Faustian Bargain

Oil and gas accounts for 27.4 percent of the province’s GDP. Both ANDP and UCP governments have provided enormous subsidies and incentives for oil producers. Quite simply, Alberta is addicted to oil — the province is a textbook petrostate.

However, a decade of multiple recessions tied to the global price of oil has highlighted the need for economic diversification. Instead of looking for transformative and equitable solutions, Alberta has gambled on attracting Big Tech. In the minds of the province’s political class, Big Tech appears to be capable of dragging the Albertan economy kicking and screaming into the future. This may be true in a certain narrow sense, but striking a bargain with Big Tech comes at a ruinous social price.

Waterloo, Ontario was devastated when the rapid collapse of Blackberry resulted in thousands of layoffs. Yet the meteoric rise of nearby Toronto’s tech sector encouraged Waterloo to remain committed to the industry. This contributed to the Toronto-Waterloo corridor becoming the locus of Canada’s tech industry. Toronto is now one of the most expensive cities in the world.

Tech-friendly development has provided the blueprint for plans to transform major cities across Alberta. Edmonton’s Ice District is a perfect example: a section of the city’s downtown core that has been given over to office infrastructure. But such development projects are quixotic, since Albertan cities simply cannot compete with the enormous economic power of Toronto, Vancouver, or Montreal.

Positioning Alberta as a telecommuting hub is not a good idea, either. The flight of telecommuting tech workers from San Francisco to cities like Austin for cheaper living has been disastrous for existing residents. The exploding cost of housing across the entire Greater Toronto Area is the result of a similar phenomenon. The halo that used to surround Big Tech is becoming ever more tarnished as mistrust in the products of Silicon Valley increases; the so-called “techlash” has arrived.

Google’s parent company, Alphabet, focused on developing a “smart city of the future” in Toronto’s Quayside — but initial civic enthusiasm for the “Smart City” has since morphed into outright hostility. The now-abandoned project, a massive public-private partnership scheme, offered Torontonians unaffordable housing development and passive corporate surveillance.

In a similar vein, “green” developments have popped up in Alberta, driven by developers. The cost of a home in one of these developments in Edmonton is between $527,000 and $728,000, well above average.

There may be some truth to the claim that Big Tech is recession-proof. But it is also volatile in a way that is not directly linked to the business cycle, prey to restructuring and layoffs made in the name of “efficiency.” In Alberta, retraining programs, which are already underfunded, seek to move workers from one precarious industry to another. Tech companies rely on highly qualified and experienced workers, which poses a significant obstacle for workers who are transitioning careers later in life.

The Alberta Advantage

The dream of producing innovation “superclusters” — setting the stage for a “Made in Canada” version of Silicon Valley’s runaway housing costs — is a national passion. But Alberta, which boasts three thousand tech companies in a province of only 4.3 million, is doing its best to earn the title of leading contender. Sadly, it cannot help looking backward even as it claims to look ahead. The province still seems determined to wed its most high-profile tech investments to resource extraction.

Through a multitude of highly publicized government programs, including hundreds of millions in subsidies, grants, and other financial support, Alberta has showed its hunger for tech investment that will greenwash its environmentally devastating oil industry. Ironically, this undying commitment to oil is actually serving to alienate part of the province’s nascent tech sector.

Despite the proliferation of government-sponsored articles touting green tech, the Oil Sands have only become more destructive over time. The “greening” of oil extraction is done in the service of increasing production, leading to an increase in absolute emissions. According to a report from the Pembina Institute, it would take “the development and deployment of breakthrough technologies (as opposed to incremental improvements)” to decrease emissions to meet Canada’s already meager climate targets.

Instead of grafting tech onto the existing oil industry, Alberta could instead forge a sustainable path forward in which tech plays a pivotal role. Publicly funded R&D has transformed the social fabric in the past and could do so again. As the Canadian Centre for Policy Alternatives argued, Alberta could employ muscular public R&D to carry out “policy measures that protect workers for whom the transition to renewables entails a loss of livelihood.”

Alberta is not short on the labor power necessary to implement a Just Transition to a zero-carbon economy. In fact, the province is uniquely positioned for success in a Green New Deal-style project that could offer a lead to the rest of Canada. It’s ripe for programs that encompass tech alongside industries such as sustainable agriculture. What is lacking so far is the political will.

It’s a failure of Alberta’s political imagination to diversify its economy by piggybacking on the very sector it needs to transcend. Alberta’s political class has been duped by reports from right-wing think tanks, and its bipartisan commitment to resource extraction comes at the cost of the environment, workers, and the social good.