After more than a decade of various politicians, pundits and oil industry spokespeople in Alberta using Saudi Arabia’s wretched track record of human rights abuses to advance the cause of Canadian oil, the proponents of Ezra Levant’s “ethical oil” argument finally got the chance to speak their truth to power first-hand. With this year’s World Petroleum Congress being held in Calgary, and Abdulaziz bin Salman, the kingdom’s energy minister and a member of its royal family, among its key attendees, they had a golden opportunity to confront the kingdom. Instead, they decided to bend the knee and kiss the ring.
Few did it more enthusiastically than Alberta Premier Danielle Smith, who was all smiles when she personally greeted the prince at the airport. This is a striking departure from what she’s said about Saudi Arabia in the past, including a 2018 column in which she wrote that “I won’t be crying the blues if we stop trading with that loathsome regime. Saudi Arabia is not our friend.” She even suggested “the government should invoke the principle of national security to supply the Irving refinery with Western Canadian crude and force … Saudi oil from our market completely.”
That, of course, was back when the Saudis and their OPEC cartel were actively driving down oil prices. Now that they’re deliberately pushing them up with massive production cuts — aimed, perhaps, at influencing the 2024 U.S. presidential election — she’s clearly changed her tune. Oddly, all those concerns about democracy and human rights seem to have fallen by the wayside for the time being.
This alliance between Smith and the Kingdom of Saud isn’t about the past, though. It’s all about a shared vision of the future that revolves around continuous growth in demand for oil and gas and the opportunity for their respective jurisdictions to profit from it. “Today, if you ask me … I would see around 110 million barrels per day (of global oil production) in 2050,” said Amin Nasser, the CEO of Saudi Aramco, the world’s largest oil company, at a panel discussion during the conference Monday. “It is growing, not declining.”
This is in stark contrast to the forecast from the International Energy Agency, which predicts a peak in demand by 2030 — not 2050. "This age of seemingly relentless growth is set to come to an end this decade, bringing with it significant implications for the global energy sector and the fight against climate change," the IEA’s Fatih Birol wrote in an op-ed for the Financial Times.
He’s hardly alone in making that call. Last week, Wood Mackenzie released its own “base case outlook” that sees oil demand peaking in 2032, and falling to 92 million barrels per day by 2050. That’s a scenario that puts the planet on a trajectory for 2.5 C of warming, and any additional efforts to avert that disastrous outcome would inevitably mean even less oil gets consumed. If the world were to limit warming to 1.5 C, for example, consumption would plummet to 30 million barrels per day by 2050.
This is pretty clearly not happening, given no major country is on track to meet its 2030 Paris Agreement targets right now. But Wood Mackenzie’s forecasts show any increase in global climate ambition will have a knock-on effect on oil demand and by extension, the economic prospects of places like Saudi Arabia and Alberta. That’s why those places and their political leaders are so intent on slow-walking the energy transition right now. As Saudi Aramco’s CEO said on Monday, “A realistic time frame to achieve all of these things is important.”
“Realistic” also happens to be Smith’s go-to word when criticizing any aspect of climate policy that might curtail the combustion of Alberta’s fossil fuels. The federal government’s 2035 net-zero electricity target? Not realistic. The widespread adoption of electric vehicles in Alberta? Not realistic. The federal government’s plan to cap emissions from the oil and gas sector? You guessed it: not realistic.
But reality is very much in the eye of the beholder here, and Smith is determined not to behold the possibility that global action on climate could ever reduce demand for her province’s oil. Witness her reaction to federal Energy Minister Jonathan Wilkinson’s keynote address that dared to acknowledge that under the IEA’s 1.5 C scenario, there will be just 25 million barrels per day of oil demand in 2050. “I'm not going to allow them to take swipes at our industry and have it go unanswered, and talking about this industry winding down, being on its last legs, only having 25 million barrels a day of production by 2050 at a time when everybody's here to celebrate production and investment," Smith told reporters.
Ironically, while Smith refuses to consider the possibility of global climate action leading to reduced demand for oil, her new Saudi besties are planning for it. Crown Prince Mohammed bin Salman’s “Vision 2030” is an ambitious plan to use the kingdom’s massive oil revenues to build a new economic foundation that revolves around things like technology, finance and tourism. It includes a 50 per cent renewable energy target by 2030, a massive investment in new industries and economic sectors, and the ongoing sale of a minority stake in its national oil company. It may yet fall flat, like the kingdom’s previous attempts at economic diversification. But the fact that it’s trying this hard shows it takes the reality of decarbonization more seriously than it might want to admit.
Smith should do the same before it’s too late. After all, the only reason oil prices are high right now is because the Saudis and other OPEC members have decided to voluntarily cut millions of barrels of their production. But there’s only so far they’re going to cut, and only so long they’ll be willing to prop up the market — and by extension, Alberta’s treasury. When the Saudis decide it’s in their best interests to stop — say, when they see demand rolling over as renewables continue to take market share — they’ll happily flip the switch and flood the market all over again.
With unethical friends like these, who needs enemies?
Comments
When does (did?) Smith cross the line and become a climate criminal?
Smith has not crossed the line. She has always stood with the fossil industry.
Smith was born an oil-industry lobbyist. As an infant, the first words out of her mouth were "oil", "gas", "Esso", "Syncrude", "RStar", and "polycyclic aromatic hydrocarbons".
I wish this comment platform had like buttons such as YouTube does. Consider this a like!
The Premier of Alberta rubbing shoulders with the Saudi oil minister. Isn't that the country that represses women? Dictator oil? Blood oil?
Ethical Oil™ has always been an argument of convenience. Industry greenwashing.
Oil markets don't worry about ethics. No one fills up from the Ethical Oil pump. Refineries and consumers buy the cheapest product that meets their needs.
Refineries source crudes based on refinery technology, price, and desired output. New Brunswick's Irving refinery has been a Saudi customer for decades. Not going to stop for human rights.
Oilsands boosters complain loudly about imports of Saudi oil, but they demand new pipelines for boosting exports to China. Clearly inconsistent.
Why is it ethical to sell oil to serial human rights abusers like China, but not ethical to buy oil from serial human rights abusers like Saudi Arabia?
China, Russia, and the Saudis are all invested in Canada's petroleum industry. Not a peep from "ethical-oil" cheerleaders.
People who complain about Saudi oil imports have nothing to say when it comes to selling military vehicles to the Saudis, now waging a murderous war in Yemen. How is it ethical to sell military vehicles to the Saudis, but unethical to buy their oil?
To this day, Dear Leader Stephen Harper boasts of his contract with the Saudis:
"Former prime minister Stephen Harper says he's proud of $15-billion arms deal with Riyadh as he prepares to visit Saudi Arabia" (Globe and Mail, Oct 18, 2021)
Stephen Harper advocates for Saudi Arabia in the National Post.
"Why it's time to stop negotiating with Iran" (07-May-22)
Harper: "…lose sight of who are our real allies in the region, especially the Gulf Arab nations that share our fundamental security interests. Again, the West is failing to recognize a fundamental principle: you embrace willing friends and stand up to implacable foes, regardless of systems of internal administration. … The refusal of the U.S. administration to build ties with Saudi Arabia is an alarming case in point. The Kingdom is embarked on a wide range of reforms that the West has long wished for…"
Harper fans at The National Post lapped it up.
Conservatives are always railing about "blood" oil from Saudi Arabia. Now they are the good guys?
Would Canada be an ethical supplier of asbestos? Tobacco? Landmines? Horse meat?
Whose oil is most environmentally responsible? Which dictators are most democratic? Whose landmines are most humane? Whose tobacco is most healthy?
Canada's oil is no more ethical than Canada's asbestos and tobacco is.
Fossil fuel companies by their very mission -- to produce fossil fuels for profit as long as possible -- are not socially responsible, climate-conscious, or ethical. They continue to promote various species of denialism, roll back environmental regulations, and obstruct progress.
The fossil-fuel industry is incontrovertibly opposed to climate action, which will put it out of business. Instead, the fossil-fuel industry is putting us out of business. The interests, aims, and ambitions of the fossil-fuel industry and the public interest are antithetical.
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"Former prime minister Stephen Harper says he's proud of $15-billion arms deal with Riyadh as he prepares to visit Saudi Arabia" (Globe and Mail, Oct 18, 2021)
"Former prime minister Stephen Harper says he remains proud to have negotiated a controversial $15-billion armoured vehicles deal with Saudi Arabia, as he prepares to attend an international investment conference in Riyadh as a guest of the desert kingdom.
"Mr. Harper also expressed pride in the agreement to sell light armoured vehicles to Saudi Arabia. The deal, which Ottawa brokered in 2014, called for the Canadian subsidiary of a U.S. defence contractor, General Dynamics, to supply more than 740 light armoured vehicles (LAVs) to the Saudis. The vehicles were to be equipped with machine guns and anti-tank cannons. The deal faced significant criticism because of Saudi Arabia's poor human-rights record, its role in the war in Yemen and its use of similar vehicles to fight with militants in its Eastern Province.
"'I am also proud this constructive relationship helped secure jobs for Canadians through the largest export manufacturing contract in Canada's history,' Mr. Harper wrote."
"[Former PM Stephen Harper] says he remains proud of selling $15 billion worth of weapons to Saudi Arabia when he was PM. Never mind that the kingdom is one of the most repressive regimes in the world. Who would boast about selling weapons to a region that is a precarious tinderbox? Jobs here, for repression somewhere else?
"Harper also attended Davos in the Desert, hosted by Prince Mohammed bin Salman, the leader who U.S. intelligence and the UN Special Rapporteur on extrajudicial executions believe was involved in the slaughter of journalist Jamal Khashoggi on Oct. 2, 2018."
"How to Destroy the Conservative Brand" (The Tyee, 25-Nov-21)
Canada's oil industry boosters are remarkably silent on Saudi investment in the oilsands. Saudi Arabia's sovereign wealth fund invested in CNRL and Suncor. (2020)
"Saudi Wealth Fund builds stakes in Canadian oil sands giants" (Bloomberg, 16-May-20)
"Saudi Arabia is buying shares of Alberta's oil sands companies. The 'ethical oil' argument is dead." (Macleans, May 19, 2020)
"If Canadian oil & gas companies are going to accept Saudi Arabia's money, it's probably time for their proxies to retire arguments about the immorality of their oil."
"On Friday, the Globe and Mail reported that the province was in talks with a private firm from Saudi Arabia to build a $5-billion petrochemical facility in Alberta."
"Alberta offers cash in push to become top global petrochemical producer" (2020)
"Conservatives, if elected, would work to restore ties with Saudi Arabia" (CP 2019)
Little note: Mr. Fawcett says the optimistic, 30 million barrels/day by 2050, scenario is "pretty clearly not happening". I'm not so sure. We think too much in terms of the status quo; we imagine that because oil companies have vast political power and can shape policy now, that they will continue to have vast political power and be able to continue shaping policy. We imagine that because renewables are advancing at a particular pace now and even being blocked here and there, that pace will continue.
But the thing is that growth in things like renewables and electric vehicles has been exponential. And, OK, the world economy's growth is also exponential (compounding at 2-3% per year), but the renewable economy's exponent is way bigger, like 33% or more. At a certain point, like Covid did, it goes from "not that big a thing" to "holy crap it's everywhere".
But the further thing is that when that starts to happen, and it is already starting to happen, and when demand for oil begins to drop and it becomes clear that the continued growth in renewables and electric stuff mean it's going to continue to drop . . . then oil companies will be making far, far less money, and may find themselves trapped taking losses with no way out, long before use of fossil fuels is anything like phased out. And when that happens, they will lose a great deal of political power--they will be much less rich, and perceived as much less needed. And when THAT happens, their ability to shape political outcomes and slow down action to reduce fossil fuel use will shrink a lot.
So as I see it, what we're looking at for renewable stuff and moving away from fossil fuels is not so much a long slow climb as hitting tipping points. Once the tipping point on oil company political power is hit, movement towards more optimistic scenarios becomes much more practical.
I think you are on the money. Literally.
The IEA used to be the world's premier mouthpiece for the global oil industry. The growth in renewables was at first ignored, then consistently underestimated until reputable energy analysts calculated the IEA was always 20% off the mark year over year in regard to solar and wind.
Today the IEA's annual reports have caught up and routinely publish well-backed data on the phenomenal growth in renewables, from initial investment (which is nearing parity with oil) to the total gigawatts produced by a fast expanding number of completed projects. I believe it was the IEA that first ran the numbers that backed the claim that solar power is now the cheapest form of energy ever invented.
By comparison, Alberta and its succession of leaders over the last 50 years, the latter half being increasingly delusional, are not as influential in the world as their their egos tell them. Hubris is a powerful trait that sometimes leads to a powerful downfall.
No matter how hard Smith tries to build walls around her province and rejoices in the fellowship with more powerful oil jurisdictions, no one has received or ever will receive a monthly bill for sunshine or Chinook winds. These free resources are things that could be seen in carbon industry circles as an unfair "discount" not dissimilar to the so-called discount US refineries pay for poor quality diluted bitumen from Alberta.
Except the renewables discount is passed down to consumers, giving them too much power over carbon suppliers. That's an intolerable situation for a fossilized government.
Clearly, they're not willing to do the math as long as magical thinking persists in Alberta's leadership, its industry masters and with their financiers.
Just so we're clear, ethical oil was always a smokescreen and almost everything that comes out of the mouths, or from the press releases, of the people who pushed it is lies.
I would also count the number of lawsuits they receive from critics not willing to be defamed or lied about.
Reminds me of when Peter Lougheed was called a "blue-eyed sheik" because Alberta was raking in so much money from oil royalties.
Looks like Smith would like to claim the title now...but she's too late.
There's likely some kind of law. As the evidence against a product, an industry or a regime grows more indisputable, the boosters and politicians who come out to support its continuation become more wacky. Whether or not Smith understands the climate science....the impossibility of net 0 hydrocarbons, or the tipping point the world now balances on is irrelevant.
She's fantasized being in this photo op for decades. She'll ride it for all its worth for the next few months.
Too bad for all of us who've waited so late to get aboard the "Leave it in the Ground' campaign. Smith may well yet dance on all our graves.....the fossil fools aren't going to give an inch.
The less they give in, the harder they'll fall.
If Smith makes the moratorium on renewables permanent, or creates a very onerous and unfair approval process on purpose to make it nearly impossible to build new or expand, renewable energy outfits have three choices:
1. Sue the government over losses, whether monetary or over the targeted discrimination against their right to run legitimate businesses in Alberta without undue hurdles not imposed on anyone else;
2. Leave the province for greener pastures, hopefully on invitation from other provinces and not the US;
3. Both of the above.
Ultimately, Alberta's $30 billion / 5,000 job loss will be someone else's gain.