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Are we headed back to a 1980s economy?

At the start of the 1980s, there emerged a strong belief that Canada’s future would be based on energy megaprojects — oil and gas pipelines from the north, a surge of oilsands plants and massive hydro-electric projects.

At the start of the 1980s, there emerged a strong belief that Canada’s future would be based on energy megaprojects — oil and gas pipelines from the north, a surge of oilsands plants and massive hydro-electric projects.

This megaprojects dream vanished when oil prices collapsed a few years later and a new vision for Canada — as an innovative, knowledge-based country with high-tech aspirations and clever, well-educated workers — replaced it.

Now, it seems, we are back to branding Canada as an energy nation, whose economy is driven principally by the oil and gas industry, and in particular oilsands production.

This, at least, was the impression created when Canada’s energy ministers recently met in Alberta to develop what was described by some as a “national energy strategy.”

There was no pretence about who the key players were. The conference of ministers received a handsome gift of money from energy companies to pay for the wining and dining or other costs of their gathering, and industry got access in return.

It is hard to see why federal and provincial ministers would seek money from people they are supposed to regulate in order to have a meeting.

The industry, for its largesse, made presentations to the ministers.

But these presentations are not being made public, according to a spokesperson for the Alberta government. We want Canadians to be engaged, the industry says, but apparently not that engaged.

To be sure, there were some productive nods towards “voluntary” collaboration on energy efficiency and conservation, though little was said about the vital challenge of climate change, which is of course the critical issue.

But the bigger question is what kind of economy do we aspire to for the future?

Is our future to be that of a natural resource producer for the U.S. and, perhaps, Asians as well?

Are we back to the early 1980s and those dreams of an endless stream of billion-dollar megaprojects?

Or do we have a different ambition, of a Canada as a broadly diversified economy driven by knowledge and innovation?

The Canadian Council of Chief Executives, in a brief for the energy ministers, saw energy development as something all parts of Canada could profit from.

In a burst of extravagant language, the big business lobby group went to so far as to declare that building, with a federal subsidy, the $6.2-billion Lower Churchill Falls project of massive dams in Labrador and a transmission line across open water to Newfoundland “just might be the nation-building exercise of the 21st century.”

Let’s hope Canadians have a bigger vision of their future than this.

At their meeting, the energy ministers released a paper — Canada as a Global Energy Leader: Toward Greater Pan-Canadian Collaboration — which contained many enthusiastic paragraphs on Canada’s potential in energy production and exports but little more than lip service to how Canada will meet its Copenhagen Accord commitment to bring greenhouse gas emissions down by 17 per cent in 2020 compared to 2005, a huge omission given that 2020 is less than 10 years away.

Clearly, energy will be an important part of Canada’s future. We would be foolish not to use it to our advantage.

But this has to be done in a way that is environmentally responsible because climate change is happening and our current fossil fuel development is making it worse.

Yet for all the oil and gas industry’s talk of new technologies and low carbon systems, it is surprising how little of its own money it spends on research and development.

In 2009, according to Statistics Canada, the oil and gas extraction industry spent just $388 million on research and development, which was nearly 30 per cent less than what it spent in 2006 and 12.5 per cent less than what it spent in 2005.

If the industry is serious about the environment, it should be spending much more, not slashing its research and development budgets— especially now, when profits are booming.

Looking to the future, while energy resource development is important we cannot rely on it alone for a diversified, competitive and environmentally sustainable economy.

In fact, in 2009 the overall energy sector — oil, gas, coal, uranium, hydro-electricity, nuclear power and renewables — accounted for just 6.8 per cent of the economy and employed 263,000 Canadians in an economy that employed 16.8 million altogether. It’s too small a horse to pull our entire economy.

It will take much more than energy projects to build a successful economy for all Canadians.

We need a bigger vision.

Economist David Crane is a syndicated Toronto Star columnist. He can be reached at crane@interlog.com.