The International Energy Agency (IEA) predicts that Canada could face challenges to remaining significant a global oil and gas power. The global transition to green energy and net-zero carbon emissions by 2050 may be the primary reason for that.
Currently, Ottawa holds the world’s third-largest oil reserves, mainly concentrated in its Western province of Alberta. According to the IEA’s 2022 Energy Policy Review, Canada strives to retain its status as “a major global oil and gas supplier” beyond 2050 as many countries worldwide push toward emission cuts.
Global oil consumption will decline substantially in the coming decades from the current 100 million barrels per day. However, many nations and industries will still rely on oil and gas products.
Canada’s major oil producers pledged to decrease carbon dioxide emissions by 2050, primarily via large-scale carbon capture projects and storage technologies. The strategy aims to preserve the sector as an economic backbone across multiple industries and Western provinces, where some of the most carbon-intensive oil is extracted.
“The environmental profile of oil sands production, in particular, will become a greater focus for importing countries and warrants action,” the IEA said.
Oil sands may start to run afoul of carbon reduction measures. The extraction of the dense crude is energy-intensive and more expensive than drilling traditional wells.
So while the oil industry will likely continue to run deep into the future, the emergence of alternative fuels and environmental pressures may push higher-cost developments to the side. Canada’s biggest oil-producing provinces, Alberta and Saskatchewan, area already set to experience the fastest growth in renewables energy capacity in the country by 2023.
The recent report lauded efforts by the leadership in Ottawa. However, it also noted that it should pay closer attention to the global green transition.
Canada should outline a specific pathway for achieving its net-zero emissions goal by mid-century, according to the IEA. Furthermore, carbon capture, a key technology for reducing emissions in Alberta’s oil sands, is essential for achieving climate goals.
The IEA believes that Canada’s oil sands will pose a further challenge even as “the nation scores well on overall ESG indicators relative to many other oil and gas producers.” Many funds and banks have pulled funding from the Canadian oil sands sector in recent years.
“Canada must focus on significantly decarbonising its oil and gas sectors while at the same time ensuring competitiveness in increasingly well-supplied world markets,” said a representative of the IEA.
