Amid all the tragedies unfolding in the world right now, the plight of young people in Canada probably doesn’t rise very far up anyone’s list. But make no mistake: for all the talk coming out of Alberta right now about that province getting ripped off by the Canada Pension Plan, it’s actually Canadians under 45 that consistently get the shortest end of the political stick. As some of us mark the first-ever “Intergenerational Fairness Day”, I think that’s worth reflecting on at length.
We can start with the Canada Pension Plan, where Alberta’s latest temper tantrum is obscuring a genuine element of institutionalized unfairness that’s built into the program’s bones. It’s one that millions of young Canadians have become almost subconsciously aware of: intergenerational borrowing. As University of Alberta economist Trevor Tombe noted in a recent Twitter thread, while the effective rate of return on the CPP contributions of anyone born after 1980 is 2.3 per cent (after inflation), previous generations have seen rates as high as 23.1 per cent. The baby boomers, for example, enjoyed an average return between 4.2 and 6.1 per cent.
This is, to be clear, a perfectly acceptable form of intergenerational support. The Canada Pension Plan was in danger of becoming unsustainable, and younger people had to pay in more in order to shore up the system for both their parents and grandparents as well as future generations.
(You’re welcome, by the way.)
But this is hardly the only loan that’s been taken out on their — on our — behalf. Housing policy and local planning decisions in Canada have long been biased towards protecting the equity of existing homeowners, much of which was accumulated through no work or wisdom of their own, rather than affordability issues faced by younger people. That some politicians have recently gotten serious about this issue doesn’t excuse their many, many years of paying it almost no heed — especially as interest rates continue to bite.
Climate policy is another area where a debt is clearly being incurred. The more we punt the work of reducing greenhouse gas emissions down the road, the more onerous that work becomes. The costs associated with climate change for both local governments and the national economy will continue to grow, and our refusal to make any meaningful down payments on them right now only adds to the environmental mortgage we’re expecting future generations to pay off.
Of course, that debt is the biggest in Alberta. The collective bill on the province’s unreclaimed wells and unremediated tailings ponds just keeps growing, all while oil and gas companies remain free to shower their shareholders with record profits and growing dividend payments. In time, the refusal of the provincial government to direct more of those profits towards paying off the combined environmental debts of these companies, which could be as high as $120 billion (and growing!), will be seen as a major failure. But here, once again, future generations will be left to pay the bill.
This intergenerational inequity is not going completely unnoticed by older Canadians. Goldy Hyder, the CEO of the Business Council of Canada, called it out in a recent op-ed for the Globe and Mail. “It is long past time for us to look far beyond the next earnings call and the next election,” he wrote. “We need to make tough decisions about our future, and that might mean some form of short-term pain for long-term gain. We owe future generations far more than just apologies. We owe them action.”
He’s right, but I won’t be holding my breath waiting for it to happen. The odds of older voters suddenly embracing higher taxes and more stringent climate policies in the name of protecting the collective well-being of future generations are only slightly better than the odds of Danielle Smith crossing the floor again in the Alberta legislature.
If anything, it’s younger voters who are shaking things up. The recent polls that put the Liberals well behind the Conservatives among younger voters for the first time in eons show they’re willing to try almost anything to change the status quo. Young people are mad as hell, in other words, and they’re not going to take this anymore.
Pierre Poilievre, to his credit, clearly understands this. No, his ideas won’t actually do much to address intergenerational inequities, and sweeping the current government out of office might do more harm than good to the longer-term priorities of younger Canadians. But Poilievre’s willingness to feel their pain and echo their concerns clearly counts for something.
The Liberal government can still learn from that, if it wants to. A good place to start would be forming the Task Force on Generational Fairness that Generation Squeeze has called for, one that would shed more light on the challenges younger people are facing. The Liberals could also try more forcefully calling out complaints about the unfairness of equalization, the Canada Pension Plan, or some other aspect of our federal system. Let everyone know there are other forms of unfairness in this country, and they deserve to be taken far more seriously than Alberta’s constant carping about Confederation. That alone might improve their poll numbers, if nothing else.
Conservative premiers want to be gatekeepers on housing
For well over a year now, Pierre Poilievre has been telling people the best way to address Canada’s housing crisis is by removing the “gatekeepers.” What he might not realize is that the biggest gatekeepers of all are conservative premiers in places like Ontario, Saskatchewan, Nova Scotia and New Brunswick.
Sean Fraser, the federal government’s new housing minister, has been criss-crossing the country making funding announcements with local politicians who agree to remove regulations and support increased density. The latest beneficiary of the federal government’s $4-billion Housing Accelerator Fund was Calgary, where he was joined by Mayor Jyoti Gondek and federal MP George Chahal to announce $228 million in federal funding that will get 6,825 new units built by 2027 and 35,950 new units by 2033. “This is a major, major advance when it comes to housing policy in the city of Calgary,” Fraser said, “and I would dare say it sets an example for the rest of the country to follow.”
That’s clearly what premiers like Scott Moe, Blaine Higgs, and Doug Ford are worried about. Last week in Halifax, Moe suggested that "there is a federal government that is increasingly looking at the potential benefit, for lack of a better term, of circumventing the provinces and landing in Toronto or Vancouver and dropping a housing program strictly for political gain.” On Twitter, Higgs argued that “Justin Trudeau’s Liberal government’s jurisdictional creep — bypassing provinces to send money directly to municipalities — is an unfair pressure tactic and often creates duplicate processes.”
It’s not hard to see why the premiers want this cash to flow through their offices rather than directly from Ottawa. But in the midst of a housing crisis, one that many of those premiers have talked about wanting to address, squabbling over who gets the credit isn’t a good look. That’s especially true when, as Halifax Mayor Michael Savage noted, the provinces are often the ones responsible for gumming up the works. He cited the example of federal funding for Halifax Transit, which had to be matched by the province to get unlocked. "The province didn't match the money, and it took them eight months or so just to pass through the money from the federal government,” Savage told the CBC. “So does it slow things down if you go through the province? Of course it does."
It would be nice if Poilievre spoke out against this attempt by provincial premiers to act as gatekeepers on new housing funding. Perhaps, as it turns out, not all gatekeepers are created equal in his eyes. Either way, Fraser intends to plow ahead. "When we have a useful tool that's proving itself as an effective way to get more homes built, there is no good argument, in my view, to take that tool off the table."
Oil and gas doesn’t love you back
In Alberta, apparel professing one’s love for the oil and gas industry is almost as ubiquitous as Lululemon gear in Vancouver. Whether it’s “I ♥️ Oil Sands,” “I ♥️ Canadian Energy” or some other variation on the theme, the message remains the same.
The message coming back from said industry, though, is a little bit different. Despite routinely posting more than a billion dollars in quarterly profits, Suncor Energy just finished up a round of 1,500 layoffs — and it isn’t done yet. It’s also moving forward with a plan to replace its fleet of massive mining trucks with autonomous (and driverless) vehicles, all part of an industry-wide push to replace people with technology.
Why? To save money, of course. “On Thursday’s call [Rich] Kruger instead kept his focus on savings, talking about how much company efforts would reduce its break-even price on a barrel of oil,” The Canadian Press story noted. “The job cuts should work out to about US$1.20 per barrel, while the more efficient trucks should shave about US$1 per barrel, he said.”
To be clear, there’s nothing wrong with this push to reduce costs. That’s what companies are supposed to do, and labour costs have been running out of control in the oil and gas industry for a long time. But the workers in said industry should be abundantly clear about who the real threat to their job and paycheques is: their own companies.
It’s not Justin Trudeau, who has invested more than $30 billion of taxpayer dollars (and plenty of his own political capital) to get the first major pipeline to Canadian tidewater built in generations. It’s not environmental activists who want to see these companies reduce their emissions more aggressively than they have been to date — work that would probably increase employment, all things considered. And it’s not journalists like me who call the balls and strikes as they see fit.
This isn’t just an Alberta story, either. Even in Texas, where the apparent scourge of a Liberal prime minister from Quebec doesn’t exist, the number of people employed in the oil and gas dropped dramatically in 2015 (when oil prices crashed after Saudi Arabia flooded the market with supply) and has continued to decline ever since. That includes four years under president Donald “drill, baby, drill” Trump and an uninterrupted run of Republican governors and state representatives.
Renewable energy, on the other hand, is a true growth industry. The International Energy Agency’s new report on employment in the energy sector shows that while global oil and gas employment is down by more than a million workers since 2019, it’s up nearly five million for clean energy jobs. That divergence is expected to only continue widening going forward, especially if governments can bring climate policy into closer alignment with their climate pledges.
These facts don’t change the feelings of the people wearing the pro-industry clothing here in Alberta. They’ll continue to blame federal politicians and environmental activists rather than looking squarely at the real reason behind the decline in their beloved industry’s head count: the world is changing, and the companies they love have to change with it. In time, that too will get blamed on Justin Trudeau.
China’s complicated relationship with coal
Climate change slow-walkers love to point to China and its continued reliance on coal-fired electricity as an example of why countries like Canada shouldn’t do anything to reduce their own emissions. It’s true China continues to commission new coal-fired plants at the same time as the rest of the world — including Canada — is moving decisively away from that source of energy.
But China’s relationship with coal is more complicated — and more encouraging — than the slow-walkers would have you believe. A recent policy announcement from the Chinese government that will see existing coal generation paid for its capacity rather than its production offers a window into what’s really happening over there.
China continues to add more wind and solar capacity than any other country on Earth and that won’t change any time soon. But as conservative politicians here in Canada never tire of telling people, the wind doesn’t always blow and the sun doesn’t always shine. That’s where China’s coal plants come into play.
“The anticipated benefit of keeping coal capacity in the system, generating little but getting paid anyway, is it could allow for more variable generation (wind and solar) to get into the mix without hurting electricity security,” China expert David Fishman tweeted. “Based on those numbers, it looks like grid planners in China are anticipating many coal plants are going to be getting most of their revenue via capacity payments (and not by generating power) by the second half of this decade.” Or, as BloombergNEF’s Jenny Chase noted, “The best sort of coal power plant is the sort that doesn't run, and coal capacity factors are falling in China (and expected to fall further).”
These declining capacity factors, combined with a projected rebound in hydro output (one that was driven by a series of droughts), could push China’s emissions into decline next year. That’s far sooner that many people expected, and it could be a permanent tipping point. “If coal interests fail to stall the expansion of China’s wind and solar capacity, then low-carbon energy growth would be sufficient to cover rising electricity demand beyond 2024,” Lauri Myllyvirta, the lead analyst at the Centre for Research on Energy and Clean Air, wrote. “This would push fossil fuel use — and emissions — into an extended period of structural decline.”
Well, there’s some good news on that front as well. The Chinese and American governments just released a joint statement ahead of COP28 later this month in Dubai committing both countries to co-operate on climate policy and renewable energy development. They reiterated a pledge by G20 nations to triple global renewable energy capacity by 2030, but their willingness to boost it is significant given their respective share of the global renewables market and ability to move its needle significantly. “If the two countries can work together to shore up the buy-in for the target, that will very considerably smooth the way for having it adopted," Myllyvirta told The Associated Press.
Let’s hope.
Is it time to pump the brakes on nuclear energy?
Nuclear energy has enjoyed a recent renaissance unlike anything in its history, and that reappraisal is mostly a good thing. If we’re going to come close to meeting emissions reduction targets, the lifespan of existing nuclear facilities needs to be extended as long as possible. That means not shutting them down prematurely, as we saw in Germany, and investing more deliberately in their refurbishment, as we’re seeing in Ontario.
New nuclear, on the other hand, is a different conversation. The most recent major nuclear project, reactors 3 and 4 at the Vogtle Generating Plant, came in years late and many billions of dollars over budget. So-called “small modular reactors” may be on the same unfortunate path if the recent news about the cancellation of NuScale Energy’s proposed “Carbon Free Power Project” are any indication. The Idaho project involved combining six 77-megawatt SMRs into 462 megawatts of capacity that was expected to come online in 2026. But with costs already soaring more than 50 per cent and construction yet to even begin, the project has instead been put on ice.
This isn’t necessarily the end of SMRs, and Ontario Power Generation hasn’t backed away from its own plans to build a fleet of them here in Canada. But as clean energy author and investor Ramez Naam noted, it’s still a clear setback. “We need clean, firm power that can be dispatched in winter or long cloudy weeks, and that's geographically compact,” he tweeted. “We have multiple shots on goal here, including traditional nuclear reactors, SMRs, next-generation geothermal, ultra-long-duration storage, power-to-x, space-based solar, and fusion. Even so, it's a shame to see one of those approaches languishing.”
The Wrap
On Tuesday, I wrote about the disconnect between the politics and economics of the federal government’s carbon tax, and how the latter might have been allowed to overwhelm the former. I got the feedback I expected from some of my economist friends (former friends?), including ones who worked hard on the development of our climate policy infrastructure, and it’s all fair game.
I do want to make one thing clear, though: It was never their job to sort through the politics or ensure that elected officials were consistent in their application and defence of the policies they recommended. That failure is entirely on the politicians who took the advice of economists. Even so, that’s water over the dam at this point. Everyone who cares about climate policy needs to work together on finding a line we can actually defend and start fighting to protect it. Let’s learn the lessons that our experience with the carbon tax can teach us and apply them going forward.
On Wednesday, I wrote about David Eby, one of my favourite politicians in the country and someone I think could make a real difference at the federal level — if he wanted to. The federal NDP isn’t in the process of searching for a new leader yet, but if Jagmeet Singh can’t deliver meaningful gains in the next election, then he’ll almost certainly have to step aside. That’s especially true if it delivers the sort of collapse in Liberal support we’re seeing in recent polls, since that should create an opening for the NDP.
My fondness for Eby and his cerebral approach to politics is well-documented at this point. But if his recent moves on the housing front are any indication, he might be capable of bigger and bolder decisions than even his fans thought possible. And there are few things more bold than a sitting premier resigning the post to run for the leadership of a federal party.
As ever, please reach out with anything you think I need to know. And please, share this as widely as you can without unduly annoying your friends and relatives.