The energy sector has grown to become the most important group of industries in Atlantic Canada with a full spectrum of activity across the region, ranging from offshore oil and natural gas to wind farms to nuclear power. In its latest edition of Atlantic Report, the Atlantic Provinces Economic Council (APEC) examines the tremendous contributions energy developments are making to the economy of Atlantic Canada, and the challenges facing the future development of the industry.
In November 2007, the Atlantic Provinces Economic Council held its 13th annual Business Outlook conference. This conference is held annually in four cities across Atlantic Canada, bringing together leaders from business, government and academia to examine the region’s major economic issues. At this year’s event, we chose to turn a critical eye to the twin issues of climate change and the development of the region’s energy sector.
This report examines recent developments in Atlantic Canadian mining and energy sectors, the economic potential of these reserves, and projections regarding market development.
This report documents the recent and projected growth in Atlantic Canada’s energy portfolio, discusses the two most prominent drivers of these energy developments – growing demand for energy in U.S. Northeast and environmental pressures for cleaner energy – and highlights the risks involved in making these long-term energy investments. The article concludes by pointing to the potential for more of a regional approach to help ensure a clean energy future for the Atlantic provinces.
Atlantic Canada’s international export performance has improved since the mid-1990s with a significant boost from energy exports after 1999. The three-fold increase in energy exports between 1999 and 2002 accounted for 82% of the growth in Atlantic Canada’s merchandise exports over this period. These energy exports reflect increased shipments of refined petroleum and offshore crude oil and natural gas. This Report Card provides an overview of recent trends in international export performance in each Atlantic province.
Alberta’s energy-driven economic boom is creating a substantial increase in the demand for workers and stimulating a huge influx of migrants, including Atlantic Canadians. While net migration from Atlantic Canada to Alberta is at a record high, total annual outmigration from the Atlantic region to all Canadian provinces is still below previous peaks.
Buoyed by investments in energy, infrastructure and other initiatives, the region has seen three consecutive years of 3%+ growth for the first time since the mid-1980s. However, this is likely to change in 2001. A number of major projects have wrapped up and a slowdown in the United States has put the brakes on strong growth in the region’s economy. The 18th edition of APEC’s Major Projects Inventory identifies 221 projects in various stages of development across Atlantic Canada, ranked according to their likelihood of being developed.
The 19th edition of APEC’s Major Projects Inventory identifies 241 projects in various stages of development across Atlantic Canada valued at $44.4 billion, up 19% over last year’s Inventory. Energy and mining investments continue to dominate the list, accounting for about 78% of all Inventory projects. While the overall Inventory is up over last year, activity in 2002 is more muted. Construction is scheduled to begin on three major energy developments in 2003-04, which should make the Atlantic provinces among the economic growth leaders in the country once again.
Foreign direct investment (FDI) is becoming an increasingly important part of the Canadian economy, yet the available evidence suggests that the amount of FDI flowing into the Atlantic region is small relative to the size of its economy. Based upon a database compiled by APEC, call centres are the largest employers, followed by manufacturing and the retail sector. The United States is by far the biggest investor in the region. Foreign firms make an important contribution to the provincial economies in Atlantic Canada, boosting investment, employment and exports.
The world economy is again adjusting to a significant increase in oil prices. Since 2002, oil prices have more than doubled and in early October, they were almost 50% higher than in December 2004. With the economy at full production capacity, the Bank of Canada has indicated that interest rates will need to rise further to keep core inflation on target. With respect to economic growth, Newfoundland and Labrador is expected to lead regional and national rankings next year.
