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How a Bernie Sanders administration could dismantle Canada’s fossil fuel economy

Canada’s extractive economy is highly dependent on oil exports to the US. A Sanders Green New Deal could finally force the Trudeau government to clean up its act.

Shreya Kalra
16 March 2020
Activists preventing a ship from docking that is carrying supplies for the Trans Mountain Pipeline Expansion Project, Port of Vancouver, Washington, November 5 2019
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Alex Milan Tracy/SIPA USA/PA Images

With the US Democratic primary narrowed to two main contenders – Bernie Sanders and Joe Biden – it is important to consider the economic implications that a Sanders administration could have on its northern neighbor.

A large segment of Canada’s economy is dependent on its oil exports to the US. Sanders has promised to take sweeping climate action, putting a Green New Deal at the heart of his agenda. This would potentially devastate the oil and gas sector in Canada.

Canada is the world’s fourth largest producer of oil. The provinces of Alberta and Saskatchewan in particular have reaped the financial rewards of this extractive and once booming industry. However, with the immediate need to lower carbon emissions, the oil and gas sector in Canada faces inevitable eviction.

Julia Levin, the Climate and Energy Program Manager at Environmental Defence Canada, says that the powerful oil and gas lobbyists have sold Canada the narrative of how dependent the nation is on oil. But oil extraction only contributes to about 5% of the country’s GDP, and along with mining and quarrying, it contributes to approximately 11% of GDP.

While oil exports account for a relatively small portion of Canada’s GDP, this dependence has created volatility for the overall economy. Daniel Stephen Horen Greenford, a PhD student in Ecological Economics and Climate Policy at Concordia University, warns that “by hooking our economy to oil, we’re making our entire economy volatile - oil dictates our dollar and that affects all other sectors, including our purchasing power.”

On February 19, when the Canadian dollar strengthened against the US dollar, Simon Harvey, FX market analyst for Monex Europe and Monex Canada, explained that gains for the Canadian dollar “can be broadly linked to the railly in oil markets.”

The majority of Canada’s oil exports go to the US. According to Natural Resources Canada, in 2018, 96% of Canada’s oil exports went to the US.

Sanders aims to transition the US’ entire energy system away from fossil fuels. His official campaign website states: “We must pass a Green New Deal to achieve 100% sustainable energy for electricity and transportation by no later than 2030 and to fully decarbonize the economy by 2050 at the latest.”

If implemented, a Bernie Sanders Green New Deal would decimate the oil and gas sector in Canada. But this withdrawal from fossil fuels is imminent regardless of whether Sanders wins or not.

“It is highly probable that in the near future our oil and gas industry will collapse, massive layoffs will happen, companies will go bankrupt, there will be tremendous social, economic and political chaos and impact to deal with,” says Greenford. “The government needs to have a mature and transparent conversation to deal with the climate impacts on Canadian people.”

The sun is setting on the fossil fuel industry, and it is up to Prime Minister Justin Trudeau whether he wants to continue his government’s false narrative that we can have both a bustling extractive economy and a sustainable environment.

Canada is the second fastest warming country on the planet, with the northern part of the country most at risk. The government has made lofty promises to decrease its carbon emissions through a number of agreements and pledges. In 2015 as part of the Paris agreement, Canada committed to reducing its emissions by 30% by 2030; and in 2018, Canada joined the Carbon Neutrality Coalition with the intention of becoming carbon neutral by 2050. But Canada is far from reaching these goals. In fact, according to Pembina Institute’s latest report, its carbon emissions from the oil and gas sector increased 23% between 2005 and 2017. Emissions from oilsands alone are projected to continue growing at a similar rate until 2030.

However, the road to sustainability will be dirty and costly if we don’t collaborate and hold one another accountable. Canada and the US recently missed an opportunity for one such collaboration. The US Mexico Canada Agreement, a renewed version of the NAFTA trade agreement signed in December 2019 failed to even mention the climate crisis.

Canada continues to expand its oil and gas sector. Just several months ago, the Trans Mountain pipeline extension was approved by the courts, despite intense backlash from the indigenous community.

Meanwhile, thousands of young people continue to protest across the country to ensure that the government doesn’t get away with backroom deals that obstruct a just transition for all Canadians towards a more sustainable future. The movement has had recent successes – pressuring the Trudeau government to cancel the $20 billion Frontier oil sands mine that would have emitted about four million tonnes of GHG emissions per year. A Sanders administration in the US could finally pressure the Canadian government to decarbonize the economy at the rate that the crisis requires.

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