The Most Consequential Decision of the Decade

This is the time when we commonly look back over the year, or decade, or century, and pronounce our choice of the most significant event or events. There are endless events to choose and a multitude of rationals for our different choices. So many in fact I weary of making the attempt. I do, however, take an interest in choices made by others, at least others I respect. And this year I'm taken by a choice of David Smith, the Guardian's  Washington DC bureau chief.

Mr. Smith suggests in his article "The decade that shook America" that Trump's decision to deny climate science and withdraw the U.S. from the Paris climate accords "may prove the most consequential decision of the decade." I'm inclined to agree.

This may not seem as consequential a decision as the hands-down winner of the previous decade—George W. Bush's decision to invade Iraq—but it could have even more profound and longer-lasting effects. One might ask, however, how do you top a decision that destroyed a country, further destabilized the world's most unstable region and unleashed ISIS?

We might answer: because of its immense affect on humanity's greatest threat, indeed humanity's greatest threat of all time—global warming. On a country basis, China has edged out the U.S. as the world's top polluter, but countries don't pollute, people do. And the average American produces well over twice the emissions of the average Chinese. Indeed, Americans, along with Australians and Canadians, are the top emitters of the developed countries.

Considering Americans' pathetic pollution performance and considering also that the U.S. is the world's most powerful and most influential nation, Trump's decision does serious damage to global climate responsibility. By withdrawing from the accords, the U.S. not only illustrates its own malfeasance but sets a powerful example for every other country that is tempted to become a slacker, and there is a long list of those.

So in two consecutive decades, we have the most consequential decision in each made by an American president, both decisions frightfully bad and made by incompetents. What, I wonder, will the U.S. presidency have in store for us in the '20s.

War Rooms and Coal Barons

Alberta's recently constituted "war room," sometimes known as the Canadian Energy Centre, is off to a rocky start. First we learned it plagiarized its logo and now it turns out one of its spokesmen has been misrepresenting himself as a reporter. Not an auspicious beginning for the ministry of truth.

But then it's only really interested in half the truth. Individuals and organizations concerned about the climate crisis will attract its attention, but individuals and organizations that attempt to undermine climate science will not. Take, for example, Robert E. Murray, former CEO of Murray Energy, Tea Party funder, avid Trump supporter and global warming denier. Murray Energy is the largest private coal company in the United States, still operating despite having lapsed into bankruptcy.

Bankruptcy has not halted the coal baron's spendthrift ways, however. This year, he paid himself $14-million and earmarked another $1-million for global warming denial. He has over the years funded an array of PACs and other conservative organizations including groups that deny anthropogenic climate change. Among those groups is the Canadian organization the International Climate Science Coalition. The coalition claims climate is “always changing in accordance with natural causes and recent changes are not unusual.”

Premier Kenney and his UCP colleagues are outraged by American funding of Canadian environmental groups, but we can be assured their "war room" won't be challenging Mr. Murray's beneficiaries. It will not be checking their alternative facts. Covering both sides of the issue would be an attempt to ensure a fair debate, i.e. a debate Kenney et al. cannot win, so Mr. Murray may freely fund fibs about climate change to his heart's content and need have no fear of war rooms. In any case, he has enough on his plate with bankruptcy court.

Time Recognizes the Adult in the Room

What a time we live in when children have to tell adults to behave responsibly. But such times these are.

Consider Greta Thunberg and Donald Trump. Which, we might ask, is the adult in the room. Greta, who has the wisdom but no power, or Donald, who has the power but no wisdom. Greta, the teenager who knows we must listen to scientists, or Donald, the buffoon who thinks he knows better than the scientists.

For what it's worth, Greta has been chosen as Time magazine's Person of the Year for 2019, which has apparently made Donald cross. And Donald, being Donald, reacted by making unkind remarks about Greta. And Greta, being Greta, responded by wittily one-upping Donald ... all on Twitter of course.

Time states that they chose Greta because she "has succeeded in turning vague anxieties about the planet into a worldwide movement calling for global change." She has indeed. And Donald? Well, Donald has just created more vague anxieties.

So of course Greta is the adult in the room. As to Donald, I won't say he is the child in the room because that wouldn't be fair to children, most of whom are much better-behaved. Donald is yet another one of our surplus of political leaders who lack the good sense to listen to the best people we have on the worst problem we face.

Greta richly deserves to be recognized as person of the year. If there is any hope left for saving humanity from its environmental sins, she represents it.

Is This the Line in the Sand?

Crunch time. How far will Trudeau go to placate Alberta? Premier Kenney may just have drawn the line in the sand. He has said that the federal government faces a stark choice. It can either approve Teck Resources' Frontier Mine or risk leaving the country's oil industry "with no way forward."

The proposed mine is a 292-square-kilometre open-pit bitumen-mining operation 120 kilometers north of Fort McMurray, projected to produce 260,000 barrels of oil a day. It will be the largest open-pit tar sands mine in our history, adding six megatonnes of climate pollution every year. The tar sands are already the fastest-growing source of carbon emissions in the country. To quote avid environmentalist Tzeporah Berman, "All the current national climate policies, including a carbon tax and coal phase-out, would be overwhelmed by this carbon juggernaut."

But it will be hard to resist. Tech has done its homework, signing support agreements with all 14 local Indigenous communities. And big bucks will flow. According to a joint panel of officials from the Alberta Energy Regulator and the Canadian Environmental Assessment Agency, the federal government would receive about $12 billion in taxes over the project's lifespan, while Alberta would make over $55 billion in taxes and royalties.

Earlier this year the panel recommended that the project receive federal approval. Nonetheless it recognized problems, reporting. "The project, in combination with other existing, approved, and planned projects, is likely to result in significant adverse cumulative environmental effects to wetlands, old-growth forests, wetland- and old growth-reliant species at risk, fisher, Canada lynx, woodland caribou, the Ronald Lake bison herd, and biodiversity." It also recognized that, "If the project is approved and constructed, it may make it more difficult to achieve Canada's targets and commitments under the Paris Accord." Indeed. The federal cabinet has until the end of February to decide.

Kenney is optimistic. After a friendly meeting with Trudeau, he reported, "At least we have a federal government, a prime minister, that's willing to listen to our case and he indicated an openness." Those can't be words welcome to the ears of environmentalists.

Kenney is oil all the way. His attitude is incompatible with the urgency required to deal with climate change. If Trudeau is serious about dealing adequately with global warming, sooner or later he will have to challenge him. This may be the moment.

Reality is Confirmed

Reality is essentially what science tells us it is. Everything else is speculation. About the worst story about reality that science has been telling us lately is that we are heating up the atmosphere and if we don't stop pretty damn quick we can start writing off global civilization. This is not a pleasant reality to hear about and many turn off their ears.

Quite aside from the evidence all around us—rising sea levels, melting glaciers and ice caps, extreme weather events, unprecedented wildfires, etc.—scientists have been predicting our future based on computer models. What a relief if it turned out the models were unreliable or too pessimistic. No such luck, unfortunately. A paper recently published by scientists from the University of California, MIT and NASA reports, "We find that climate models published over the past five decades were skillful in predicting subsequent global mean surface temperature changes."

The scientists evaluated the performance of models published between the early 1970s and the late 2000s by comparing their predictions to observed temperature changes. They were particularly impressed by the skill of the 1970s' models given the limited evidence available at that time. Models have of course become increasingly more complex but the skill shown by the early models "suggests that climate models are effectively capturing the processes driving the multi-decadal evolution of global mean surface temperatures."

So there you have it. Climatologists have got it right. Their understanding of the planet's climate system is solid. Their models have accurately predicted global heating for the past 50 years and can, therefore, be counted on to predict it accurately for the next 50 years.

Scientists checking other scientists is of course part of the process. And in this case it firms up what they have been telling us about our misbehaviour. We are cooking the planet and we are heading precipitously toward apocalypse. Venus, anyone?

OPEC Rides to the Rescue

Although Albertans have always thought of their enviable wealth resulting from entrepreneurship, hard work and the free market, that isn't quite the case. We are an entrepreneurial place and we work hard, although no harder I suspect than other Canadians, but the free market hasn't had all that much to do with it. In fact for half a century or so our wealth has arrived primarily on the back of that nemesis of the free market, government interference in the marketplace. Specifically the governments that make up the Organization of the Petroleum Exporting Countries (OPEC). Back in the 1970s OPEC discovered its members controlled most of the world's oil reserves and if you control supply you control price. It's called a monopoly. They jacked up prices multi-fold and they, and Alberta, became very rich.

Ever since, they have been turning the taps off and on to optimize their revenues. With other large producers coming on line, such as Russia and more recently the U.S. with its booming shale oil, OPEC's clout has been considerably reduced but they can still bump prices up when necessary. Indeed, their aggressive management of supply has supported oil prices at $50-$75 U.S. per barrel this past year. OPEC and its allies, led by Russia, have been agreeing to supply cuts since 2017 to counter output from U.S. shale fields.

Last week they agreed to one of the deepest cuts this decade. The deal will apply for the first three months of 2020. According to Gary Ross, founder of Black Gold Investors, along with a weak U.S. dollar and improving economic data, "this should ensure a $60-$65 Brent oil price in the seasonally weak period of next year."

Alberta, as always riding the coattails of unethical oil, can expect its tar sands producers to make money at those prices. Once again, we bow to the sheikhs.

Is Kenney Costing Alberta Investment and Jobs?

Calgary Economic Development CEO Mary Moran reported recently that a tech company that had considered setting up its head office in Calgary had changed it mind. The reason? Talk of separation. "We as an organization just lost a 1,000-person company that didn't come to Calgary, selected another city, because they're concerned about Wexit," she said. The loss of those 1,000 jobs should not come as a surprise—investors do not much like political instability.

And Kenney is at least partly to blame. While he claims to be a loyal Canadian, not interested in separation, he keeps stirring the pot. He rants endlessly about how Ottawa, or more specifically Justin Trudeau, is out to get us. The fact the feds bought us our very own $4.5-billion pipeline has not dampened his rhetoric. He knows separation would be folly but he also knows that it's great leverage to use against the feds. And it's unlikely his pugilistic nature will allow him to tone down the rhetoric even as Wexit talk loses us jobs and dollars.

This isn't the only factor discouraging investment in Calgary's tech sector. This growing field has been a beacon for diversification aided by tax credits, including the Alberta Investor Tax Credit and the Capital Investment Tax Credit, to help startups get funding. Kenney's government has now axed the credits. According to Brett Colvin, CEO of Goodlawyer, an online marketplace for micro-legal services, "When they froze the credit, that was definitely some wind out of our sails. It's definitely going to have a huge impact for my company going forward and many other startup companies and companies in the technology space." Many smaller tech companies have already laid off employees and others have had to consider whether they even have a future in Alberta.

In the same vein, the UCP have cut Alberta Innovates, the province's largest research agency, funded primarily by the provincial government. It will lose up to 125 jobs, 20 per cent of its workforce. Alberta Innovates offers grants and programs to assist entrepreneurs and researchers in a wide variety of industries. Imperial Oil CEO Rich Kruger, emphasizing that new technologies can take a long time to develop, expressed concern about the cuts. "Research is an area where continuity and focus tends to be of a longer-term nature," he said.

Chad Saunders, at the University of Calgary's Haskayne School of Business, suggests the government may be relying on larger companies. Businesses making a profit of over $500,000 per year will enjoy a tax cut from 12 to eight per cent. Let's hope that works.

Aside from dependence on large companies, Kenney has also doubled down on oil. Among those who have noticed this dependence on fossil fuels is Moody's. The credit rating agency has downgraded Alberta's credit rating, observing "a structural weakness in the provincial economy that remains concentrated and dependent on non-renewable resources."

Moody's was also no doubt paying attention to the 30 percent increase in the province's budget deficit under the UCP, due in large part to reducing the corporate tax and ending the carbon tax. Mount Royal University professor Duane Bratt also noted that the agency was influenced by a looming battle with labour. Labour strife, muted under the NDP, now rampant, will not encourage investment.

Nor did the province's environmental behaviour escape notice. The report states, "Alberta's oil and gas sector is carbon intensive and Alberta's greenhouse gas emissions are the highest among provinces." The new government's climate change policies, including rolling back the NDP's climate programs, won't help. Even wiser heads in the oil patch recognize the need for strong measures to deal with global warming. And investors in other industries are likely to look with suspicion on a jurisdiction that appears anti-environment, particularly when the premier displays a hearty aversion to environmentalists.

Cutbacks in health care and education are not likely to help either. Companies looking to set up shop look for more than economic opportunity. They look also for quality of life.

At a recent business forum in Lake Louise, presenters mentioned ongoing environmental criticism, delays in building pipelines, and a surge of separatist sentiment as hurting Alberta's reputation. Kenney is contributing to two of the three. Even as he flits about the continent looking for investment—New York, Houston, wherever—his policies at home undermine his goal.

Kudos to Carney (and Good Luck!)

Mark Carney is a banker par excellence, a Canadian boy who made the big time. He served as Governor of the Bank of Canada from 2008 to 2013 and is credited with helping the country weather the recession. He then went on to become Governor of the Bank of England, his term ending next year. He will then take on a new role as the United Nations' special envoy on climate action and climate finance.

He has described his mandate thus: “This provides a platform to bring the risks from climate change and the opportunities from the transition to a net-zero economy into the heart of financial decision-making. To do so, the disclosures of climate risk must be comprehensive, climate risk management must be transformed, and investing for a net-zero world must go mainstream.”

He will speak from more than a UN pedestal. Big money has his back. Trillions of dollars controlled by some of the world’s largest institutional investors are shifting toward companies that embrace transition to a low-carbon economy. The Network for Greening the Financial System (NGFS), a group of 18 central banks, has been studying how the financial system can provide leadership on climate change.

Carney has used both carrot and stick. On the one hand, he has warned companies to be more open about their "climate change footprint" to avoid asset price changes that could destabilise markets. He has also pointed out to insurers that while the number of extreme climate events has risen threefold in the last few decades the cost of claims has risen fivefold. On the other hand, he has said that transition to an environmentally sustainable future provides an opportunity worth trillions of dollars for companies and financiers.

He has emphasized that climate change is a global problem requiring global solutions, and the whole financial sector is central. In his words, "Carbon emissions have to decline by 45 per cent from 2010 levels over the next decade in order to reach net zero by 2050. This requires a massive reallocation of capital."

Carney speaks the language of business—money—and he can speak to what politicians, Conservatives and Liberals, always put first—the economy. This is someone who understands the business community and how investing works, and he can connect those to the demands of climate change.

Furthermore, he will be coming home to Canada where he is desperately needed. If anyone can deal with the excessive influence of the oil industry on our climate change conversation, he can.

We Spend More Than Enough on Our Military

Once again the Americans are leaning on us to spend more on our military. The new U.S. national security adviser, Robert O'Brien, insists it is an "urgent priority" that American allies set their military budgets at two percent of their GDP. They spend 3.2 percent, we spend 1.3 percent, and that seems to me to be about right.

In the first place, the U.S. is defending an empire, we are not. Secondly, they love to spend money on their military; they are after all a militaristic nation. They spend $649-billion a year, nearly as much as the next eight-largest spending countries combined, including China, Russia and India.

Congress routinely passes the Pentagon’s budgets with overwhelming bipartisan majorities, partly out of warrior worship but also because military spending is a major component of the American economy and defense contractors are masters at distributing contracts across as many congressional districts as possible. The interdependence has been referred to as the military/industrial/Congressional complex.

According to an article in Harper's, "The complex is embedded in our society to such a degree that it cannot be dislodged, and also that it could be said to be concerned, exclusively, with self-preservation and expansion, like a giant, malignant virus."

NATO members have agreed to the target of two percent of their GDP although only a handful have achieved it. Why they agree, other than placating the U.S., is puzzling. The only significant threat to the NATO countries is Russia and their combined expenditure, excluding the U.S., is over six times that of Russia's. If they are spending their money with a modicum of efficiency they should have the firepower to overwhelm Russia with lots of room for mischief elsewhere.

Nonetheless, the Americans will no doubt be pushing their allies for more spending at the 70th anniversary meeting of the alliance in London this week. The word is that Canada will hold the line on its current defence spending, given that it has promised a 70 percent increase over 10 years and, furthermore, our Department of National Defence apparently has trouble spending its current allocation.

Personally, I would rather see our foreign aid increased to two percent of GDP and our military spending reduced to the measly 0.26 percent we spend on foreign aid.