PLATEAU POINT
How new IEA emissions targets will affect the oilsands.
It could spell the end of an era. The International Energy Agency, which was hastily founded by developed oil-consuming countries back in the 1970s to keep an eye on global markets and ensure they never ran out of crude supplies, is now calling for new proposals that could see oil demand plateauing after 2020.
In the run-up to the United Nations Climate Change Conference (COP21), being held in December in Paris, the IEA is proposing four strategies to help transition to a decarbonized world: ensuring carbon emissions peak by 2020, setting long-term emission targets, five-year reviews and establishing a process for tracking achievements in the energy sector.
With energy production accounting for two-thirds of the world’s greenhouse-gas emissions, policy-makers are training their sights on coal and crude oil production, leading to policies that could curtail investments in many fossilfuel developments, including the oilsands.
“Any climate agreement reached at COP21 must have the energy sector at its core or risk being judged a failure,” said IEA chief economist Fatih Birol in a statement.
The Paris-based agency believes that a peak in global energy-related emissions could be achieved as early as 2020 if governments implement five key policy measures — so-called ‘bridge scenarios’ — that include banning coalfired power plants; raising investments in renewables to US$400 billion by 2030, from US$270 billion currently; phasing out energy subsidies for consumers; energy efficiency in transportation and buildings; and reducing methane emissions in oil and gas production.
“These measures have pro- found implications for the global energy mix, putting a brake on growth in oil and coal use within the next five years and further boosting renewables,” said the IEA in an executive summary received by the Financial Post ahead of the report’s full release Monday. “In the bridge scenario, coal use peaks before 2020 and then declines while oil demand rises to 2020 and then plateaus.”
The major climate milestone is possible utilizing only proven technologies and policies, and without changing the economic and development prospects of any region, the energy watchdog states.
A number of countries including Canada have announced their intended nationally determined contributions (INDC) to rein in carbon emissions, but the goals fall short of the major course correction required to ensure global temperatures do not rise more than two degrees centigrade — a key environmental goal.
The biggest breakthrough would be to break the link between economic growth and GHG emissions. The IEA believes that the countries’ current combined pledges would weaken but not break the link over the next two decades.
“If stronger action is not forthcoming after 2030, the path in the INDC Scenario would be consistent with an average temperature increase of around 2.6 C by 2100 and 3.5 C after 2200.”
Last week, more than 100 North American scientists called for a moratorium on new oilsands development to limit climate warming, although the industry believes technological breakthroughs can help rein in emissions.
Many oil companies, including Royal Dutch Shell, BP and Suncor have recently called for a carbon tax in the hope of bringing cost certainty to their projects and social acceptance to an industry that is increasingly being demonized.