The Woolwich Observer

Latest gas price spikes will put pressure on greening plans

- STEVE KANNON Editor's Point of View

There was plenty to despise about Vladimir Putin even before he began inflicting horrors on the people of Ukraine. His illicit attempt to sovietize the neighbouri­ng country has moved him into the stratosphe­re of reviled despots.

While Ukrainians suffer most, the rest of the world can thank Putin for boosting already increasing inflation, commodity shortages and future food shortages. Oh, and much higher prices at the pump.

Price shocks at the gas station are nothing new, but they reached new levels in the past week or so, with costs soaring past anything we’ve seen before. That’s led to calls for greater domestic production, both in this country and in the US, as a way to both lower prices in the near term and boost energy security in the long run. Conversely, environmen­talists are calling for a speedier shift to alternativ­es, particular­ly in Europe, to reduce the dependence on Russian oil and gas.

In Canada, there are some calls to increase oil exports, reviving the pipeline debates. But even the industry itself has some misgivings about spending today given the uncertaint­y around fossil-fuel usage. The oil sector is no stranger to boom-and-bust cycles, so it’s no surprise there’s a bit more interest in taking profits as dividends rather than spending billions of dollars for projects that would take years to develop.

While Alberta would certainly be keen on scaling up production – the province is currently enjoying the resurgence of an industry laid low at the start of the pandemic – such moves run counter to Ottawa’s stated goal of reducing greenhouse gas emissions. Reducing demand is the rationale for carbon taxes that are already hitting consumers in their wallets. Those concerns are weighed against security issues and the reality that Canadians will be dependent on fossil fuels for years to come, and their unhappines­s about rising prices will likely be reflected at the polls.

Globally, demand for fossil fuels is expected to grow each year until at least 2030. That’s going to wreak havoc with pledges to reach net-zero global emissions by 2050, a goal which Canada shares.

The Internatio­nal Energy Agency, for instance, notes global spending on clean energy projects needs to grow from less than $2 trillion today to at least $5 trillion by 2030 to help meet that goal.

In the near term, the agency’s 2021 report describes a net zero pathway that requires the immediate and massive deployment of all available clean and efficient energy technologi­es, combined with a major global push to accelerate innovation. The pathway calls for annual additions of solar PV to reach 630 gigawatts by 2030, and those of wind power to reach 390 gigawatts. That’s four times the record level set in 2020. For solar PV, it is equivalent to installing the world’s current largest solar park roughly every day. A major worldwide push to increase energy efficiency is also an essential part of these efforts, the IEA says, resulting in the global rate of energy efficiency improvemen­ts averaging four per cent a year through 2030 – about three times the average over the last two decades.

Skeptics abound. Most of the global reductions in CO2 emissions between now and 2030 in the net zero pathway come from technologi­es readily available today. But in 2050, almost half the reductions come from technologi­es that are currently only at the demonstrat­ion or prototype phase.

Getting to that stage will require unpreceden­ted cooperatio­n and investment­s, particular­ly on the part of developed nations.

“Our roadmap shows that the enormous challenge of rapidly transition­ing to a net-zero energy system is also a huge opportunit­y for our economies. The transition must be fair and inclusive, leaving nobody behind. We have to ensure that developing economies receive the financing and technologi­cal know-how they need to build out their energy systems to meet the needs of their expanding population­s and economies in a sustainabl­e way,” said IEA executive director said Fatih Birol in the report.

The IEA plan calls for no new oil and natural gas developmen­ts on route to 2050. The current shortages and potential profits means that’s an unlikely scenario – oil companies will step up to fill the void, and government­s looking to lower prices and develop domestic capabiliti­es will certainly feel pressure to put net-zero aspiration­s on hold.

Norway-based research firm Rystad Energy predicts spending on oil and gas production to rise this year to US$456 billion from $418 billion in 2021. Producers in Canada aren’t expecting to see much of that in this country, however. The Canadian Associatio­n of Petroleum Producers (CAPP) is forecastin­g a 22 per cent increase in natural gas and oil investment in 2022. Capital spending in the sector is expected to grow by $6 billion to reach CDN$32.8 billion, compared to an estimated $26.9 billion in 2021. Much of that will be in existing facilities rather than new projects.

Given the current situation, the organizati­on is emphasizin­g security issues and the benefits of North American solutions to increasing demand. Industry estimates show global oil demand will top 100 million barrels per day within the next two to three years and remain at or above that level until 2040 and beyond. Natural gas is expected to be one of the fastest growing sources of energy in the world, with demand projected to increase 14 per cent by 2030, and 28 per cent by 2050, according to an IEA outlook.

“Demand for oil and natural gas is expected to rise and remain strong for decades. Every barrel of oil and molecule of natural gas not produced in Canada will be produced by other countries that likely do not match our high environmen­tal and social standards. As one of the most innovative and responsibl­e energy producers in the world, Canada needs to take on a larger role in meeting the growing global demand for energy,” argues CAPP president Tim McMillan in a statement.

Feeling pressure from consumers, producer provinces, industry groups and its own battered finances, Ottawa faces a choice between its green statements and economic realities in a geopolitic­al climate that’s changed dramatical­ly throughout the pandemic and by the events of the past few weeks.

 ?? ?? Everybody's Irish on St. Patrick's Day, but right now everybody's Ukrainian, too, in solidarity.
Everybody's Irish on St. Patrick's Day, but right now everybody's Ukrainian, too, in solidarity.
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