- Canada’s oil and gas sector creates immense wealth and prosperity for our country; we must not overlook that or let go of it prematurely given the global context of future energy demand
- Canadian oil and gas workers and the communities that overwhelmingly rely on the sector cannot be left behind; it’s imperative that their livelihoods are “protected and improved” as described in Canada’s ‘Just Transition’ initiative
- Canada, with its world-class ESG performance, should rather ‘transition’ itself into being a global oil and gas supplier of choice; as long as the world needs oil, it should come from sustainable producers like Canada
Canada’s federal government has recently announced plans to start engaging with Canadians on another ‘Just Transition’ Initiative that, according to its makers, is a new approach to “…economic, environmental and social policy that aims to create an equitable and prosperous future for workers and communities as the world builds a low-carbon economy.”
Not one single worker or community can be left behind says the website, therefore government climate action must be focussed on transition ‘those’ workers away from emission-intensive industries as alluded to by the initiative’s discussion paper. Also said is that any legislation introduced as part of the initiative will support Canada’s transformation to a low-carbon economy and “…protect and improve the lives of workers and communities across the country.”
Reminiscent of the ‘Just Transition’ for Canadian Coal Power Workers and Communities back in March of 2019 – playing a part in the federal government’s commitment to phase out coal-fired electricity generation by 2030 and reduce greenhouse gas emissions – it’s critical that we have an open discussion about global energy markets, Canada’s world-class oil and gas sector and our opportunity to be a sustainable global supplier of choice for decades to come.
Here are a few reasons why Canada’s new ‘Just Transition’ initiative must take into account the accomplishments made by our oil and gas sector and what our government can do to not leave any of our energy workers or communities behind in the transition to a lower-carbon future.
Global Oil & Gas Demand Is Here to Stay
Fatih Birol, Executive Director of the International Energy Agency (IEA), explained in a recent interview that the IEA expects oil demand to recover to pre-pandemic levels sooner than thought and continue to grow for several years yet. The IEA’s Oil Market Report for June 2021 confirms its leader’s statements, predicting that global oil demand will “continue to recover and, in the absence of further policy changes, by end-2022 reach 100.6 million barrels per day.”
Natural gas is also projected to be in high demand, with the IEA’s World Energy Outlook 2020 long-term prediction showing growth of nearly 30 per cent over today’s levels by 2040. And according to Shell, LNG is expected to be the fastest-growing source of natural gas as buyers are better connected to sources of supply via an increasing number of liquefaction facilities coming online around the world.
BP’s 2020 annual energy outlook and its “Business as Usual” (BAU) scenario is yet another projection that suggests oil and gas demand is here to stay, despite being released in the Fall of 2020 before vaccine rollouts boosted the overall outlook for global energy markets. It sees global oil demand hovering at just under 100 million barrels per day through to 2030 before eventually tapering off down to 89 million by 2050.
According to many energy analysts, this “Business as Usual” scenario is the most plausible to occur given the challenges that the world currently faces with COVID-19 and the drastic behavioural changes that would have to happen globally to bring BPs two other lower-emission projections to fruition.
All future energy demand projections mentioned above (and many others not listed) point towards sustained use of oil and gas by global consumers at levels similar to or even higher than today for decades yet. So then, the question remains: where are the best sources of supply for oil and gas given the world’s increasing focus on sustainability and climate action?
As a top performer on Environmental, Social and Governance (ESG) metrics, Canada is currently one of the most sustainable and responsible oil and gas producers on the planet. Our sector operates under one of the most stringent regulatory regimes in the world and has championed reducing its environmental footprint in numerous ways. Take for example the net-zero pledge made by our operators that account for 90 per cent of oil sands production. Few (if any) other major global producers have done the same.
Therefore, as long as the world needs oil and natural gas, it should come from the most sustainable and responsible producers around. I think we can all agree on that, even perhaps the "environmentalists" who protest Canadian pipelines carrying Canadian oil and inadvertently help cede global market share to less environmentally friendly producers when they succeed in shutting down projects like Keystone XL. Take for example the fact that Russia has now overtaken Mexico as the second-largest importer of oil into the U.S. at 844,000 barrels per day in May, about the same capacity a completed Keystone XL would have been capable of shipping from sustainable producers up north.
Canada’s ‘Just Transition’ initiative must take into account our nation’s exemplary ESG performance in the context of global energy markets, and not leave our job-creating, wealth-generating energy sector behind. Rather, Canada should ‘transition’ itself into being an oil and gas supplier of choice by developing supportive policies that provide our sustainable producers at home with improved access to global buyers. This is especially true for parts of Asia where emerging markets and developing economies are expected to account for most of the projected demand growth over the next several years.
Without a Global Transition, Canada Will Lose Out
Canada’s recently updated climate strategy plans to reduce emissions between 32 to 40 per cent by 2030, with the goal of being completely neutral, or ‘net-zero’ by 2050. Any plausible pathway to net-zero (with the goal of avoiding the worst consequences of a warming climate as a result) will require significant action – not just in Canada, but globally – to reduce GHGs from oil and gas.
Unfortunately, the world has hardly reached a consensus or taken unified action on fossil-fuel-related emission reductions as part of the fight against climate change. For example, the IEA recently reported that global electricity demand will increase by 5 per cent in 2021 and 4 per cent in 2022, with half of this generation coming from fossil fuels, particularly new coal projects in developing parts of the world.
In other words, global demand for fossil fuels is on the rise despite global energy markets being shot into upheaval over the past few years due to a worldwide pandemic that coincided with stronger calls for a more rapid acceleration towards clean energy use.
Today, approximately 600,000 Canadians, located mostly in Alberta, Saskatchewan and Newfoundland and Labrador are either directly or indirectly employed by the oil and gas sector. Analysis by TD Economics shows that anywhere from 50 to 75 per cent of these workers are at risk of being permanently displaced by a ‘Just Transition’ towards a net-zero future by 2050, equivalent to 312,000-450,000 lost jobs.
In a net-zero scenario, those jobs may truly be lost to history. But perhaps all the energy analysts who expect BP’s "Business as Usual" to be the most realistic demand scenario to play out are correct? If so, the world would still need 89 million barrels of oil per day in 2050 with oil and natural gas accounting for a combined 50 per cent of total energy demand and renewables just under 30 per cent.
Perhaps the lost energy sector jobs in Canada’s ‘Just Transition’ initiative would just be ‘transitioned’ to another producer in South America or the Middle East, one with weaker protections for human rights and the environment, non-existent regulatory transparency and poor governance no doubt?
China, India and other major developing economies must be on board with the energy transition to make any global net-zero pathway even possible, to make any 'Just Transition' that could permanently displace the jobs of hundreds of thousands of Canadians something we should even be discussing or thinking about doing. Otherwise, any 'Just Transition' may just result in Canadians losing out huge on the jobs and economic prosperity generated by the oil and gas sector while global market share is ceded to other nations with weaker protections for workers, human rights and the environment.
Canada Can't Afford to Lose the Oil & Gas Sector
Let’s not forget that the oil and gas industry has generated more than $500 billion in revenues for Canadian governments since 2000 and accounts for more than one-fifth of our nation’s total exports. CERI predicts the upstream sector alone will create $530 billion in economic activity in Canada between 2020-2025 at a time where our economy needs it the most.
Economists have said that the oil and gas sector "pays the bills" for Canada, while others have discussed in length the massive economic damage our country would experience if the industry was shut down or "phased" out like coal-fired power generation will be by 2030.
As said before by the federal government, “not one single worker or community can be left behind.” TD's analysis of Canada's 'Just Transition' initiative predicts exactly that, the permanent displacement of hundreds of thousands of oil and gas jobs in Canada.
Canada's ‘Just Transition’ should then focus on how we can move towards being a global supplier of choice without commensurate drops in production to reduce total GHGs from oil and gas, allowing us to continue benefitting from the prosperity created by the sector while also decreasing emission intensities associated with production (more below). This is good for Canadian families and governments, global democracy and human rights, and the environment after all!
Of the world’s top 10 oil exporters, Canada ranks number one on the following ESG indexes. Which nation would you choose to get your oil and gas from?
- Democracy Index 2020
- Global Peace Index 2020
- Social Progress Index 2020
- Rule of Law Index 2020
- Corruptions Perception Index 2020
- Green Future Index 2021
- Global Press Freedom Index 2020
- Environmental Performance Index 2020
- Sustainable Development Index 2020
- Women, Peace, Security Index 2019/20
We Can Support Both Oil & Gas and Climate Action
Don't get us wrong, Canada can and should transition towards a lower-carbon future to help in the fight against climate change. Our nation already has been doing so for many years, and as it stands today we are a global leader in renewable energy, clean technology and innovation. But any ‘Just Transition’ must be economically viable and include a balanced and fact-based discussion around how we are going to go about shifting to a low-carbon future without risking the livelihoods of hundreds of thousands of oil and gas workers who, quite frankly, are part of one of the most environmentally responsible petroleum sectors in the world.
Canada’s continued production of oil and gas and a transition to a cleaner future use are not mutually exclusive. Our existing world-class record on reducing the environmental footprint associated with oil and gas production speaks for itself:
> Since 1995, oil sands emissions intensities decreased by 44 per cent (BMO Capital Markets)
> By 2030, oil sands GHG intensity could improve another 20 to 30 per cent with the application of planned innovations (BMO Capital Markets)
> Alberta, accounting for ~80 per cent of Canada’s oil production, is one of the few global oil jurisdictions with mandatory disclosures, regulated emissions protocols and carbon taxes on excess GHGs (BMO Capital Markets)
> Between 2015-2019, Canada decreased its total volume of gas flared from oil and gas operations by 42 per cent (Global Gas Flaring Tracker Report: July 2020)
> Canada was responsible for just 0.67 per cent of the 150 billion cubic metres (m3) of gas flared by oil companies around the world in 2019 (Global Gas Flaring Tracker Report: July 2020)
> If the rest of the world followed Canada’s flaring standards, total GHG emissions from every barrel produced would drop by 23 per cent (Stanford, University of Calgary Study: Journal of Science)
Canada is also already a global leader in renewable energy production, as shown by the following facts:
> Canada was the seventh-largest producer of global energy in the world in 2020 (IREA)
> Between 2010 and 2018, renewable electricity generation across the country increased 16 per cent, with wind and solar having the largest growth (NRC)
> Canada was home to the 8th largest installed onshore wind power capacity in the world in 2019 (NRC)
> Canada also had the 8th largest liquid biofuel production capacity in the world in 2019 (NRC)
> Six out of every 10 homes in Canada are powered by hydropower (IHA)
The Canadian oil and gas sector is by far the largest spender on clean technology, accounting for 75 per cent of annual spending in Canada, and revenues generated by the sector’s activities can help fund the transition to a lower-carbon economy after all.
New emission reduction technologies and the utilization of carbon capture and storage, for example, can help Canada become one of the lowest-emitting oil and gas producers in the world. According to BMO Capital Markets, the oil sands now emit just 4 to 5 per cent more than the global average on a well-to-wheels basis, with several newer projects already boasting below-average carbon footprints. Some of Canada's largest energy firms are already investing billions of dollars into renewable energy projects and new innovations that will help the sector lower its environmental footprint even more.
Given Canada's demonstrated leadership in climate action, emission intensity reductions and so much more, why can't we support the entire energy sector? Why do we have to choose between oil and gas or climate action? We don't. We should be proud of our oil and gas workers and their accomplishments and position ourselves to be a global supplier of choice for as long as there is demand for the products they work so hard to sustainably produce.
Canada's 'Just Transition' Must Be Based in Reality
Canada’s ‘Just Transition’ initiative, while important in the fight against climate change, must not get ahead of itself for all of the reasons above. If oil and gas are going to be in high demand in 10, 20, and even 30 years from now, it only makes sense that Canada is a go-to supplier of choice because of our outstanding ESG performance and existing leadership on climate action and renewable energy.
Yes, Canada can and should always do better to reduce its GHG emissions, but let’s give our country and its world-class petroleum sector the recognition it deserves. We owe it to the hundreds of thousands of oil and gas families across this great nation to focus on transitioning into a role as a global supplier of choice, and not away from the very jobs that contribute immensely to the high standard of living enjoyed by Canadians from coast-to-coast.
Join Us Today!
Canada’s oil and gas industry is at the forefront of environmental innovation and reducing our emissions while still meeting growing consumer energy demand globally. #MoreCanada pic.twitter.com/CaC0eDhJPy— Oil Sands Action (@OilsandsAction) August 10, 2021
Share this page to spread the word.
SAGD Project - Cenovus Energy Five companies which together account for about 90 per cent of Canada’s oil sands production have announced an unprecedented alliance to achieve net-zero greenhouse gas (GHG) emissions by 2050. The Oil Sands Pathways to Net Zero initiative aims ...
Fatih Birol, Executive Director of the International Energy Agency (IEA), says that his organization expects oil and gas demand to return to “pre-crisis” levels sooner than first anticipated. The IEA’s revelations come not even a month after it said that no new investment is n...
Key Points • The IEA's Net-Zero to 2050 scenario requires massive changes to the global energy infrastructure system and record-setting deployments of renewables and EVs • Current actions by governments in parts of the world will make it extremely difficult for the IEA's scen...