Guest Commentary
By Satyamoorthy Kabilan
The debate around what to do with Canada’s energy endowment is raging all around us. Of particular interest is what to do with the ever increasing sources of carbon-based energy sources, in the form of oil and gas, which are being developed and exploited across our nation. Do we keep our energy and use it locally or should we be selling it on external markets? How essential is it to be able to get Canadian energy out into external markets? What should we do with the proceeds from our energy sales? What role does climate change and the environment play in all of this? Most importantly, what are the long term impacts of our decisions on future Canadian prosperity?
The future is uncertain which in turn, makes robust long-term decision making difficult for issues such as energy. However, there are approaches that use a variety of plausible futures to factor in major uncertainties and allow us to better understand and cope with a range of futures. While there is no certainty about whether the world will move toward any one of these scenarios, we can draw some insights into strategic elements that must be considered regardless of how our world evolves. These elements also suggest priorities that Canadians should consider if they wish to tilt the odds in a particular direction:
The global price of energy will have regional impacts within Canada, but Canada does have pathways to prosperity within any price environment.
The potential for severe climate change represents a risk to Canadian firms whether they produce energy or use it in their products and services.
The key strategic decision at the national level concerns the optimal use of energy, whether to sell raw product into a high-demand global market or to use it for production of higher-value goods and services.
Investment in technology is essential for both economic and environmental reasons, but the best focus of that investment depends on the expected direction of the global market and climate.
Efficient, timely, and predictable regulatory processes will be equally important to the protection of the environment and the effective development and deployment of new energy technologies.
Whether Canada chooses to export raw resources or focus on value-added processing within Canada, open domestic markets for people, goods, and capital will be vital for Canadian success.
Whether Canada’s non-renewable resources become increasingly valuable over time or are overtaken by increasingly low-cost renewable alternatives, Canada should convert more of the proceeds from selling finite resources into enduring financial assets for the future and move away from its dependence on commodities.
We are fortunate in our collective natural endowment in Canada, but with these riches come difficult choices. In the years ahead, we may choose to expand energy production rapidly or slowly, sell it abroad or use it at home, spend the proceeds now or save for the future, target investments in technology or let markets decide, and be leaders or followers in tackling climate change. There are options for building a successful and prosperous Canada in every scenario but we need to make good strategic choices for that to happen. We cannot control the global drivers affecting energy, but the choices we make will determine how well we live during our own lifetimes—and how well our children live in theirs.
Satyamoorthy Kabilan is the Director, National Security and Strategic Foresight with the Canadian Conference Board
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