Energy picture much bigger than a pipeline

A global shift to clean power is underway, Merran Smith and Dan Woynillowicz write.

Protests. Politics. Polarization. Pipelines are dominating our national discourse once again.

Is it a serious issue? Certainly. And yet the time and attention it’s consuming risks distracting Canada’s business and political leaders from the much broader and deeper shifts occurring in the world’s energy system.

Because just as social media upended communications, the transition to clean energy is rapidly undoing century-old expectations around transportation and, yes, oil.

Consider this: Roughly half of all electric cars sold globally last year were in China, which saw a 73 per cent increase in EV sales over 2016. China is now the world’s biggest manufacturer of EVs.

At the same time, China put 90,000 fully electric buses on its roads last year, and in December, the city of Shenzhen announced that all 16,359 buses in its fleet were officially electric. For context, New York City has one-third as many buses.

With so much attention on the prospect of exporting oil to China, you may not realize that Canadian clean tech companies are exporting solutions that support Chinese efforts to minimize their oil consumption and improve air quality. Toronto-based Hydrogenics, for example, produces fuel cells that convert hydrogen into clean electricity. Growing Chinese demand has been a boon for them.

And by no means is this transition confined to China. Britain, France, Germany, Norway, the Netherlands, Scotland — and yes, China — have all announced they will eventually prohibit the sale of gas- and diesel-fuelled vehicles, sending shock waves through auto and oil sectors.

While there are just three-million electric cars on the road today, BP’s most recent Energy Outlook forecasts there will be 300 million by 2040. So perhaps it isn’t surprising that the world’s largest publicly traded oil and gas companies are initiating an evolution of their own. As the CEO of Shell (yes, Shell) put it, “Societal acceptance of the energy system as we have it

Roughly half of all electric cars sold globally last year were in China.

is just disappearing.” His next car, he said, will be electric, but that’s just the tip of the iceberg. Shell announced last year that it will be investing up to $2 billion annually in clean energy by 2020 — while also divesting all of its Canadian oilsands assets.

And they aren’t alone.

Statoil has made big investments in offshore wind power, drawing on its experience with offshore oil drilling; the company plans to invest roughly $16 billion in renewables by 2030. Total, a top player in solar and battery power, has similar ambitions, aiming for low-carbon business to account for 20 per cent of its portfolio by 2035. And BP is once again investing heavily in solar, wind and biofuels.

It’s a smart move, according to a recent report from Wood Mackenzie, which says oil and gas companies that adopt renewables early will be at a competitive advantage, while slow adopters could find themselves at a structural disadvantage. Despite this, among Canadian oil and gas producers, only Suncor has begun seriously diversifying into renewable energy (yet it reduced the number of wind power assets in its portfolio last year).

In contrast with the oilpatch, Canadians understand the need to transition. When asked about the best way forward for Canada’s economy in an Abacus Data public opinion survey last year, just one-third suggested Canada should prioritize promoting the use of Canada’s oil and gas. Two-thirds said Canada should prioritize other ways of growing our economy.

In a followup survey, 74 per cent agreed that the pace of innovation in new forms of energy is quick, and Canada must be part of this new energy revolution — and not fall behind because of a reliance on oil.

What does all this boil down to for Canada? The very real risk of falling behind. Not fully seizing a world-shifting opportunity.

Whether or not more pipelines should be pursued, the global energy transition is happening — with or without us. And Canadians don’t want us to be left behind.