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Science & Tech

Perrin Beatty on the future of Canada's energy mix

How has Ontario's green energy shift affected the province? What have been the effects of oil prices' decline in Canada? Perrin Beatty weighs in.

  • Published May 26, 2015
  • Updated Apr 26, 2023
  • 1,027 words
  • 5 minutes
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The Honourable Perrin Beatty is the president and CEO of the Canadian Chamber of Commerce and previously, the president and CEO of Canadian Manufacturers & Exporters. On May 27, Beatty will chair a panel of energy leaders in conversation at the Energy Council of Canada’s 2015 Canadian Energy Summit in Toronto. Canadian Geographic spoke to Beatty about some of Canada’s key energy issues at the moment.

What have been the effects of the decline in oil prices on oil-producing provinces?
We’ve seen a dramatic impact in terms of government revenue as a result of declining prices and it’s meant an economic slowdown in the energy-producing regions as a consequence. It has both affected the royalties received by the provincial governments as well as the level of economic activity in these provinces, including employment levels.

Do you see other effects looming for these regions or Canada as a whole?
It depends on how protracted and how severe the decline is. In Canada, we’re seeing how important the energy industry is to us in terms of driving revenues at both the federal and provincial level and in creating employment in and outside of the sector. I think most of us are anticipating that the price will firm up somewhat and that next year, we’ll be looking at something stronger. But it’s been very unpredictable.

So you’re predicting that prices will stabilize sometime next year?
That’s certainly our hope. Indeed in the government’s most recent budget, they predicted that we would see some stabilization of prices and that they wouldn’t go any lower. If the global price continued to decline, it would have a significant impact on the sector and both the regional and national economy.

Do you think this has changed the future of oil in Canada’s energy mix?
I think most of us see this as part of a cyclical process. It’s the nature of commodities where there’s both boom cycles and bust cycles and right now, we’re in a bust cycle. The game-changer in this has been fracking. It has changed the equation between gas and oil and not only make gas much more competitively priced, but has also lowered the return on gas. The other factor is global supply. What we’re seeing today is that global supply is growing faster than demand and in North America, we’re seeing a dramatic change in terms of our ability to supply ourselves from our own sources. That’s particularly the case in the United States where the fracking industry has had an enormous impact.

How do you think the electricity trade between Quebec and Ontario will benefit these provinces?
I think it was a wake up call for everybody a few years ago when we had the power blackout; Ottawa was dark but you looked across the river to Gatineau, Que., and it was all lit up. It spoke volumes about the need for us to do a better job connecting with one another and that Ontario needed to take advantage of the tremendous surplus of energy that’s produced in Quebec. What we need more broadly is better interconnection throughout the entire intercontinental grid. It should be easier to move electrons across the border, as well. We need to look at the regulatory and infrastructure needs to make that happen.

Ontario has positioned itself in the green energy market. How has this affected electricity prices?
Electricity prices are likely to increase in the foreseeable future. If you go back 50 years, what really led to the massive industrialization in Ontario is that government’s ability to supply affordable electricity and extend it into rural areas, as well as improving roads and education. That gave Ontario a major competitive advantage. Today, there’s a major challenge to the province in terms of infrastructure, which we’ve been spending for the last 40 years instead of renewing. When we look at the cost of electricity, as it continues to escalate, it is putting serious pressure on our manufacturing base in particular. We’re seeing shifts take place globally as well. As a result of policies in Germany, German companies are investing in North America where the cost of electricity can be a fraction of what it is in Germany. With the capacity of businesses to locate anywhere in the world, electricity remains a major input cost and is something that is a considerable steering affect on investment decisions made by business.

Are these higher prices something that will eventually level out or decrease? Or, is this the price that must be paid for a greener energy market?
One hopes that as we see improvements in technology, green energy will become more competitive and we’ll be able to supplement what’s available from other sources. Today it’s more expensive to produce, but costs are coming down. I think what we would anticipate in the longer term is increased cost competitiveness in renewables. But in my lifetime, I anticipate that the global economy will continue to be reliant on fossil fuels for most of its production. We need every source of energy right now. We need to encourage the development of renewable and alternative technologies and we need to drive down prices for those technologies. We will continue to use hydrocarbons, but we will also need to improve the technology that we use when consuming hydrocarbons to mitigate the environmental impacts.

What is the single biggest issue or aspect in Canada’s energy industry for you right now?
This being an election year, our priority is to do outreach to political parties and to Canadians as a whole to help them understand that we’re at a critical point in our national economy. We either invest in the infrastructure that will allow us to get to global markets or suffer the serious economic consequences as our only customer, the United States, becomes less dependent on Canadian energy. The window is tight and closing rapidly. I believe that we should bring our resources to global markets in a responsible way, a way that respects the environment, community rights and the rights of aboriginals.


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