• Global demand for fossil fuels is at record levels and still growing.
• The energy “transition” will take a lot longer than anti-Canadian energy activists suggest.
• Stopping Canadian energy projects does nothing to keep oil and gas from being produced or consumed globally.
• Energy security is a growing concern for policymakers; Canada can help provide energy security to the world.
Global events over the past two years have highlighted the need for a more serious and pragmatic conversation around fossil fuels, renewables and the speed of the overall energy transition to come.
Energy security has now taken centre stage in the minds of policymakers across the globe. Several governments are looking to shore up energy supplies to blunt surging prices while keeping the power on for homes and businesses across their respective nations.
Canada, the world’s fourth-largest oil producer and sixth-largest producer of natural gas, seems a likely candidate to fill this supply void with its responsibly produced energy. After all, of the world’s top producers and exporters, we consistently rank at the top for all Environmental, Social and Governance (ESG) indices and are one of the most transparent, regulated and environmentally conscious energy producers on the planet. The latest global developments also mean we are now talking more about the reality of Energy Security Guarantees.
And with growing global demand for oil and natural gas for decades to come, it only makes sense that the most sustainable producers are put up to the job – nations like Canada with demonstrable progress and continued commitments to reducing environmental impacts.
But in usual fashion, opponents of Canadian oil and gas disagree, ignoring the current global energy realities set forth by recent events.
Here are some of the important facts these activists turn a blind eye to and why we need to start having a more balanced and realistic discussion around energy security, energy demand, and the energy transition to come.
Ignored Reality #1 – Fossil fuel demand is at record levels and growing
Anti-energy activists continue to sing the same old tune, suggesting global oil and gas demand will stop growing in the imminent future.
“We don’t need this stuff anymore,” one of them said in a recent debate with Canada Action. However, several current projections from reputable energy firms and organizations contradict such claims:
#1 - According to the International Energy Agency’s WEO 2021, oil demand is projected to grow to 104.1 million barrels per day (bpd) by 2026, up 4.4 million bpd over 2019 levels. The IEA’s Stated Policies Scenario (STEPS) shows oil demand hovering at around 104 million barrels per day until the mid-2030s and declines very gradually to 2050.
#2 – Shell’s latest corporate outlook projects global LNG demand to grow 90% by 2040, up to more than 700 million metric tons per annum. The IEA expects natural gas demand to grow nearly 15% by 2030 (STEPS).
#3 - The IEA has also found overall coal demand was expected to grow six per cent in 2021. This could lead global coal production – of thermal and metallurgical quantities – to rise to its highest-ever level in 2022, and that worldwide it “…may well hit a new all-time high in the next two years.”
As it stands today, every time crude oil demand has dipped in the past, it has returned to previous record highs and grown higher thereafter – like it did in late 2021.
Canadians can have both oil, natural gas, AND renewables; this doesn’t have to be an “either-or” conversation, but one where we can support all forms of energy for the benefit of our families and the global environment.
Ignored Reality #2 – Long and drawn-out nature of the energy transition
Anti-oil and gas activists continue to cite the IEA’s net zero pathway as evidence of the world’s trajectory of moving away from fossil fuels towards renewable sources. Upon its release, the IEA suggested the world needed to immediately end all investments into new coal, oil and gas production if it were to accomplish net zero emissions by 2050.
Fast-forward to nearly a year later, and we can say with certainty that is not what has happened globally. According to Rystad Energy, overall oil and gas investments will increase to $628 billion in 2022, up 4 per cent from $602 billion in 2021. Coal investments are also on the rise in China, India and other emerging market economies.
The Financial Times pointed out the speed of which the transition to net zero is occurring compared to the goalposts outlined by the IEA’s pathway.
Yes, the world needs to continue the push towards renewable power generation while investing in new cleantech and innovation to drive down GHG emissions from major emitting sectors. But activists need to take a step back and be more realistic about how fast the overall transition is going to happen.
False narratives suggesting that Canadian oil and gas should not have a significant place in the world’s energy mix for years to come are negligent of current realities – energy security/scarcity, global demand projections and the speed of the overall transition.
Anti-oil and gas activists are also negligent of the incredible wealth generated by the oil and gas sector for Canadian governments and families, which in turn could help pay for some of the immense $275 trillion of projected investment needed to make the energy transition globally.
Ignored Reality #3 – Renewables and EVs require an immense amount of minerals and metals
International Energy Agency
The world will need much higher production levels for several minerals and metals to support an energy transition away from fossil fuels. The IEA, for example, suggests demand for lithium, graphite, cobalt and nickel will need to grow by 42x, 25x, 21x, and 19x, respectively, to achieve its Sustainable Development Scenario.
Today’s supply and investment plans for several critical minerals fall well short of what is required to see an accelerated deployment of wind turbines, solar panels and electric vehicles. Additionally, much of these minerals come from a small group of producers – which should raise concerns given current global events.
The stark reality is that the production of many energy transition materials is more concentrated than that of oil or natural gas. Current events highlight the need not only for energy security, but for mineral and food security as well.
For example, more than 75 per cent of global lithium, cobalt and rare earth metal production is controlled by three countries. The Democratic Republic of the Congo and People’s Republic of China accounted for roughly 60 per cent and 70 per cent of global production of rare earth elements and cobalt in 2019, respectively.
International Energy Agency
Canada has a vast wealth of several critical minerals needed for the energy transition. As the only country in North America with the required natural resources to produce advanced batteries for EVs, the opportunity for our mining sector is unprecedented.
Canada’s Towards Sustainable Mining initiative and world-class performance on Environmental, Social and Governance metrics means that these resources will be produced under one of the most environmentally conscious regulatory regimes in the world.
However, as with any extractive and developmental process, there will be environmental impacts associated with the mining of these materials.
Are we prepared to accept these impacts? Or, will ENGO’s vehemently oppose any and all natural resource development only to offshore that production to countries often with weaker protections for human rights and the environment – just like they have with their opposition to oil and gas projects over the past several years?
Serbia’s withdrawal of exploration permits for a lithium mine after months of protests is a great example of the shortsightedness of offshoring valuable energy, mineral and agriculture products.
The World Bank estimates that globally the production of lithium will need to increase by 500% by 2050. Where will all that critical material come from if we continue to shutdown natural resource projects and ignore the importance of balancing economic prosperity with concerns over resource security and the global environment?
Ignored Reality #4 – Stopping Canadian energy projects does nothing to keep resources in the ground
According to the Financial Post, nearly $150 billion worth of energy projects have been cancelled in Canada over the past few years. Go back further to the late 2000s and that figure grows significantly higher.
For example, 18 LNG export terminals have been proposed in Canada since the mid to late 2000s. Today, just one (LNG Canada) is under construction. Meanwhile, the United States has rapidly developed its LNG industry and is now the world’s largest exporter with seven operational facilities and several more underway.
Additionally, since the Keystone XL pipeline was first proposed in 2008 until it was cancelled in 2021, global oil demand had grown by more than 10 million barrels per day. The Northern Gateway and Energy East pipelines (cancelled in 2016 and 2017, respectively), would have allowed Canada to export its responsibly produced oil to countries worldwide, especially in Asia and Europe.
While anti-oil and gas activists have opposed all major energy projects in Canada, state-owned producers have risen to the occasion.
Saudi Aramco, the world’s leading oil producer, recently announced plans to boost oil production capacity by at least 1 million barrels per day, to 13 million, by the 2030s. Iraq, another major state-owned producer, is planning to double its oil production to 8 million barrels per day by 2027.
It's clear that stopping Canadian energy projects does nothing to keep a single molecule of oil and gas in the ground. All it does is cede market share to other producers, often with much weaker protections for human rights and the environment while being a sorely missed economic opportunity for Canadians.
Ignored Reality #5 – A new meaning for ESG = Energy security guarantees
Balancing concerns around energy security and the global environment will be a new challenge for policymakers across the world.
Over the past several years, energy policy and investment have been overwhelmingly focussed on environmental impacts. Energy companies have been pressured to adopt net zero emission targets, while government opposition to fossil fuels has discouraged oil and gas exploration, effectively halting many new projects in the West.
But today’s events are making many leaders rethink their energy policies.
Boris Johnson, Prime Minister of the United Kingdom, brought up the importance of energy security at a recent press conference.
“One of the things we are looking at is the possibility of using more of our own hydrocarbons, and you’ll have heard already about what the business secretary has had to say about licences for UK domestic production,” said Johnson.
“That doesn’t mean we are abandoning our commitment to reducing CO2 … We have got to reflect the reality that there is a crunch on at the moment. We need to intensify our self-reliance as a transition with more hydrocarbons.”
Other nations are also looking for new sources of supply, as energy security concerns develop amid turmoil in global markets.
Latvia’s Ambassador to Canada has suggested his country would welcome shipments of Canadian LNG to help Europe reduce its dependence on other producers.
“We are trying to build a resilient energy system,” Kaspars Ozolins mentioned in an interview. “If Canada is going to invest in LNG, we would wholeheartedly support it.”
Canada, home to a vast wealth of energy resources, has an opportunity to play a key role in providing energy security to trade partners in Europe and elsewhere around the world. With supportive government policies, we can become a go-to oil and gas supplier of choice on international markets in the short to medium-term.
Canadians produce energy under one of the most stringent regulatory regimes seen globally. We are also one of the most transparent and environmentally responsible producers on the planet and should be seen as a stable and reliable source for the world’s energy needs.
Yes, we need to move towards more renewable energy in the fight against climate change, but we also must consider the dangerous and far-reaching ramifications that energy scarcity is having on families around the globe.
Opponents of Canadian oil and gas would do well to understand that security will be a big part of the ‘S’ in ESG moving forward into the future. Canada, a stable and reliable source of energy, can and should be playing a significant role in providing that security to the world – benefiting families and the global environment.
The World Needs More Canada
The world needs more responsibly produced Canadian natural resources!
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