The “just transition” report is nothing short of the utter transformation of Canada

Jun 21, 2023

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The “just transition” report talks a lot about workers, but precious little about the companies who employ them. These pipeliners were working for Ironside Energy on a pipeline project near Lampman in 2021. Photo by Brian Zinchuk

OTTAWA – The report’s name may not include the term “just transition,” but the House of Commons Natural Resources Committee report released on June 19 was all about it. And the report means to change Canada in almost every manner imaginable, from powering vehicles and heating homes, to largely winding down one of our nation’s largest industries – oil and gas. Hence, the need for a “just transition” to other jobs.

Just before Parliament rises for the summer, the Natural Resources Committee came out with it’s “just transition” report. Expect it’s not called that now. Now it’s “energy transformation.” It just talks and awful lot about “just transition.”

Entitled “Creating a Fair and Equitable Energy Transformation,” The 56 page report (plus 31 pages of appendixes and dissenting opinions) outlines nothing short of the utter transformation of Canada, its economy and workforce, by way of transitioning away from fossil fuels to a largely electric economy, with the possibility of hydrogen usage as well. In doing so it means to largely do away with the fossil fuel industry which is one of Canada’s largest industries and contributors to GDP, exports and wealth. The report provides recommendations as to what to do with the people involved in that industry, but not so much the companies who employ them, create those jobs or that wealth.

The report is not official government policy, as the report ends with a “request for government response.” However, as both the Conservative and Block Quebecois parties issued dissenting opinions, it is clear that the report is fundamentally the opinion of the Liberal and New Democratic Party members of the committee. (Watch for an in-depth story on response from the Conservative Party on Thursday.)

The report issues 19 recommendations (which Pipeline Online published verbatim here). They range from setting “clear targets” to the coal transition to income support for older workers. There’s talk of dramatic transformation to electrification of the nation’s economy, adoption of hydrogen and nuclear power, but essentially nothing about supporting the businesses, themselves, or the owners and investors of those businesses.

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Justification for the “just transition”

The introduction explains, “In response to the threat of climate change, countries around the world are adopting measures to cut their greenhouse gas (GHG) emissions and adapt their economies to lower-emitting activities and technologies. Canada is no exception. Under the Paris Agreement (COP21), which has 194 signatories, Canada has committed to taking the necessary action to limit global warming to two degrees Celsius above pre-industrial levels, and to continuing efforts to limit the increase to 1.5 degrees Celsius by 2100.

“In the coming years, Canada’s economy and energy systems will undergo a transformation as the country pursues a goal of net-zero1 emissions by 2050. In this context, during 10 meetings between 4 April 2022 and 22 September 2022, the House of Commons Standing Committee on Natural Resources (the Committee) studied the measures needed to transition Canada’s energy system towards a fair and equitable net-zero future.”

However, that stated goal of net-zero by 2050 is not universal. The electrical power generation industry across the country will be expected to get to net-zero 15 years sooner. The report notes, “The electricity sector itself may have to decarbonize more quickly than the rest of the economy. While Canada aims to achieve net-zero emissions overall by 2050, the Government of Canada has committed to having a net-zero electricity grid by 2035. Francis Bradley, President and CEO of Electricity Canada, described the federal targets as “very aggressive” but affirmed that “the electricity sector is committed to working towards those targets.” To achieve a net-zero electricity system, Mr. Bradley said that Canada must pursue “every non-emitting source of generation.”

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Doubling or tripling the electrical grid doesn’t just mean power generation, but transmission lines like these coming out of Boundary Dam Power Station, and distribution to every house and business in the country. All in 27 years. Photo by Brian Zinchuk

 

Double or triple the electrical grid

Indeed, the report focuses heavily on “Electrifying Canada’s Energy System,” which was one of the subheadlines. The changes suggested are not small, but mammoth, calling for doubling or tripling power production by 2050, just 27 years from now. This is to occur at the same time the proposed Clean Electricity Standard would do away with the last of the coal-fired generation, as well as natural gas-fired power generation in all but exceptional circumstances, by 2035.

Pipeline Online has reported numerous instances of fossil fuels providing up to 84 per cent of power in Saskatchewan and 90 per cent in Alberta on any given day. Doubling or tripling the existing power generation grid would not only mean expanding what’s there, but replacing nearly all of what currently exists in those two provinces, and do that replacement within 12 years.

The report said, “A net-zero world will need significantly more electricity than we use today. Electricity generated from non-emitting sources can play many roles that are currently filled by fossil fuels, including powering vehicles, generating heat for industrial processes and supplying some of the energy needed for resource development, among other uses.

“Canada already generates approximately 80% of its electricity from non-emitting sources, chiefly hydroelectricity, followed by nuclear energy and other renewables like wind and solar.23 However, the country will need to expand its generating capacity to meet its emissions targets. According to various estimates, Canada must double or triple its capacity to generate electricity from non-emitting sources to achieve net-zero emissions by 2050.

Recommendation 15 calls for nuclear energy projects to be “classified as clean energy projects and made eligible for sustainable finance.”

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Coal transition as a model

In a second called “Learn from past experiences and best practices,” Perhaps ironically, the report references previous “just transition” efforts for coal power workers and communities. Recommendation 6 is that the Government of Canada implement all 10 recommendations from the Task Force on Just Transition for Canadian Coal Power Workers and Communities, and report on the implementation of those recommendations.

In-depth conversations Pipeline Online has had with municipal officials, union representatives, coal and power workers in Estevan over the last six months have revealed essentially universal dissatisfaction with how the “coal transition” has been going to date. The new report notes, “There are several factors that differentiate the coal transition from the net-zero transition. For example, the Alberta Federation of Labour’s representative outlined some differences between the coal-fired power industry and the oil and gas sector, stating that ‘we can’t simply cut and paste what we did in the coal-fired power industry and apply it to oil and gas.’”

The report notes:

  • “The smaller scale of the coal industry, at 2,000 workers, compared to 130,000 workers in Alberta’s oil and gas sector alone.” (Editor’s note, Estevan, alone, has nearly 1,000 workers either mining coal or creating power from it, so this 2,000 workers number across the country may be suspect.)
  • “The lower rate of unionization in the oil and gas sector, making it more difficult to communicate with workers.”
  • “The difficulty of identifying the factors that lead to job losses in the oil and gas sector, which include climate policies, market forces and technology advancements. These factors make it “much harder to decide who should qualify for benefits.”

 

Boundary Dam Power Station. Photo by Brian Zinchuk

 

Only four of those ten recommendations were implemented, the report notes. They include funding locally-driven transition centres, identifying local infrastructure projects (notably, Coronach has seen sidewalk improvements), meeting with affected communities to connect them with federal programs, and “dedicated, comprehensive, inclusive, and flexible just transition funding program for affected communities.”

The six points not followed to date include labour market inventory and skills profiles, a pension bridging program, development of a transition plan championed by a lead minister, regulatory provisions for just transition in environmental and labour legislation, long-term research on the impact of the transition and “a comprehensive funding program for workers staying in the labour market to address their needs across the stages of securing a new job, including income support, education and skills building, re-employment, and mobility.”

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That last point has been a universal criticism Pipeline Online has heard of the coal transition program in Estevan – no retraining for coal-related workers, because they haven’t been laid off yet.

Oil and gas to see “some transformation”

In perhaps the largest understatement of the report, the committee said, “Given that Canada aims to achieve net-zero emissions by 2050, the sector is expected to undergo some transformation.”

It noted, “The oil and gas sector employs hundreds of thousands of people (Figure 3), contributes $20 billion in tax revenues and supplies fuels for a range of uses at home and abroad. At the same time, the oil and gas sector is the country’s largest source of GHG emissions.”

The footnotes list employment estimates as, “522,000, directly and indirectly, including the national supply chain,” according to the Canadian Association of Petroleum Producers, or “593,000, directly and indirectly,” according to Natural Resources Canada.

In Saskatchewan, 8,859 people are considered directly employed in oil and gas, and a further 17,252 people are indirectly employed, according to Natural Resources Canada.

Finding workers is already hard. But the report makes no mention of changing demographics. Photo by Brian Zinchuk

Labour market tightness

Recommendation 18 talks about collaboration to identify key skill sets needed in a net-zero transition, prioritizing “historically marginalized or disadvantaged groups for reskilling or upskilling opportunities,” developing training curricula and programs in partnership with organize labour.

The report said, “A few witnesses referred to tightness in Canada’s labour market, suggesting that the country faces a shortage of workers that may complicate a transition. The Minister of Labour described the labour shortage in the energy industry as “very acute.” Éric Pineault noted that the current “challenge is not to create jobs. The challenge is to help those communities that depend too heavily on the oil sector. Qualified workers need to be retrained to work in other sectors where they are urgently needed.” He stated that in particular, the energy industry is “fighting over workers from the construction sector and the manufacturing sector. Workers in the gas, oil sands and traditional oil extraction sectors will be and are now needed in other sectors of the Canadian economy.” Indeed, ECO Canada’s representative said that, “because they’re desperate,” employers in the environmental sector are reducing the skill requirements for their jobs, due to the “tremendously rapid [job growth] rate” in the sector.

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Not much mentioned about companies

The committee’s report talks substantially about workers, but has little mention about any sort of transition for the companies that employ them. It does mention a “written brief from a coal exporter in British Columbia, Westshore Terminals, which pointed out that thermal coal exports account for 60–70% of its sales and revenue and help to support 200 unionized jobs in addition to multiple indirect jobs from service suppliers working with their terminal.”

The report said, “It is true that the oil and gas sector is an important actor in many regions and communities across Canada. For example, witnesses mentioned that there are more than 15,000 businesses in the oil and gas supply chain in Alberta alone, while the sector employs approximately 22,000 people directly and indirectly in Newfoundland and Labrador.”

It does not once, however, mention drilling rig, service rig, hydraulic fracturing, trucking, midstream, gas processing, oil refining, seismic, consulting, safety, chemical or any of the other myriad companies directly involved in oil and gas production, midstreaming and processing.

Nor does it talk about the hundreds of billions of dollars invested into those companies over the years, and whether their assets will become stranded. Indeed, the word “stranded” is not mentioned once in the report. The just transition report does not make any reference to the ownership of those companies, including mom and pop operations so prevalent in Saskatchewan’s oilpatch.

There was one reference to oil sands companies. Dale Swampy, of the National Coalition of Chiefs was quoted as having “expressed hope for the federal government to support the province’s major oil sands companies as they transition to this production method.”

It does, however, speak of the economic benefits oil and gas has provided to Indigenous communities.

Chief Delbert Wapass, from the Indian Resource Council, explained: “For our members, for many other First Nations, oil and gas provide the best opportunity. It doesn’t mean that we aren’t interested in other sectors or that we don’t want to be part of the net-zero economy, but […] it should be obvious that having a strong oil and gas sector that has meaningful Indigenous involvement and ownership and that is a global leader in environmental, social and governance principles is in the interests of all Canadians.”

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Does oil and gas have a future?

The report added, “As this report has described, energy security is expected to be an enduring consideration for policy-makers around the world. Some witnesses such as Shannon Joseph and Dale Swampy argued that Canada should focus on positioning its oil and gas sector as a pillar of global energy security and stability. At the same time, witnesses expected Canada’s oil and gas sector to come under increasing pressure in a decarbonizing world, including Nichole Dusyk and Hadrian Mertins-Kirkwood, who felt that the country should emphasize a transition away from fossil fuels.”

“The path that Canada takes will depend partly on the future demand for oil and gas products. The Committee heard some diverging narratives on this point. Whereas CAPP’s representative pointed out that the global demand for oil is currently growing, the Minister of Natural Resources emphasized that the IEA expects oil consumption to begin declining by 2030 or 2035, followed by a decline in natural gas consumption. Nonetheless, the world will continue to use petroleum products “for decades to come—if not for fuel, then certainly in various petrochemical products” according to Kevin Nilsen of ECO Canada.

“Canada could choose to invest further in its role as a major exporter of petroleum products. CAPP’s representative advocated this course, saying that Canadian natural gas could reduce emissions in other countries if it is used to replace coal-fired electricity. Dale Swampy, of the National Coalition of Chiefs, added that Canada should have a competitive advantage because it earns high scores according to environmental, social and governance (ESG) metrics, which are used to assess non-financial dimensions of investments. “I have heard that the last barrel should be a Canadian barrel because of our high ESG standards,” he said, adding: “I think the last barrel should be a First Nations barrel.”

“In contrast, some witnesses argued that Canada would be mistaken to assume that there will be continued global demand for its oil and gas. Éric Pineault suggested that Canada’s comparative advantage would be limited in a decarbonizing world because Canadian crude oil is relatively carbon intensive. Sandeep Pai added that future demand for fossil fuels in developing countries may be weaker than generally assumed.”

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Picking losers: oil and gas; and winners: hydrogen and batteries

There was brief mention about some workers finding work in a yet-to-emerge hydrogen fuel based economy. Citing hydrogen as a low-carbon fuel, it said, “Decarbonization may increase the demand for low-carbon or renewable fuels that currently play a small role in Canada’s energy system. For example, hydrogen is a potential contributor to Canada’s net-zero fuel mix. Mark Kirby, President and CEO of the Canadian Hydrogen and Fuel Cell Association, argued that hydrogen could play many roles in a net-zero future, from powering vehicles to generating heat and electricity. However, Mr. Kirby warned that if Canada cannot build the infrastructure to support hydrogen use, then “we could miss out on the economic opportunity of the industry as well as miss our commitments to net zero.”

The report said, “If low-carbon fuels are to be produced on a larger scale, then Canada will need more workers who are trained to handle them. If hydrogen is to be more widely adopted, the Nuclear Innovation Institute’s representative mentioned that pipeline construction workers and system safety inspectors would need new certifications, while workers would be needed for new roles like fuel cell retrofit installers and fuelling station managers.

Hydrogen would need pipelines, and pipeliners, after all, wouldn’t it? Photo by Brian Zinchuk

 

“Fortunately, there is some overlap in skillsets between workers in existing and emerging fuel industries. For example, the skillset for workers in biofuels plants are comparable to the skills needed in today’s oil refineries. Clean Energy Canada’s representative cited a study which found that more than 90 per cent of the workers in the oil and gas sector in the United Kingdom are well positioned to transfer their skills to other energy sectors. Nevertheless, CAPP maintained in its brief that transition will occur within sectors—such as the oil and natural gas sector—and that demand for skilled workers will continue as their roles evolve to include hydrogen production and carbon capture, utilization and storage functions.”

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Indeed, it talks of developing a “low-carbon hydrogen industry and national expertise in this field,” including “helping to build hydrogen hubs in close proximity to production sites and markets where demand for hydrogen could increase.”

“Blue hydrogen,” which is hydrogen derived from natural gas but supported by carbon capture and storage, was listed as an opportunity for Alberta.

There was, however, considerable reference to critical minerals and battery manufacturing for electric vehicles. “One of the clearest opportunities for Canada to leverage its access to critical minerals, clean power and skilled workers is in the supply chain for zero-emission vehicles. This supply chain runs from the raw materials needed for vehicle batteries through to vehicle assembly,” the report said.

Notably, the oil and gas industries are concentrated largely in Western Canada, while auto manufacturing is principally in Ontario. But even so, it said, “While low-carbon supply chains will bring many advantages, they will also bring some disruption. For example, the automotive parts industry may need fewer workers because zero-emission vehicles typically have fewer parts than internal combustion engine vehicles.”

Also, “Even where jobs exist, Canada may not have an adequate supply of workers. Daniel Breton noted that Canada will need to help automotive workers adapt their skillsets to make zero-emission vehicles.”

Charging infrastructure, including in First Nations communities, was needed.

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Trust?

The report pointed out a lack of trust in a “just transition.” It stated, “Sandeep Pai identified a lack of trust as an obstacle to achieving the net-zero transition, stating that “one of the issues with just transition is trust. Globally—including, to some degree, Canada—we have never done good just transitions. Workers have always felt they have been left behind.” Michael Burt observed that many workers identify strongly with their employment and that many fear change. His organization, the Conference Board of Canada, found that approximately three-quarters of workers are willing to transition to jobs in the “green” sector, but only if they can be assured of job security, decent pay and the ability to obtain the skills for those jobs.”

Recommendation 19 talks about analyzing and identifying gaps in employment insurance, “including gaps that may emerge or widen in a net-zero transition.”

It also talks about “new incomes supports, including pension-bridging, for individuals affected by net-zero transition.” That’s a idea where someone might be in their 60s or late 50s, too early to retire on a pension, but also too old to restart in a new trade. Pension bridging would basically be a form of early retirement benefit.

Will younger workers find a “just transition,” if their jobs disappear? Photo by Brian Zinchuk

 

Conclusion

The report concludes, “The transition to net-zero is a momentous undertaking that will require effort from across Canadian society. The Government of Canada will have key roles to play at every stage of the transition, from identifying potential impacts to advancing principles for action to implementing a strategy that supports the net-zero industries of the future. The recommendations outlined in this report can help the Government of Canada play its role in a well-considered, inclusive, and coordinated fashion. By acting on these recommendations, Canada will be better positioned for a fair and equitable net-zero future.”

 

Coming on Thursday: Response from Conservative Natural Resources Critic Shannon Stubbs, vice chair of the Standing Committee on Natural Resources, who filed a dissenting opinion. Pipeline Online spoke to her at length on Tuesday.

 

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Canada’s oil output would plummet by 2050 in a net-zero world, new modelling shows