Sunday, July 12, 2009

Canada is leaking emergy

That's not a typo in the title. Emergy is a term coined by famed energy and ecology researcher Howard Odum. An analysis underpinned by the emergy concept explains why importers of Canada's natural resources such as crude oil, natural gas, unfinished wood, grains and metal ores are getting a bargain as much of Canada's emergy endowment is given away for free.

Canada has long been a major exporter of natural resources. Blessed with large forests, massive mineral and hydrocarbon deposits, and fertile prairies, Canada's small population hasn't needed all that it can produce. And so, much of its natural wealth has been exported to other nations hungry for raw materials, energy and food. All of this has helped to make Canada a rich, developed country with an enviable standard of living and a wide array of well-funded public services for its citizens including universal health care.

So great is Canada's natural endowment that it has more than made up for the fact that the country and its people have been giving away a substantial portion of the value of their resources to foreign customers for free. And, the country is planning to expand that giveaway as it gears up for much larger exports of synthetic crude oil and bitumen from its huge tar sands mining operations in Alberta.

To understand this giveaway, one needs to understand emergy, a concept invented by energy researcher Howard Odum. Emergy is the "available energy of one kind that has to be used directly or indirectly to make a product or service." Emergy is something close to "embodied energy" though the way that term is used today often leaves out nature's energetic contribution. Odum discerned something which is not obvious to even the professionally trained observer of international trade: Much of the value of natural resources comes through nature from the soil, the sun and geologic processes. These processes represent substantial inputs of energy. Buyers of such resources pay little more than the costs of extraction (or growing, in the case of crops) plus transportation. Therefore, they pay almost nothing for the free services nature provides.

This wouldn't be so injurious to Canada if it processed and transformed most of these natural resources itself. But it does so only on a limited basis. Much of the harvest from its farm fields and forests and the output from its mines and wells is shipped to other countries for processing. When some of this comes back in finished form, Canadians pay a hefty premium for that processing since unlike nature's services, human processing cannot be provided free of charge. Odum would say that the emergy balance in the exchange is negative. More emergy value goes out than returns.

But Canada has a substantial manufacturing and service economy. It, too, imports some raw and partially finished goods to produce finished goods for export--in some cases back to countries that provided the raw materials. So, Canada has benefitted to a certain extent from the uneven terms of trade that emergy-blind trade arrangements assure.

Not so well-off as Canada are many developing countries which have little or no manufacturing and processing capability, but a large resource base, either agricultural or mineral or both. These countries are forced to export many of their resources rather than process them at home. The agricultural and mineral exports from several Central and South American countries and many African countries come to mind.

An emergy analysis explains in part why many developing countries remain so impoverished despite their abundant natural resources. While there are often other problems in such countries involving governance and geopolitical instability, understanding the uneven terms of trade that an emergy analysis would reveal can go a long way in explaining the economic difficulties they suffer.

Where the decision has been made to process more of a country's natural wealth at home, there is a better chance for economic success. The valuable free emergy supplied by nature provides more jobs and value to the home country if it can process the resources which embody that emergy.

And, just as this is becoming apparent to many resource-rich developing countries, some developed countries such as Canada--when it comes to the tar sands--and the United States--when it comes to U. S. grain and timber exports--are regressing to a policy that increases giveaways of their natural wealth. All this is done in the name of a free trade ideology that is devoid of any appreciation of nature's role in providing us with so much of what we need on a daily basis.

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Howard Odum's book "A Prosperous Way Down" (summarized here in a reprinted presentation by Odum) provides a clear and concise explanation of emergy and how emergy exchanges affect the economies of countries through trade. Below is a table from the book that though dated provides an idea of how developed and developing countries rank in their emergy exchanges. Undoubtedly, China has improved its emergy ratio in trade since it now has a huge industrial base. But the relative position of other countries may not have changed that much. Andrew Nikiforuk's "Tar Sands: Dirty Oil and the Future of a Continent" provides a revealing window into Canada's tar sands development strategy including its foolish and excessive export of unrefined oil products to the United States even as Canada continues to import large quantities of oil to the eastern part of the country from abroad for want of an east-west pipeline.

Balance of Traded Wealth Evaluated with Emergy
Various numbers from the 1980s

NationEmergy from Within %Ratio of Emergy Received to Emergy Exported
Netherlands234.3
West Germany104.2
Japan314.2
Switzerland193.2
Spain242.3
U. S. A.772.2
Taiwan241.89
India881.45
Brazil910.98
Dominica690.84
New Zealand600.76
Poland660.65
Australia920.39
China980.28
Former Soviet Union970.23
Liberia920.151
Ecuador940.119

Source: "A Prosperous Way Down" by Howard T. Odum and Elisabeth C. Odum

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