Environmental groups in Canada say governments and the oil and gas industry can no longer pretend there is an economic case for increased oil production after the latest international energy forecasts suggest demand for Canadian oil will drop before the end of this decade.
But the International Energy Agency also said there are new opportunities for oil and gas companies to turn their “skills, competencies and resources” into a competitive advantage for clean energy technology. For its part, the Canadian oil industry argues that it is more committed to being cleaner and greener than most other producers and should be used as an investment to help finance clean technology in other areas.
The International Energy Agency predicted in a report released this week that, under existing climate policies, oil production in Canada will increase by about 700,000 barrels per day by 2030 before starting to decline. .
If Canada implements the new policies promised by the Liberals, including mandating more sales of electric cars and capping emissions from oil and gas production, available Canadian oil will decline by 100,000 barrels per day. ‘by 2030.
And in a zero net policy – where all greenhouse gases still emitted are captured by 2050 – the oil supply will drop even faster.
Globally, the IEA predicts that with existing policies, demand for oil will peak around 2030. With policies to meet tighter targets by 2030, demand will peak by 2025. Below zero net, demand peaks even earlier and will be reduced by a fifth in less than 10 years and by more than 75% by mid-century.
Increasingly, more expensive, more emission-intensive Canadian oil will be driven out of the market by cheaper oil from the Middle East and Russia, the report suggests.
“The IEA report does a good job of saying, ‘Look, especially countries like Canada where the cost and carbon are high, we’re going to be stuck,” said Keith Stewart, senior energy strategist at Greenpeace. Canada.
The international agency is also clear that the only scenario where the world meets its Paris climate agreement target to minimize global warming is the net zero plan, and has stated in this case that there is no no good investment to make in expanding oil production after this year. . It is not just in Canada, but around the world.
Stewart said the report underscores that it is time for Canada “to deal with the decline of the oil industry and the growth of alternatives.”
“I think this report says very clearly that you are going to sell less oil, do it with it,” he said. “And the minute we actually start planning for this… then we can continue the work and reap these benefits. “
Tim McMillan, president of the Canadian Association of Petroleum Producers, said Canada’s oil and gas industry is a “leading investor in emissions reduction and clean technology” and that investments in it will support both hundreds of thousands of jobs and will provide government revenue to fund clean technology.
“As we see countries around the world grappling with an energy crisis and failing to deliver responsible energy to their citizens, Canada must act and provide a safe haven for investments in natural gas and oil, so that our trading partners do not have to rely on others who are not as determined to reduce their emissions relative to Canada for their energy needs, ”he said.
Demand for natural gas is not affected as quickly as oil, in part because many countries, including Canada, will use it to replace coal as a cleaner source of electricity, or to make electricity. hydrogen.
But even so, in a net zero world, demand for natural gas will stop growing around 2025, and the IEA predicts that there are no new natural gas projects needed beyond those already in development. By 2050, he expects natural gas to provide just one percent of the world’s electricity, up from 20 percent today.