Farmland is the new gold, according to The Carbon Bubble author Jeff Rubin

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      Author Jeff Rubin thinks that governments across the country have squandered enormous economic opportunities by denying the impact of global warming.

      In an interview at the Georgia Straight office, the former chief economist at CIBC World Markets said that while Prime Minister Stephen Harper has played up Canada’s role as an “energy superpower”, it’s coming at a tremendous long-term economic cost.

      “We really haven’t been open to investigating the possibilities of climate change, particularly when it comes to agricultural production—and what that might be in terms of the country becoming a breadbasket,” Rubin said.

      In his new book The Carbon Bubble: What Happens to Us When It Bursts (Random House Canada), Rubin cites NASA research in describing the Canadian Prairies as a “climate-change hot spot”.

      There, he said, growing seasons are 26 days longer than they were 50 years ago. Crops that could only survive farther south in the past now flourish north of the 49th parallel. And he expects that will only increase in the coming years as average temperatures continue rising.

      “All of the sudden, you can grow soya bean and corn,” Rubin noted.

      Jeff Rubin says Canada could become the world's breadbasket.

      Naturally, this is attracting the interest of the investment world. He pointed out that the Canada Pension Plan Investment Board bought Assiniboia Capital Corp., which manages more than 115,000 acres.

      This makes Assiniboia the largest farmland trust in the country. In April, the Saskatchewan government responded to the CPP investment-board purchase by imposing a moratorium on buying of farmland in that province by some institutional investors.

      Rubin pointed out that in Ontario and Manitoba, there are no prohibitions on institutional investors purchasing agricultural land.

      He said the rush to buy farmland is rooted in two realities. First, climate change is already having a seriously detrimental impact on food production in California, which is enduring a lengthy drought. Moreover, he predicted that as the average temperature rises in Iowa, Illinois, and Kansas, production in those states will be affected as well. Farmland has become a hedge for investors against climate change.

      Secondly, Rubin noted that agricultural prices have risen even as other commodities, including fossil fuels, have fallen sharply in value.

      “Already today, food prices provide a lot more value added than oil or coal,” he stated. “Thinking of it in the future, that’s going to be all the more the case.”

      As a result, he predicts much more institutional investment in Canadian farmland, describing it as the country’s “hottest asset”.

      While that’s occurring, he expects bad news on the horizon for fossil-fuel companies.

      There are slightly more than 400 parts per million of carbon-dioxide equivalents in the atmosphere today, up sharply from the preindustrial era. Rubin said the International Energy Agency has created a model showing that when the level reaches 450 parts per million, there will be a worldwide 33-percent decline in coal consumption and a 15-percent drop in oil usage during the subsequent 20 years.

      “I can guarantee those are not the demand forecasts that grace the business plans of Suncor, Exxon, or any coal company,” he stated.

      He said that the market capitalizations of U.S. coal companies—such as Alpha Natural Resources, Arch Coal, and Peabody Energy—have been “absolutely decimated”, falling by as much as 90 percent. He noted that this should send a message to Canadian managers of university endowment funds to divest fossil-fuel stocks.

      “Not that they’re loaded on coal,” Rubin said, “but they have a good sprinkling of oilsands stocks in their portfolio. You know, quite apart from save the world, you can save your portfolio. That’s because if you look at the performance of these stocks, they’ve been devastating.”

      So what does all of this mean for B.C.’s fledgling liquefied-natural-gas industry? Is it truly the bridge fuel that Premier Christy Clark has been touting to help the world reduce emissions by burning less dirty fuel in Asia, such as coal?

      Rubin characterized that as “nonsense”.

      He said that people who tout the LNG industry fail to recognize how quickly the goalposts move in energy markets. In 2007 and 2008, there were discussions about importing LNG to North America, but that changed with the fracking revolution.

      Then North America wanted to export LNG to Asia and Europe, where gas prices were far higher. However, Rubin noted that China has signed long-term deals to buy Siberian natural gas at prices 30 to 40 percent below LNG. “Once again, the goalposts have moved,” he stated.

      More ominously, he said that research from Harvard and Stanford universities is indicating that it’s debatable whether LNG from fracked shale gas has a lighter carbon footprint than coal after taking fugitive emissions into account.

      “It’s not a huge leap of faith to see those same goalposts move against shale gas,” Rubin said. “And that totally changes the economics of LNG exports.”

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      3 Comments

      400 ppm

      Jun 18, 2015 at 11:34pm

      I never trust people I see optimizing & never making sacrifices/doing things for existential reasons, which is why I find econs despicable.

      Nassim Taleb

      Food Security

      Jun 21, 2015 at 10:38am

      Food Security is critical.

      The exporting of unrefined Bitumen with no meaningful royalties is stupid.

      Norway has a nationalized Oil & Gas / energy sector they keep 80+% of the profits.

      Norway has a Trillion Dollar surplus mountain of Cash.

      Alberta and Canada are in serious structural long term deficits.

      We in Canada keep virtually zero Net Royalties after you factor in Government subsidies to Big Oil & Gas Corporations.

      That makes us as Canadians stupid for allowing this to continue.

      Adrienne Peacock

      Jun 22, 2015 at 3:19pm

      And Site C is still going ahead? Here we have one of the greatest potential fruit and vegetable growing area about to be flooded to produce energy we don't need (and will have to sell at a loss of about $800 million in the first four years). The Peace River valley is one of the three areas in BC which has class one and two farmland (Harold Steves), capable of growing enough fruits and vegetables to feed a million people, according to agrologist Wendy Holm. Building a megadam at Site C is 60s thinking and should not even be considered today. California is in the midst of a 4 year drought and we are going to flood a precious valley? How crazy is that?