Oilpatch shows confidence despite `death knell' warning

CALGARY The Canadian oil and gas industry is confident in its own future even after a United Nations report sounded a “death knell” for global fossil fuel use.

The UN's Intergovernmental Panel on Climate Change (IPCC) warned Monday that global temperatures will rise by 1.5 C over the next two decades and pinned much of the blame on burning coal, oil and natural gas as “the main human influence on the climate.”

The document is a “code red for humanity,” said Antonio Guterres, secretary-general of the United Nations, in prepared remarks tied to the release of the report.

“This report must sound a death knell for coal and fossil fuels before they destroy our planet.”

The report provoked divergent reactions in Canada, where the oil and gas industry is responsible for the country's largest export category but where there is building environmentalist pressure to encourage more renewable energy.

“The industry is confident that they have a place in the future of energy development. It's going to certainly be a different mix of energy sources going forward,” said Tristan Goodman, president of the Explorers and Producers Association of Canada, which represents mid-sized oil and gas companies.

“Many of our businesses are entering the renewables space, so it's not an either-or,” Goodman said.

The oil and gas industry is also participating in the energy transition by shifting toward more hydrogen production and carbon capture and storage investments, he said.

Goodman said all levels of government in Canada have made a “genuine commitment to dramatically reduce GHG emissions and the industry has ways to move forward in doing that,” and some of the policies that have been put in place will begin to curb emissions in the coming years. Still, he said it's impractical for Canada and the world to “make a 180-degree pivot overnight,” because hydrocarbons are tied to quality of life, and availability of necessary goods and services in Canada and around the world.

The oil and gas industry is committed to moving toward a “clean energy future,” said Gurpreet Lail, president and CEO of the Petroleum Services Association of Canada, which represents companies that do the hands-on work in the oilfield.

“The Canadian industry has and continues to recognize and embraces the need for alternative forms of `green' energy as part of an `energy mix,' but as we transform our energy development, fossil fuels must remain a part of that mix as there is not a current, viable replacement available,” she said in an emailed statement.

“At the end of the day, we cannot go to renewables overnight and the world still needs fossil fuels,” Lail said, adding that carbon capture is one way the industry can reduce its emissions.

The IPCC report has led some environmental activists to demand an immediate pivot away from oil and gas ahead of the 26th Conference of the Parties (COP26) climate summit in Glasgow, U.K. in November.

The report ascribed 81 per cent to 91 per cent of human-caused CO2 emissions to the burning of coal, oil and natural gas.

But a reduction in emissions will have to be balanced with surging demand for energy sources.

“The global demand for energy, and with it the demand for natural gas and oil, is growing and will likely surpass pre-pandemic levels within two years and is expected to grow for decades to come,” Tim McMillan, president and CEO of the Canadian Association of Petroleum Producers (CAPP), said in an emailed statement. Financial Post with additional reporting by Bloomberg