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Credibility and Choice Are Our Most Valuable Assets

Assets and liabilities are what we talk about when we talk about oil and gas as a business. Assets are the tangible things we own. They have value. Liabilities are the debts we owe. They have negative value, you might say. Tori covered this ground beautifully in her post on assets and liabilities. These concepts are key when we discuss Alberta’s fossil fuel industry.

Today I’d like to focus on our personal assets and liabilities. Unlike houses, money, or oil and gas facilities, our personal assets and liabilities are intangible. You can’t point to them or touch them. But they are just as real as tangible assets. They play an important role in daily life. Because we are social creatures, we use our personal assets in the pursuit of our goals.

One of our most important personal assets is our credibility. We acquire this asset by being serious and believable, by speaking in good faith and keeping our word. How important is credibility? Try to imagine living without it. Or consider how you act when you encounter a person lacking in credibility. Work, relationships, high social standing — these things are impossible without credibility. Squander it, and you will damage them.

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Science, Observation, and Credibility

Over a century ago, the Swedish scientist Svante Arrhenius theorized that rising levels of atmospheric carbon dioxide would create a greenhouse effect, which would gradually increase the earth’s surface temperature. Arrhenius followed established scientific methods in developing his hypothesis. He set out to explain an observable phenomenon — the temperature variation between the glacial and interglacial periods. He used infrared observations of the moon to calculate the amount of radiation captured by the water vapour and carbon dioxide in the earth’s atmosphere, which had increased during the Industrial Age. Then he calculated the result we could expect if carbon dioxide levels continued to increase.

Arrhenius performed his work with objectivity and precision. He was a rigorous scientist whose ground-breaking work in chemistry earned him the Nobel Prize — and credibility with his peers. Subsequent researchers confirmed and refined his original theory. They built mathematical models to describe the effect of carbon dioxide and substantiated their models with measurements. Others measured the amounts of carbon dioxide and equivalent gases coming from specific sources. Thousands of scientists, across decades of research spanning all areas of the globe, have shown conclusively the effects of carbon dioxide concentration in our atmosphere. It is no longer possible to deny that fossil fuel combustion is warming the earth. Do so, and you sacrifice your credibility. And we know where that leads.

Credibility and Our Energy Future

Other scientists, researchers, and entrepreneurs are working just as hard on ways to thrive without increasing CO2 levels. Renewable technologies are already capturing large parts of the energy market, and the pace of change is accelerating. Solar panels, wind turbines, and energy efficiency will make fossil fuels obsolete. It doesn’t matter how we feel about energy. If events continue to unfold as expected, shifting markets will crush demand for our fuels.

When I say “as expected,” I’m referring to the expectations of economists and analysts at the International Energy Agency, Equinor, bp, Bloomberg New Energy Finance, Rystad Energy, the International Institute for Sustainable Development (PDF), and the Pembina Institute

These analysts are united in the view that fossil fuel demand will begin to decline sharply in this decade, and that it will not recover. These people are highly qualified. They examine the data. They’re not infallible, but we have to take them seriously. Otherwise, we lose credibility.

Of course, we all know people who  assert that fossil fuel use will continue to grow for decades. Healthy debate is important, so I ask them to back up their pronouncements with facts and data, to the same rigorous standards as the climate experts. Otherwise, we’re under no obligation to take them seriously.

Choice

I’ve also been thinking lately about another valuable personal asset — choice. This one is also a societal asset. Both individually and collectively, we have the ability to make decisions, based on relevant facts and our own best interests. With the coming decline of our fossil fuel industry, we’re going to face some important ones.

The value of choice ought to be immediately apparent to Albertans and Canadians because we live in a democracy, which is founded on this asset. We alone choose our friends, homes, occupations, and leaders. No one makes these decisions for us. True, there are times when the collective will may run counter to our own wishes. But we still have the ability to make choices and to influence the course of our society.

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There are some who believe we have no choice about fossil fuel production. They claim that all the consequential decisions are made in Washington, Moscow, Riyadh, and Beijing and that decisions made in Calgary or Edmonton have no significance. They are referring to the theory which holds that if one supplier of fossil fuels reduces its supply, another supplier will simply make up the difference.

Leakage exists, of course, but it doesn’t take place automatically or instantaneously, as I’ve recently learned. The refineries that process our crude are optimized for it, and they can’t process other varieties without expensive retooling. That won’t happen instantaneously, and in an era of declining demand, it may not happen at all. The owners of those assets will make appropriate decisions, based on the conditions they encounter and their own best interests. We should do the same.

There is no law that decrees Alberta must maximize its production of fossil fuels, regardless of circumstances. There is no law that decrees we must pollute our own air, land, and water. There is no law that decrees we must generate massive amounts of carbon dioxide, a substance that is wreaking havoc across Canada and Alberta itself. To the extent that we do these things, we do them by choice. No one is forcing us to do so.

In the near future, our fossil fuel industry will decline, and we’ll have to replace the jobs, GDP and revenue it once produced. We’ll have to make decisions about the abandoned wells, tailings ponds, and other liabilities the industry is likely to leave behind. 

When the decline comes, the value of our credibility and ability to choose will be more apparent than ever. The partners we seek will expect these things of us. Ironically enough, it is credibility and choice that built Alberta’s energy industry in the first place. They are our most valuable assets, and we should use them well.

What do you think? Is Alberta’s credibility on the line when we talk about energy? How much choice do we have about energy production?

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