Globe Climate: Is it time for Big Oil to kill itself slowly?

Good afternoon, and welcome to Globe Climate, a newsletter about climate change, environment and resources in Canada.

The same week that the UN says the world is failing to address a catastrophic biodiversity collapse, Canada experiences a loss of its own.

The death of a mother grizzly bear and her two cubs – including a rare, blond-headed grizzly – in Banff National Park is a major loss to the population. Parks Canada said that they were killed by a Canadian Pacific Railway train on a rail line through the Alberta park.

When governments act to protect and restore nature, the authors of the UN report found, it works. But despite commitments made 10 years ago, nations have not come close to meeting the scale of the crisis, which continues to worsen because of unsustainable farming, overfishing, burning of fossil fuels and other activities.

Now, let’s catch you up on other news.

Noteworthy reporting this week:

1. This week Adam Radwanski wrote a column: Canada needs industrial strategy to be a climate leader, and it’s out of time to waste. But, he argues, if we want to be a green leader – and not be left behind by a global economy increasingly focused on that imperative – following other countries' lead in decarbonizing some domestic buildings or facilitating more EVs on our roads won’t be enough.
2. Kelly Cryderman also weighs in on pipelines and the environment. Before Erin O’Toole tested positive for COVID-19, he was going to fundraise. The cancellation of the event also postponed the inevitable tough questions he would have faced on the topics. This means that the Conservatives will soon have questions to answer, carefully.
3. The commissioner of Alberta’s public inquiry into the funding of environmental groups intends to ask for another extension and says he won’t examine whether those groups are spreading misinformation about the industry. The inquiry was given a $2.5-million budget and a deadline of July 2. Mr. Allan was already given a four-month extension and another $1-million.

A deeper dive

Big Oil is going through a great reshaping. Politicians should be watching closely.

Just this morning, Reuters is reporting that Royal Dutch Shell PLC is launching a major cost-cutting drive to save cash so it can overhaul its business and focus more on renewable energy and power markets. That follows a prediction from global energy giant BP that while the overall demand for energy will grow, the supply will change: The role of fossil fuels will decrease while renewable energy will increase. In the case of oil, BP expects global demand to fall over the next 30 years, driven in part by an increase in electric – and more efficient – vehicles.

As The Globe’s energy reporter Emma Graney put it to me today in an e-mail: “Shell and BP battle for renewables supremacy is the new blockbuster hit: Oil Companies Gone Rogue, coming to cinemas everywhere in Feb. 2021.”

It’s no joke. Things are changing – and rapidly.

And with peak demand possibly coming sooner than many had forecasted, Eric Reguly, The Globe’s European bureau chief, is seeing it play out in real time. With the EU doubling down on a green economic recovery, he offers up this not-so-reserved idea: oil companies should opt to kill themselves slowly by running down their reserves and not replacing them. The billions of dollars saved on capital spending could be used instead to finance fat dividend payments – or in the case of Shell, an energy transition. In effect, oil companies would become income trusts, making them profitable for investors even at relatively low oil prices.

What does it say about the Canadian oil and gas industry’s prospects though if two of the world’s largest energy companies are looking at a future with less demand for oil? Brace for another foreign vote of non-confidence in the future of fossil fuels in Canada.

All of this puts Ottawa in a precarious position when it comes to federal support for the oil sands particularly and the oil sands overall. While government has declared energy and utilities as critical infrastructure, there are now calls to support “a clean energy future” as Natural Resources Minister Seamus O’Regan recently put it. That is not going over well in Alberta where many argue the oil sands aren’t just essential, they’re at the midpoint of their production life, with new pipelines on the way.

This week, as Parliament reopens with the Speech from the Throne, The Globe’s climate policy columnist Adam Radwanski argues it’s time for Prime Minister Justin Trudeau to seize upon the economic disruption caused by the pandemic to develop a clean-economy industrial strategy.

Throne speeches can be viewed as an aspirational goal-setting exercise for sitting governments. This one could be something different – a direction for the future.

- Ryan MacDonald

What else you missed

Canadian task force calls for billions in spending over next five years to spur green economic recovery: It recommends, among other things, investing in green retrofits for homes and fostering the use and production of zero-emission vehicles, a week before Prime Minister Justin Trudeau is due to outline his own plan to parliament.

Crude oil industry is starting to hear echoes of coal’s demise: The problem for the crude industry is that it can’t really predict the demand side of the equation with any accuracy, given the uncertain nature of the recovery from the pandemic.

The Arctic is shifting to different climate due to effects of global warming, scientists say: Already, they said, sea ice in the Arctic has declined so much that even an extremely cold year would not result in as much ice as was typical decades ago.

Electric vehicle sales slump as supply challenges leave dealerships with shortages: . As the economy reopens, consumers are starting to return to auto showrooms — but finding an electric vehicle continues to be a problem, especially outside Quebec, British Columbia and Ontario.

Opinion and analysis

On the issue of climate change, we are choking

Gary Mason: “I’d like to just fault politicians for a gross failure of leadership, but we are all to blame. We don’t force the matter. Boomers are more than happy to let another generation deal with a problem primarily of their making.”

Why clean growth is the foundation of a strong economic recovery

Don Drummond and Rachel Samson: “Understanding these interconnected dimensions of prosperity is critical to developing policy that doesn’t just restore what we’ve lost in this crisis but improves the ability of Canada’s economy – and Canadians – to thrive in the future.”

The crucial distinctions the Supreme Court should make about the federal carbon-pricing backstop

Grant Bishop: “Certain provinces straight out oppose federal carbon pricing, and Ottawa does not want to offend other provincial governments that support the backstop. But the politics of the moment should not define constitutional law for generations yet to come.”

Here’s what readers had to say

Tamsin McMahon is a U.S correspondent for The Globe and Mail, based in California. Last week she wrote about what it’s like covering and experiencing the rise of the west coast wildfires as the years go on.

In a tweet, she wrote: “For the past 3 years I’ve covered wildfires as a journalist, driving through the destruction and telling the stories of people whose lives have been affected. But watching areas less than 10mi from my home be put under evacuation warning is a whole other emotional experience.”

Here’s what some readers had to say:

• Gb121: “The science of COVID told us to social distance. We listened and we bend the curve. The science of climate change tells us we need to reduce emissions a minimum of 50 per cent by 2030 to avoid the worst effects of climate change.”
• Cynical in Toronto: “The loss of animal life must be staggering”
• Daysofmiracle: “It’s hard to watch the United States burn materially and metaphorically.”

Making waves

Each week The Globe will profile a Canadian making a difference in Canada. This week we’re highlighting the work of Laura Zizzo doing entrepreneurial work in climate.

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I am an entrepreneur seeking to help organizations understand and better manage climate-related risk and opportunity. As a lawyer by training, I started in climate law by working on legal agreements related to buying and selling carbon offsets. After founding a climate-focussed law firm in 2009, I co-founded Mantle314, a climate consultancy, with my engineer-brother, Ryan, in 2015.

I believe that an interdisciplinary approach and diverse thinking is needed to address the complex challenge of climate change. This thinking guides Mantle314′s approach and my current work. I find my work is most impactful when I am helping senior decision-makers understand how they can support and thrive in the transition to a low-carbon future, and be more resilient to the impacts of a changing climate.

With clients ranging from large banks and asset managers, to municipalities and charitable organizations, our Mantle314 team translates climate change for business. My biggest lesson in my work on climate is that we have to start with something tangible and actionable - not with a big goal that seems impossible to comprehend. It’s clarity on what climate change means for an organization and incremental change at the start of a journey that can lead to the big shifts we need.

- Laura

Do you know an engaged young person? Someone who represents the real engines pursuing change in the country? Email us at GlobeClimate@globeandmail.com to tell us about them.

Photo of the week

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Guides and Explainers

• We’ve rounded up our reporters’ content to help you learn about sustainable ways to live life at home, travel, invest, and generally to learn about our species at risk.
• If you like to read, here are books to help the environmentalist in you grow, as well as a downloadable e-book of Micro skills - Little Steps to Big Change.

Catch up on Globe Climate

• A disastrous reminder of climate change
• Some of Alberta’s oil sands tailings ponds are leaking into groundwater
• Finance and investing can’t self-isolate from climate change
• Canada needs a green recovery. Can Chrystia Freeland deliver?

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