The agriculture sector will rise in importance in coming decades as the world warms and moves away from fossil fuels.

That’s the most recent prediction from Jeff Rubin, former chief economist for CIBC World Markets, whose latest book, The Carbon Bubble, forecasts a not-so-distant future in which climate change will open up the possibility for cultivating crops, historically grown in places like Kansas and Iowa, much further north. At the same time, Rubin argues, global dependence on fossil fuels will drop, freeing up capital to migrate to crops like corn and soy.

“There could be some tremendous opportunity for Western Canada, in the same provinces that are likely to be victims of the carbon bubble,” Rubin told DeSmog Canada. “Food is the only real sector in the commodity field that has been resilient, that’s kept its pricing power. You could argue that just that alone is sufficient.”

Agriculture has always played a major role in Canada’s economy. Rod MacRae, associate professor of environmental studies at York University and national food policy expert, notes the food sector trails directly behind energy and automobile manufacturing, employing one in every eight Canadians.

Last year, farm cash receipts (the income from selling commodities combined with direct subsidies) totalled $57.4 billion. To put that in perspective, the auto industry sold $82.6 billion worth of products in 2012, with oil and gas contributing $133 billion to the country’s GDP in 2013.

But the energy industry is currently in trouble: projects in the Alberta’s oilsands are stalled out, with low prices and market access woes resulting in shoddy returns.

Rubin calculates that over the last seven years, the oilsands have lost 70 per cent of share value. Yet land in the prairies has seen double digit annual increases in the same window, he says, pointing to the Canadian Pension Plan Investment Board’s 2013 acquisition of 115,000 acres of Saskatchewan farmland as an example of the changing economic terrain.

Droughts in California and British Columbia may further incentivize purchases of prairie lands.

“The strength of food prices themselves are going to make that land valuable,” Rubin says. “But once you start taking into effect the corn belt and a lot of food belts may be migrating to higher latitude regions, which is certainly what all the climate change models are suggesting, then that’s an even more compelling reason.”

Farming in a Hotter World

However, diseases, pests and weeds will also benefit from increased temperatures and atmospheric carbon dioxide, says York University’s MacRae.

Add in the inevitable rise in extreme weather events (like microburst rainfalls that drop several inches of precipitation in a very localized area) and climate change may have some seriously detrimental side effects on Canadian agriculture.

While MacRae likes Rubin’s argument that the food system should be a greater priority, he questions if current agricultural practices will survive such rapid and significant changes.

If Canada promotes local and organic farms, it might be a different story, he says.

“If we dramatically change the food system, we can create resilience and also mitigate emissions,” MacRae said. “Then, we’re in a much better place to deal with climate change. If we manage that properly, we can create a very viable food system economy.”

That requires government intervention — specifically, a national food strategy, he says.

Without one, MacRae says, “We can’t design anything around big pictures challenges and solutions, because it’s so fragmented and nobody wants to take the lead on it so there’s no way to marshal and coordinate resources.”

Rubin said the transition from an energy-centric to a food-centric economy is already being guided by market forces.

But for MacRae the right type of agricultural industry will require a heavy interventionist approach. He added there hasn’t been an adequate level of government participation in the food system since the Second World War.

A future of carbon taxes, biofuels and local power

But a shift to an agriculture-oriented economy may not just revolve around food, according to John Parkins, professor of rural and environmental sociology at the University of Alberta.

In coming years, oilsands majors like Suncor, Syncrude and Shell may be keenly looking for new opportunities to reinvent themselves, especially if a significant economy-wide carbon tax or another type of polluter-pay system is implemented, he said.

Parkins suggests such transformation may take the form of biofuels, which can range in origin from corn to potatoes to vegetable oils to wood chips. Oilsands companies, he says, are ultimately in the business of transportation: as alternative fuels become more viable, they could significantly reduce the need for fossil fuel-generated energy.

“In a big way, [agriculture] is related to questions about how we electrify the grid and how we put fuel in our vehicles,” he said. “If the solutions become more located within agriculture, then I could see a massive transition. That takes the question around agriculture beyond just the food question to a whole bunch of other sectors.”

Yet that shift will also require some power moves from various levels of government.

While a carbon tax may serve as a stick, capital (which Parkins describes as “agnostic about what sector it’s in”) may need more incentive to invest in socially beneficial areas.

Unfortunately, MacRae reiterates that food or agriculture is rarely a priority for the federal government, making such options significantly less probable. Based on the vague planks in the platform of the three major federal parties, he’s not optimistic that will change soon.

Image Credit: Israel Photo Gallery via Flickr

The Narwhal’s reporters are telling environment stories you won’t read about anywhere else. Stay in the loop by signing up for our free weekly dose of independent journalism.

Canada can reduce its carbon footprint by 90 per cent, play its part in the fight against climate change and grow its economy at the same time according to a recent report by the United Nations Sustainable Development Solutions Network. 

“This is a really important piece of analysis for Canada. It shows that we can cut our carbon pollution dramatically by 2050, making a strong contribution to tackling climate change, while growing our economy by over 200 per cent,” Clare Demerse, a senior policy advisor at Clean Energy Canada says.

By powering transportation, buildings and electricity with largely renewable energy (water-power, wind, solar) and biofuels and applying wide spread use of greenhouse gas (GHG) capturing technologies such as carbon capture and storage (CCS) in the oil and gas sector the report argues Canada can cut its GHG emissions production by 90 per cent by 2050 based on 2010 levels.

The catch is none of this can happen unless Canada implements policies effectively regulating the production of GHG emissions, something the federal government has so far been unable to do.

“Many of the major changes described in the Canadian decarbonization pathway will not occur without strong policy signals, which will require public support and in many cases will be driven by public pressure,” the UN network concludes. 

Electrification of the Economy Is the Key to Reducing GHG Emissions 

Reducing GHG emissions of transportation and buildings sectors by 97 per cent and 96 per cent respectively are the “two of the core foundations of the Canadian deep decarbonization pathway.” The key to reaching these targets is a substantial shift to renewable energy.

Canada's projected GHG emissions by sector by 2050 in a 90 per cent GHG emissions reduction scenario. Source: UNSDNS

“Decarbonizing electricity production is essential, since it is a precondition to reducing emissions throughout the rest of the economy through electrification,” the report states.

Water-power (Canada’s largest source of renewable energy), biomass, wind and solar are projected to lead the way in decarbonizing Canada’s electrical supply with wind and solar generating as high as 17 per cent and 10 per cent of Canada’s electricity respectively.

Oil consumption for transportation will need to plummet with the majority of Canadian vehicles running off of biofuels, hydrogen or electricity in the 90 per cent GHG emissions reduction scenario. The report sees a slight shift to mass transit (trains, buses) over personal vehicles and a large transformation from trucks to trains for freight.

Electricity production (left) and fuel consumption (right) by source by 2050. 

“The results the modelers presented are one way to hit the target they were given, but they’re not a prescription. As they point out, Canadians and our governments will need to make policy choices about what kind of low-carbon path makes the most sense for us,” Demerse told DeSmog Canada.

British Columbia’s successful and surprisingly popular carbon tax and Quebec’s cap-and-trade system are two homegrown Canadian climate policy examples Prime Minister Stephen Harper’s government could follow to fulfill Canada’s international responsibilities to cut global warming GHG emissions.

Report Surprisingly Projects Oil and Gas Output Will Double by 2050

The report assumes Canada can remain an oil and gas “energy superpower” in a world that has gone nearly zero-carbon. The report predicts Canadian oil and gas production will double by 2050 as well.

“The report’s assumptions on global oil demand seem a little unrealistic. Studies have shown that demand will drop as countries transition to low carbon economies,” Professor Mark Jaccard, an energy economist at Simon Fraser University says.

Canada's GHG emissions by sector (2010 baseline). Source: UNSDSN

“If Canada is able to power its cars and buildings with virtually zero fossil fuels by 2050, why wouldn’t the rest of the world want to do the same? If global demand for oil drops, oil prices will drop too — and then we would see far lower production than the oilsands industry is counting on today,” Demerse told DeSmog Canada.

To keep the oil and gas sector in play in a near zero-carbon scenario the report recommends Canada employ widespread use of technologies such as carbon capture and storage (CCS) in the sector. CCS captures carbon emissions, and converts them into a dense fuel that can be transported to sites below ground for storage.

Canada only has one operational CCS project. The Pembina Institute, an energy policy think tank, predicts Alberta alone will need twenty-five large-scale CCS projects to meet its own GHG emissions reduction targets.

“Why would companies adopt expensive CCS (carbon capture and storage) technology if at the moment they can dump waste into our atmosphere for free?” Jaccard says.

The authors of the report admit CCS is not “commercially viable” in Canada at the moment given “current climate policy stringency.” The low price on carbon and lack of regulations on GHG emissions in the Canadian oil and gas sector provide very little financial incentive for companies to invest in expensive technologies that decrease the carbon footprints of their operations.

“Until there are regulations on carbon in Canada technologies like CCS are going nowhere,” Jaccard told DeSmog Canada.

Unclear If the Oilsands Have A Place In A Decarbonized Canada

The UN network behind the report is unable or unwilling to say if the oilsands (also called tar sands) industry, the fastest growing source of GHG emissions in Canada, has a future in a low carbon Canada. The report cites “literature conflicts on whether production from the oil sands can be cost-effective in a deep decarbonization scenario.”

Image Credit: Blue Green Canada, United Nations Sustainable Development Solutions Network

The Narwhal’s reporters are telling environment stories you won’t read about anywhere else. Stay in the loop by signing up for our free weekly dose of independent journalism.

The recent shelving of the Joslyn mine oilsands project in Alberta is a reminder of the fragile economics of the oilsands. No economic formula could be found to make the $11 billion project work and it has been put on hold indefinitely.           

Oil major Total E&P, the biggest partner in the project, said the Joslyn mine project “cannot be (financially) sustainable in the long term.” Interestingly, Total did not blame lack of new pipelines for squeezing profit margins either.

“You run the risk in developing fossil fuels that one day will either become fully depleted or too expensive to extract,” Philip Gass, a policy analyst at the International Institute of Sustainable Development, said from Winnipeg.

It would be difficult to deny Canada has economically benefited from developing the oilsands, a particularly difficult and expensive fossil fuel to mine and refine into light fuels — but failing to diversify the Canadian economy beyond an oil and gas ‘energy superpower’ makes for a very uncertain economic future for Canada.

“Canada could find itself an energy superpower overspecialized in the ‘old economy’ (resource extraction) in a world rapidly trying to cut carbon emissions and avoid catastrophic climate change,” Andrew Jackson, a senior policy advisor with the Broadbent Institute, told DeSmog Canada.

“Putting all your eggs in one basket is never a good economic strategy,” Jackson said.

Benefits of Energy Development Remain Largely Locked in the Sector

The idea that all Canadians benefit from a surging oil and gas industry is slowly turning into a farce. An International Monetary Fund (IMF) report earlier this year finds every dollar invested in the energy sector in Alberta grows Canadian gross domestic product — an economic vitality indicator — by 90 cents. Of this growth, 82 cents remains in Alberta, mostly in the energy sector (67 cents).

IMF‘s breakdown of $1 investment in the energy sector scenario.

“There appears to be an important scope to increase inter-industry linkages across Canada that would lead to wider sharing of benefits from the energy sector,” concludes the IMF report released in January.

Increasing inter-industry linkages or value-added jobs does not appear to be priority of the federal government. New oil pipeline projects are almost all geared to shipping Canadian oil and oilsands bitumen to refineries in the U.S. or overseas, not in Canada. Most of the heavy equipment for oilsands extraction comes from the U.S.

“The spin-off effects of the energy boom are not being felt in Ontario and Quebec, where most Canadians are,” Jackson says.

The federal government’s low corporate tax rate and the exemption of provincial resource royalties from the Canadian system of wealth redistribution (which ensures all Canadians receive the same public services) further locks the economic benefits of the energy sector within the sector and resource-rich provinces.

Energy Sector Is Not A Big Jobs Creator

“The oil and gas sector is capital intensive, not labour intensive. Manufacturing could employ more people,” David Macdonald, a senior economist with the Canadian Centre for Policy Alternatives, says.

The same IMF report on the Canadian energy sector indicates that of the 752,000 jobs created in Canada between 2007 and 2012, the oil and gas sector can only take credit for less than 13,000, or 1.7 per cent, of them.

Job creation is not exactly Canada’s strong suit at the moment.

“The employment rate in Canada, that is the percentage of Canadians over fifteen years of age who are working, is sixty one per cent. This is the same level the employment rate was at during the worst of the recent financial crisis,” Macdonald told DeSmog Canada.

Employment rate (blue) and unemployment rate (black) from 2003 to 2013. SOURCE: Canadian Centre for Policy Alternatives 

The official unemployment rate (seven per cent) in Canada has returned to pre-recession levels, but Macdonald points out that Statistics Canada does not count Canadians who are not actively searching for employment as unemployed.

“Eighty per cent of the so-called ‘recovered jobs’ since the recession are Canadians who have simply given up looking for work,” Macdonald says from Ottawa.

Part-time/Temporary Job Creation On The Rise

Ninety-five percent of all net jobs created in Canada in 2013 were part-time according to the Canadian Chamber of Commerce. Part-time workers and the self-employed, who earn on average 20 per cent less than their employed counterparts according to CIBC, now make up 30 per cent of the Canadian work force.

Canada has created more full-time than part-time jobs since the recession but the rate of part-time job creation has grown faster than full-time. Fifty-three per cent of Canadians between the ages of 25 and 44 who found work since the recession could only find temporary jobs. The rate of Canadian part-time workers who want full-time work but cannot find it has grown 37 per cent during the same period.

“Since 2011 the number of underemployed workers has exceeded the number of unemployed workers — in 2013 there were 1.35 million unemployed workers and 1.43 million additional underemployed workers. And that is before we even begin to take into account skills-related underemployment. This is an issue that needs to be taken seriously,” a Canadian Labour Congress report concludes.

SOURCE: Canadian Labour Congress

Fourteen per cent of working Canadians are underemployed or unable to get enough work to meet their financial needs, a 28 per cent increase since 2008.

Canada Needs to Create Well-Paying, Long-Lasting Jobs

“Whether you are talking about green jobs or brown jobs (fossil fuels extraction) you want to create jobs that are fair, well-paying and long lasting,” Gass of the International Institute of Sustainable Development told DeSmog Canada.

“We would like to see federal policy facilitate the creation of more specialized manufacturing jobs and encourage unionization in the work place. Unions tend to create better paying full time jobs,” Macdonald says.

A report released last month by the Parkland Institute examining unions in Alberta (the province most hostile to unions) found in terms of economic performance, wage growth is lower in Alberta compared to other provinces with higher unionization rates, despite Alberta’s oilsands boom.

“There is $600 billion sitting on companies shelves in Canada that is not being reinvested in the economy. Companies only invest where there is an expectation for growth. At the moment it appears the expectations are low,” Jackson says from Ottawa.

Corporations operating in Canada are not the only ones with low expectations for growth. When polled earlier this year by the Broadbent Institute, Canadians between 20 and 30 believed they will face a future of precarious employment and the income gap will grow during their lifetimes despite Canada’s energy boom. Baby boomers (50 to 60 years of age) in the same poll stated they think their children are more likely to slip down an economic class than move up.

“With interest rates at all time lows I would like to see public investment into mass transit, passenger rail, etcetera ramped up. Public investment can pave the way for private investment,” Jackson said.

Unfortunately the current priorities of the federal government — tax cuts, tax breaks, battling unions and cuts to public spending — are taking Canada in just the opposite direction.

Image Credit: Cheryl via Flickr

The Narwhal’s reporters are telling environment stories you won’t read about anywhere else. Stay in the loop by signing up for our free weekly dose of independent journalism.