This post is part of the Cursed: How the Resource Curse Manifests in Newfoundland and Labrador project, led by Dr. Lori Lee Oates.
Newfoundland and Labrador has long paid the economic price of boom-and-bust cycles that are frequent outcomes of being a resource dependent economy. Our province has been through this before with the devastating Cod Moratorium of 1992, which was the largest layoff in Canadian history, putting 40,000 people out of work. This decimated the provincial population with outmigration reaching nearly 60,000 people or 10% of the population at the time (p. 13). Likewise, massive swings in oil prices have long dictated the province’s economic fortunes, as jobs and the provincial treasury have relied on volatile commodities. This has also proven extremely problematic as low oil prices and reduced production have each caused significant economic problems for provincial revenues in both 2014 and 2020.
The transition away from fossil fuels is not just an option … it is a necessity to ensure that workers and communities will have access to sustainable, high-quality jobs in the emerging green economy, as the world heads toward peak oil.
The transition away from fossil fuels is not just an option. The world is already well down this road with the United States Inflation Reduction Act. Now, it is a necessity to ensure that workers and communities will have access to sustainable, high-quality jobs in the emerging green economy, as the world heads toward peak oil. The wild card in all of this, of course, is the future energy demands of Artificial Intelligence (AI). World Energy GH2 on the west coast of Newfoundland is already pursuing options to supply energy to data centres that power AI. We are seeing early reports that energy demands are likely to increase as governments seem eager to invest in AI. Future modelling and data from the International Energy Agency (IEA) will be likely to be crucial when assessing the long term implications.
At the same time, we have seen the devastation of climate change firsthand here in Newfoundland and Labrador, and across the country. Wildfires have scorched millions of hectares of forest, displacing communities and wildlife. Increasingly severe storms, like Hurricane Fiona, one of the largest storms recorded in Atlantic Canada, have ravaged coastal towns.These storms have swept away homes and critical infrastructure in places like Port aux Basques, displacing people and causing millions in damages. Rising sea levels and coastal erosion threaten entire communities, while record-breaking heat waves and periods of extreme cold have strained power grids, exacerbated droughts, and contributed to rising food insecurity. These climate-related disasters are no longer isolated incidents; they are part of a worsening pattern that demands urgent action.
Currently, as it stands, the IEA projects that global oil demand will peak by 2030 (p. 11). They have also stated that for the world to meet the 1.5 °C or 2 °C goal set out by the 2015 Paris Climate Agreement; all new fossil fuel expansion should stop. The Global Warming of 1.5 °C Report of the IPCC, The Intergovernmental Protocal on Climate Change, has further recommended 1.5 degrees as a target to avoid the worst impacts of climate change. For Newfoundland and Labrador, where offshore oil accounts for roughly 15% of GDP, 10% of provincial revenue (p. 28) and thousands of jobs, the consequences are clear: economic diversification is not optional, it is essential. However, the question must be asked will workers bear the brunt of this shift, or will they be supported through an energy transition?
Just transitions are inclusive of all those impacted and affected by the transition. In the context of the energy transition, that means supporting workers in the fossil fuel sector with transferable skills make the shift.
Just transitions are inclusive of all those impacted and affected by the transition. In the context of the energy transition, that means supporting workers in the fossil fuel sector with transferable skills make the shift. Indigenous communities must also be engaged in land use, inclusive of their knowledge and sovereignty, as they bear the brunt of the worst impacts of climate change. For a discussion of this, see The End of This World: Climate Justice In So-Called Canada. According to Canada’s 2030 Emissions Reduction Plan, “Canada’s average temperatures are rising at twice the global average, and three times in the North. (p. 7)”
Research from the Journal of Economic Modelling from Heidi Garrett-Peltier, at the University of Massachusetts, has shown that oil workers facing displacement should be prioritized for employment in energy efficiency retrofits. Every $1 million invested in retrofits generates 4.5 times more jobs than the same investment in the oil and gas sector, which creates just 0.7 jobs per $1 million spent. Ensuring a just transition means not only mitigating job losses but actively creating pathways to more sustainable employment, where both economic security and climate resilience are prioritized.
It is imperative that those working in fossil fuel sectors have a clear pathway to stable employment. Unions will need to protect jobs, workforces will need to be retrained. Many of the skills, such as electrical work, welding, and engineering are directly transferable to renewable energy, energy efficiency retrofits, and infrastructure projects. Labour organizations and unions across Canada, including Unifor and the Canadian Labour Congress, have strongly advocated for federal and provincial policies that provide reskilling programs, income supports, and job placement services, to ease the transition.
Labour organizations and unions across Canada, including Unifor and the Canadian Labour Congress, have strongly advocated for federal and provincial policies that provide reskilling programs, income supports, and job placement services, to ease the transition.
Likewise, initiatives like the Youth Climate Corp call for public funding and a jobs guarantee for youth ages 18-35 in green jobs. Retrofitting and building out infrastructure shows promise in moving towards a just transition. Inspired by and akin to that of the New Deal Era Civilian Conservation Corp for and comparable to the American Climate Corps, launched under the Biden Administration, the program is calling for 2-year apprenticeships with thriving wages. With all this, it is clear, the transition should not be framed as a loss but rather as an opportunity.
Newfoundland and Labrador seems to have other priorities. Resource extraction has long been pushed as the solution to economic issues in the province and as this project page has suggested: “when considering the research on the resource curse, and especially the literature on poor economic outcomes, one cannot help but conclude that it is this very reliance on natural resources revenue that actually prevents development in the province.” The Advance 2030 plan seeks to double oil production by 2030 at a time when we are supposed to be coming off of oil. While it is very unlikely that this goal will be reached, it remains the policy of the provincial government. This makes the transition all the more difficult, meaning any future progress will need to be more abrupt if we are to meet existing climate targets.
Between 2021 and 2023, both the federal and provincial governments made significant financial commitments to the oil and gas industry, despite warnings from climate experts. In 2021, the federal government allocated $320 million to an Oil and Gas Industry Recovery Fund. The following year, under pressure from the province, it approved the Bay du Nord oil project, although the project is currently stalled. Then, in 2023, the provincial government invested $50 million in a program aimed at incentivizing oil companies to drill new exploration wells. These decisions run counter to the principles of a just transition and represent a step in the wrong direction.
The provincial government likes to argue that oil will continue to be needed into the future. However, doubling down on an industry that is fading away is not good policy.
It is actions like this that will slow the transition and make getting off fossil fuels even harder. The provincial government likes to argue that oil will continue to be needed into the future. However, doubling down on an industry that is fading away is not good policy. If we do achieve net zero, the location from which we draw the last barrel of oil will not be determined by emissions levels of the extraction. Rather, it will be determined by cost per barrel and those decisions will not be made in St. John’s. They will likely be made in Houston, London, Oslo, and perhaps Edmonton. Once again, Newfoundland and Labrador is allowing its economic fortunes to be determined by outside forces. If that happens, it is working class people who will suffer the most under a rugged and abrupt transition. This could occur either through the explicit destructive effects of climate change, quickly disappearing oil jobs, and lost opportunities in the green economy. This is just a continuation of the resource cursed economics that have long plagued Newfoundland and Labrador.
Feature Image: “StJohns Newfoundland ViewfromSIgnalHill2” by Aconcagua is licensed under CC BY-SA 3.0.
I find it interesting the way this article is framed in several ways. First, the assumption that boom and bust cycles are purely a phenomenon of resource dependent economies, and not a feature of capitalist logic itself. Second, the assumption that a transition is already underway when we are already seeing a reversal of any gains from the Paris Agreement with Trump’s commitment to ‘drill baby drill’ (as if any countries were serious about it regardless). To not consider this fact already situates this article as outdated. And third, a ‘just transition’ vis-a-vis ‘growth’ and ‘creation of jobs’ to me is an unconvincing argument. You have studied economics, I see, but have you read Marx’s Capital? My advice to you is that this is a necessary starting point for anyone wanting to be educated in the field, as framing a ‘just transition’ as a possible policy solution given material and class realities seems rather foolish.