[Ecuador just showed the world what it means to take climate
change, biodiversity loss, and Indigenous sovereignty seriously, all
with one national referendum.]
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ECUADOR JUST SHOWED THE WORLD WHAT IT MEANS TO TAKE CLIMATE CHANGE
SERIOUSLY  
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Nick Gottlieb
September 5, 2023
Canadian Dimension
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_ Ecuador just showed the world what it means to take climate change,
biodiversity loss, and Indigenous sovereignty seriously, all with one
national referendum. _

In August, millions of Ecuadorians voted in a referendum to halt oil
exploration and development in the Yasuní National Park in the Amazon
rainforest, photo courtesy Amazon Frontlines.

 

In 2017, Justin Trudeau addressed a crowd of energy executives
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Houston, Texas and proclaimed, “No country would find 173 billion
barrels of oil in the ground and just leave them there.”

It’s not quite 173 billion barrels, but Ecuador just proved him
wrong.

On August 20, the country voted by national referendum
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end oil drilling in Yasuní National Park by a margin of nearly 20
percent. The “once-in-a-lifetime
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opportunity to help protect one of the world’s most vital ecosystems
will keep 726 million barrels
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oil in the ground.

According to Canadian politicians, this exercise is meaningless: if
Ecuador doesn’t produce that oil, Saudi Arabia—or Russia, Iran, or
some other designated “bad actor”—will.

But according to research on global oil market dynamics, the
Ecuadorian vote is the equivalent of removing 156 million tonnes of
carbon dioxide accumulation from our future atmosphere. How? Through a
radical theory that the United Nations Environment Programme
has called
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basic economics of supply and demand.” According to the
UN’s _Production Gap Report_: “if there is less available of a
commodity—such as oil—its price will increase, meaning less of it
will be consumed.”

This phenomenon is known as the price elasticity of demand. By
removing 726 million barrels of oil from the future global oil market,
Ecuador is shrinking global supply, thus driving up prices. Price
increases lead to lower demand, and lower demand means lower total
consumption, combustion, and emissions.

While the magnitude of this effect can vary based on the oil and
market conditions, researchers have found
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the per-barrel impact is roughly half a barrel, meaning that for every
barrel left in the ground, total global oil consumption will decrease
by half a barrel.

This principle means that actions like Ecuador’s, which restrict the
production of oil and gas, are actually mitigation strategies, tools
that can help reduce global emissions. They are an approach known as
“supply-side climate policy”—managing emissions by restricting
the production of fossil fuels.

Canada has some supply-side policy: we don’t allow drilling in
national parks (just surrounding them
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for example, although unlike Ecuador’s Yasuní National Park, our
parks don’t tend to sit on huge deposits. More significantly,
Québec became the first jurisdiction to ban oil and gas exploration
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in 2022, although again, that’s a far cry in significance from
ending development in Alberta.

Yet, overall, oil and gas production is not just continuing
unrestricted in Canada. It is growing. Canadian oil production set a
record in 2022 and is expected to grow eight percent more
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the next two years, largely because of the Trans Mountain pipeline
expansion project.

The Liberals argue that the Trans Mountain purchase was some kind of
political sacrifice meant to placate the right as they moved forward
with their carbon tax. But the ongoing drama between Alberta Premier
Danielle Smith and the federal government should make it abundantly
clear: not only did it not work, but it was never going to work. It
was a form of “climate appeasement
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comparable to Chamberlain’s failure to prepare for war in the 1930s.

But even the idea that it was a compromise in the first place is a
stretch: there’s a simple, multi-partisan consensus among Canada’s
political parties, including the bulk of the NDP, that the oil we
export isn’t our problem. Our leaders scoff at calls for reducing
production by claiming “if we don’t produce it, someone else
will.” These assertions are typically heard alongside absurd
regurgitations of Ezra Levant’s “ethical oil
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argument, which is often rebranded as “net zero” oil.

That claim is simply wrong, and is inconsistent with the “basic
economics of supply and demand.” The more we export, the cheaper
fossil fuels are, the more fossil fuels are burned.

As the fourth-largest oil producer in the world, we could lead the way
by drawing down production. Strong supply-side policy in Canada would
have durable, measurable impacts on global emissions that would dwarf
our attempts at domestic decarbonization.

Supply-side policy would also help us mitigate some of the risks
associated with the demand-side climate policies we are already
pursuing. Electric vehicles, public transit, home retrofits: these all
achieve emissions reductions by reducing demand for fossil fuels. But
you know what reduced demand means? A lower price.

Successful demand-side climate policies are subject to a perverse
rebound effect: any inroads we make into total fossil fuel use will be
partially offset by the newfound cheapness of fossil fuels. Levers
like supply restriction can help maintain the price level, maximizing
the emissions reductions that demand-side climate policies can bring.

Demand-side policies are also something of a gamble: countries model
the potential emissions reductions of subsidies, vehicle standards,
and so on, and use those models to claim they are “on track” for
meeting targets. But the real world is complex. It’s possible
policies will produce the expected result, but it’s also possible
they won’t. What if these policies ultimately fail, or fail to
succeed at the scale needed? We’re betting the planet on economic
modelling of a kind of energy transition that’s never happened
before
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Which is another argument for complementing our existing mitigation
policies with a supply-focused approach. A cap on fossil fuel
production that shrinks over time leaves nothing to chance: it’s a
hedge, a guarantor. The combustion of fossil fuels is the unequivocal
cause of the climate crisis. The one way to be sure we’re on track
to ending it is to regulate it directly.

Today, the combination of far-off net zero pledges, planned future
policies, and yes, some existing policies and economic trends, are
forecast to limit future warming to around 3C, an outcome that is
almost certain to be catastrophic. We need to take the guesswork out
of it: instead of an emissions cap for the industry, Canada needs a
production cap that declines over time. Alberta’s done it
before—the province legislated production caps from 2018-2020 in an
effort to save the industry from itself. And, of course, they’ve
done it again under Smith, just for the wrong industry
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Ecuador just showed the world what it means to take climate change,
biodiversity loss, and Indigenous sovereignty seriously, all with one
national referendum, and at significant cost in a country wrestling
with the challenging reality of being a resource producer in the
Global South. Canada is a rich country and one of the nations most
responsible for climate change. It is long past time we catch up to
reality and end our mad rush to burn the planet to the ground.

_Nick Gottlieb is a climate writer based in northern BC and the author
of the newsletter Sacred Headwaters
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understanding the power dynamics driving today’s interrelated crises
and exploring how they can be overcome. Follow him on
Twitter @ngottliebphoto [[link removed]]._

_Canadian Dimension is the longest-standing voice of the left in
Canada. For more than half-a-century, CD has provided a forum for
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* Ecuador
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* Amazon Rainforest
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* Climate Change
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* oil and gas industry
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* Canada
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