The climate case against Trans Mountain

Writing in The Globe and Mail Thomas Homer-Dixon and Yonatan Strauch have a solid explanation for the incompatibility between the Trans Mountain pipeline and the climate commitments Canada has chosen for itself:

For these [pipeline] opponents, further massive investment in the extraction and export of some of the most carbon-intensive fossil fuel on Earth is nonsensical – idiotic, even. In a dangerously warming world, we should be investing in a clean-energy future, not entrenching Canada more deeply in the economic past.

Continued investment in the oil sands generally, and in the Trans Mountain pipeline specifically, means Canada is doubling down on a no-win bet. We’re betting that the world will fail to meet the reduction targets in the Paris Climate Agreement, thus needing more and more oil, including our expensive and polluting bitumen. We’re betting, in other words, on climate disaster. If, however, the world finally gets its act together and significantly cuts emissions, then Canada will lose much of its investment in the oil sands and the Trans Mountain pipeline expansion, because the first oil to be cut will be higher-cost oil such as ours.

There are more sophisticated analyses of the situation which are necessary, concerning global budgets and international negotiations, but it’s fair and accurate to say that Canada’s progress toward decarbonization depends on not making heavy new investments in fossil fuel infrastructure. If the Trudeau government or any other keeps pushing in that direction, Canada seems likely to end up the poorer while the world will be further imperilled both by the emissions we generate and the diplomatic consequences of putting fossil fuel profits before collective action to avert planetary disaster.

B.C.’s latest move against the Kinder Morgan pipeline

When it comes to stopping unsustainable fossil fuel development, anything that creates investor uncertainty can be useful. By that metric, the British Columbia government’s announcement of a diluted bitumen shipment expansion moratorium while it studies how a diluted bitumen spill would unfold is a small contribution to shifting Canada to an acceptable development pathway.

Still, I wish governments would look squarely at the real problem: the fundamental contradiction between continued fossil fuel exploitation and the climatic stability objectives that states including Canada asserted in the United Nations Framework Convention on Climate Change, the Paris Agreement, and in their own climate announcements. Making it all about local issues may be politics as usual, but it misses the main ethical issues at play.

Arbitrary power and moral corrosion

It seems to be a feature of human psychology that arbitrary power over others corrodes virtue. That claim can be supported by highly artificial (and unscientific) situations like the Stanford prison experiment, but it’s also evident in day-to-day interactions. We may hope that an innate sense of fairness would be enough to usually stop people from pressing an undeserved advantage; failing that, people might be counted on to recognize that we tend to interact with the same people over and over, and reputation is important, so it’s in our interest not to exploit a unilateral advantage. And yet, when actually put in the situation where we can dictate terms to others, too often we use the power for selfish ends while pulling together a rationalizing story for ourselves about how what we’re doing is savvy, or fair, or even benevolent.

Perhaps the most extreme case of arbitrary power concerns decisions made today that affect future generations. I think Henry Shue’s moral analysis of climate change is among the most perceptive accounts of the problem:

The ones who need to worry about severe climate change are the most vulnerable, including children yet to be born, who may reap the whirlwind if we sow the wind. Those who will suffer most, if anyone does, will be people with absolutely no past role in causing the problem and with no other kind of responsibility for it (and other species, most with no capacity for morally responsible action but full capacity for suffering and frustration). This would put the wrong done by the avoidable precipitation of severe climate change, it seems to me, in the general moral category of the infliction of damage or the risk of damage on the innocent and the defenseless. This is far worse than simply neglecting to protect rights, as wrong as that is, and it more like recklessly dropping bombs without knowing or caring whom they might hit. Can someone seriously argue that we are not morally responsibilty for avoiding the wreaking of such havoc?

Shue, Henry. “Deadly Delays, Saving Opportunities” in Gardiner, Stephen et al eds. Climate Ethics: Essential Readings. Oxford; Oxford University Press. 2010.

What remedies exist for these dangers of arbitrary power? They fall into three categories.

At the individual level, first we can work to guard against the risk of behaving in this way when we’re the ones with the power. Trying to apply a Kantian notion of acting in the way we would like everybody to act may provide some protective restraint. We can make sure to have open communication with the people affected by our choices, and work to maintain a willingness to hear what they tell us. Especially when it comes to person-to-person interactions, we should avoid the perspective that it’s virtuous and a sign of intelligence and capability to take as much as possible and leave the others involved with only the scraps they were able to hold onto. We should avoid perspectives on ethics based around entitlement – the view that because things have been one way in the past, we have a right for them to continue that way forever. It’s a form of reasoning that entrenches injustice, and which perpetuates ever-worsening outcomes when we assert the right to the over-generous fish and water allowances of the past while turning the land and sea to desert. The ethics of a situation must be evaluated with changing circumstances borne in mind, and with no automatic value attributed to arrangements which are long-standing.

As individuals we can also use social pressure to discourage and punish selfish behaviour. We can make public records of cases where people have abused their power over others and use those records to punish the abusers in cases where they have become subject to the power of someone else. The internet could be a big help with this, since sharing the information is easy, and it is easy for others to find. It’s not much help against the most dishonest — con artists who create a new identity in each town they visit — but it could provide some protection against abuse by those who operate under their own name and generally seek to preserve their good reputation. This is one reason we should be skeptical when people assert a “right to be forgotten” that applies to true information they would prefer others not to know about.

At a societal level we can and do enact policies that limit arbitrary power and provide recourse and remedies. This is especially important when circumstances make people vulnerable to abuse: whether they are seeking housing in an over-heated market, employed in a dangerous trade, or otherwise at risk. This is a big reason why criminal prohibition of things like sex work and psychoactive drugs actively causes harm: it puts vulnerable people in a situation where they cannot complain or seek help from the authorities. We need to be mindful of situations where regulation creates in-between spaces where the rules don’t apply, such as by leaving precarious workers without the legal right to employment under the power of abusive employers.

Perhaps in the long term human beings are capable of moral growth. More immediately, we can design and operate institutions which work with people’s imperfections and which mitigate the harmful impacts they create on others. We can also demand more of the people who we know. In a world that has grown crowded with existential dangers we have created for ourselves, acting with generosity toward others has grown beyond a virtuous extra to be applauded. It has become bound up with the potential for human survival and flourishing. Those espousing a moral philosophy where what you deserve is determined by the power you hold and the ruthlessness with which you wield it should gradually find themselves without power, and without the respect of the community.

A new MacBook Pro or a nice digital SLR

Reporting on the Credit Suisse Research Institute’s global wealth report, The Economist explains:

If the world’s wealth were divided equally, each household would have $56,540. Instead, the top 1% own more than half of all global wealth. The median wealth per household is just $3,582; if you own more than that, you are in the richest 50% of the world’s population.

Even for those who believe that it’s ethical for your wealth to be determined by the amount of economic value you create for others, the evidence that high wages are deserved is weak (especially for top executives).

New big dams in Canada

Some earlier comments discussed the Site C dam project in B.C. Today, B.C.’s NDP government committed to finishing the $10.7 billion project.

Like the Muskrat Falls project in Labrador, this is a multi-billion dollar project facing extensive criticism from environmentalists and Indigenous people.

On the one hand, it is desirable to get as much low carbon generation as possible. On the other, these projects seem to represent continued Indigenous exploitation by Canadian governments (ignoring the standard of free, prior, and informed consent from UNDRIP), and it’s not clear there aren’t lower cost options which are equally desirable from a climate perspective. Loss of glaciers and summer snowpack might also have a catastrophic effect on hydro production.

Stranded assets and regulatory risk

One of the most important economic and political points arising from climate change is uncertainty about how seriously future governments will respond to the problem. If some kind of political change makes governments serious about hitting the 1.5 – 2.0 ˚C temperature targets from the Paris Agreement, it will mean doing everything possible to rapidly reduce emissions, from imposing high carbon prices to mandating the abandonment of especially harmful technologies and practices like burning coal and using exceptionally filthy fuel for international maritime shipping. This is termed “regulatory risk”. Whenever a potential investment project has finances that rely on governments continuing to talk big but do little about climate change, the project risks becoming non-viable after all the costs of development are spent if the government subsequently starts to take climate change seriously.

When it comes to actual fossil fuel reserves, there is a related issue of “stranded assets” – fossil fuel reserves that would be economically viable to extract if they could be sold, but where the climate change and energy policies of governments either directly prohibit their extraction or add other costs like carbon taxes which make the extraction unprofitable. In such a scenario, firms that depended on the value of these reserves to justify their own market value could be in trouble, along with everyone who has invested in them.

A recent article in The Globe and Mail describes how firms are aware of these risks:

[Caisse de dépôt et placement du Québec] The Quebec-based pension fund is part of a growing tide of institutional investors – which includes giants such as Vanguard and BlackRock Inc. – pressing companies for more information on how they will manage the transition to a low-carbon economy. Companies in carbon-heavy industries such as energy and mining face the highest pressure, as investors fear being stuck holding stranded assets: companies who fail to plan for the future and whose valuations will likely plummet as a result.

“It’s a risk that we could be left holding the bag in a Minsky Moment and it could be quite costly,” says Toby Heaps, chief executive and co-founder of Corporate Knights Inc., a Toronto-based organization focused on corporate social responsibility. “I wouldn’t say we need to sound the fire alarm, but certainly it’s time to pause and take a serious look at how we can accelerate our transition to a low-carbon economy.”

The pressure has catapulted climate risk to the top of the agenda in many of Canada’s boardrooms as companies grapple with how to measure, mitigate and disclose potential liabilities. Last year, the board at Suncor Energy Inc. recommended that shareholders approve a proposal put forward by NEI Investments to enhance the company’s climate-related disclosures. Shareholders voted overwhelmingly in favour of the resolution.

There is every reason for advocates of stronger climate change mitigation policies to pressure firms to consider these risks before investing. There are ample examples of how – once a project is built and operating – it becomes politically impossible to shut down, regardless of how much harm it is causing. A classic example is coal-fired power plants in the United States that were built before the Clean Air Act and are thus exempt from the obligation to install scrubbers. Arguably, the entire bitumen sands is a massive example of a terrible idea that has become impossible to discontinue because too much has been invested, too many jobs are now at stake, and governments have become too dependent on royalties and other related revenue.

Targeting pipelines

By the time of the 2015 World Heavy Oil Congress, midstream companies like Kinder Morgan, Enbridge and TransMountain PipeLines had grown used to the calamity that accompanied their pipeline applications. TransCanada’s Keystone XL project had ignited the battle, drawing ferocious protests from ranchers and Indigenous people in Nebraska. This in turn had attracted opposition from regional and then national and global environmental groups, which had long searched in vain for a catalyst to intensify and expand climate change activism. Keystone XL turned oil sands pipelines into an international political issue and a proxy of the first resort for the much broader debate about climate and energy policy. In the process, the pipeline — eventually any pipeline intended to move bitumen to tidewater — became the symbol of the entire fight. It was the line in the sand, the first full and direct conflict between progress in the age of fossil fuel — defined by expanding energy use and industrial megaprojects — and progress in the age of climate change, which sought to balance economic growth and industrial development with sound environmental stewardship and reductions in greenhouse gas emissions.

Turner, Chris. The Patch: The People, Pipelines and Politics of the Oil Sands. Simon & Schuster, 2017. p. 119 (emphasis in original)

Boom psychology

Perhaps every boom is expected to last forever. Every boom contains within it some skewed logic in which the impossible growth and rapidly amassed wealth undergo a transition from fantastically fluid to some simulacrum of a solid state. The careening boom logic becomes the norm. Luck becomes a strain of genius, and opportunism starts to resemble a chess master’s grand strategy. The boom was built on stuff as solid and true as glass and steel, crafted from the technological brilliance and entrepreneurial daring of a generation of the smartest engineers the nation has ever known, its credibility renewed daily at a rate of 2.4 million barrels. With such lofty heights near enough in the Patch’s collective memory, even the deepest troughs can seem like mere hiccups on a journey headed ever upward.

Turner, Chris. The Patch: The People, Pipelines and Politics of the Oil Sands. Simon & Schuster, 2017. p. 107–8

Scale of bitumen sands investment

Midway through the boom’s first wave, in 2006, a Statistics Canada study reported that Alberta was in the midst of “the strongest period of economic growth ever recorded by any Canadian province.” Annual provincial gross domestic product (GDP) and population growth both cleared 10 percent.

When the oil industry’s champions first pitched the federal and provincial governments on more favourable tax and royalty regimes in the mid-1990s, they promised $25 billion in capital expenditure on oil sands projects within 25 years. They hit that mark inside of five years and kept on charging. More than $200 billion was invested in the oil sands from 1999 to 2013. In 2014, the peak year for investment, $34 billion more in capital poured into the Patch. Alberta collected $5.2 billion in royalties from oil sands production the same year.

Turner, Chris. The Patch: The People, Pipelines and Politics of the Oil Sands. Simon & Schuster, 2017. p. 96