Critical international attention to the environmental impact of the oilsands can create a huge opportunity for Albertans, and for all Canadians. The negative press will inevitably power innovation, making us a more responsible producer of this incredible asset.
This opportunity is brought into focus by the comparison between resource-rich Alberta and resource-poor Israel.
As Dan Senor and Saul Singer show in Start-Up Nation, the Israelis have built one of the world’s most vibrant economies despite a relatively small population and a tiny land base almost devoid of natural resources and water. Their high-tech entrepreneurialism has resulted in more Israeli companies listed on the NASDAQ than any other country apart from the United States. No place better demonstrates the old saw: “Necessity is the mother of invention.”
Israel’s success in the knowledge-based economy is instructive for those wrestling with Alberta’s economic future. Alberta sprawls across a land base more than 30 times the size of Israel, one blessed with an extraordinary abundance of natural resources. Although the provincial population is only half that of Israel, Albertans are well educated and the province hosts an energy industry richly endowed with engineering and technological expertise.
However, Alberta is not a “start-up nation,” and is not even a provincial leader in this respect within the Canadian economy. Our track record in terms of innovation (research, development and commercialization) is modest at best.
While differences between any two countries, or in this case between a country in the Middle East and a Canadian province, are never easy to explain, part of Israel’s comparative success comes from a very threatening external environment that leaves no room for complacency. Innovation is critical for both economic success and national survival, and here the Alberta contrast is dramatic and instructive.
To date, Alberta’s only external threat has come from volatile international markets and occasional revenue forays by the national government into Alberta’s oilpatch, but these hardly compare to an environment of unrelenting military threat and frequent wars.
As a consequence, it has been too easy to be complacent in a richly endowed province situated within a generally tranquil environment.
However, there is growing concern that complacency will not provide a roadmap to sustainable prosperity in an increasingly competitive global environment.
We need a challenge to bring out our best, and thus environmental criticism of the oilsands may be just the test we need.
The success of the environmental movement to date shows that complacency in the production and consumption of energy is a recipe for failure in the face of a slow, erratic but nonetheless inevitable transition to a carbon-constrained economy. Simply put, we must get better at what we already do well, and that is the extraction of conventional energy resources.
We will have to be better and greener to meet rapidly changing market expectations. The global oil supply is getting heavier and heavier as conventional stocks of light crude are exhausted, and if there is an opportunity for Alberta to position itself as a truly global leader, it is in the greener production of heavy oil, and a deposit of 200 billion barrels of oil in the oilsands provides a huge incentive.
We won’t lead the world in renewable energy when too many of our competitors have a significant lead, much greater investment capacity and larger domestic markets.
But, when it comes to the greener production of heavy oil, Albertans could own the podium if we embrace the challenge thrown down by environmental critics.
Success will depend on major public investment and a co-operative culture that spans government, universities and industry.
It will come from design and not from muddling through. Success is never guaranteed, but it is within our grasp.
Jim Gray is the past chairman and Roger Gibbins is the current president and CEO of the Canada West Foundation.