Sliding global demand for Canada's oil and gas production between 2025 and 2050 will accelerate the energy transition away from fossil fuels faster than many in government are calculating, said the chair of international think-tank the Energy Transitions Commission (ETC).
Adair Turner said a declining market for the country’s fossil fuel exports will potentially strand oilsands assets but at the same time ratchet up the need for carbon-capturing technologies to clean up remaining production if Ottawa is to meet its mid-century emissions reduction targets.
Turner pointed to what he believes are over-optimistic Canada Energy Regulator (CER) forecasts suggesting international appetite for Canadian oil and gas would still come in at a daily four million barrels (bbl) and around 11 billion cubic feet (bcf) of oil and gas, respectively, by 2050, down from around 5.5 million bbl and 17 bcf today.
These demand projections are in yawning discrepancy with global net-zero figures backed by the ETC, which expects a worldwide market for closer to one million barrels a day (b/d) of oil and under six bcf/d of gas by 2050.
"Every country has a dominant myth about why it is different [when it comes to the energy transition], said Turner, speaking with Canada’s National Observer at Canada's Net-Zero Forum in Toronto on Tuesday.
“But when you consider that if Canada's net-zero and the global net-zero [forecasts] are scenarios where the rest of the world grasps the opportunity of using [renewable energy] technologies to get to net zero and does it, then Canada's oil and gas exports will fall dramatically whether [proponents of Alberta oil] want it or not.
"If in 2050, the world is going to be using 20 million barrels of oil a day, the cheapest and likely cleanest place to produce it will not be Alberta, it'll be Saudi Arabia and Iraq, where they get the stuff out of the ground for US$4 to US$5 a barrel with very little Scope 1 and 2 emissions,” said Turner. “That is a context which Canada needs to closely consider.”
Scope 1 refers to emissions directly controlled by a company, such as gas flaring, while Scope 2 covers emissions from burning fossil gas to generate electricity used to extract oil.
"There is a serious challenge, of course. It will be an income loss [given oil and gas' contribution to the national gross domestic product], but it is still going to happen faster [than forecast], first for oil and more slowly for gas,” he said.
The CER's bullish view of future international demand for Canadian oil and gas is further complicated by a disparity in electrification forecasts, with the ETC expecting 55 to 65 per cent of the world to be powered by green electricity by mid-century, while Canada falls off pace with a figure closer to 45 per cent.
"This bigger reliance on fossil fuels [in Canada] will mean it also has a much bigger role for a set of negative emissions technologies [primarily carbon capture and storage (CCS)] in order for it to add up to net zero [by capturing and sequestering higher levels of released emissions],” said Turner.
“So the 'equilibrium solution' [clean energy production plus emissions reduction] will be different and costlier.”
Turner makes allowance for the likelihood that blue hydrogen generation — run off fossil gas but with emissions-limiting CCS — could have a longer run as part of the country's energy transition than is currently being considered. But this would still require "the costs of CCS technology are brought down in a way that we have not seen so far."
Canada's solar and wind power fleet, though in its infancy with a combined 19 gigawatts (GW) installed nationwide, could grow to tap "what is a massive resource," he said.
While Canada is in the Northern Hemisphere and ”clearly not in the [solar] class of North Africa, the Sahara or Chile,” the country’s so-called “irradiation levels” — the intensity of the solar resource — are better than many parts of northern Europe where photovoltaic (PV) arrays continue to be widely installed, said Turner.
He added that Canada is home to world-leading offshore wind resources and “not-too-bad onshore wind, particularly across the Prairies.”
"There is a solution that electrifies Canada as rapidly and completely as we have suggested in [the ETC's] global scenarios and does so with renewables and at a reasonable cost."
Turner gauges CCS' potential industrial uptake on a like-for-like basis, with "all other competing [transition] technologies." Top of the table, he said, will be "highly modularizable" PV, electric vehicles and batteries, followed by heat pumps, wind, hydrogen electrolyzers, CCS and large-scale nuclear. Those that are "deployed fastest with greatest mass production" will be the commercial — and climate — winners.
"I would be surprised if [CCS] ends up being the lowest-cost [transition] solution because it won't be cheaper than putting in even more electrification, more renewables and so on. CCS will be about buying some quite high costs at the margins."
Turner remains “bewildered” by the failure of the international oil and gas industry to bring down the cost of CCS over the last 10 years. “Oil and gas has a huge long-term interest because it is the only available technology that could make continued large-scale fossil fuel production compatible with net zero. And the results aren’t there. So either they aren’t trying hard enough or CCS just isn’t coming down the cost curve.”
Comments
The Alberta government, under Smith, has clearly lost its mind and its soul.
Successive Alta govts have had DECADES to prepare for the fading of fossil fuels, and the transitioning of economies and workers, to one of the many other opportunities the province has to offer.
This is insanity--and evil.
Insanity and evil sums up Smith perfectly.
"...insanity and evil..."
It's also standard practice for overtly ideological right wing governments that have been bought by industries with no inherent interest in protecting the common good of the people.
This is a bit of good news I guess. However, I'm skeptical about the emphasis on CCS. According to the IPCC's Multiple Opportunities for Scaling up Climate Action, CCS is at the bottom of the list- most expensive and least effective. It just seems like a strategy for oil and gas companies to keep up production while pretending to address Climate Change. https://www.ipcc.ch/report/ar6/syr/figures/summary-for-policymakers/fig…
That's exactly what the article said, though. Well, they didn't come out and say "pretend" . . . but they sort of eliminated the other possibilities.
I really don't like the idea of CCS as a solution. It does not capture and store carbon, it captures and stores carbon dioxide which is two thirds oxygen. If permanently stored, that oxygen is lost to us forever. Let's just not burn fossil carbon in the first place.
An exemplary article. The Achilles heel of successive Alberta governments once Peter Lougheed left politics is economic competence.
Being a rich, high income province came about through exploiting its natural resource inheritence without thinking very hard about the mounting environmental liabilities and costs, let alone banking and investing its wealth for future generations. Being rich doesn't mean a province holds the patent on wisdom.
How is rhat possible? By electing people who willingly sold themselves to the will of Big Oil, a majority foreign owned entity that couldn't give a fig about ordinary Albertans, and that is lining up to abandon them as the transition away from fossil fuels builds.
The most galling aspect of this circumstance comes in two parts. Part one is the decades of loudmouth braggadocio of conservatives who love displaying that wealth without a clue about how transitory it can be. Part two is just far down the rabbit hole Alberta's leaders have fallen, to the point where they will protect the damaging status quo by eliminating any hint of economic diversification (e.g. renewables) seeing it as competition while at the same time cajoling the feds to increase the flow of subsidies for last century industry and upping the volume on political rhetoric and looney conspiracies.
The bigger they are.....you know how it goes.