Notwithstanding the widespread acknowledgement that global warming is a serious environmental problem for future generations, the world continues to rely on fossil fuels for over 80% of primary energy consumption. In Canada, despite being the second largest producer of hydroelectricity in the world, 80% of end use energy is provided by fossil fuel. Despite committing to a 30% reduction in emissions by 2030, Canada’s emissions were down only 0.14% from 2005 levels as of 2018, the most recent year for which data are available, and global emissions set an all-time record in 2019. Investment in “renewables”, which has increased markedly in recent years, has not resulted in a net decrease in fossil fuel use – it has only offset a quarter of the increase in global electricity demand from 2010-2018. Against this backdrop, 26% of Canada’s emissions were from upstream oil and gas production in 2018. Production is forecast by the Canada Energy Regulator (CER) to grow through 2040, such that by 2050, assuming production growth stops in 2040 at the end of the CER forecast, the oil and gas sector alone will exceed an 80% emissions reduction target in 2050 by 101%, even if every other sector of Canada’s economy reduced emissions to zero. The Trudeau Government’s recent claim that Canada will be “net-zero” by 2050 is completely incompatible with its own forecasts of increased oil and gas production. The energy sector constituted 9.2% of Canada’s GDP in 2019, down from 11% in 1997, despite the fact that oil and gas production increased by 56%. Taxes paid by industry to government have declined by 69% since peaking in 2006, from $3.96 to $1.21 per barrel. In Alberta, by far the largest oil and gas producing province, total revenue from non-renewable oil and gas production has declined by 67% since 2005, even though production has increased by 41%. In BC, total royalty revenue from oil and gas production is down 84% since 2005, despite a 96% increase in production.
Canada is at a crossroads if it is serious about its commitments on climate change. Politicians tell us that production must grow in order to provide revenue to reduce emissions, and are using taxpayer funds to expand the Trans Mountain pipeline, build the Keystone XL pipeline, and subsidize LNG exports. At the same time, the data show that production must decline if emissions targets are to be met, and revenue from oil and gas production is collapsing, even as production grows. Although it is likely that Canadians will need oil and gas at some level for the foreseeable future, Canada’s current path for emissions reduction is a recipe to fail. Canada urgently needs a viable energy strategy based on facts, not empty political rhetoric.
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