It’s no secret that the Harper government has doubled down on oil production and exports as the winning combination for keeping the economy in the black for years to come. But something unexpected is happening on the Prime Minister’s way to the bank. That is, our once-willing trading partners are making noises about turning their backs on us, and the product we have to offer.

Proponents of Canada’s strategy on oil will be quick to point out, quite correctly, that international demand for oil remains high. They may also point out that there’s a certain hypocrisy to those like Neil Young and Desmond Tutu who travel to Canada by gas guzzling planes and cars only to lament the nation’s oil industry. Like it or not, they’re right. But what is also undeniable is that Canada’s, and to a large extent Alberta’s, global reputation when it comes to carbon pollution and climate change is beginning to directly effect our country’s ability to responsibly develop our natural resources and – importantly – our economy.

Take for instance recent reports out of the US, which suggest that Canada’s unwillingness to get serious about climate change present one of the biggest stumbling blocks to the Obama administration’s approval of Keystone XL. This is more than mere supposition with the US moving aggressively on climate change in Barack Obama’s second term. Strict regulations out of the US EPA this week aimed at cutting carbon pollution from power plants serve only as the most recent case in point.

Likewise, a recent report out of China called Stephen Harper “Canada’s George W. Bush” for his single-minded pursuit of oil sands and pipeline development. Sure, this comes from a country that is currently one of the biggest investors in, and potential beneficiaries from, Canada’s oil sands. But, it’s also worth remembering that China is a fickle customer, one that is prone to quick changes of heart and mind. One needn’t look further than the Australian coal industry, which was crippled by a drop in exports after concerns about domestic air quality were raised by the Chinese government. And, just this week comes news that China will respond to the US’s carbon pollution regulations with a hard cap on CO2 of its own.

How is the Government of Canada responding to these not-so-subtle suggestions that it’s time to get serious about climate change? By ignoring them, that’s how. Not to be outdone, the Province of Alberta recently buried its own head in the sand by effectively killing the province’s most credible and widely respected non-profit organization, known locally as Climate Change Central or just C3, dedicated to addressing and adapting to climate change.

In consumer psychology, there’s a commonly observed phenomenon known as a “halo effect”. A halo effect happens when certain good behaviours are seen as so positive that they counteract what people see as inevitable bad behaviours. Halo effects manifest themselves in terms of what some commentators have called “social license”. But, unlike social license, halo effects also work backwards; that is, certain behaviors are seen as so bad that they make inevitable bad behaviours seem even worse.

Applied to Canada’s and Alberta’s stance on oil, it’s plainly obvious that failing to follow through on much-needed good behaviours on climate change leaves nothing for the rest of the world to point to but what many agree are some really, really bad behaviours when it comes to oil and pipelines.

As a result, those who are calling for a more aggressive policy response to climate change end up losing because Canada falls further and further behind in terms of the need for global leadership and action. But, herein lies the rub: Those who come down on the side of expanded oil sands development and pipelines also end up losing. They lose because failing to get serious about climate change makes it increasingly difficult to do business on global stage where psychology counts for much more than misguided political rhetoric.

(This post first appeared in The Globe and Mail.)