Taking action in support of our vital natural resource sector

KEY POINTS

• Global context is needed when discussing the transformation of energy systems in Canada

• We can support both oil and gas and renewables such as wind, solar and hydro - this isn’t an either-or conversation

• Local communities directly affected by the transformation of our energy systems should be the ones making the decisions on any “transition” to come

The federal government’s ‘just transition’ policy has caught the attention of Canadians across the country – especially in Alberta, Saskatchewan and Newfoundland and Labrador, provinces that are home to the bulk oil and gas workers that may be disproportionately affected by the legislation.

In light of having balanced, fact-based and pragmatic discussions around important topics of the day such as resource security, economic prosperity and climate action, we’d like to share five realities about this policy for all Canadians to consider.

So, in point form, here are five realities of the ‘Just Transition’ policy that Canadians cannot ignore.

Reality #1 – Global oil and gas demand continues to grow to new record levels. Prematurely transforming the national economy away from oil and gas – a major source of wealth for Canadians and Indigenous Peoples – will significantly hurt our overall wealth and prosperity.

• Nobody should assume fossil fuel consumption is going away anytime soon. Global liquefied natural gas demand is projected to grow 76% by 2040 ^[1]. Meanwhile, oil demand is expected to grow past record-high levels of 2019 for decades yet based on current policies ^[2].

• Canada’s oil and gas sector generates incredible wealth and prosperity for Canadians from coast-to-coast. For example, from 2000 to 2019, the sector generated nearly $505 billion for Canadian governments, and from 2023-2032 it is expected to generate another $594 billion ^[3][4]. That’s roughly $1.1 trillion in government revenues used to pay for things such as schools, roads and hospitals.

• Oil and gas exports account for roughly one-fifth of Canada’s total annual merchandise exports on average every year. From 1988 to 2019, the cumulative value of Canadian oil and natural gas products was more than $1.94 trillion, adding major surpluses to trade balances ^[5]. In 2021, oil and gas exports accounted for 29% of Canada's total exports.

• While global oil and natural gas consumption levels are hitting new record-highs, less stable, reliable and responsible energy producer nations are scrambling to account for as much international market share as possible – and reap the economic benefits. For example, dozens of countries are expanding their liquefied natural gas (LNG) export sectors to meet rapidly growing global gas demand.

• Canada is essentially forfeiting the economic opportunities associated with expanding our energy export infrastructure to reach new markets amid growing global demand. For example, a 2020 report found that a healthy LNG sector on Canada’s west coast (with several operational facilities) could create more than $500 billion in economic activity, tens of thousands of jobs, and billions of dollars in government revenues for Canadians over the next 40 years. Today there are still zero operational LNG export facilities in Canada, while the U.S. and other countries have rapidly accelerated the development of their own industries.

• Many Indigenous communities in Western Canada now see natural resource projects such as the Trans Mountain expansion and Coastal GasLink as opportunities to generate own-source revenues and lift their communities up out of extreme poverty rates, where one in four people are impoverished ^[6]. Through collaboration and ownership in such projects, Indigenous Peoples are improving the socio-economic conditions within their communities, a vital step towards economic reconciliation with First Nations.

Reality #2 – Canada’s ‘Just Transition’ policy must be developed in a global context, including rising oil and gas demand + concerns about energy security and how Canadian energy can reduce emissions abroad.

• Canadians cannot have an honest and realistic discussion on the energy transition in isolation. Greenhouse gas (GHG) emissions are global; they do not respect international boundaries. Today’s energy trade flows are also globalized. Such a complex global topic needs a global discussion – and global solutions.

• Canadian natural gas is a global solution to some of our current problems. Canadian-made LNG, for example, is expected to be some of the least carbon-intensive LNG of its kind in the world. More Canadian LNG on global markets is a win for global energy security and the environment while benefitting Canadian and Indigenous communities here at home.

• Independent research teams at three reputed North American universities found that Canadian LNG to China for power and heat generation, when compared with coal, could accomplish a 34-62% reduction in CO2 emissions per unit of electricity generated.

• Canadian liquefied natural gas (LNG) exports to Asia could reduce annual emissions by the equivalent of removing every single car from Canadian roads - and then some ^[7].

• Canada should do everything possible to capture more oil and gas market share. Our country is one of the most stable, responsible and reliable energy exporters globally and one of the few remaining democratic producing countries on the planet.

• Autocratic countries account for most of the world’s oil and natural gas production + exports. History has made it clear that democracies are the better choice as stable and reliable energy supply sources.

• The current war in Ukraine has brought energy security into the limelight for countries in Europe, Asia and elsewhere abroad. As we have seen, sourcing energy from unreliable autocratic nations can be a significant geopolitical risk, which, in the worst-case scenario, can result in widespread destruction, humanitarian crises and the tragic loss of life.

• Among the world’s top oil and natural gas exporters, Canada ranks at the top of the list on several Environmental, Social and Governance (ESG) related indices. Canadian energy is the best choice if you support social progress, human rights and environmental protection.

• Diminishing Canada’s presence on global energy markets through an untimely energy transition may result in more atmospheric emissions globally and less energy security for our closest allies and trade partners – as we have seen in Europe and elsewhere abroad.

Reality #3 – Canada’s ‘Just Transition’ must carefully avoid the severe and unintended consequences of energy supply shortages. 

• A ‘just transition’ away from oil and gas jobs and production at a time when Canada relies on fossil fuels for more than 80% of its total energy supply ^[8] could lead to increased reliance on foreign producers abroad. As a result, Canadian energy security would suffer, as would hundreds of thousands of workers across the country who rely on the sector to provide for their families.

• The “de-industrialization” of Germany and other parts of Europe resulting from a lack of affordable energy for factories is just one stark example of the economic consequences of energy shortages ^[1]. Moreover, some analysts say the lowered economic output associated with the collapse of entire industries in Germany and elsewhere around Europe may be permanent ^[9].

• Some European industries have been forced to switch back to coal or oil for electricity supply, counteracting emission reduction efforts and prolonging the use of more carbon-intensive fuels worldwide ^[10]. This is counterintuitive to the notion from anti-fossil fuel opponents that if we transition away from fossil fuels today, there will be fewer GHGs in the atmosphere tomorrow.

• Europe’s energy crisis took its toll on markets across oceans. In Canada, for example, energy prices have been the driving factor behind the surge in the cost of living over the past year ^[11]. In a globalized society that relies heavily on fossil fuels for the transportation of goods, high energy costs are transferred to consumers, which has made life unaffordable for millions of people across the globe.

• Reducing Canada’s capacity to provide the world with stable, responsible and reliable oil and natural gas supplies does nothing to lower emissions or foster global peace and stability. Blocking Canadian energy infrastructure and pipelines allows energy-rich autocracies with less transparency in government and less protections for human rights and the environment to obtain more global market share, empowering these nations with an abundance of revenues to do with what they wish.

• A truly ‘just transition’ has to engage with stakeholders in local communities across Canada and ensure the task force is geographically and vocationally reflective of the groups affected. It also has to avoid partisanship and polarization, and provide jobs when and where they are required.

• Any energy transformation must take a balanced and timely approach on the path towards net zero by 2050 and avoid leaving any humans behind regardless of their industry.

Reality #4 – A ‘Just Transition’ must recognize Canada’s world-class leadership in reducing environmental impacts, advancing social progress and upholding human rights.

• Why would Canada cede global energy market share when we can supply even more of the world’s energy needs – at a higher level of environmental compliance and regard for social progress and human rights? If you care about these things, you support Canadian oil and gas.

• It is not credible to suggest that Canada’s oil and gas industry has not made significant progress at decarbonization.

• Of the world’s top oil and natural gas producers, Canada ranks among the highest on Environmental, Social and Governance related indices.

• Canada gets 83% of its electricity supply from non-emissions sources such as hydro, solar, wind and nuclear.

• Canada’s oil and gas industry has reduced GHG emissions per barrel by a third since 1990.

• Regarding LNG specifically, LNG Canada’s emissions intensity of 0.15% of CO2 per tonne produced is less than half the global industry average.

• Canadian oil and gas producers were responsible for just 0.67% of total gas flared from oil and gas operations around the world in 2019.

See more environment-related oil and gas facts here. 

Reality #5 – Canadians need to be honest with each other.

Taking on a balanced approach to a transformation of our current energy systems, these three things can be true at the same time:

1. We should prepare for a transition to less fossil fuel use over some period of time, and

2. We should work together to ensure consumers have the power they need to go about their lives, which have become more power-dependent over the last few decades than many would have imagined (manufacturing, transportation, healthcare, education, residential and commercial heating and cooling of buildings, transportation, communications, data storage and many other needs)

3. We can support all forms of energy simultaneously while continuing to reduce their emissions intensities. This isn’t an “either-or” discussion, but one that should include both fossil fuels and renewables for the betterment of the world. It is proven that the more access people have to energy, the better their standard of living and quality of life ^[12]. It is also proven that as people get richer, they focus more on the health of their environments.

There has been too much polarization in the energy discussion for a long time. Moving forward, we have to come to terms with our energy needs, including:

WHERE will that current and future power requirement come from within the globe?

WHAT technologies will be used to supply that growing power requirement?

WHEN will these technologies be available at scale to supply the energy we’ll need?

WHO will benefit from the employment, tax revenues and royalties? Saudi? UAE? Canada?

HOW will these new technologies support our Canadian communities (both Indigenous and non-Indigenous) across Canada?

How “Transitions” Have Gone in the Past

The Canadian government began working on “Just Transition” in 2018, creating a “Just Transition” task force focussing on the future of coal workers. By all accounts, it was a failure.

“Overall, we found that Natural Resources Canada and Employment and Social Development Canada were not prepared to support a just transition to a low-carbon economy for workers and communities,” the Commissioner of the Environment and Sustainable Development wrote in a report last year.

“Although the government had identified Natural Resources Canada as the lead department to deliver just-transition legislation in 2019, the department took little action until 2021.”

In other words, nobody should be surprised that there is some skepticism around the idea of the federal government smoothly transitioning workers out of major sectors of the economy. Let’s fix it. That starts with having balanced, honest and fact-based discussions on global energy demand, the true speed of any energy transition, and how much Canadians have to lose (and how much other less responsible producer nations abroad have to gain) by hindering the responsible development of an industry which has contributed immensely to our country's overall wealth and prosperity for decades.

More #CanadianEnergy helps us accomplish three important goals:

✅ Energy Security
✅ Economic Prosperity
✅ Environmental Leadership pic.twitter.com/nzFz49Y3Ls

— Canada Action (@CanadaAction) March 4, 2023

SOURCES

_{1 – Shell – LNG Outlook 2023, Date Accessed: February 2023 (https://www.shell.com/energy-and-innovation/natural-gas/liquefied-natural-gas-lng/lng-outlook-2023.html)}

_{2 – International Energy Agency – World Energy Outlook 2022, Date Accessed: February 2023 (https://www.iea.org/reports/world-energy-outlook-2022)}

_{3 – Canadian Energy Centre – $701 billion: The Energy Sector’s Revenues to Canadian Governments 2000-2019, Date Accessed: February 2023 (https://www.canadianenergycentre.ca/701-billion-the-energy-sectors-revenues-to-canadian-governments-2000-2019/)}

_{4 – Canadian Energy Centre – $495 billion in government revenues from the Canadian oil and gas industry projected over next decade, Date Accessed: February 2023 (https://www.canadianenergycentre.ca/495-billion-in-government-revenues-from-the-canadian-oil-and-gas-industry-projected-over-next-decade/)}

_{5 – Over $1.9 trillion: The value of Canada’s oil and gas exports, 1988 to 2019, Date Accessed: February 2023 (https://www.canadianenergycentre.ca/over-1-9-trillion-the-value-of-canadas-oil-and-gas-exports-1988-to-2019/)}

_{6 – Canadian Poverty Institute – Poverty in Canada, Date Accessed: February 2023 (https://www.povertyinstitute.ca/poverty-canada)}

_{7 – Offshore Energy – Canadian LNG exports to Asia could cut emissions by the equivalent of removing all vehicles from Canadian roads, new study shows, Date Accessed: February 2023 (https://www.offshore-energy.biz/canadian-lng-exports-to-asia-could-cut-emissions-by-the-equivalent-of-removing-all-vehicles-from-canadian-roads-new-study-shows/)}

_{8 – Natural Resources Canada – Energy Factbook 2022-2023, Date Accessed: February 2023 (https://natural-resources.canada.ca/sites/nrcan/files/energy/energy_fact/2022-2023/PDF/Energy-factbook-2022-2023_EN.pdf)}

_{9 – Financial Times – Germany confronts a broken business model, Date Accessed: February 2023 (https://www.ft.com/content/50a462b3-0e8b-49e1-873c-9505760d4a66)}

_{10 – The Wall Street Journal Podcasts – Europe is Turning to Coal. What Does That Mean for Climate Change?, Date Accessed: February 2023 (https://www.wsj.com/podcasts/the-journal/europe-is-turning-to-coal-what-does-that-mean-for-climate-change/a33199d2-2f99-484e-b995-2389bb3b7482)}

_{11 – CBC - As the cost of gas climbs, here’s what’s fuelling the price at the pump, Date Accessed: February 2023 (https://www.cbc.ca/news/business/gas-prices-explained-2022-1.6460817)}

_{12 – Our World in Data – Access to Energy, Date Accessed: February 2023 (https://ourworldindata.org/energy-access)}