Towards a managed wind-down: the conversation BC needs to have

(Co-authored with CCPA-BC Senior Economist Marc Lee and first posted here.)

An enduring lesson from COVID-19 is that where there’s a will there’s a way. Faced with a pandemic, governments have risen to the challenge and made profound changes that would have seemed impossible mere months before.

We now need to shift this out-of-the-box thinking to the existential threat posed by climate change. The need to eliminate fossil fuels for energy as fast as possible must be at the centre of that shift. An open letter from top economists around the world argues it clearly:

Governments must actively phase out the fossil fuel industry. Bailouts and subsidies to big oil, gas and coal companies only further delay the essential energy transition, distorting markets while locking us into a future we cannot afford. Instead, a coordinated phaseout of exploration for and extraction of carbon resources allows governments to redeploy funds towards green technology, infrastructure, social programs and good jobs, spurring an economic transition that benefits people and the planet.

In BC, in spite of climate action planning going back to 2007, the idea of a managed wind-down of fossil fuel industries remains a taboo topic. Talk about green energy and new technology development too often accepts as a given the continued expansion of oil and gas production for export. And industry is too often given a free pass to do nothing, as climate action plans focus on reducing emissions from buildings and passenger transportation.

Consider that almost one-quarter of BC’s total carbon emissions are from the extraction and processing of fossil fuels, the vast bulk of which are from natural gas production. BC’s commitment to expanding fracking to supply an LNG export industry is driving the province beyond its legislated GHG targets. 

We now need to shift this out-of-the-box thinking to the existential threat posed by climate change.

The BC government is seeking some emission reductions by powering upstream fracking and processing with electricity, while continuing to be a growing exporter of fossil fuels. This approach to managing the climate costs of fossil fuel extraction is ultimately untenable, and to add insult to injury, means all BC Hydro ratepayers are effectively subsidizing the expansion of gas production.

Major investments in BC to expand fracked gas production are a local manifestation of a global fossil fuel over-supply problem that threatens to undermine the 2015 Paris Agreement on climate change objective of “holding the increase in the global average temperature to well below 2°C above pre-industrial levels and to pursue efforts to limit the temperature increase to 1.5°C above pre-industrial levels” (Article 2).

Fossil fuel producers are no ally in this transition, and due to their political influence they play an oversized role in shaping policy and delaying meaningful action. Because fossil fuel interests will fight a managed wind-down tooth and nail, it will take much stronger political will and public oversight (i.e., regulation and management) of our fossil fuel resources and industrial activity. 

Given the late hour in confronting the climate emergency, it is time our governments stopped trying to appease these fossil fuel companies. Our official climate plans should not seek to win the support or endorsement of these companies (as is currently the case). Rather, if our climate plans are not making the oil and gas companies deeply anxious, they are not plans worth having. 

BC communities that are dependent on fossil fuel extraction and export are highly vulnerable in the growing movement to decarbonization. Major shifts in global climate policy and energy demand require BC to take a more pro-active and planned approach to the managed wind-down of fossil fuel extraction. 

Fossil fuel interests will fight a managed wind-down tooth and nail.

Unjust transitions permeate Canadian history—whether from plant closures due to industrial consolidation, commodity price busts, or free trade agreements. Without advanced planning, change may come from the outside, and too often workers end up being cast aside.

What would a managed wind-down look like? In addition to measures to reduce demand for fossil fuels within BC, the province needs new supply-side measures to restrict production eventually to zero. Our framework for a managed wind-down is built on four pillars:

• Establish carbon budgets for domestic GHG emissions including fossil fuel production limits between now and 2050;

• Invest in the domestic transition off of fossil fuels and develop a green industrial strategy for BC;

• Ensure a just transition for workers, being mindful of the regional nature of resource employment; and

• Enhance public returns from resource development through tax and royalty reform to fund the transition, to be shared with Indigenous nations.

There are, of course, many other environmental and health reasons for winding down fossil fuel industries, apart from climate change. Mining coal has adverse health impacts on workers, and burning it has adverse impacts on people exposed to the resulting air pollution. Pipelines rupture and coal trains derail, causing damage to habitat and ecosystems even when far away from human settlements. Fracking for gas can contaminate aquifers and has long-term impacts on fresh water supplies. 

A plan to wind down fossil fuel extraction and export will thus have substantial co-benefits besides reducing greenhouse gas emissions, including the development of alternative green jobs, new investment in green infrastructure, skills and training, with a focus on decarbonization. 

Phasing out fossil fuels must be informed by notions of climate justice: that the transition is fair, the path forward is set in partnership with Indigenous people, and that no one, in particular workers and communities in the existing fossil fuel sectors, is left behind. But it starts with an honest conversation in which our leaders acknowledge that we face a climate emergency, and that fossil fuel production in our province will have to be wound down in the next 20 to 30 years.

In the wake of COVID, there’s no reason to believe BC cannot rise to this challenge.