim Prentiss was trotted out to deliver 9 paragraphs of irrelevancy.
But Canada did get what our government wanted; nothing really changed. A vague commitment to reduce our emissions by 20% from 2006 levels (non-binding and unenforceable) and a promise to contribute to an international fund (dollars that are likely to come out of our current Foreign Affairs budget anyway).
But in terms of real change? Well, all we're going to get is more of the same. Enbridge is trying to build a pipeline across northern BC to haul bitumen (our vaunted "heavy oil") from Fort MacMurray to a tanker terminal at Prince Rupert. The Dogwood Initiative is working hard to keep that from happening, and is experiencing some success. But the extraction at the oil sands is still set to expand without any controls or limitations.
Which is one of the reasons Harper was willing to eat shit in China; China doesn't care what people do in their own country, as long as they fulfil their contractual obligations. So war criminal, genocidal lunatic, or environmental criminal, none of it matters as long as the resources keep flowing. And the US has pointed out that it does have some reservations about Alberta's bitumen extraction process. Several states are now refusing to accept oil from the tar sands, and President Obama announced on his arrival in Copenhagen that the EPA was going to be able to regulate CO² emissions. So Canada is facing growing restrictions on its ability to export dirty oil to the US.
As an aside, the move to declare CO² a pollutant and regulate it through the EPA is an important step for the US. Recent studies have indicated that the introduction of pollution controls in the US in the 1970s was important to the US remaining an economic powerhouse through the rest of the century. By forcing industries to clean up their act, the US government forced production efficiencies on those industries, making them much more competitive. This despite the extra imposed costs. It seems obvious that the same reasoning and results would apply to restrictions on CO².
So our PM, having no intention of imposing restrictions of any type on Alberta's bitumen production (he is, after all, the son of an oil executive, and beholding to oil companies), has realized that its necessary to find new markets that will not put restrictions on methods of production. Enter China.
China indicated at Copenhagen that while they are willing to agree to CO² reductions, they really have no interest in international verification procedures. Regretfully, NASA failed the launch of a satellite capable of doing that monitoring; currently the satellite rests on the bottom of the ocean near the Antarctic ice shelf. So until the US comes up with another 230 million dollars, international monitoring of CO² emissions is nothing but a dream.
But despite their dislike of international monitoring, China bids fair to become the renewable/green energy powerhouse of the 21st century. With the ability to totally ignore local opposition, China has begun building large wind and solar installations to supplement their coal and oil power producing infrastructure. In Canada, we've lost that opportunity with the Harper government's decision to spend infrastructure funds on partisan projects. Instead of taking the opportunity to help Canada into the 21st century, Harper decided instead to continue to believe that its the 1950s, and spend on old school projects. And unless there's someone presenting an oversized Conservative-logo'd novelty cheque, good luck on finding out where our billions of dollars are being spent. The Bush regime perfected the art of spending the country into impotence as a technique of hobbling future governments. Harper does it by cutting taxes (yes, we've gone from an inherited 13 billion surplus back to deficit spending--mostly down to Harper's cutting of the GST and other taxes)(as an aside, I'm actually in favour of taxes like the GST/HST; being strictly consumption-based and applying across the board, they tend to act to discourage spending and encourage saving).
So post-Copenhagen, we're really no further along to where we need to be. No international binding agreement on CO² reduction. The sea levels continue to rise, the poles continue to melt, the death of billions over the next 50-100 years still looms, and future of human life on Earth still hangs in the balance.

Peak Oil

According to The Guardian:

The world is much closer to running out of oil than official estimates admit, according to a whistleblower at the International Energy Agency who claims it has been deliberately underplaying a looming shortage for fear of triggering panic buying.

The senior official claims the US has played an influential role in encouraging the watchdog to underplay the rate of decline from existing oil fields while overplaying the chances of finding new reserves.

The allegations raise serious questions about the accuracy of the organisation's latest World Energy Outlook on oil demand and supply to be published tomorrow – which is used by the British and many other governments to help guide their wider energy and climate change policies.

Listen to an audio clip with Terry Macalister here.

A report by the UK Energy Research Council (UKERC) said worldwide production of conventionally extracted oil could "peak" and go into terminal decline before 2020.

The world has used less than half of the planet's conventionally extracted oil, but the remaining resources will be more difficult and expensive to get out of the ground, slowing production and increasing prices of crude.

With exploitation of the world's reserves running at more than 80m barrels a day, even major new discoveries such as the oil fields recently found in the Gulf of Mexico by BP would only delay a peak by a few days or weeks, the report said as reported by The Guardian.

The risk to the UK from falling oil production in coming years is greater than the threat posed by terrorism, according to an industry taskforce report published today.

The report, from the Peak Oil group, warns that the problem of declining availability of oil will hit the UK earlier than generally expected - possibly within the next five years and as early as 2011. [Also reported in The Guardian]

We don't have any plans in place to deal with peak oil: in Canada, we import the oil we use, and export the oil we produce (leaving most of us feeling WTF?). We peak out, everything falls apart. Our government is in denial, our corporate heads seem to be suffering a complete meltdown,and the general public just doesn't want to know. Any wonder why I'm a bit despairing of our future?

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BC Power Generation Ruling

In an interesting decision yesterday, the BC Utilities Commission (BCUC) ruled that current BC Hydro acquisition plans are “not in the public interest” and refused to allow them to go ahead. This includes the Campbell governments plans for privately-owned “run of river” hydro projects that were intended to change the numbers in the government's greenhouse gas emission policy.
The Campbell government is possibly Canada's greenest government, having passed into law a requirement that BC reduce greenhouse gas emissions from 2007 levels by at least 33% by 2020 and 80% by 2050. One of the methods by which they hoped to achieve these targets was to increase power production in the province, but have that power generated by smaller-scale hydro projects (the “run-of-river” projects). Then, in a very controversial move, the Campbell government decided that they would encourage these projects to be privately owned and developed.
Typically, this set off a firestorm of protest in the province (BC, after all, keeps its conservatives in check by occasionally electing the social-democrat NDP—in the last election less than 5000 strategic votes would have flipped the outcome). A broad spectrum of affected citizens, spearheaded by Rafe Mair, a former radio talk-show host and currently writing regularly in The Tyee, have been keeping the heat on both the private power companies (primarily Plutonic Power Corp, who saw their share price fall 24% yesterday), called IPPs or independent power producers, and the provincial government. The heat comes mostly from broad-based environmental concerns—we've learned over the years that even hydro power comes at a price—from the effect on communities, the forests, and on the sport and commercial fisheries.
One of the interesting rulings from BCUC is that BC Hydro will not be allowed to downgrade their Burrard Generating Station from 5000 GWh to 3000 Gwh. If the ruling stands, private power generation projects will have to be reduced by a similar amount—thus the fall in Plutonic's share price yesterday.
The ruling suggests that the government and BC Hydro have been purposely overestimating BC's power requirements in order to justify IPP entry into the market. Lori Winstanley of COPE, quoted in the 29 July '09 Globe and Mail, says quite plainly that “[w]e have a very flawed energy plan in this province...the government cannot continue to exaggerate the need for power.” The BCUC did approve a BC Hydro plan to spend $418 million on demand side management, which is a good thing as there are significant gains that can be realized by simply reducing demand in the province. But one of the reasons for increased demand on generation capacity is that a large amount of power from BC is sold south into the US, and BC Hydro isn't seeing that demand drop at any time in the future. Particularly with the growing demand for low greenhouse gas emitting power, which is only set to grow from south of the border. And US dollars are important to BC Hydro—they made billions on Enron's whipsawing of the California utility market.
And the BCUC also approved BC Hydro's spending of $41 million on continued consultation on the proposed Site C mega-project dam on the Peace River, so there's still hope for US dollars to flow long-term into BC Hydro's coffers. 'Caused it's always about the money, innit?

The Oil Refiners Conundrum

Irving Oil Ltd. and their partner BP PLC have decided to stop their planned construction of an $8B oil refinery that was to have been built in St. John, and they have done so on the basis of a report that looking out over the next thirty years, oil consumption has now peaked. There are now a number of analysts that believe that even if the economy recovers, gasoline consumption peaked last year, and we will never achieve those levels again.
Some analysts are suggesting that with the economy still tanking and excess inventory of gasoline and other refined products piling up (there's a million barrels per day of production capacity sitting idle in North America at the moment, and surplus inventory has hit a 24-year high), crude oil prices can be expected to tank—possibly as low as $20/barrel.
So even though refiners have seen their margins rising to a ten-year high (according to numbers released by MJ Ervin and Assoc. in 1998 refiners were seeing an annual average margin of 6.7¢/litre which has risen to a year-to-date average of 15.6¢/litre this year), they are not planning any more production capacity and are, in fact, abandoning planned expansion. Plans such as Royal Dutch Shell's now abandoned plans for a refinery near Sarnia, Ont., that was to handle production from the Alberta oil sands. Shell has also delayed the expansion of its Texas plant for two years—obviously wanting a better read on future North American consumption patterns before building what may well prove to be capacity that's surplus before it even comes on line.
Of course, if crude prices do fall to $20/bbl, a massive oversupply could trigger a steep fall in gasoline prices, and stimulate demand. But if North American governments hold to improved mileage rate requirements for new cars, even increased demand may not make up for the current oversupply.
But other analysts are suggesting that, particularly with the Saudis keeping a lid on their production in order to stabilize prices, prices may yet rebound to the $100/bbl level before dropping back into the $50-$60 range. If that is the case, demand is likely to fall even more than projected, leaving North America with a growing oversupply problem and refiners facing decent margins, but considerably less volume from which to get those margins.
So refiners are caught in a bind; legislated drop in demand and oversupply means falling volumes and lowered overall profits. Or legislated drop in demand, higher crude prices bringing a corresponding drop in consumer demand, and oversupply at refineries meaning lower consumption and a steadily rising oversupply. Either way, there's not going to be a lot of construction going on—even as the current refineries age. And if North American governments ever get really serious about global warming, these antiquated refineries will not only not be expanded, but will begin closing to meet emission requirements—which will finally take out the excess capacity, but will not encourage anyone to build new plants. Ultimately, this could mean that North America will be entirely reliant on shipping crude overseas ( that is, oil sand crude, making it even less economically viable than it is today) and importing refined hydrocarbons. Which is, contrary to my expectations, already happening.

So What's the Big Whoop about Deflation?

So Canada has registered it first “technical deflation” in 15 years in June 2009. More than a few people are having a very quiet freakout about this. A few, like Ken Rogoff (former research director at the IMF, now Harvard economics professor), John Makin (economist with the American Enterprise Institute, a hard-right conservative outfit) and Paul McCulley (portfolio manager at Pimco—who run the world's largest bond mutual fund) suggesting that this might be the time to bring back inflation—perhaps as high as 6% for a couple of years.
The spark behind this is the release of the consumer price index for the last couple of months, showing that in May and June, prices for consumers fell for the first time in years. While you and I might think this is good news, economists and businesses think differently about this. If the CPI is dropping, it begins to make sense, as a consumer, to put off spending money on anything. Why buy now, if in a month the price will have dropped? Does it make sense to spend 20K on a car if, by waiting a year, you can save $1100 (assuming an annual 6% deflation rate)? Of course not, particularly when not buying accelerates the deflation rate.
Again, as a consumer, this sounds great. Prices falling, money worth more instead of less (inflation eats away at the value of the dollar, making it worth less. Deflation reverses that), it sounds like good times for all. But with everyone sitting on their money, businesses find no reason to stay in business, or if they do, they certainly don't need to be as big. So as consumer spending falls, unemployment rises and the economy contracts. And if nothing kicks this pattern apart, it stabilizes into a long-term nation-crippling problem. Just ask the Japanese, who have been grappling with a structural deflation problem for over a decade now, since the collapse of the commercial real estate bubble.
We're not necessarily in that position here in Canada, as the major reason for our fall in the CPI is primarily the result of a 19% fall in gasoline prices. Although, nationally, prices increased at the pump 6.8% from May to June, prices have dropped 24.3% since this time last year. It should be noted that natural gas, car, and house carrying costs have all fallen over the last year as well, helping drive the CPI into negative territory. Phillip Verleger, a U of C professor and energy economist, is now forecasting a drop in the price of oil to $20/barrel (as predicted by peak oil theory, which forecasts a series of spikes and slumps in oil prices), which will hammer Oilberta—not so much in resource revenues, but in cancelled oil sands projects, unemployment, and concurrent collapse in consumer spending which will ripple out through the economy—and will continue to push the CPI into negative numbers. But, if you strip out the effect of oil/energy pricing from the current numbers, inflation is still tripping along at 2.1%, which is why this period is referred to as “technical deflation.”
So this is why our governments are all Keynesian now. The possibility of structural deflation is scaring the hell out of all of them and the corporate community. The system we live under is predicated on continual growth, and stabilizing that growth (removing the bubbles and crashes, inflationary and deflationary cycles) has been made job one for governments. Both corporations and the public dislike uncertainty, so uncertainty must go.
From an environmental point of view, a sustained period of deflation might be just the thing we need. But a deflating economy will have more trouble making the shift to a green(er) future than one that is growing. An expectation of profit is essential for businesses in order to get them to make changes in their business models.

Someone's Paying Attention

Just not in the way you might hope. When it comes to issues of food security, countries around the world are buying up huge tracts of farmland in the Third World in order to ensure their own food security. As global food production suffers, these investments in offshore land stand to become very profitable, and then essential. Just not to the country where the food is grown.
There's a new website dedicated to tracking this trend; http://farmlandgrab.org/

Reuters | Wednesday June 3 2009

By Bate Felix

BRUSSELS, June 3 (Reuters) - The European Union is concerned by the trend of foreign investors and countries acquiring large tracts of farmland in developing countries to guarantee their own food security, a senior EU official said on Wednesday.

[...]

“The poorest countries are selling commodities, they are exporting migrants and now they are selling their land from which they will not take any kind of benefit in terms of food or whatever,” Manservisi added.

Countries such as Saudi Arabia, Abu Dhabi, the United Arab Emirates, China and South Korea are looking to buy farmland beyond their borders after sharp food price hikes in 2008 highlighted a need for greater food security.

Gulf Daily News | Wednesday, June 03, 2009

...

After suffering losses on investments in firms such as Citigroup, Gulf sovereign wealth funds are pumping billions of dollars into local industries such as banks and governments are boosting spending to avert an economic slowdown.

Gulf countries, mainly reliant on food imports, have also increased efforts over the last year to buy land in developing nations from Pakistan to the Philippines and Ethiopia, to help cater for a growing population.

The idea makes sense--after all, food security is one of the more important issues in a nation's life. No government is, after all, more than three days away from a revolution--just stop the food from getting to the people. But this idea of doing it on the backs of other countries is the logical outgrowth of neo-liberal globalization. It assumes, for a start, that contracts will remain valid in a worsening environment, that shipping will remain possible in a post-peak oil world, and that there will always be loads of money to pay for it all and generate the needed increases in capital. Oh, and that starving people won't just kill and eat the rich.

Food security isn't that hard, really. We just can't live the way we do now and expect it to magically appear. All things being equal, the average family of four can obtain food security on about 2 hectares or 5 acres (the classic book on the subject is called Five Acres and Independence by Maurice Grenville Kains), but I realize that not everyone wants to be responsible for their own food security and all things are not equal. I'm of the opinion that in order to boost Canadian food security, all farming income derived from 65 hectares (160 acres ~½ mile square) should be tax-free as long as you are living on the farm. This would make small farms much more economic to operate and, I suspect, would put a lot of people onto farms in order to take advantage of the tax break.

But the current practice of hydrocarbon-intensive production and increasingly non-secure transportation of food around the world in clearly unsustainable. I suspect that before much longer, we''ll be back to Clemantine or Mandarin oranges only at Winter Soslstice and not the year 'round fruit they seem to be currently. And this will be true for a lot of foods. After all, food security is about eating, not about eating anything you want when you want it.

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