Canadian Energy Centre
A Matter of Fact: The IEA’s updated net zero scenario is still unrealistic
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From the Canadian Energy Centre
By Deborah JaremkoCanada can lead the world with reliable, affordable energy supply and clean technology as countries work to reduce emissions
The International Energy Agency (IEA) has updated its net zero scenario, pushing for governments to implement more aggressive climate policies on the energy industry.
The IEA itself acknowledges the scenario is “a pathway, but not the only one” for the energy sector to reduce emissions to net zero by 2050.
The agency acknowledges the world is not on this trajectory, but the Government of Canada uses the net zero scenario as the basis for policies like its proposed oil and gas emissions cap, which will hurt Canadians without environmental gain.
“We’re the fourth-largest oil producing country, and we’re the only ones that are saying oil and gas is not here to stay. That’s a huge roadblock for all of us,” Gurpreet Lail, CEO of Enserva, the national trade organization representing energy service and supply companies, told the Globe and Mail during the World Petroleum Congress last week.
Canada can lead the world with reliable, affordable energy supply and clean technology as countries work to reduce emissions. But the sector needs to be allowed to thrive rather than being phased out while it is needed.
Here are the facts.
Fact: The IEA net zero scenario is not a forecast
The IEA’s updated net zero scenario envisions that the world does not need any new coal, oil and natural gas projects. By 2030, it imagines world oil demand will drop by 23 per cent, natural gas demand by 18 per cent, and coal demand by 44 per cent.
It’s difficult to see how this could actually come about, given that even with accelerating investment in low carbon energy resources the world’s consumption of oil, gas and coal is as high or higher than it has ever been. And rising.
The IEA reports both oil and coal demand are at record levels. The agency itself projects the world’s total energy consumption – which increased by 15 per cent over the last decade – will increase by a further 24 per cent by 2050.
On the world’s current trajectory, the IEA says oil, gas and coal will still account for 62 per cent of world energy supply in 2050, compared to 78 per cent in 2021.
“There’s no evidence that oil demand is going to peak any time soon,” Arjun Murti, former partner with Goldman Sachs, said at the recent Global Business Forum in Banff.
“Oil is not in its sunset phase.”
Fact: The IEA net zero scenario is unrealistic
The IEA’s net zero scenario includes components that are unrealistic.
For example, it says electricity transmission and distribution grids need to expand by around two million kilometres each year to 2030. But it also acknowledges that today, building these grids can take more than a decade, putting that scale and timeline already out of reach.
The net zero scenario also hinges on a “unified effort in which governments put tensions aside and find ways to work together.” But the IEA also acknowledges the world today is “a complex and low-trust geopolitical environment.”
Consider that Russia is trying to boost trade with Asia as economic ties with the West shrivel over Moscow’s actions in Ukraine, according to Reuters News. In just one example, state-owned Gazprom plans to start gas deliveries to China through the Power of Siberia pipeline in 2025 and expand that service in 2030 with Power of Siberia-2.
Russia’s invasion of Ukraine accentuated the world’s reversal away from the concept of globalization, where everyone benefits from the global economy, leading energy analyst and Pulitzer Prize-winning author Daniel Yergin said on a recent ARC Energy Ideas podcast.
“The era of globalization was what I call the WTO consensus: we’re all in this global economy together. In China, hundreds of millions of people come out of poverty. India enters the global economy, standards of living go up and you get really impressive economic performance,” Yergin said.
“Well, that era is ending and it’s heading pretty fast now as we move into this new era of great power competition, which hopefully does not become great power confrontation.”
Energy is at the heart of the “new map,” as Yergin calls it.
Responsibly produced, reliable energy from Canada can benefit world energy security while helping reduce emissions. That is why it is essential the sector is not phased out through government policy.
Fact: Canadian energy and clean technology can help reduce world emissions
One of the fastest and most effective ways to reduce emissions is to switch from coal-fired power to power generated from natural gas, traded globally as LNG.
Consider that between 2005 and 2019, emissions from the U.S power sector dropped by 32 per cent because of coal-to-gas switching, according to the U.S. Energy Information Administration.
Natural gas from the LNG Canada project alone could reduce emissions in Asia by up to 90 million tonnes annually, or the equivalent of shutting down up to 60 Asian coal plants, the project says.
That’s a reduction of more than the entire emissions of the province of British Columbia, which were 64 million tonnes in 2022.
Expanding Canada’s LNG exports to Asia could reduce emissions by 188 million tonnes per year, or the annual equivalent of taking all internal combustion engine vehicles off Canadian roads, according to a 2022 study by Wood Mackenzie.
One of the reasons LNG from Canada has a lower emissions intensity than LNG from other jurisdictions is the success producers have seen reducing methane emissions. It’s an opportunity for technology exports.
The IEA views cutting methane emissions from oil and gas as a critical component of achieving climate targets.
The latest data shows that oil and gas producers in Alberta decreased methane emissions by 44 per cent between 2014 and 2021, a 10 per cent drop from 2020. The sector is expected to surpass the target of reducing methane emissions by 45 per cent by 2025.
“I don’t know of any other jurisdiction that is as far forward in terms of its methane management as Canada,” says Allan Fogwill, chief operating officer of Petroleum Technology Alliance Canada.
“There’s nothing to suggest we couldn’t have similar impacts in the United States, the Middle East, or former Soviet countries that also are involved in oil and natural gas production.”
Fact: Canada’s carbon capture and storage leadership can benefit the world
The IEA says “rapid progress” is required to deploy more carbon capture, utilization and storage (CCUS) projects to reduce emissions.
This is another area where Canada’s energy sector can take the lead.
Since 2000, CCS projects in Saskatchewan and Alberta have removed more than 47 million tonnes of emissions, or the equivalent of taking more than 10 million cars off the road. This work has helped inform development of major CCS projects globally including Northern Lights in Norway.
Canada has five of the world’s 30 commercial CCS facilities, accounting for about 15 per cent of global CCS capacity even though Canada generates less than two per cent of global CO2 emissions, according to the Global CCS Knowledge Centre.
Among CCS projects under development in Canada is one of the largest in the world, proposed by the Pathways Alliance of oil sands producers.
The first phase of the Pathways CCS project will connect 14 oil sands facilities to a CO2 storage hub in northern Alberta. The target is to reduce emissions from operations by 22 megatonnes by 2030 on the way to net zero in 2050.
Fact: Oil and gas still needed in IEA net zero scenario
Even in the IEA’s net zero scenario, in 2050 about 14 per cent of world energy needs are still supplied by oil and gas.
This includes non-combustion uses like petrochemical feedstock and asphalt, which crude from Canada’s oil sands is particularly well suited to supply. Researchers with Queen’s University recently found that asphalt from Alberta’s oil sands can extend pavement lifespan by 30 to 50 per cent.
The world needs more Canadian oil and gas, not less.
Alberta
New children’s book demonstrates how the everyday world is connected to natural resources
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From the Canadian Energy Centre
‘Today’s youth have the opportunity to lead us into the future with innovative solutions for environmental challenges’
After a 24-year career in oil sands land reclamation, author Tanya Richens is sharing her knowledge with young minds.
Her new book, From the Earth to Us: Discovering the Origins of Everyday Things, explores the relationship between natural resources and the things we use in everyday life, from computers and water bottles to batteries and solar panels.
“There is a gap in society’s understanding of where things come from. We are a society driven by consumerism and immediate gratification. We order something online, and it arrives on our doorstep the next day. We don’t stop to think about where it really came from or how it was made,” Richens says.
“There’s an ever-increasing societal position that mining is bad, and oil is even worse… But there’s a simple hypocrisy in those beliefs, since so many things in our lives are made from the raw materials that come from mining and oil and natural gas,” she says.
The book, illustrated by reclamation artist Shannon Carla King, follows young Hennessy Rose and her Cavalier King Charles Spaniel Riley on a trip to a children’s summer camp.
Hennessy’s mom is a guest speaker on the origin of everyday items and the relationship between humans and the earth. Through detailed explanations of items surrounding her, Hennessy’s mom teaches the kids how rocks, minerals, oil and gas from the earth are used to power and aid our lives, creating items such as building supplies, food and hair products, camping and sports equipment, and cell phones.
Author Tanya Richens poses with her two books for children about natural resources. Photo for Canadian Energy Centre
“I thought a simple and fun book explaining the raw materials needed to make everyday items would be valuable for all ages,” Richens says.
“When people feel personally connected to natural resources, they are more likely to promote sustainable practices. Today’s youth will have the opportunity to lead us into the future with innovative solutions for environmental challenges.”
Richens‘ career began with Alberta Environment, where she was a coordinator of reclamation approvals in the oil sands. She oversaw technical reviews of oil sands reclamation applications, communicated with statement of concern filers, coordinated public hearings and provided support for legislative changes.
She moved from government to Suncor Energy, ensuring the company’s compliance on reclamation projects and led initiatives to obtain reclamation certificates. She now works as an independent consultant.
Drawing on her wealth of experience in the field, Richens’ first book, Adventures in Land Reclamation: Exploring Jobs for a Greener Future, seeks to excite kids aged 9-12 years about jobs related to the environment and land reclamation.
Hoping to get From the Earth to Us into the hands of teachers, Richens is heading to the Edmonton Teachers Convention in late February. She says the book supports multiple learning outcomes in Alberta’s new science curriculum for grades 3, 4, 5 and 6.
“Ultimately, I’d like people to understand and acknowledge their individual part in the need for mining and oil and natural gas development. Until the naivety and hypocrisy in the world is addressed, I’m not sure that real environmental change is possible.”
Richens’ books can be purchased on her website at tcrenvironmental.com.
Alberta
U.S. tariffs or not, Canada needs to build new oil and gas pipeline space fast
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From the Canadian Energy Centre
Expansion work underway takes on greater importance amid trade dispute
Last April, as the frozen landscape began its spring thaw, a 23-kilometre stretch of newly built pipeline started moving natural gas across northwest Alberta.
There was no fanfare when this small extension of TC Energy’s Nova Gas Transmission Limited (NGTL) system went online – adding room for more gas than all the homes in Calgary use every day.
It’s part of the ongoing expansion of the NGTL system, which connects natural gas from British Columbia and Alberta to the vast TC Energy network. In fact, one in every 10 molecules of natural gas moved across North America touches NGTL.
With new uncertainty emerging from Canada’s biggest oil and gas customer – the United States – there is a rallying cry to get new major pipelines built to reach across Canada and to wider markets.
Canada’s Natural Resources Minister Jonathan Wilkinson recently said the country should consider building a new west-east oil pipeline following U.S. President Donald Trump’s threat of tariffs, calling the current lack of cross-country pipelines a “vulnerability,” CBC reported.
“I think we need to reflect on that,” Wilkinson said. “That creates some degree of uncertainty. I think, in that context, we will as a country want to have some conversations about infrastructure that provides greater security for us.”
Many industry experts see the threat to Canada’s economy as a wake-up call for national competitiveness, arguing to keep up the momentum following the long-awaited completion of two massive pipelines across British Columbia over the last 18 months. Both of which took more than a decade to build amidst political turmoil, regulatory hurdles, activist opposition and huge cost overruns.
On May 1, 2024, the Trans Mountain pipeline expansion (TMX) started delivering crude oil to the West Coast, providing a much-needed outlet for Alberta’s growing oil production.
Several months before that, TC Energy finished work on the 670-kilometre Coastal Gaslink pipeline, which provides the first direct path for Canadian natural gas to reach international markets when the LNG Canada export terminal in Kitimat begins operating later this year.
TMX and Coastal GasLink provide enormous benefits for the Canadian economy, but neither are sufficient to meet the long-term growth of oil and gas production in Western Canada.
More oil pipeline capacity needed soon
TMX added 590,000 barrels per day of pipeline capacity, nearly tripling the volume of crude reaching the West Coast where it can be shipped to international markets.
In less than a year, the extra capacity has enabled Canadian oil production to reach all-time highs of more than five million barrels per day.
More oil reaching tidewater has also shrunk the traditional discount on Alberta’s heavy oil, generating an extra $10 billion in revenues, while crude oil exports to Asia have surged from $49 million in 2023 to $3.6 billion in 2024, according to ATB analyst Mark Parsons.
With oil production continuing to grow, the need for more pipeline space could return as soon as next year, according to analysts and major pipeline operators.
Even shortly after TMX began operation, S&P Global analysts Celina Hwang and Kevin Birn warned that “by early 2026, we forecast the need for further export capacity to ensure that the system remains balanced on pipeline economics.”
Pipeline owners are hoping to get ahead of another oil glut, with plans to expand existing systems already underway.
Trans Mountain vice-president Jason Balasch told Reuters the company is looking at projects that could add up to 300,000 barrels per day (bpd) of capacity within the next five years.
Meanwhile, Canada’s biggest oil pipeline company is working with Alberta’s government and other customers to expand its major export pipelines as part of the province’s plan to double crude production in the coming years.
Enbridge expects it can add as much as 300,000 bpd of capacity out of Western Canada by 2028 through optimization of its Mainline system and U.S. market access pipelines.
Enbridge spokesperson Gina Sutherland said the company can add capacity in a number of ways including system optimizations and the use of so-called drag reducing agents, which allow more fluid to flow by reducing turbulence.
LNG and electricity drive strong demand for natural gas
Growing global demand for energy also presents enormous opportunities for Canada’s natural gas industry, which also requires new transportation infrastructure to keep pace with demand at home and abroad.
The first phase of the LNG Canada export terminal is expected to begin shipping 1.8 billion cubic feet of gas per day (Bcf/d) later this year, spurring the first big step in an expected 30 per cent increase in gas production in Western Canada over the next decade.
With additional LNG projects in development and demand increasing, the spiderweb of pipes that gathers Alberta and B.C.’s abundant gas supplies need to continue to grow.
TC Energy CEO Francois Poirier is “very bullish” about the prosect of building a second phase of the recently completed Coastal GasLink pipeline connecting natural gas in northeast B.C. to LNG terminals on the coast at Kitimat.
The company is also continuously expanding NGTL, which transports about 80 per cent of Western Canada’s production, with more than $3 billion in growth projects planned by 2030 to add another 1 Bcf/d of capacity.
Meanwhile Enbridge sees about $7 billion in future growth opportunities on its natural gas system in British Columbia.
In addition to burgeoning LNG exports from Canada, the U.S. and Mexico, TC Energy sees huge potential for gas to continue replacing coal-fired electricity generation, especially as a boom in power-hunger data centres unfolds.
With such strong prospects for North America’s highly integrated energy system, Poirier recently argued in the Wall Street Journal that leaders should be focused on finding common ground for energy in the current trade dispute.
“Our collective strength on energy provides a chance to expand our economies, advance national security and reduce global emissions,“ he wrote in a Feb. 3 OpEd.
“By working together across North America and supporting the free flow of energy throughout the continent, we can achieve energy security, affordability and reliability more effectively than any country could achieve on its own.”
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