‘The world still needs fossil fuels:’ Canada’s oilpatch sees future for the industry despite ‘death knell’ warning

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CALGARY — The Canadian oil and gas industry is confident in its own future even after Monday’s call from the United Nations for a “death knell” for fossil fuel use globally.

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The U.N.’s Intergovernmental Panel on Climate Change (IPCC) released a new report Monday that warned global temperatures will rise by 1.5 degrees Celsius over the next two decades and pinned much of the blame on burning coal, oil and natural gas as “the main human influence on the climate.”

The document is a “code red for humanity,” said Antonio Guterres, secretary-general of the United Nations, in prepared remarks tied to the release of the report. “This report must sound a death knell for coal and fossil fuels before they destroy our planet.”

The alarming report provoked divergent reactions in Canada, where the oil and gas industry is responsible for the country’s largest export category but there is building environmentalist pressure to encourage more renewable energy.

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“The industry is confident that they have a place in the future of energy development. It’s going to certainly be a different mix of energy sources going forward,” said Tristan Goodman, president of the Explorers and Producers Association of Canada, which is an industry group representing mid-sized oil and gas companies.

“Many of our businesses are entering the renewables space, so it’s not an either or,” Goodman said. The oil and gas industry is also participating in the energy transition by shifting toward more hydrogen production and carbon capture and storage investments, he said.

We cannot go to renewables overnight and the world still needs fossil fuels

Gurpreet Lail, president and CEO of the Petroleum Services Association of Canada

Goodman said all levels of government in Canada have made a “genuine commitment to dramatically reduce GHG emissions and the industry has ways to move forward in doing that,” and some of the policies that have been put in place will begin to curb emissions in the coming years.

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Still, he said it’s impractical for Canada and the world to “make a 180 degree pivot overnight,” because hydrocarbons are tied to quality of life, availability of necessary goods and services in Canada and around the world.

The oil and gas industry, and the oilfield services sector, is committed to moving towards a “clean energy future,” said Gurpreet Lail, president and CEO of the Petroleum Services Association of Canada, which represents companies that do the hands-on work in the oilfield.

“The Canadian industry has and continues to recognize and embraces the need for alternative forms of ‘green’ energy as part of an ‘energy mix,’ but as we transform our energy development, fossil fuels must remain a part of that mix as there is not a current, viable replacement available,” she said in an emailed statement.

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“At the end of the day, we cannot go to renewables overnight and the world still needs fossil fuels,” Lail said, adding that carbon capture is one way the industry can reduce its emissions.

Regardless, the IPCC report has led some environmental activists to demand an immediate pivot away from oil and gas ahead of the 26^th Conference of the Parties (COP26) climate summit in Glasgow, U.K. in November.

“The science in the IPCC’s report makes it clearer than ever that Canada cannot waste time and money of false solutions being pushed by oil and gas companies that sanction more oil and gas production,” Environmental Defence national climate program manager Dale Marshall said in a release, adding that oil and gas companies “are overwhelmingly responsible for the problem in the first place.”

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The IPCC report ascribed 81 per cent to 91 per cent of human-caused CO2 emissions to the burning of coal, oil and natural gas.

“From a physical science perspective, limiting human-induced global warming to a specific level requires limiting cumulative CO2 emissions, reaching at least net zero CO2 emissions, along with strong reductions in other greenhouse gas emissions,” the report notes.

It also says that reducing methane emissions, or CH4, “would also limit the warming effect resulting from declining aerosol pollution and would improve air quality.”

But the reduction in emissions will have to be balanced with surging demand for energy sources.

“The global demand for energy, and with it the demand for natural gas and oil, is growing and will likely surpass pre-pandemic levels within two years and is expected to grow for decades to come,” Tim McMillan, president and CEO of the Canadian Association of Petroleum Producers, said in an emailed statement Monday.

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CAPP members Canadian Natural Resources Ltd., Suncor Energy Inc., Cenovus Energy Inc. and Imperial Oil Ltd., have pledged to be net-zero companies by 2050, in line with the country’s stated climate goals.

“With our continuous emissions intensity reductions and our leading role in clean technology investments in Canada, the industry has demonstrated we are committed to playing a pivotal role in helping Canada meet its stated emissions reduction goals and that Canada’s industry is capable of supplying affordable, reliable and cleaner energy to a growing global population,” McMillan said.

With a file from Bloomberg

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