Guest commentary by David Campbell, Jupia Consulting Inc.
This commentary first appeared in The Telegraph Journal on June 8, 2024. It is shared with the author’s permission.
Atlantic Canada is an energy powerhouse. In 2023, the region exported $18 billion worth of crude oil, refined oil products and electricity to other countries. That works out to $7,000 worth of energy-exports for every resident of the region. Energy accounted for 47 per cent of the value of all international exports from the four provinces combined.
In addition to a large offshore oil and gas industry, the region is home to Canada’s largest oil refinery and only liquified natural gas (LNG) import terminal.
The region’s energy exports provide the fuel for millions of cars, trucks and airplanes and ensure households all across New England can keep warm in the winter. And do not forget the thousands of kilometres of road that have used asphalt produced in Saint John.
The customers for Atlantic Canada’s energy exports send $18 billion into the region that becomes wages paid to workers supporting tens of thousands of good paying jobs. In 2023, the money flowing into the region from energy exports also induced more than $3 billion in tax and royalty revenue for governments that was used to pay for health care, education and other public services.
Now there is a move afoot to position the region as a producer of green and clean energy including wind, solar and nuclear electricity as well as green hydrogen and other carbon free fuels. There are five large scale green hydrogen projects being pursued in Newfoundland and Labrador and others in Nova Scotia and New Brunswick. If all goes well, tens of billions of dollars’ worth of investment will flow into the region creating a new source of export revenue for the region.
There are many reasons why this is a good idea. First, while there is considerable debate around the long-term future of fossil fuel-based energy, there is little doubt the world’s use of coal, oil and gas will decline over time. Building up new sources of energy in Atlantic Canada will ensure energy continues to be a driver of export revenue for the region.
Why should we care about exports? Because the vast majority of the goods and many of the services we consume as households and businesses are imported from other locations. When we buy vehicles, telephones, televisions, furniture, avocados and beef, we send money outside the province, creating jobs, wages and tax revenue elsewhere.
The way we offset the economic loss from these imports is to develop export industries based on the assets and attributes we have here in the region. If the value of imports to the region far exceeds the value of exports, it dampens our economic potential and capacity to properly invest in public services.
Of all the places in the world, why would green energy investment come to a place like Atlantic Canada? It turns out we have a strong wind regime both onshore and offshore. The four provinces have a large amount of publicly owned land and a vast network of logging roads and rural infrastructure that help lower the capital costs associated with installing wind turbines and other energy infrastructure. We have multiple ports for the shipment of green fuels to global markets and a long history as an energy exporter.
But any new industry such as this needs public support. There is growing resistance to the development of new forms of energy in the region. People are being told hundreds of wind turbines will have negative impacts on the environment as well as the tourism industry. Solar farms are considered by many to be a blight on the landscape. Nuclear energy has a very small geographic footprint, but some complain about the long-term storage of spent fuel and other risks.
I talked to someone recently who was on a team pitching a wind energy project in New Brunswick a couple of years ago. They had NB Power’s support as well as the local First Nation community. They did all their homework and went into the community to make their case. According to the person I was speaking with, local people were deeply opposed to having a few turbines near the community and the project was eventually scrapped.
It is more important than ever for politicians and community leaders to engage residents in a conversation about the future. What kind of future do we want for our region? Energy has been a driver of economic development since the 1920s when hydroelectric dams were built to provide the energy needed to build large sawmills, pulp mills and other value-added forest products operations.
A future where Atlantic Canada produces less energy means a future with less economic potential. It also likely means higher cost energy for businesses and residents.
What kind of region do we want to leave our grandchildren? One that is economically enfeebled relying even more on handouts from Ottawa? Is that our vision for the future?
I have looked at economic and population data going back to the 1920s and for the most part the last 100 years has been a story of progress in this region. Using New Brunswick as an example, in the 1940s per capita household income was 33 per cent below the rest of Canada. By the 2010s, the income gap had shrunk to only 10 per cent. I believe this progress will be in jeopardy without a strong private sector economy and carbon free energy will be key to the success of the private sector economy.
Will New Brunswick and the rest of Atlantic Canada take advantage of this opportunity? At this point it is still unclear. Many countries around the world are throwing billions of dollars to stimulate the green energy sector including the United States, Australia and many European countries. This is a race and, as I have said before, there will be winners and there will be losers.
I hope for the sake of future generations we will be on the winning side.
David Campbell is president of Jupia Consultants Inc., an economic development consulting firm based in Moncton, and New Brunswick’s former chief economist