Canada Has Set the Bar High for Climate Action. Let’s Recognize That Fact.

Canada's environmental social governance rankings vs. world's top 10 oil exporters

For the first time in Canada, every major political party campaigning during last September’s federal election proposed a climate action platform. That fact alone is a strong indication of just how important climate is for most Canadians in 2021.

You would be hard-pressed to find similar pledges from political parties among the world’s top ten oil exporters including Iraq, Nigeria and Angola to name a few. But most of these countries are home to state-owned oil and gas sectors that operate at the whim of less transparent governments. In most cases, there may just not be any other political parties to "vote" for at all.

Comparing Apples & Oranges

Canadian oil and gas Environmental Social Governance scores versus top 15 oil reserve holders

From a political perspective, comparing Canada’s democratic party system to the regimes of most other major global oil and gas producers is, in the strongest sense of the term, like comparing apples to oranges.

This is why it is so perplexing to hear anti-Canadian oil and gas activists claim our nation’s record on climate action “…is one of the worst in the G7.” Apart from the United States, no other G7 nation produces as much oil and gas as Canada, and yes, there are emissions associated with providing the world enormous amounts of energy.

The problem with comparing Canada to most other G7 producers for oil and gas emissions is that Canada is an export economy that’s been endowed with an incredible wealth of natural resources, such as oil and gas reserves, that are the envy of much of the world and underpin our entire way of life. That’s often not the case with most G7 nations.

Canada's Environmental Social Governance Rankings vs. World's Top 20 Producers

So, how about comparing Canada to the world’s top 20 oil producers, or top 15 oil reserve holders? After all, Canada is the fourth-largest producer and exporter of oil. Such a comparison is more practical than standing us up beside our G7 peers, and provides the following useful Canada-related points:

> Of the world’s top 15 oil reserve holders, Canada ranks #1 on Environmental, Social and Governance (ESG) metrics

> Of the world’s top 20 oil producers, Canada ranks #2 on Social and Governance indicators and #4 on the Environment

Let’s compare apples to apples, and oranges to oranges, shall we?

And although some anti-oil and gas activists say our nation is a laggard on climate action because Texas added more wind power capacity than all of Canada did since 2015, comparisons of renewable production between the two jurisdictions aren’t all that helpful either. Texas has a lot of catching up to do, with a goal to generate just 10 per cent of its electricity from sources such as wind by 2025.

Meanwhile, Canada already gets 67 per cent of its power from renewable sources that include wind, hydro, solar and biofuels, and that figure is growing substantially. Between 2010 and 2018, renewable electricity generation across Canada grew by 16 per cent, with wind and solar seeing the largest growth.

Global Oil & Gas Demand is Rising

Global oil demand forecast wood mackenzie july 2021

Also perplexing is that amid a global energy crisis, anti-oil and gas activists sing the same old tune. They want to leave every last molecule of Canadian oil and gas in the ground, referring to roadmaps such as the International Energy Agency’s Net-Zero by 2050 released in May of 2021.

Do they protest oil from the U.S., Saudi Arabia and Nigeria imported on the East Coast? You won't hear a peep.

Fast-forward to September, and we now see the same organization (the IEA) calling for Russia to supply Europe with more natural gas so that widespread energy shortages don’t further cripple European households and businesses. This crisis has left many Europeans wondering if they will have the energy required to heat their homes this winter, not to mention the strain it has induced on entire industries and supply chains that are essential to a contemporary lifestyle.

Not even a month later the IEA's World Energy Outlook 2021 predicted in its Stated Policies Scenario there will still be over 100 million barrels of oil demand per day by 2050. If you don’t know already, that’s on par with record-highs seen in 2019, levels that Goldman Sachs says are to return shortly.

The IEA also says emerging market economies in Asia and Africa will account for the lion’s share of future demand growth and that these regions will have to make the most drastic changes if the world is to even come close to accomplishing net-zero emissions by 2050.

But the global energy crisis unfolding in 2021 has caused many nations to rethink their plans to phase out fossil fuel and nuclear power plants. In other words, the stated policies of governments such as China - the world's largest emitter - are reversing, at least for the near term, as they and other countries delay plans for a quicker transition to less GHG-intensive forms of power generation and instead opt for national energy security.

Another Future Energy Crisis to Come?

Global Energy Crisis Headline Warnings October 2021

Today the world is literally screaming for more fossil fuels amid a global energy shortage, and anti-Canadian oil and gas activists seem not to care who bears the consequences. What's troubling is that opponents of Canadian energy still haven't thought twice about the true cause and effect relationship their activism promotes when they restrict our nation from accessing global markets. Attempts to close the Line 5 pipeline by activists - and what would happen to Canadian jobs, global pollution and market share altogether - is a great example of such a disconnect.

To add, warnings of underinvestment in the global oil and gas sector from reputed research firms and organizations suggest there is a much worse energy shortage looming on the horizon.

A joint December 2020 analysis by the International Energy Forum (IEF) and Boston Consulting Group (BCG) found that insufficient investment into the oil and gas sector could result in reduced supply and higher prices, leading to greater market volatility while slowing the world’s economic recovery and jeopardizing energy security abroad. The report found that annual investment into the sector had to rise by 25 per cent annually from 2021 to 2023 to prevent an energy crisis.

Given current events, it seems the IEF and BCG were bang on.

warnings of underinvestment into the oil and gas sector - moody's investment group

Another more recent analysis by Moody’s found that global annual upstream spending needs to increase by as much as 54 per cent to $542 billion annually if the oil market is to avoid the next supply shortage shock.

Both analyses discuss how global investors’ focus on low-carbon portfolios in conjunction with the recent pandemic's effects on global markets has left a huge supply gap that must be filled if we are to prevent another energy crisis.

In a world increasingly focussed on social and environmental outcomes, what better place to get that supply than nations like Canada with world-class performance on ESG metrics?!

Canada’s Record on Climate Action

Global Energy Methane Emissions & Intensities by Country 2020

It’s easy for anti-Canadian oil and gas activists to say that we should wind down all petroleum production to fight climate change. Of course it is, because they aren’t one of the ~520,000 workers across the country who rely on the sector to support their families.

What these activists ARE advocating for is to cede global market share to less responsible producers in South America, Africa and the Middle East, ones with much weaker protections for human rights and the environment, and that is irresponsible in itself. Such actions are leaving Canadian workers behind, not to mention the well-funded opportunities for R&D and innovations focussed on improving environmental outcomes -- that these workers are part of.

Anti-oil activists continuously fail to acknowledge that Canada is already a global leader in climate action. Consider the following:

Canada Gas Flaring Intensity vs. Global Major Oil Producers

> We are one of the first nations with a majority of the oil and gas sector to commit to net-zero emissions by 2050

> We are a global leader in emission intensity reductions and water recycling

> We are one of the few oil-producing nations where detailed disclosures are publicly available on climate and environmental-related risks

> We are a global leader in carbon capture utilization and storage, a technology the IEA says will be instrumental in reaching net-zero emissions

> We are a global leader in methane emission reductions and account for just a fraction of a percentage of global gas flaring from oil and gas production

> We are one of the few global oil and gas producers with carbon pricing

> We are a global leader in renewables, cleantech and innovation

> Of the world’s top 10 oil exporters, we rank number one on all the following ESG indexes:

Canadian Energy Is the Best Choice

Canada Gas Flaring Volumes Major Oil and Gas Producers

These points make clear that Canada's commitment to climate action is foundational. In addition, there’s a huge trove of facts and statistics that show, even further, why we should be the global supplier of choice for energy.

For the most part, the conversations we are having right now around environmental outcomes in Canada's natural resource sectors simply aren’t happening within the context of other jurisdictions. And in many instances, basic protections for workers’ rights and the environment generally don’t exist, and if they do, they are much weaker than those practiced in Canada.

It’s time we start recognizing Canada’s performance on climate action for what it is. Of course, we can do better on climate, and improvement will continue. But it’s critical that we don’t lose sight of the fact that we already are one of the best-in-class oil and gas producers in the world. Projections of continued growth in demand for decades combined with warnings of looming supply shortages means we should be stepping up to the plate as a major energy producer for buyers increasingly focussed on sustainable and responsible supply chains.

The fact that all major political parties of Canada have a platform to address climate action is one of many indicators of why we should be providing the world with more responsibly sourced Canadian energy – not less. Let's not forget that.

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