TransCanada gas pipeline may sidestep environmental review

TransCanada’s planned 650-kilometre natural gas pipeline to Kitimat would cross about 320 watercourses including the habitat of more than 100 species at risk, such as white sturgeon, woodland caribou and marbled murrelet, company documents show.

But under Conservative government changes to environmental laws, there’s no guarantee the Coastal GasLink project will undergo a federal environmental assessment.

“It’s a travesty of the public trust,” said Otto Langer, retired head of habitat assessment and planning for the federal fisheries department in B.C. and Yukon. “If we can’t have an environmental review on a project of this sort, this is proof we have gutted Canada’s environmental protection.”

The federal government is soliciting public comment on whether a federal assessment is warranted for the Coastal GasLink project.

Céline Legault, spokeswoman for the Canadian Environmental Assessment Agency, said that even if the project is not subject to a federal environmental assessment, “all applicable federal legislative, regulatory and constitutional requirements must be fulfilled.”

TransCanada has also submitted its project description to Victoria in advance of an official assessment by the B.C. Environmental Assessment Office.

Langer dismissed the notion of a provincial assessment because the B.C. government is “giving the green light everywhere” to projects and that its environmental review process is too soft on industry.

“It’s pretty sad,” he said. “I don’t know how we slipped down this slope so quickly … and I don’t know where it will all end.”

B.C.’s Environmental Assessment Office reported in August it had conducted assessments of 162 projects in the last 20 years. Only two were refused outright — Kemess North copper-gold mine in 2008, and the Ashcroft Ranch landfill project in 2011.

Coastal GasLink’s 1.2-metre-wide pipeline would extend from near Groundbirch, a community 40 kilometres west of Dawson Creek, to a proposed liquefied natural gas facility near Kitimat.

The buried pipeline would initially have a capacity of 1.7 billion cubic feet of natural gas per day, which could be expanded to five billion cubic feet per day.

TransCanada documents outlining the pipeline project say it would cross four major drainages — the Peace, Fraser, Skeena and Kitimat rivers.

Of 286 species identified along the pipeline corridor, about 37 per cent (107 species) are recognized as species of management concern, Trans-Canada says.

That includes 17 species federally protected under the Species at Risk Act, 27 species recognized by the Committee on the Status of Endangered Wildlife in Canada, and 35 species designated as red (extirpated, endangered or threatened) or blue (of special concern) by the B.C. Conservation Data Centre.

More than 20 species of fish, including all five Pacific salmon species and steelhead, could be affected.

“Given the large number and diversity of species that may be encountered as a result of construction and operation of the project, there is the potential for project-related activities to affect fish and fish habitat,” the documents state.

“The potential effects of the pipeline construction on aquatic species and habitat are well known and understood. These potential effects may arise through construction of watercourse crossings or through erosion and include the deposition of sediment into watercourses, temporary disturbance of species present at crossings and potential disturbance to fish habitat.”

Langer said that despite reduced federal environmental protection, the Canadian Environmental Assessment Agency has the nerve to boast of “Canada’s strong environmental laws, rigorous enforcement and followup, and increased fines” on its website.

Concluded Langer: “It makes me want to puke.”

Craig Orr, executive director of Watershed Watch, said he is “astounded that there is even a thought of exempting something of such magnitude, with such potential risk.

“There is so much discretionary power now in whether anything gets an environmental assessment. I don’t think it serves Canadians well, especially those concerned about the environment.”

Under Bill C-38, passed by Parliament last June, Ottawa has limited federal protection of fish habitat to activities resulting in serious harm to fish that are part of a commercial, sport or aboriginal fishery. Serious harm is defined as “death of fish or any permanent alteration to, or destruction of, fish habitat.”

Bill C-38 also transfers greater responsibility for environmental assessments to the provinces. The Conservative government argued that the move helps to avoid duplication and allows it to focus on major projects.

Ottawa continues to be involved in environmental reviews of B.C. proposed projects such as the Enbridge Northern Gateway pipeline, Taseko’s New Prosperity mine in the Chilcotin, and BC Hydro’s Site C dam on the Peace River.

Bill C-45, an omnibus bill tabled last month in the House of Commons, is being criticized for further eroding environmental protection, including exempting pipelines from the Navigable Waters Protection Act, which would become the Navigation Protection Act. Only three oceans, 97 lakes and 62 rivers will be covered by the new act, representing less than one per cent of Canada’s waterways.

On Nov. 21, a coalition of groups, including the B.C. Assembly of First Nations, David Suzuki Foundation and Ecojustice, released an open letter to the federal government urging that the bill not be passed.

The groups complain that the bill would also give industry the “option to request that their existing commitment to protect fish habitat be amended or cancelled” and would eliminate the Hazardous Materials Information Review Commission.

“These are major changes that, if not stopped now, will ripple out across communities everywhere in Canada — putting our water, air, food and quality of life at risk,” the letter states.

The Sun reported Aug. 22 that the federal government had washed its hands of environmental assessments on 492 projects in B.C., including gravel extraction on the lower Fraser River, run-of-river hydro projects and wind farms, and bridge construction, as well as demolition of the old Port Mann Bridge, shellfish aquaculture operations, hazardous-waste facilities and liquid-waste disposal.

The deadline for written responses on the Coastal GasLink project is Dec. 3. A decision will be made available on the agency’s website no later than Jan. 3, 2013.

Construction of the project is proposed to start in 2015, with completion in 2018.

© Copyright (c) The Vancouver Sun

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Expect First Nations to press on resource rights

Resource Rulers, a new book by Bill Gallagher, outlines the recent history of First Nations, the resource industry and government relations, and confirms what I suspected.

The First Nations are on a winning streak, and we’re kicking butt in the courts. There are close to 170 positive court cases so far, related to resources and jurisdiction since the inception of the Constitution Act of Canada.

In 1982, when the pa-triation of the Constitution from Britain and the discussions to develop the Charter of Rights and Freedoms were underway, First Nations fought to have aboriginal and treaty rights enshrined in the Constitution and given legal weight. The result was Section 35, which states: “Existing aboriginal and treaty rights of the aboriginal peoples of Canada are hereby recognized and affirmed.”

At the time we complained that Sec. 35 was not defined and only gave us the right to go to court. Then prime minister Pierre Trudeau announced that three first ministers’ conferences would be held to define those rights. The three conferences were held, but unfortunately the meetings got nowhere.

The premiers had the chance to define rights or initiate a process at the conferences, but instead left it for the courts to decide. In the intervening years First Nations have gone to the courts repeatedly and we have amassed an impressive winning streak.

Prior to the patriation of the Constitution, aboriginal title was established by the Calder case in British Columbia and the James Bay Cree decision in Quebec.

In 1997, however, the Supreme Court ruled on the Delgamuukw case and shifted the landscape forever. Delgamuukw refers to a case brought forward by the Gitxsan and Wet’suwet’en traditional territory in British Columbia.

The court defined aboriginal title as the collective right for aboriginal people to hold title to their traditional lands. It then recognized that the right was protected under Sec. 35 of the Constitution and stipulated that the Crown had a duty to consult aboriginal groups prior to acting and said that compensation is required in some cases. The Bernard and Marshall cases on the East Coast bookended the decision, with the court ruling in favour of the Mi’kmaq nation.

The wins have been incremental over the past 30 years, gradually building on the success of previous cases. As a result, First Nations’ successes largely have flown under the radar. Governments are not anxious to react or recognize our successes, and media have failed to get their minds around it. In the journalistic world of 24-hour breaking news, complicated and incremental stories are often ignored. Gallagher’s book refers to this as the largest unreported story of the decade.

All this success has empowered First Nations to the point that today resource development has to have the blessing of First Nations whose traditional territory is affected. The Gateway pipeline, for example, likely will never be built as long as First Nations groups oppose it.

The Supreme Court has ruled that governments in Canada have a constitutional duty to consult and accommodate aboriginal groups when making decisions that could adversely affect lands and resources within a First Nation’s traditional territory.

The Harper government and First Nations are on a collision course. The government wants to make Canada a major exporter of natural resources. First Nations, however, are claiming title and want serious consultation and resource revenue sharing. The courts seem to be moving in that direction.

The federal government must follow up with public policy and legislation that implement the principles embodied in the court decisions. First Nations must be included as serious players in the resource industry.

This includes resource revenue sharing, meaningful consultation, equity in resource companies and seats on boards of directors.

The old days of limited consultation and the vague promise of jobs and training are long gone.

Unfortunately, most members of the public can’t or won’t accept the fact that aboriginal people hold tremendous power and are not afraid to use it. Court decisions have empowered our people, and we can expect more legal challenges and unrest in the future.

The national example exists in Quebec, whose government has initiated a long-term agreement with the James Bay Cree on resources and revenue sharing. This is a model that Saskatchewan’s Wall government would be wise to review.

First Nations leaders have to avoid the trap of focusing on minor amendments to the Indian Act and legislation that requires publishing salaries of chiefs and councillors. I see this as a smoke screen and a distraction to avoid the serious discussions that have to take place on resources.

Resource revenue sharing and our meaningful role in the resource industry represent the next big move for Canada’s First Nations.

If the federal and provincial governments choose not to act, resource projects such as the ring of fire in northern Ontario, future potash mines in Saskatchewan, and hydro projects across Canada will be in jeopardy.

Gallagher’s book should be required reading for all First Nations leaders and their supporters. It represents a road map to our future.

© Copyright (c) The StarPhoenix

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Fighting Climate Change – Why Current Solutions Don’t Work

Gail Tverberg
World leaders seem to have their minds made up regarding what will fix world CO2 emissions problems. Their list includes taxes on gasoline consumption, more general carbon taxes, cap and trade programs, increased efficiency in automobiles, greater focus on renewables, and more natural gas usage.

Fighting Climate Change – Why Current Solutions Don’t Work: Gail Tverberg

Are We Kidding Ourselves In Our Attempts To Solve The World’s CO2 Emission Problems?
Photo Credit: Señor Codo – flickr

Unfortunately, we live in a world economy with constrained oil supply. Because of this, the chosen approaches have a tendency to backfire if some countries adopt them, and others do not. But even if everyone adopts them, it is not at all clear that they will provide the promised benefits.

The Kyoto Protocol was adopted in 1997. If emissions had risen at the average rate that they did during the 1987 to 1997 period (about 1% per year), emissions in 2011 would be 18 percent lower than they actually were. While there were many other things going on at the same time, the much higher rise in emissions in recent years is not an encouraging sign.

Figure 1. Actual world carbon dioxide emissions from fossil fuels, as shown in BP’s 2012 Statistical Review of World Energy. Fitted line is expected trend in emissions, based on actual trend in emissions from 1987-1997, equal to about 1.0% per year.

The standard fixes don’t work for several reasons:

1. In an oil-supply constrained world, if a few countries reduce their oil consumption, the big impact is to leave more oil for the countries that don’t. Oil price may drop a tiny amount, but on a world-wide basis, pretty much the same amount of oil will be extracted, and nearly all of it will be consumed.

2. Unless there is a high tax on imported products made with fossil fuels, the big impact of a carbon tax is to send manufacturing to countries without a carbon tax, such as China and India. These countries are likely to use a far higher proportion of coal in their manufacturing than OECD countries would, and this change will tend to increase world CO2 emissions. Such a change will also tend to raise the standard of living of citizens in the countries adding manufacturing, further raising emissions. This change will also tend to reduce the number of jobs available in OECD countries.

3. The only time when increasing natural gas usage will actually reduce carbon dioxide emissions is if it replaces coal consumption. Otherwise it adds to carbon emissions, but at a lower rate than other fossil fuels, relative to the energy provided.

4. Substitutes for oil, including renewable fuels, are ways of increasing consumption of coal and natural gas over what they would be in the absence of renewable fuels, because they act as add-ons to world oil supply, rather than as true substitutes for oil. Even in cases where they are theoretically more efficient, they still tend to raise carbon emissions in absolute terms, by raising the production of coal and natural gas needed to produce them.

5. Even using more biomass as fuel does not appear to be a solution. Recent work by noted scientists suggests that ramping up the use of biomass runs the risk of pushing the world past a climate change tipping point.

It is really unfortunate that the standard fixes work the way they do, because many of the proposed fixes do have good points. For example, if oil supply is limited, available oil can be shared far more equitably if people drive small fuel-efficient vehicles. The balance sheet of an oil importing nation looks better if citizens of that nation conserve oil. But we are kidding ourselves if we think these fixes will actually do much to solve the world’s CO2 emissions problem.

If we really want to reduce world CO2 emissions, we need to look at reducing world population, reducing world trade, and making more “essential” goods and services locally. It is doubtful that many countries will volunteer to use these approaches, however. It seems likely that Nature will ultimately provide its own solution, perhaps working through high oil prices and weaknesses in the world financial system.

Elastic Versus Inelastic Supply

It seems to me that many bad decisions have been made because many economists have missed the point that crude oil supply tends to be very inelastic, while other fuels are fairly elastic. Let me explain.

Elastic supply is the usual situation for most goods. Plenty of the product is available, if the price is high enough. If there is a shortage, prices rise, and in not too long a time, the market is well-supplied again. If supply is elastic, if you or I use less of it, ultimately less of the product is produced.

Coal and natural gas usually are considered to be elastic in their supply. To some extent, they are still “extract it as you need it” products. Supply of natural gas liquids (often grouped with crude oil, but acting more like a gas, so it is less suitable as a transportation fuel) is also fairly elastic.

Crude oil is the one product that is in quite short supply, on a world-wide basis. Its supply doesn’t seem to increase by more than a tiny percentage, no matter how high the price rises. This is a situation of inelastic supply.

Figure 2. World crude oil production (including condensate) based primarily on US Energy Information Administration data, with trend lines fitted by the author.

Even though oil prices have been very high since 2005 (shown in Figure 3, below), the amount of crude oil has increased by only 0.1% per year (Figure 2, above).

Figure 3. Historical average annual oil prices, (“Brent” or equivalent) in 2011$, from BP’s 2012 Statistical Review of World Energy.

In the case of oil, both supply and demand are quite inelastic. No matter how high the price, demand for oil doesn’t drop back by much. No matter how high the price of oil, world supply doesn’t rise very much, either.

In a situation of inelastic supply, the usual actions a person might take appear to work when viewed on a local basis, but backfire on a world basis, if not everyone participates. When one country tries to conserve crude oil (whether through a carbon tax, gasoline tax, or higher automobile mileage requirement), it may reduce its own consumption, but there are still plenty of other buyers in the market for the oil that was saved. So the oil gets used by someone else, perhaps at a slightly lower price. World oil production remains virtually unchanged. Thus, a reduction in oil usage by an OECD country can translate to more oil consumption by China or India, and ultimately more development of all types by those countries.
Adding Substitutes Adds to Carbon Emissions

If we don’t have enough crude oil, one approach is to create substitutes. Because crude oil supply is inelastic, though, these substitutes aren’t really substitutes, though. They are “add ons” to world oil supply, and this is one source of our problem with increasing world emissions.

What do we use to make the substitutes? Basically, natural gas and coal, and to a limited extent oil (because we can’t avoid using oil). The catch is, that to make the substitutes, we need to burn natural gas and coal more quickly than we would, if we didn’t make the oil substitutes. Since the supply of coal and natural gas is elastic, it is possible to pull them out of the ground more quickly. Thus, making the substitutes tends to increase carbon dioxide emissions over what they would have been, if we had never come up with the idea of substitutes.

The increased use of coal and natural gas is pretty clear, if a person thinks about coal-to-liquids or gas-to-liquids. Here, we need to first build the plants used in production, and then with each barrel of substitute made, we need to use more natural gas or coal. So it is very clear that we are extracting a lot of additional coal and natural gas, to make a relatively smaller amount of oil substitute. There is often a substantial need for water to make the process work as well, adding another stress on the system.

But the same issue comes up with biofuels, and with other renewables. These too, are add-ons to the world oil supply, not substitutes. While theoretically they might produce energy with less CO2 per unit than fossil fuel systems, in absolute terms they lead to natural gas and coal being pulled out of the ground more quickly to be used in making fertilizer, electricity, concrete, and other inputs to renewables.

Related: Do Biofuels Still Have A Future In The US? – Interview With Jim Lane

Related: Is Affordable Energy a Myth? – Interview with Ed Dolan
Carbon Taxes and Competitiveness

Each country competes with others in the world market place. Adding a carbon tax makes products made by the local company less competitive in the world marketplace. It also signals to potential coal users that the countries adopting the carbon taxes are willing to a leave a greater proportion of world coal exports to those who are not adopting the tax, thus helping to keep the cost of imported coal down.

Asian countries already have a competitive edge over OECD countries in terms of lower wages and lower fuel costs (because of their heavy coal mix), when it comes to manufacturing. Adding a carbon tax tends to add to the Asian competitive edge. This tends to shift production offshore, and with it, jobs.

Figure 4. China’s energy consumption by source, based on BP’s Statistical Review of World Energy data.

China joined the World Trade Organization in 2001. Figure 4 shows clearly that its fuel consumption ramped up rapidly thereafter. It seems likely that the number of Chinese manufacturing jobs and spending on Chinese infrastructure increased at the same time.

Economists seem to have missed the serious worldwide deterioration in CO2 emissions in recent years by looking primarily at individual country indications, including CO2 emissions per unit of GDP. Unfortunately, this narrow view misses the big picture–that total CO2 emissions are rising, and that CO2 emissions relative to world GDP have stopped falling.

(See my posts Is it really possible to decouple GDP growth from energy growth and Thoughts on why energy use and CO2 emissions are rising as fast as GDP. See also Figure 1 at the top of the post.)
The Employment Connection

I have shown that in the US there is a close correlation between energy consumption and number of jobs. (For more information, including a look at older periods, see my post, The close tie between energy consumption, employment, and recession.)

Figure 5. Employment is the total number employed at non-farm labor as reported by the US Census Bureau. Energy consumption is the total amount of energy of all types consumed (oil, coal, natural gas, nuclear, wind, etc.), in British Thermal Units (Btu), as reported by the US Energy Information Administration.

There are several reasons why a connection between energy consumption and the number of jobs is to be expected:

(1) The job itself in almost every situation requires energy, even if it is only electricity to operate computers, and fuel to heat and light buildings.

(2) Equally importantly, the salaries that employees earn allow them to buy goods that require the use of energy, such as a car or house. (“Energy demand” is what people can afford; jobs allow “demand” to rise.)

(3) The lowest salaried people can be expected to spend the highest proportion of their salaries on energy-related services (such as food and gasoline for commuting). The wealthy spend their money on high priced goods and services, such as financial planning services and designer clothing that require much less energy per dollar of expenditure.

The thing I find concerning is the close timing between the ramp-up of Asian coal use and thus jobs using coal, and the drop-off of US employment as a percentage of US population, as illustrated in Figure 6 below. Arguably, the ramp up in world trade is just as important, but some aspects of programs that are intended to save CO2 emissions also seem to encourage world trade.

Figure 6. US Number Employed / Population, where US Number Employed is Total Non_Farm Workers from Current Employment Statistics of the Bureau of Labor Statistics and Population is US Resident Population from the US Census. 2012 is partial year estimate.

Of course, the US did not sign the Kyoto Protocol or enact a carbon tax, and it is its jobs that I show falling as a percentage of population. It is more that the CO2 solutions act as yet another way to encourage more international trade, and with it more “growth”, and more CO2.
Using More Biomass is Not a Fix Either

Burning more wood for fuel and creating “second generation” biofuels from biomass seems like a fix, until a person realizes that we are reaching limits there, as well.

In June 2012, twenty noted scientist published a paper in the journal Nature called Approaching a State Shift in the Earth’s Biosphere. This report indicates that humans have already converted as much as 43 percent of Earth’s land to urban or agricultural uses. In total, 20 percent to 40 percent of Earth’s primary productivity has been taken over by humans. The authors are concerned that we may now be reaching a tipping point leading to a state shift, because of loss of ecosystem services as use of biological products increases. With this state change would come a change in climate. Simulations indicate that this tipping point may occur when as little as 50% of land use is disturbed. This tipping point may be even lower, if world-wide synergies take place.
On Our Current Path – Lacking Good Solutions

While this list of problems relating to current proposed solutions is not complete, it gives a hint of the problems with reducing CO2 emissions using approaches suggested to date. There are many issues I have not covered.

One issue of note is the fact the cost of integrating intermittent renewables (such as wind and solar PV) increases rapidly, as we add increasing amounts to the grid. This occurs because there is more need to transport the electricity long distances and to mitigate its variability through electricity storage or fossil fuel balancing. (See for example, Low Carbon Projects Demand a New Transmission and Distribution Model, Grid Instability Has Industry Scrambling for Solutions, and Hawaii’s Solar Power Flare-Up.)

While the problems noted in these articles are probably solvable, the cost of these solutions has not been built into energy balance analyses. Energy balances (or EROEI estimates) as currently reported do not vary with the proportion of intermittent renewables added to the grid. If energy balance analyses were adjusted to reflect the high cost of adding an increasing proportion of wind or solar PV to the grid, they would likely show a rapidly declining energy balance, above a certain threshold. This would indicate that while adding a little intermittent renewables (as we have done to date) can be a partial solution, adding a lot is likely to have serious cost and energy balance issues.

Another issue that is difficult to deal with is the fact that we are not dealing with a temporary problem with CO2 emissions. The idea is not to slow down the burning of fossil fuels, and burn more later; what we really need to do is to leave unburned fossil fuels in the ground for all time. This is a problem, because there is no way that we can impose our will on people living 10 or 50 years from now. The Maximum Power Principle of H. T. Odum would seem to indicate that any species will make use of whatever energy sources are available to it, to the extent that it can. Even if we temporarily defeat this tendency with respect to humans’ use of fossil fuels, I don’t see any way that we can defeat this tendency for the long term.

Considering all of these issues, it does not appear that most of the “standard” solutions will really work. What other options do we have?

Related: Ensuring Sustainable Development Is A Matter Of Human Decency: Jeffrey Sachs

Related: Bring Sustainable Development Back into Mainstream Economics!
Nature’s Solution

The Earth has been handling the problem of shifting conditions for over 4 billion years. The earth is a finite system. Nature provides that finite systems, such as the Earth, will cycle to new states of equilibrium over time, as conditions change. While we would like to defeat Earth’s tendency in this regard, it is not at all clear that we can. Part of this cycling to a new state is likely to be a change in climate.

A state change is a cause for concern to humans, but not necessarily to the Earth itself. The Earth has moved from state to state many times in its existence, and will continue to do so in the future. The changes will bring the Earth back into a new equilibrium. For example, if CO2 levels are high, species that can make use of higher CO2 levels (such as plants) are likely to become dominant, rather than humans.

Exactly how this state change might occur is subject to different views. One view is that changing CO2 levels will be a primary driver. The Nature article referenced previously suggested that increased disturbance of natural ecosystems (as with greater use of biomass) might force a state change. My personal view is that a financial collapse related to high oil price may be part of Nature’s approach to moving to a new state. It could bring about a reduction in world trade, a scale back in CO2 emissions, and a general contraction of human systems.

However the change takes place, it could be abrupt. It will not be to many people’s liking, since most will not be prepared for it.
Steps That Might Work to Slow CO2 Emissions

It would be convenient if we could slow CO2 emissions by working to produce energy with less CO2. This option does not seem to be working well though, so I would argue that we need to work in a different direction: toward reducing humans’ need for external energy. In order to do this, I would suggest two major steps:

(1) Reduce the world’s population, through one-child policies and universal access to family planning services. This step is necessary because rising population adds to demand. If we are to reduce demand, lower population needs to play a role.

(2) Change our emphasis to producing essential goods locally, rather than outsourcing them to parts of the world that are likely use coal to produce them. I would suggest starting with food, water, and clothing, and the supply chains necessary to produce these items.

Changing our emphasis to producing essential goods locally will have a multiple benefits. It will (a) add local jobs, and (b) lead to less worldwide growth in coal usage, (c) save on transport fuel, and (d) add protection against the adverse impact of declining world oil supply, if this should happen in the not too distant future. It should also help reduce CO2 emissions. The costs of goods will likely be higher using this approach, leading to less “stuff” per person, but this, too, is part of reaching reduced CO2 emissions.

Related: The Dangerous New Era Of Climate Change: Jeffrey Sachs

Related: Will Sustainable Development Become An Impossible Dream?

It is hard to see that the steps outlined above would be acceptable to world leaders or to the majority of world population. Thus, I am afraid we will end up falling back on Nature’s plan, discussed above.


[1] Michael Kumhof and Dirk Muir recently prepared a model of oil supply and demand (IMF working paper: Oil and the World Economy: Some Possible Futures). In it, they assume a long run price-elasticity of oil supply of 0.03, and remark that a paper by Benes and others indicates a range of 0.005 to 0.02 for this variable. The long term price elasticity of oil demand is assumed to be .08 in the Kumhof and Muir analysis.

[2] I would argue that standard EROEI measurements are defined too narrowly to give a true measure of the amount of energy used in making a particular substitute. For example, EROEI measures do not consider the energy costs associated with labor (even though workers spend their salaries on clothing, and commuting costs, and many other good and services that use fossil fuels), or with financing costs, or of indirect impacts like wear and tear on the roads by transporting corn for biofuel.

Other types of analysis have ways of dealing with this known shortfall. For example, when the number of jobs that a new employer can be expected to add to a community is evaluated, the usual approach seems to be to take the number of jobs that can be directly counted and multiply by three, to estimate the full impact. I would argue that with substitutes, some similar adjustment is needed. This adjustment which would act to increase the energy use associated with renewables, and reduce the EROEI. For example, the adjustment might divide directly calculated EROEI by three.

A calculation of the true net benefit of renewables also needs to recognize that nearly the full energy cost is paid up front, and only over time is recovered in energy production. When renewable production is growing rapidly, society tends to be in a long-term deficit position. Typically, it is only as growth slows that society reaches as net-positive energy position.

[3] I obviously have not covered all potential solutions. Nuclear power is sometimes mentioned, as is space solar power. There are new solutions being proposed regularly. Even if these solutions would work, ramping them up would take time and require use of fossil fuels, so it is wise to consider other options as well.

[4] The way that limited oil supply could interfere with world trade is as follows: High oil prices cause consumers to cut back on discretionary goods. This leads to layoffs in discretionary sectors of the economy, such as vacation travel. It also leads to secondary effects, such as debt defaults and lower housing prices. The financial effects “concentrate up” to governments of oil importing nations, because they receive less tax revenue from laid-off workers at the same time that they pay out more in unemployment benefits, stimulus, and bank bailouts. (We are already at this point.)

Eventually, countries will find that deficit spending is spiraling out of control. If countries raise taxes and cut benefits, this is likely to lead to more lay offs and debt defaults. One possible outcome is that citizens will become increasingly unhappy, and replace governments with new governments that repudiate old debt. The new governments may have difficulty establishing financial relationships with other governments, given that most are major debt defaulters. Such issues could reduce world trade substantially. With the drop of world trade would come much more limited ability to maintain our current systems, such as electricity and long distance transport.

By Gail Tverberg

Gail Tverberg is a trained casualty actuary who writes about the impact of the limited supply of oil. She speaks internationally about oil issues, and writes frequently about the issue on her blog, Our Finite World and on The Oil Drum (where she is an editor). Tverberg is also a Fellow of the Casualty Actuarial Society and a Member of the American Academy of Actuaries. She has a Masters Degree in Mathematics from the University of Illinois, Chicago.

Climate Change: The Standard Fixes Don’t Work is republished with permission from Our Finite World.

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Green growth or de-growth: What is the best way to stop businesses destroying the biosphere?

David Smith
Green growth or de-growth: What is the best way to stop businesses destroying the biosphere?

An English journalist who, when he’s not exploring the social consequences of political actions,

The world’s major 3,000 corporations are responsible for a third of global environmental damage, but economists are divided in their views of how to stop them polluting. Some say government regulation, allied to promoting the business case, is the answer. But other experts say we need a new type of capitalism, which allows our economies to stop growing, or even to shrink.

A study by London-based consultancy Trucost has shown that the world’s top 3,000 public companies are responsible for a third of all global environmental damage.

Related Story: Capitalism’s Pallbearers: The Companies That Run, & Could Destroy, The Global Economy

The figure they came up with was US$2.2 trillion (£1.4 trillion) for 2008, more than the national economies of all but seven countries. Over half of the cost was caused by emissions of greenhouse gases. The other major causes of damage were air pollution, and the over-use and pollution of freshwater.

Richard Mattison, the Trucost Chief Executive Officer, said:

We monetised the damage to give people an idea of the scale of the problem. If we said to business leaders they were emitting million of tonnes of carbon, they wouldn’t know if that was a lot, whereas they understand money and so it communicates the core message.

Trucost produced an even more cataclysmic prognosis for 2050, by which time annual environmental damage from water and air pollution, greenhouse gases, general waste and depleted resources could be US$28.6 trillion.

A significant portion of the US$2.2 trillion figure has been self-inflicted by big corporations who will increasingly have to pay to repair the damage caused by natural disasters. The scale and frequency of these disasters is partly a result of greenhouse gas emissions from those selfsame big corporations.

There are many recent examples of the effects of freak weather on the world economy. Massive floods in Pakistan and China forced the global cotton price to 15-year highs, pushing up the costs of clothes at retailers such as Primark, Next and H&M. Meanwhile, droughts and wildfires in Russia sent wheat prices soaring, which had a sharp knock-on effect on the price of bread, and other foods.

Trucost’s research shows how the profits of the world’s largest companies will come under increasing pressure from resource scarcity and unpredictable price hikes, undermining their share price growth. It is precisely these major companies that pension funds invest in.

Related Infographic: Why Green Products Are Not As Green As They Claim To Be

Although Mattison argues that putting a price on biosphere damage helps to persuade companies to take action, some economists disagree. Peter Victor, at York University in Toronto, and author of Managing Without Growth: Slower by Design, Not Disaster, says the numbers are meaningless to most people.

We say 20 trillion dollars by 2050, but how many people can understand a trillion? Most shrug their shoulders and say ‘so what?’ Billions, or trillions, what’s the difference? We are still playing the same game of measuring everything in economic terms and once you do that everything is tradeable. If we lose 20 trillion dollars by damaging the environment, well, we’ll become a 100 trillion economy then. It’s no big deal. Of course it’s more than a big deal. It’s the deal, he said.

Professor Victor says we need a new narrative about environmental damage which gets the message across more powerfully than figures.

Putting it in monetary terms is not enough to change minds. It needs the input of artists and communicators as much as scientists, to tell the story in a new way, he said.

As long ago as the 1960s, Professor Victor concluded that the constant quest for economic growth would lead inexorably to environmental catastrophe. He began to produce economic models which are not predicated on growth, but are steady-state, or even shrinking. His influential models have been emulated by environmental economists around the world.

But the idea of no-growth economies is far too radical for the leaders of the major world powers. The official line of the Organisation for Economic Co-operation and Development (OECD) remains that environmental damage can be contained with a “green growth” strategy, rather than a de-growth strategy.

Related: Climate Change Poses Major Threat to Cambodia’s Rural Poor

Trucost are operating for the most part within the same economic paradigm as the OECD. Their CEO, Mattison, presents the environmental debate as an opportunity for savvy businesses to gain a competitive advantage. As environmental damage worsens, he says, governments will apply more stringently the polluter-pays principle to regulation. As a result, investors and businesses will face higher insurance premiums, higher green taxes, rising resource prices and increases in clean-up costs. The figure equates to 6-7% of the companies’ combined turnover, a third of profits.

So businesses face a stark choice, Mattison says. Either they take the long-term view now and plan for a radically different near future, or the decisions will be forced upon them. Clearly it is better for the environment if they make the changes now.

There is a massive opportunity for innovative businesses. There are a number of ways they can gain an advantage. For many companies, it’s a purely capitalist argument that they can gain business, or reduce costs, or encourage investment, by being greener, he said.

Mattison says there are many major companies who have understood the agenda, such as the sport and leisure group Puma. The German company became the first global corporation to publish details of its impact on the environment.

Puma used Trucost analysis to work out that the combined cost of the carbon it emitted and the water it used in 2010 was €94.4 million. The company set a target of reducing by 25% its carbon, waste, energy and water use by 2015. Puma’s outsourced processes, such as embroidering and printing, are now subject to the same environmental standards as its own manufacturing processes.

Puma chief executive Jochen Zeitz said: “The business implications of failing to address nature in decision-making are clear. Since ecosystem services are vital to the performance of most companies, integrating the true cost for these services in the future could have significant impacts on corporate bottom lines.”

Another company which has pledged to reduce its environmental impact is Walmart, the world’s biggest retailer. The US giant will cut 20 million tons of carbon pollution from its supply chain over the next five years. The sum is equivalent to the annual greenhouse gas emissions of 3.8 million cars.

The knock-on effects of Walmart’s decision are enormous because of the scale if its operations. It has more than 8,400 superstores in 15 countries and employs over two million people. In 2009, it had sales of $405 billion.

The influence of Walmart’s decision on thousands of companies worldwide could be greater than national policy-making, said Mattison. “Walmart, for instance, makes up 10% of Chinese exports to the US. Walmart’s decision will force behaviour change right down the supply chain. Chinese companies which don’t respond to key questions around water, waste, carbon emissions and energy consumption, won’t supply Walmart any more. This shows how business can be a force for change.”

Walmart’s enlightened approach was, of course, influenced by its long-term financial goals. “Walmart has said it’s ‘following the carbon to get to the cash’, which is a very capitalist argument,” said Mattison. “One of the biggest pluses for Walmart is they can attract more investors with greener policies. It was pressure from investors to be greener that actually made them change their policies in the first place. Lots of major pension funds are now considering which companies are the most environmental before investing.”

Walmart is controlling its own destiny, but many major companies have been overtaken by events. They have been forced to take steps to avoid the impending degradation to the biosphere, or avoid damaging their reputation, which could prove costly as public awareness of green issues grows.

Related Infographic: The Walmart Economy

Water is one of the major issues faced by global corporations. The UN predicts water shortages for 1.8 billion people by 2025. Unilever, for example, has taken action to secure the water supply to its tea plantations in Kenya’s Rift Valley. The local population has chopped down large sections of the Mau Forest, which impacts on water gathering. To compensate, the company has spent $475,000 over 10 years planting more than a million indigenous trees. Similarly, the brewing giant SABMiller has made major investments in reforestation in Columbia and South Africa, and set tough targets for reducing water consumption.

Meanwhile, Volkswagen, Europe’s biggest carmaker, is investing $430,000 in re-planting forests and digging rain water pits to secure the water supply to its factory in Puebla, Mexico. And ArcelorMittal, the world’s largest steel producer, has invested almost $2.1 million since 2006 on restoring the ecosystems surrounding America’s Great Lakes which supply water to nine of its facilities.

The French energy group GDF Suez has invested in conserving biodiversity on its landfill sites as part of its “reputational risk management”.

Clearly, many major companies have the foresight to take environmental issues into account. But the authors of a second report into biodiversity loss, the UN’s Economics of Ecosystems and Biodiversity, don’t believe the companies will collectively do enough unless forced to do so.

The authors of the report, which estimated the annual global economic impact of biodiversity loss at between $2 trillion and $4.5 trillion, said too few firms took green issues seriously enough. In one section, PricewaterhouseCoopers (PwC) calculated that fewer than one in five firms saw biodiversity as an important business issue, while just two of the world’s largest 100 companies managed it as a strategic risk.

Report lead author Pavan Sukhdev argues that governments need to force businesses to address biodiversity loss. He told The Guardian newspaper: “We have created soulless corporations that do not have any innate reason to be ethical about anything. The purpose of a corporation is to be selfish. That is law. So it’s up to society, and its leaders and thinkers, to design the checks and balances that are needed to ensure that the corporation does not simply become cancerous, and that’s something that sometimes we do and sometimes we really don’t.”

But Professor Victor remains unconvinced that government legislation, allied to company self-regulation, is enough to sufficiently restrain the impact on the biosphere if we continue to operate within the parameters of modern-day capitalism.

We are moving towards more global institutions which control the damage, and that is a necessary thing, but the primary purpose of businesses is still economic growth and expansion, particularly in rich countries. This won’t help the environment at all, he said. “Growth is the common driver of many bad trends in capitalism so we need to re-think what our economic and social policies should be. Thinking along these lines is what led me to model economies based on zero growth, or even de-growth.”

The battle against climate change illustrates the attractiveness of his strategy. According to Professor Victor’s model, to reduce greenhouse-gas emissions (GHG) by 80% over 50 years, an economy that increases its real gross domestic product (GDP) by 3% a year must reduce its emissions intensity by the huge margin of 6% a year. For an economy that does not grow, the annual cut would be a still challenging 3.2%.

His model looked at what could happen if the Canadian economy were not growing. “I asked if we could have reduced greenhouse gases, no poverty, full employment and fiscal balance without growth. And my computer model showed that you can,” he said.

Related Story: How Did Canada Turn Its Debt Crisis Around In 6 Years, 20 Years Ago?

A key ingredient of the model was a shorter working year, which spreads employment around. The benefits of greater productivity can thus be directed towards more leisure time, rather than increasing GDP. “Then we can have higher employment rather than keeping expanding the capacity of the economy and putting pressure on the biosphere,” he said.

Related Story: Disruptive Innovation: Fuelling The Growth Of Emerging Markets : Javier Santiso

Professor Victor rejects the belief that tinkering with the current capitalist system is an adequate strategy. “If we remain short-termist we are done for. The world where the environment seems infinite is no longer there. We’re bumping up against the limits. We need to think longer term about how we will accommodate nine billion by middle of the century,” he said.

“We need new ideas, and one thing which makes me hopeful is the changes at grassroots level, such as the spread of Transition Towns. It’s never enough and we do need regulatory framework, but the government frameworks could follow the initiatives of the public. The onus is on older folk to be open to new ideas and not dismiss them as hopeless idealism,” he said.”

Kinder Morgan pipeline may be too close to Burnaby schools.

More schools likely along Kinder Morgan pipeline

Burnaby residents concerned over Kinder Morgan pipeline

Kinder Morgan pipeline may be too close to Burnaby schools.

Burnaby Residents Opposed to KinderMorgan Expansion (BROKE) claim that the numbers of schools are located in the route of the Kinder Morgan’s Trans Mountain pipeline are much higher than reported.

“Besides Stoney Creek Community School and Lyndhurst Elementary, I received information this morning that even the Forest Grove Elementary is adjacent to the Trans Mountain right of way in the Forest Grove neighbourhood,” BROKE spokesman Alan Hunter said.

“There are many other schools along the route too. We don’t have an accurate count yet, but we are building it. One problem is that we cannot get an accurate up to date map of the present pipeline routes in Burnaby – there are jet fuel and pipelines carry a mix of products from synthetic crude to diluted bitumen and Kinder Morgan has not announced where the route will be except to say it will generally follow the existing Kinder Morgan pipeline route from Alberta to Burrard Inlet,” he said.

He also said that the residents were appalled to know that the Ministry of Education does not have an evacuation plan for the schools on the jet fuel and crude oil pipeline route.

“We have safety plans for schools and public buildings in case of a seismic event but nothing for children in schools near volatile jet fuel pipelines or near pipelines, tank farms and sub-stations that carry a toxic cocktail of chemicals — some of which, like benzene, that are known carcinogenic,” he said.

BROKE is now following up with the Ministry of Education, all school districts, the BC Federation of Teachers, the Burnaby Teacher’s Association, all PACs on the pipeline routes and near tank farms to develop comprehensive plans for child and worker safety.

A jet fuel line passes within meters of housing developments around Forest Grove and by Stoney Creel Community School. Jet fuel is very volatile and there is no specific safety plan for children or teachers at the school or along the pipeline routes.

Both pipelines present a real and present danger in case of a seismic event or a leak. And Kinder Morgan plans to build a third one to expand the shipment of heavy crude oil shipped at high heat at high temperature with a toxic cocktail of chemicals like cancer-causing benzene.

There was, of course, the pipeline rupture in 2007 in Burnaby that resulted in evacuations and then there were more evacuations in 2009 around Seaforth Elementary School near Government Road and around Forest Grove from a spill, Alan Hunter recalled.

BROKE is not the only organization raising the issue of schools and pipelines. The Burnaby Teachers’ Association also has concerns.

“Teachers in Burnaby, to the best of my knowledge, have not received any health and safety training or specific evacuation training to respond to any oil spills or exposure to these highly toxic chemicals,” Association president James Sanyshyn said.

The Wilderness Committee is equally worried about the pipelines and schools, pointing to the US where a Nevada mother launched a lawsuit against Kinder Morgan recently.

Committee spokesperson Ben West called the case a great tragedy. “It’s exactly the type of tragedy we need to prevent from happening here in BC,” he said.

“With Kinder Morgan holding info sessions at several elementary and secondary schools in the province, we hope this news will serve as a warning to local residents about the threats posed by pipelines running through highly populated communities.”

Kinder Morgan is planning to twin the Trans Mountain pipeline, which has been running oil from Alberta to Burnaby since 1953. The company hopes to twin the existing line, more than doubling capacity from 300,000 barrels of oil per day to 750,000, along the existing right-of-way where possible.

Liberia’s Historic Struggle To Escape The Resource Curse

Liberia is a nation rich with natural resources including iron ore, gold, diamonds, natural rubber, vast forest for logging and timber harvesting, and vast agriculture land for ensuring food security. Yet like many of their African counterparts, who are equally rich in natural resources; corruption, global volatility and the “Dutch Disease” have left the country under the spell of the Resource Curse – turning Liberia from one of the fastest growing economies in the world, to one of the poorest and underdeveloped.

Back in 2004, The Sunday Standard, a Botswana newspaper, published an article by Professor Joseph Stigliz entitled “Botswana Has Escaped the Resource Curse Phenomenon”. In it, Stiglitz compared and examined several economies who were equally endowed in natural resources such as petroleum products, diamonds, gold and other rich minerals; and explained why some had been affected by the “Resource Curse” phenomenon, whilst others managed to escape.

“Thirty years ago, Indonesia and Nigeria, both dependent on oil, had comparable per capita incomes. However, Indonesia’s per capita income is now four times that of Nigeria,” Stiglitz said. Sierra Leone and Botswana, who are both rich in diamonds, was another comparison. While Botswana managed to escape the resource curse, averaging an 8.7 percent annual economic growth rate over the last thirty years, Sierra Leone was plunged into civil strife in 1991 – lasting until 2002.

The Resource Curse

The Resource Curse is a term coined by economists, to describe how, on average, countries with large endowments of natural resources tend to perform worse than countries that may be less well endowed. Professor Stigliz gave three major reasons for the curse’s ‘spell’:

First, he identified corruption and rent-seeking by public and private officials in these nations as one of the prime causes. “It is the prospect of riches orient officials’ efforts to seizing a larger share of the pie, rather than creating a larger pie that is responsible for the resource curse,” he wrote, adding that the result of this wealth grab could often led to war, as seen in many Sub-Saharan African countries. This reason is also supported by other authors such as Larsen (2006), Auty (2001a), Gylfason (2001a), Sachs and Warner (2001), Torvik (2002), and Stevens (2003).

The second reason he cited is associated with volatility in world prices of natural resources. He averred that many nations in Sub-Saharan Africa heavily relied on the earnings of their primary products and thus failed to diversify their economies. Volatility in the prices of these primary products, as such, greatly harmed economic performance, leaving a serious imprint of social and economic woes on the populations of these countries.

Finally, Stiglitz noted that oil and other natural resources, though a major source of wealth, do not create jobs by themselves. Unfortunately, they often crowd out other economic sectors, a phenomenon he labeled as the “Dutch Disease”.

(The Dutch Disease is a concept that purportedly explains the apparent relationship between the increase in exploitation of natural resources and a decline in the manufacturing sector. The term was coined in 1977 by The Economist to describe the decline of the manufacturing sector in the Netherlands after the discovery of a large natural gas field in 1959.)

Related: Can Africa Break Its Resource Curse?: Joseph Stiglitz

Related: Australia’s Resource Boom: From Blessing To Curse

Brief Historical Look at Liberia

All three factors in Stiglitz’s framework have had relative levels of influence on Liberia’s own experience with the Resource Curse. But before we can prescribe the symptoms, and the subsequent remedies, we must first examine Liberia’s unique history.

Liberia gained its independence in 1847, making it the first and oldest independent African nation. The nation’s founding fathers and first set of leaders unfortunately failed to set a clear vision of inclusive political and economic governance within the new Liberian State, leading to a path of social, political and economic division, where the indigenous population were marginalized for almost a century.

But as history has shown us repeatedly – especially most recently in the Middle East – marginalized societies tend to fight back against the system suppressing them. At the same time, the elite or privileged class are likely to do all they can to maintain the status quo because of the enormous benefits they, and their families and cronies, enjoy. The Liberian State, accordingly, was no exception. As more and more indigenous Liberians and their sympathizers gained enlightenment many years following independence, they revolted against the elite, leading to the 1979 Rice Riot, the 1980 Military Coup d’ tat and the 1989 civil war, which lasted for 14 years, claiming many lives and displacing others both internally and externally in the process.

The administration of Liberia’s 18th President William V.S. Tubman, which lasted for 27 years (1944-1971), though was, at least, delivering impressive economic growth amid the turmoil. During the 1960s and the first half of the 1970s, the important iron ore sector attracted substantial foreign investment; and by 1975, Liberia had become the world’s fifth largest exporter of iron ore. From 1946 to 1960, the Tubman Administration also attracted over US$500 million in foreign investment; while exports rose from US$15.8 million in 1948 to US$82.6 million in 1960, an increase of 422.8 percent. Government revenue during this period also rose from US$32.4 million in 1960 to US$69.9 million in 1971, an increase of 115.7 percent (Tellewoyan, 2006).

This immense economic growth, which was rivaled only by Japan at the time, was considered by some as no less than a miracle. Yet as Clower et. al. (1966) would recognize, this had been “growth without development”. Sadly, the remarkable miraculous economic growth that took place in Liberia was not translated into inclusive economic development, which set the agenda for future political and social instability (and the subsequent 14-year civil war from 1989 to 2003). As successive leaders and governments went on without correcting the wrongs of the past, Liberia went from a period of prosperity to becoming one of the most underdeveloped and poorest nations in the world today.

Related: Liberia Economy

Related: Liberia Economic Statistics and Indicators

Liberia’s Experience With The Resource Curse

The reverse in the nation’s fortunes can be further analysed by applying Professor Stiglitz’s framework for the Resource Curse. The mere fact that Liberia’s remarkable economic growth experienced in the 1960s and early half of the 1970s was not translated into inclusive development for the population would suggest that the economy had been grossly mismanaged, but Stiglitz’s framework also allows us to break down the curse’s effects into specific symptoms; and examine the various degrees to which each symptom has resulted in the nation’s poor economic performance.

1. Corruption & Rent-Seeking By Officials

Firstly, Liberia has had a long history of public officials diverting public funds into personal use. Moreover, these officials, aided and abetted by unscrupulous investors and businessmen, engaged in rent-seeking behaviour to deny the nation and its citizens the most needed basic social services and infrastructure. These social ills have become systemic and institutionalized in most public and private mindsets as means of acquiring easy wealth. In large part as such, corruption and rent-seeking behaviour has been the major contributing factor of why Liberia has failed to escape the resource curse phenomenon since 1847.

The problem is further compounded by a misconception in the country that corruption, in the past, has had positive effects on the nation and its people. Liberians must realise that corruption has caused uncertainty in the economy, prevented foreign and domestic investments, and undermined the nation’s legitimacy. But to de-institutionalize corruption and rent-seeking as a way of life – and means of acquiring wealth – will definitely need strong political will and commitment and strong leadership under a robust governance system, in which merit and hard work are heavily rewarded over patronage, nepotism, opportunism, and vested interests.

2. Volatility In World Prices

The historical facts outlined earlier tell us that Liberia DID earn enough revenue from the sales of its natural resources in the 1960s and early half of the 1970s – especially with the advent of the Open Door Policy ushered in by President Tubman. However, the revenues earned during those years were not translated into transformational development to improve the lives of Liberians. Instead, Liberia slipped into over a quarter century of political instability and eventually the 14 years civil conflict, the aftermaths of poor governance and gross economic mismanagement of the economy.

Therefore, the decline in the prices of and demand for natural resources in the 1980s cannot be considered as prime reason why Liberia failed to escape the resource curse. This does not in any way suggest that there was no adverse impacts on the Liberian economy when global prices and demand for these resources declined, as there was serious decline in government revenue and massive unemployment in these sectors when there was a virtual halt in production. The point here is even if the prices and demand of these products had not declined at the time, the evidence shows that the Liberian economy and its people would have still not benefited, due mainly to the reasons cited above.

3. The Dutch Disease

Even today, Liberia’s economy still remains highly dependent on imported manufactured products, agricultural commodities, and earnings from exported primary products. Over the years, concentration on the iron ore and natural rubber sectors – exported as primary products – left other important sectors, such as the manufacturing and agriculture sectors, severely underdeveloped. Successive governments also failed to diversify the economy by investing more in the manufacturing sector (import-substituting industries) and mechanized farming for creating jobs and ensuring food security. Furthermore, they failed to invest in a knowledge-based economy to ensure sustainable economic growth and development. The conclusion one can therefore draw from this analysis is that Liberia did suffer the Dutch Disease, as other sectors of the economy were suppressed and neglected from growing and developing to create jobs and alleviate poverty within the nation.

Liberia’s perennial problem is that there has never been the political will and commitment to diversify and industrialize the economy, thus justifying why the nation failed to escape the resource curse unlike Malaysia and Singapore and other successful East Asian nations which today have diversified economies and major industries like electrical and electronics, chemicals, financial services, aircraft, etc.

Past governments were always complacent and highly dependent on the earnings from primary products, while at the same time diverting said earnings into personal use at the expense of the nation and the majority of its population. This should serve as a lesson for the country’s present and future political leaderships if Liberia is to achieve any transformational development in the years ahead.

Related: Are Bad Habits Stifling Africa’s Economic Potential?

Related: Resource Companies Step Up Opposition Against Anti-Corruption Rules

Breaking The Resource Curse In Liberia

For Liberia to break the spell of the resource curse, the following measures, which are not exhaustive, are being advanced. These measures, we presume, are likely to have significant positive impact on the Liberian State if prioritized and mainstreamed into policy decision making.

First and foremost, the culture of wealth grabs and rent seeking must be discouraged in the Liberian society at all levels, since these are potential indicators for conflict and high determinants of poverty. To make this a reality, wealth grabbers and rent seekers must not be allowed to go with impunity to enjoy their loots. They must be brought to book and held accountable for their actions under a transparent and accountable governance system. This means the judicial system and rule of law enforcement mechanisms through statutory institutions established to fight against corruption and rent-seeking (like the Anti-Corruption Commission, General Auditing Commission, etc.) must be strengthened. As part of the reform initiative to eradicate corruption and rent-seeking, the commercial court established most recently in the nation should be strengthened as well to expeditiously adjudicate matters on all commercial transactions. Along this path, investors must be compelled to follow all investment terms enshrined in all signed agreements, including payment of taxes and royalties and corporate social responsibilities to beneficiary communities and residents.

Furthermore, the code of conduct submitted to the Legislature by the Executive must be passed into law, to ensure certain standards for all public and private officials. In addition, a performance management system must be introduced in the public sector with well defined job descriptions for all public servants who must be assessed on a yearly basis against their performance and results achieved. Moreover, the acts of opportunism, nepotism, patronage, and vested interests must be discouraged and detested at all levels of governance, while at the same time institutionalizing a robust merit-based system of recruitment in the public sector.

Secondly, it is a known fact that high dependence on earnings from primary products is not sustainable. Sustainability is only ensured if the economy is diversified and investment is made in other sectors such as the agricultural sector (where modern methods of farming will ensure food security) and the manufacturing sector, with a focus on imports-substituting industries. In addition, efforts must be made to create a value chain with primary products, where more benefits to the nation and its people will be maximized. This would entail moving away from exporting products in their primary forms in favour of secondary/tertiary products. As a way of buttressing these efforts, government should endeavour to invest substantially in a knowledge-based economy, tapping from the nation’s best talents to ensure and guarantee sustainable development in Liberia.

Last but not least, efforts should be made to put in place systems and institutions to facilitate migration from obsolete ways of doing business in the public sector. This will largely minimize and/or eradicate malpractices in the public sector. However, this will highly depend on strong political will, commitment and robust leadership at the highest political level. In addition, in order to break the spell of the resource curse on Liberia should also include the right combination of committed politicians and bureaucrats (saints); appropriate policy analysts with available and reliable information (wizards); management of hostile and apathetic groups (demons); and insulation of the policy environment from the vagaries of implementation (systems), says Ayee (2000). This definitely suggests a good governance approach as the prerequisite for Liberia to escape the spell of the resource curse phenomenon.

Related: Africa Rising: Can “The Dark Continent” Outshine Its Former Colonial Masters?

Related: Will Africa’s Wet Dreams Turn Into A Nightmare?

The main theme of this article has been to highlight the experience of Liberia relative to the spell of the resource curse phenomenon, using the three reasons advanced by Prof. Stigliz on why some countries that are heavily endowed with natural resources have managed to escape the resource curse while others were unable to do so. The conclusion drawn from our analysis is that Liberia did not escape the resource curse due to its perennial problems of lack of political will and commitment, corruption and rent-seeking in the public and private sectors, poor governance system, and gross economic mismanagement. As remedies for breaking the resource curse on Liberia, it has been argued that a different approach to governance must be adopted including putting in place high ethical standards for public and private officials, diversification of the economy and investing highly in a knowledge-based economy, and building systems and institutions with the primary aim of enhancing service delivery in the public sector, while at the time eradicating malpractices.

Furthermore, the culture of people getting rich without working hard, while hard workers are frustrated and do not rise out of poverty must be discouraged at all levels. With strong political will and commitment, hard work, and with the proper systems and institutions, Liberia will be able to rise up to the challenge of meeting head on the fight against corruption and rent-seeking to break away from the resource curse phenomenon.

By Wilmot A. Reeves

Wilmot A. Reeves is a development practitioner working on macroeconomic issues linked to pro-poor policy analysis and the Millennium Development Goals (MDGs). He also works on capacity development, human development, project management, and gender issues. Presently, he serves as Economics Advisor with the United Nation Development Programme (UNDP) Eritrea County Office. The views expressed in this paper do not in any way reflect that of UNDP.

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Article References:

Auty, R. M. (2001a). “The Political Economy of Resource-Driven Growth.” European Economic Review 45(4-6): 839-846.

Ayee, J. R. A (2000). Saints, Wizards, Demons and Systems: Explaining The Success Or Failure of Public Policies and Programmes.

Clower, R. W., Dalton, G., Hartwitz, M., Evanston, A. A. W. (1966). Growth without Development: An Economic Survey of Liberia. Northwestern University Press.Gylfason, T. (2001a). “Natural Resources, Education, and Economic Development.” European Economic Review 45: 847-859.

Sachs, J. D. and A. M. Warner. (2001). “The Curse of Natural Resources.” European Economic Review 45: 827-838.

Stevens, P. (2003). “Resource Impact: Curse or Blessing? A Literature Survey.” Journal of Energy Literature 9(1): 3-42.

Stigliz, J. (2004). “Botswana Has Escaped the Resource Curse Phenomenon”. Sunday Standard, Gaborone, Botswana.

Tellewoyan, J. (2006): The Years The Locusts Have Eaten: Liberia 1816-2004. Xlibris Corporation.

Torvik, R. (2002). “Natural Resources, Rent Seeking, and Welfare.” Journal of Development Economics 67: 455-470.

Alarm over lack of evacuation plans for schools near Kinder Morgan pipeline

November 22, 20012

BROKE raises alarm over lack of evacuation plans for schools near Kinder Morgan pipeline

BURNABY, BC. – Burnaby Residents Opposed to Kinder Morgan Expansion (BROKE) are raising the alarm regarding emergency earthquake planning for schools near Kinder Morgan’s existing pipeline.

“It’s ironic that Kinder Morgan is holding their information session at Stoney Creek Community School this Saturday given the risk their pipeline poses to that school in the event of an earthquake,” said Elsie Dean of BROKE.

“B.C. schools have good seismic emergency plans but schools close to oil pipelines or oil tank farms have no such plans for emergencies or leaks,” said Dean. “We remember the major oil spill in Burnaby in 2007 where residents had to be evacuated and the gas line rupture in 2008 above Seaforth Elementary School where residents also had to be evacuated. But our schools which are close to heavy oil pipelines, storage tanks and refineries have no evacuation or emergency preparedness plan or even long term monitoring for pipeline corrosion and leaks. We are very concerned about the serious and long term health impacts for students and teachers.”

“Having no specific evacuation plan for an oil pipeline spill puts students and faculty at risk of exposure to a cocktail of dangerous chemicals like benzene and other polycyclic aromatic hydrocarbons,” said Dean. “This ticking time bomb is meters from the school where Kinder Morgan is hosting its information session, and chances are that the pipeline could not withstand even a moderate earthquake.”

“Teachers in Burnaby, to the best of my knowledge, have not received any health and safety training or specific evacuation training to respond to any oil spills or exposure to these highly toxic chemicals,” said Burnaby Teacher’s Association President James Sanyshyn. “The BTA will be raising this issue with our senior administration and trustees and pushing for detailed response plans at all effected schools. Ignorance is no defence – schools must be prepared for the worst case scenarios.”

“In addition to earthquakes, excavator accidents, and other causes of pipeline rupture, we should be concerned about the air and water pollution caused by the normal loading of diluted bitumen into tankers, and normal spillage,” said Karl Perrin of BROKE. “As barrels per day increases, we might expect ‘normal’ spillage to increase.”

Benzene is a known carcinogen according to the US Dept. of Health and Human Services, the International Agency for Research on Cancer, the National Toxicology Program, and the Environment Protection Agency.

High prenatal exposure to PAH is associated with lower IQ and childhood asthma.[13] The Center for Children’s Environmental Health reports studies that demonstrate that exposure to PAH pollution during pregnancy is related to adverse birth outcomes including low birth weight, premature delivery, and heart malformations. Cord blood of exposed babies shows DNA damage that has been linked to cancer. Follow-up studies show a higher level of developmental delays at age three, lower scores on IQ tests and increased behavioural problems at ages six and eight.

“While health impacts of small PAH amounts on specific individuals are difficult to substantiate, the depressing impact on property values of industrial fumes and noise is beyond dispute,” said Perrin.

Kinder Morgan’s “information” sessions have already been criticized by a host of community organizations for offering nothing substantive regarding their plans to double capacity to transport dirty oil from the tar sands, meaning they are nothing more than an exercise in corporate propaganda.

Kinder Morgan is a US based company formed after the bankruptcy and break-up of Enron.

– 30 –

Representatives of BROKE will be present for the Kinder Morgan information session to monitor the session and engage the public.

Media contacts:
Karl Perrin 604.872.7326, 778.887.7395
Elsie Dean 604.294.5834
BROKE e-mail:
Twitter @NoPipelines




Sen. McCain calls for public hearings on CNOOC bid

Amy Minsky, Global News/The West Block : Sunday, November 18, 2012 11:00 AM

HALIFAX — U.S. Senator John McCain is calling for Parliament to hold open discussions on a Chinese company’s $15-billion bid to take over Nexen, an Alberta oil firm.

So far, all discussions have taken place away of the public eye, and the Conservative government has already twice delayed its decision as it continues weighing whether the transaction will have a “net benefit” for Canada.

McCain made the comment during an interview on the Global News program The West Block with Tom Clark, when asked for his view on the possibility of state-owned Chinese National Offshore Oil Company having a stake in Alberta’s oil sands.

“I think that’s a judgment that the Canadian government has to make,” he said from the Halifax International Security Forum. “I think it’s also a role for the legislative body to hold hearings, to get witnesses and say, ‘OK what is this all about?’”

Two benefits that come with public hearings are media coverage and public education — but when cabinet makes the decision behind closed doors, that exposure is lost, he said.

“I’m very hesitant, given the gridlock that prevails in the United States, to give any advice,” McCain said. “But one thing that I think might be helpful to me, even, would be some hearings in Parliament as to exactly what this means and exactly the impact it would have.”

Swirling around the bid proposal are many questions regarding potential risks Canada might open itself to if the deal is approved.

Those concerns are based on several factors including the fact that the state controls China’s economy and the currency is set artificially, as well as a CSIS report from earlier this year that found that state-owned enterprises buying large portions of the Canadian economy can pose a threat to national security.

If the CNOOC Ltd. takeover is approved, however, it would bring billions of dollars into Canada.

But there has been some push-back from the United States.

At issue are Calgary-based Nexen’s five royalty-free holdings in the Gulf of Mexico. The stakes were acquired between 1995 and 2000 — when oil prices were low — in exchange for deep-water drilling.

Earlier this year, Democratic House of Representatives member Edward Markey issued a letter to the treasury secretary urging him to block the transfer of Nexen’s five leases to CNOOC.

A handful of Republican senators have also come out against the takeover, citing security concerns, as has former U.S. governor Howard Dean.

Last month, former U.S. ambassador to Canada Gordon Giffin said he thought it unlikely the U.S. government would approve the transfer of royalty-free leases to another government.

McCain’s advice for open hearings, however, comes as a bit of a surprise to Alberta premier Alison Redford.

“I find that a very interesting comment, to have a legislator from one jurisdiction telling another jurisdiction how do their work when, quite frankly, that’s not the approach they take in their own jurisdiction,” she said while appearing on The West Block.

“But what I would say is that Canadians have always had an awful lot of confidence with respect to the process that we have in place,” she said.

Redford said she is hopeful and optimistic that the deal will go through, because “I think it is the right thing for Canada.”

If it is approved, details on the transaction will become publicly available, she said.

“So I have no doubt that … everyone’s going to be able to be satisfied,” she said.

McCain, of course, accepts that the decision lies with the Canadian government, but is nonetheless urging Prime Minister Stephen Harper and Industry Minister Christian Paradis to consider the substantial impact CNOOC could have on Canada’s economy.

“The Canadian economy is good. It is much better than the United States, and yet it is a much smaller economy,” he said. “So I think the government has to take into consideration how big an impact and how big a role this company would play in the Canadian economy. I think that’s a judgment that only elected leaders can make.”

In September, shareholders at Nexen voted in favour of the takeover, but the ultimate decision on whether to approve or deny the deal sits with the federal government.

Follow The West Block on Twitter.

© Global News. A division of Shaw Media Inc., 2012.

Kinder Morgan to Pay $7.5 Million In Wrongful Death Case

A Clark County Nevada District Court jury has awarded the family of Nevada truck driver, Rick Lewis, $7.5 million in a case where the Lewis family accused Kinder Morgan Energy Partners L.P. of failing to monitor its operations for benzene exposure during routine operations, disregarding normal safety and industrial hygiene practices, and failing to warn its employees and contractors about the hazards associated with benzene exposure.

The lawsuit said that Lewis was exposed to benzene while working as a gasoline tanker-truck driver at a Kinder Morgan bulk loading facility, where he loaded gas on a daily bases and delivered it to various retail outlets. This exposure lead Lewis to develop Myelodysplastic Syndrome, a disease of the bone marrow which causes the abnormal production of blood cells and platelets. It is generally incurable and requires chemotherapy, transfusions, and bone marrow transplants. Benzene is a known carcinogen which can cause various forms blood and bone marrow diseases and leukemia. Mr. Lewis was diagnosed with MDS in March 2008 and died in May 2009 at the age of 58.

The lead attorney for the Lewis family said “The jury’s verdict confirms that Kinder Morgan acted in a negligent manner in distributing benzene-containing gasoline without ever warning of the dangers associated with benzene exposure. The verdict underscores that corporations have a duty to workers to protect them from hazards associated with their facilities and products. Although we cannot bring Mr. Lewis back, we hope that this verdict will send a message that these inactions will not be tolerated.” disclaimer: This article: Kinder Morgan to Pay $7.5 Million In Wrongful Death Case was posted on Wednesday, October 19th, 2011 at 7:02 pm at and is filed under Toxic Substances Lawsuits.