A boat travels past the Parkland Burnaby Refinery on Burrard Inlet at sunset in Burnaby, B.C., on April 17, 2021.DARRYL DYCK/The Canadian Press
Merran Smith is the chief innovation officer and founder and Trevor Melanson is the communications director of Clean Energy Canada, a think tank at Simon Fraser University’s Morris J. Wosk Centre for Dialogue.
With its half-a-trillion dollars in clean-energy incentives, the U.S. Inflation Reduction Act threatens to siphon away similar investments from other countries, including Canada. In the face of this reality, the substantial industry incentives in Tuesday’s budget are not just a welcome development but also a vital one.
That’s because this country’s resource-fixated economy is changing. Canada’s oil and gas lobby is right about one thing: There is indeed a bright future for Canadian energy. It’s just not in fossil fuels.
You may have heard the ads brought to you by the Pathways Alliance – a consortium of Canada’s largest oil companies. The alliance would have one imagine that a robust oil and gas sector thrives in a net-zero 2050 (the goal by which most of the world has agreed to halt climate change), when no such future is possible.
Today, 92 per cent of global GDP is covered by some kind of net-zero commitment. In the inevitable net-zero 2050, Canadian jobs in the oil sands and oil production decline by 98 per cent compared with 2025, our research finds.
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Even in a scenario where Canada fancies itself a fossil fuel island in a net-zero world, the results for oil remain relatively unchanged. No matter what our next government does or doesn’t do, oil production jobs are set to decline by at least 93 per cent. Put simply, domestic policies cannot save a global industry.
This is not based on some obscure assumption, but rather the best one available. Our model employs the International Energy Agency’s net-zero 2050 oil price of below US$30 a barrel by mid-century – a price the Canada Energy Regulator is on the verge of adopting for future net-zero scenarios.
So, why does the Pathways Alliance say that its industry can thrive in a net-zero 2050 world?
This is because the organization’s net-zero aspiration includes an important asterisk: Scope 1 and 2 emissions. For the layperson, that means they’re only counting operational emissions. Actually using the stuff (that’s Scope 3) accounts for more than 90 per cent of the sector’s carbon footprint.
While oil and gas production emissions are significant and, yes, could be reduced or even eliminated through electrification and carbon capture and storage, it is the use of fossil fuels – in everything from gas vehicles to industrial facilities as a feedstock – that contributes most to climate change.
This is precisely why the world is moving toward net zero by 2050, rapidly shifting to renewable energy, electric vehicles and clean fuels such as hydrogen.
The reality is that – no matter what measures Canada takes at home, no matter what certain politicians may promise to voters – a decarbonizing world will want a lot more clean energy and a lot less fossil fuel.
While there is a non-combustible future (think lubricants and asphalt) for oil in a net-zero world – 70 per cent of oil would be used this way in a net-zero 2050, according to the International Energy Agency – global oil consumption in 2050 will be roughly a quarter of what it is today.
As for natural gas, the industry fares better than oil, but Canadian jobs in natural gas production nonetheless decline 31 per cent in our model between 2025 and 2050.
But while the world’s emissions will plunge, non-fossil-fuel energy jobs certainly will not.
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This transition is already well under way. Aside from the U.S. Inflation Reduction Act, the European Union has its own multibillion-euro Green Deal Industrial Plan, and China still controls 60 per cent of the world’s clean-energy technology manufacturing. The number of people working in clean-energy jobs globally recently overtook fossil fuels for the first time.
Canadians have the benefit of choice: invest in the future, in reskilling our work force while there’s still time to make this a smooth transition. In our net-zero scenario, jobs in Alberta’s clean-energy sector grow 10 per cent a year out to 2050 – the fastest of any province or territory – with significantly more jobs created in clean energy than lost in fossil fuels.
The alternative, betting against the world’s biggest economies and banking on climate failure, is really no alternative at all.