Energy and Natural Resources - Op Eds

Governments across Canada are making support for green energy technology a top priority. But they should remember that simply providing subsidies to increase the supply of such tech is not enough. The optimal policy mix includes carbon pricing, to create demand for new tech, combined with government funding focused on developing distant techs not economical for private companies. Subsidizing consumers who adopt new tech is not the solution.

Ontario’s Climate Change Action Plan includes up to $375-million of research and development support for low-carbon tech, and billions more for subsidies to encourage use of low-emission tech. Alberta’s government is proposing a carbon tax, with some revenue devoted to supporting low-emission…

The Ontario government has announced the details of its “climate-change action plan.” Under the five-year plan, up to $8.3-billion would be spent on subsidies for renewable energy and low-emissions technology support. In doing so, the government has taken a U-turn from a wise cap-and-trade policy toward costly subsidy programs.

The government was on the right track previously by relying on a cap-and-trade program to price emissions. This is a cost-efficient way of reducing emissions because it reaches the desired goal by letting market participants figure out the best way to do so.

The government plans to finance the new subsidies with revenues from an auction for permits that greenhouse-gas-emitting companies…

You may be surprised to learn this, but economists are not the same as “normal” people. The main difference relates to how the two groups think about markets and prices. Most people, including elected politicians, don’t think much about the workings of markets and prices. This is a serious problem when it leads to the adoption of poor public policies.

Consumers think about the prices of the goods and services they consider buying. A high price for some product makes them consider alternatives; a low price increases the likelihood they purchase it. Business managers think about prices as ways to cover their costs and generate profits. Higher prices make a venture more attractive; lower prices reduce returns and encourage a search…

With the low price of oil today, many Albertans have long faces. Some believe we’re witnessing the beginning of the end of the oil patch, but I disagree – Alberta’s oil industry still has a promising future. However, it won’t happen automatically. Serious effort and good policy will both be required.

There are two blessings and one curse related to the future of the industry.

The first blessing is the oil itself. Alberta has a fabulous endowment of something the world desperately needs and will continue needing for many years. With the current low oil price, one might conclude that the world isn’tthat interested in Alberta’s oil any more. But don’t be blinded by the short term. As the world economy continues to grow…

The much-anticipated Royalty Review Advisory Panel report has received wide acclaim – and deservedly so. It put forward solid principles to shape a modern royalty system. But the real test will be in the design details that emerge in the next two months. Much could go wrong.

The panel recommended no major changes to the oil sands regime.

But it suggested modernizing royalties on conventional oil and gas wells. The key principle that the panel recommended was that a modern royalty emulate a “revenue minus cost” approach. Under the modern royalty framework, starting in 2017, companies will pay only a minimal, flat royalty rate until their total revenues equal their costs. Companies receive a drilling and completion cost…