So far Canada has largely avoided the energy crisis now wracking Europe. Which isn’t very much to our credit; as a massive producer of fossil fuels and hydroelectric power, with a significant nuclear industry, it would take a lot to shatter this vital sector of our economy. For that matter, it took decades of smug obtuseness for advanced nations like Germany to do it. But now we’re catching up. Thus instead of allowing the market to increase supply and reduce cost in response to price signals, the federal government has decided to spend $250 million buying votes by subsidizing home heating especially in Atlantic Canada to offset the political impact of their anti-warmth-and-light policies. As Lorrie Goldstein notes tartly, “Not hard to understand why. The Clean Fuel Standard – a second carbon tax – is going to hit Atlantic Canada especially hard which the Liberals know because their own government’s impact assessment said it will.” Unfortunately their understanding of economics is such that they think the less we produce, the more we get.
Consider that the whole point here according to Environment and Climate Change Canada is “to deliver practical solutions to home heating affordability, especially for Atlantic Canadians, while continuing to fight climate change.” But the only practical solution to home heating affordability is to increase the supply of fuel, and if they object that that doesn’t help with the fight against climate change, well, neither does subsidizing the stuff because then people can afford to keep using it whereas the whole point of carbon taxes and so on was to price it out of reach.
The minister in charge, Steven Guilbeault, seems to be making a bit of a career of cluelessless lately. He recently said “Frankly, I don’t know what it means to be woke” which invited critics to shoot fish in a barrel while also illustrating that fish don’t know they’re in water. But it is amazing the persistent way he, his boss Justin Trudeau, and the whole federal Liberal administration have been determined all along to raise the price of hydrocarbons then give us whatever money we need to afford them anyway.
We should also note that it’s in keeping with their apparent belief that all good things come from government and that its supply of them is unlimited. The Prime Minister recently put out a press release “Making life more affordable for Canadians this year” that started the usual oily blame-dodging way:
“Canadians are feeling the rising cost of living, particularly through higher food prices and rent. While inflation is a global challenge – caused by the COVID-19 pandemic and Russia’s illegal and unjustifiable invasion of Ukraine – we are helping families weather its impacts by working to put more money back in the pockets of the middle class and those working hard to join it this year.”
Then it listed a series of further massive interventions in the economy including hiking the Goods and Services Tax Credit and handing out dental care benefits and subsidies for homebuyers. The plan doesn’t include cutting one single spending program, overt or disguised as a tax rebate. It literally never occurs to them that if you’re in a hole the first thing might be to stop digging. Including on energy.
To be fair, the press release after the usual obsequious start (“Every Canadian deserves to be able to heat their home with affordable, reliable, and clean power”) says this quarter-billion bucks under the Low Carbon Economy Fund will also buy unicorns and treadmills for them. But in doing so it boots the economics just as hard:
“With a focus on lower-income households, this funding will help homeowners who currently use home heating oil move to more affordable and greener home heating sources, like electric heat pumps. At current energy rates, switching from heating oil to a heat pump has the potential to save homeowners thousands of dollars per year in heating bills.”
Arrant rubbish. If switching to a heat pump would save you thousands a year, and you were poor, you would run not walk to the heat pump store without waiting for a subsidy. But it gets worse, because the next question anyone with a grasp of real-world trade-offs would ask is: What’s going to power all these heat pumps? Where is the huge extra amount of energy going to come from?
Glad you asked. In Nova Scotia, for instance, which piously does not produce hydrocarbon fuel, the “primary source of electricity generation is coal, accounting for 51% of the province’s total generation in 2019.” Blast. (As in furnace.) New Brunswick does better from the Guilbeault point of view: “In 2019, approximately 38% of New Brunswick’s electricity generation was from nuclear, 30% was from fossil fuels (natural gas, coal, and petroleum), and 22% was from hydroelectricity.” But it’s not easy to find promising new hydroelectric sites, and nuclear is in bad odour with most greens. So more fossil fuels? Or import it and pretend it’s from the clear blue sky not someone else’s power plant?
Despite being a major oil and natural gas producer, Newfoundland and Labrador gets 96% of its electricity from hydro, including the Churchill Falls installation with its disastrous locked-in contract to sell cheap power to Quebec. So it’s all clear sailing there, or would be if the province weren’t still struggling to complete the way-over-budget Muskrat Falls project and considering another at Gull Island. Except for the bit where you need massively to expand the grid, and just wait for the added strain of all those electric vehicles they’re going to force us to drive within a decade.
The smallest Atlantic province, Prince Edward Island, piously generates almost all its electricity from wind farms… except the massive amounts imported from coal-based New Brunswick. And at just 5,660 square kilometers, it doesn’t have a lot of space for more turbines to whirl, or to bury their clapped-out blades.
No matter. As long as we keep giving away money we’ll all get rich and have better weather.