Time to envision a provincial economy beyond oil and gas, say critics

It may be a little late to put the genie back in the bottle — or the oil back in the ground — but Newfoundland and Labrador needs to start taking a serious look at renewable energy resources to broaden its economic horizons, says one of the co-chairs of the advocacy group Decarbonize NL.

If the province developed all its known oil resources right now, Delia Warren said, there would be no way to meet its targets for limiting the impacts of climate change.

And in an economy built on as instable a structure as the oil resource, the province needs to rethink its development projects, Warren said.

"It's a fact that Newfoundland and Labrador relies very heavily on oil and gas to run our social services, health care, education, all of that, so it's basically a necessity for us and we don't really have any other option at the moment," Warren said.

"But we need to be smart about the future and decreasing our reliance on oil and gas, especially given the challenges we've had in the industry recently."

Warren, a former oil and gas engineer, points to the latest spills at Hibernia - two back to back this summer — and the province's largest-ever oil spill at the SeaRose platform late last year as examples of the environmental risks associated with oil and gas development.

Those concerns, paired with a market that doesn't guarantee the price of oil, as well as an overall market shift toward renewable energy resources, should push the province to make changes, she said.

"I really like the term 'managed decline', and I absolutely believe that is a necessity, not just for environmental reasons and because of climate change and the impacts that will have globally and locally, but because it's just the smart thing to do," Warren told CBC's St. John's Morning Show.

Diversifying the economy is on the government's agenda, she acknowledges, "but I haven't seen enough of a focus on how to use the resources we do have, specifically wind energy resources, to drive that change and drive that transition."

It's a concern echoed by Warren's fellow Decarbonize NL chair, Nick Mercer.

"The province's economic development strategy, The Way Forward, just simply isn't compatible with climate science," Mercer said.

Volatile resource, essential revenue

Mercer also acknowledged the revenue from oil sales are essential to the N.L. economy at the moment.

"I'm not anti-offshore development. Offshore development of course provides a tremendous degree of benefit for the province. In recent years, offshore oil has supplied us with as much as 30 per cent of royalties for provincial coffers," he said.

"That's really important revenue that's used to support social programs and spending. However, what I see as a problem is such a major degree of dependence on a single volatile commodity."

The question Mercer raised is whether the good outweighs the bad.

"Oil creates a great deal of revenue for the province, but it also causes a lot of environmental damage," he told CBC's Here & Now.

Mercer said the oil spills in the last year have heightened his frustrations, adding the oil going into the Atlantic Ocean has a devastating impact on the environment, avian and marine wildlife, the fishery, not to mention seismic testing and its possible impact on phytoplankton.

"Nothing seems to be changing and where my frustration comes from is that the province has incredible alternatives that simply aren't being pursued," Mercer said, adding that there are federal targets met for reducing carbon emissions that Newfoundland and Labrador, at this rate, can't meet.

"Meanwhile, the province's policy goal is to double our oil production and not give any serious attention to serious sustainable energy alternatives, while incidents like this [oil spill] continue to increase in frequency."

'Tremendous resource' for renewables

Both Warren and Mercer point to the potential for wind energy development in Newfoundland and Labrador, adding it was a topic of heated discussion at this year's inaugural Decarbonize NL conference, which visited the Fermeuse wind energy project.

"A wind turbine built in Newfoundland and Labrador would generate more energy than the exact same wind turbine built anywhere else in North America because our wind resource is so strong," Warren said.

Mercer added Newfoundland and Labrador has some of "the strongest potential" for renewable energy development of any North American jurisdiction.

While Muskrat Falls has tied the province's hands largely to hydroelectric power when it comes to energy production, one of the bright spots of the project is the construction of the Maritime Link, which provides the province with a connection to the rest of North America's power grid.

The Maritime Link could finally provide Newfoundland and Labrador with the capacity to sell its excess supply of power, if Muskrat Falls and wind energy produce more than the province requires, to other jurisdictions that need it.

"Despite this enormous potential, the province currently ranks dead last among Canada's provinces in installed wind energy capacity," Mercer said.

"Considering this tremendous potential for small scale renewable energy development in Newfoundland and Labrador, why does the province remain so dependent on both the production and consumption of fossil fuels?"

Current federal regulations limit the scope and capacity for offshore wind energy development, Warren said, not to mention at the moment, those kinds of projects come with a higher price tag.

But oil companies themselves are looking at developing renewable resources, she added, and Ottawa is moving toward changes to allow development.

"These companies know what's happening, they do see the shift in the dynamics in the industry, and I think that it is possible to have both right now in Newfoundland and Labrador," she said.

Whether it's because of climate change policy or supply issues, oil and gas is "not going to be around forever and we need to start planning for that," she said.

Proactive, not reactive

While oil and gas development continues to be an essential pillar, however unsteady, in the province's revenue, opposition politicians said the latest Hibernia oil spill points to a gap in the systems in place.

NDP Leader Alison Coffin said she was shocked and disappointed to hear about the most recent oil spill, adding that the province continues to push forward with plans to double oil production in the next decade.

Coffin said her party will continue to push for an independent safety regulator to monitor the offshore.

"We're hearing again and again that we don't need an independent safety and environment officer and we don't need an independent agency, but again and again we're hearing these spills are happening, and nothing is being done about it.," Coffin said.

"I don't think we can continue to develop our offshore without having that safety and environment agency in place."

David Brazil, the Tory's natural resources critic, said while the Progressive Conservatives aren't totally in line with the NDP on the issue, adding they "have faith in the C-NLOPB," he feels there still needs to be a "more rigid approach."

"You need to do very rigorous investigations to find out why these things happen, and then put in protocols to ensure they don't happen," Brazil said.

"Start being more proactive than reactive here."

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