Engaging Energy

Interesting presentation by Jeff Rubin at the Business of Climate Change conference in Toronto in Sept 2009
Its 45 mins long, but well worth it to see how an experienced (and charismatic) financier sees the issues connecting energy, trade and globalisation. I think his timings are wrong, but otherwise its a reasonable reading of a potential future.

You’ll note that he never once mentions energy independence, only alludes to energy security but never uses the phrase, and speaks about the development of regional economies as oil costs erode labour price advantages currently experienced by emerging economies. Don’t misunderstand, its all about energy security, but he doesn’t fall into the rhetorical trap of invoking overtly nationalistic tendencies. He uses protectionist measures (carbon tariffs) to get to his view, coupled with internal carbon pricing, but everything is in believable economic terms.

If we consider Canada, and specifically British Columbia (BC), as a thought experiment in this context its interesting to see the North American western seaboard as an emerging power in Rubin’s new re-jigged, less global economy. Yes, there is a focus on resources for export in BC, but with the amount of hydropower and BC’s commitment to zero carbon electricity there may well be a competitive advantage to base a regionalised economy along that seaboard, with population and industrial centres served by natural resource flows north and south of the 49th Parallel.

Apart from BC, the combined regional energy policies are supportive of a low-carbon transition with gubernatorial and state-level initiatives favouring low carbon energy sources in California, Oregon and Washington State. A cursory reading of their respective policy positions shows that energy independence is not a rhetorical standpoint that is used strongly, except by the Governor of Oregon. There are good (and reasonably obvious) reasons for this. BC and Washington State have excellent hydro power resources, and both have potential to raise the electricity production from small and medium-sized hydro. This reduces their dependence on energy imported from outside the region. California is known for its innovative technology and progressive policies in the energy field, so has much to gain by driving a new industrial sector.

But lets take a step back to Jeff Rubin’s point about localising production of goods. That implies localising non-energy natural resource production as well as energy. The western seaboard is in an enviable position to do this. Pretty much every kind of natural resource can be found in this part of the world; timber, fish, metallic ores, agriculturally productive land. As a region it’s got it all. But !

But on its own BC doesn’t have a large enough consumer-base to support a fully vertically integrated economy. Apart from the 3 million folks in the Vancouver area, its mostly forests and mountains. Likewise it doesn’t have the full range of agricultural products that most of us have come to expect in the last few decades, due to its climate. It has an excess of low-carbon power and raw materials (and no shortage of ingenuity). It could be energy independent, but it would end up paying over the odds for the food and manufactured goods that it seems likely would be produced in California in this new regional emergent economy. The binding cross-border factors could be water and electricity, but BC should also look at processing of those raw materials to add value to them prior to export.

So an internal drive to a progressive energy policy fits with a regional strategic economic vision. Energy security is allied with food and water security and internal economic coherence.

I think I’ve just convinced myself to move to Vancouver