Canada will be left behind in the “unstoppable” renewable energy transition unless it radically changes course, according to a new groundbreaking study from the International Energy Agency (IEA).
Countries and major corporations use the IEA’s World Energy Outlook annual report as a guide for billion-dollar decisions. In the study published this week, the IEA found that based on policies in place today, the world’s energy systems will look significantly different in 2030 than they do today. With fossil fuel production set to grow in Canada, this has major implications for the country.
By 2030, there will be 10 times as many electric cars on the road globally, slashing demand for fossil fuels. The world’s solar power will generate more electricity than the entire U.S. power system does today, renewable energy will make up half of global electricity production and heat pumps and other electric heating technologies will outsell fossil fuel boilers globally. There will also be three times as much investment flowing into offshore wind than into new coal or gas power plants.
Those findings place Canada squarely behind the eight ball given that planned fossil fuel production in Canada represents 10 per cent of the world’s expansion plans, creating the equivalent greenhouse gas emissions of 117 coal plants running for decades. This effort to supply the world with fossil fuels, which the IEA projects will peak this decade, means Canada is on track to be the second-largest fossil fuel expander, behind the United States, by 2050.
“The transition to clean energy is happening worldwide and it’s unstoppable,” IEA executive director Fatih Birol said in a statement. “It’s not a question of ‘if’, it’s just a matter of ‘how soon’ — and the sooner the better for all of us.
“There are immense benefits on offer, including new industrial opportunities and jobs, greater energy security, cleaner air, universal energy access and a safer climate for everyone,” he added. “Taking into account the ongoing strains and volatility in traditional energy markets today, claims that oil and gas represent safe or secure choices for the world’s energy and climate future look weaker than ever.”
The study findings underscore just how out of step some jurisdictions in Canada are with global energy markets. In Alberta, Premier Danielle Smith has railed against proposed federal climate policies like capping oil and gas sector emissions, while knee-capping $33 billion worth of renewable energy development by pausing approvals for clean energy projects. She’s bluntly explained her rationale, telling attendees at an oil and gas conference this summer that “we don’t need a just transition because we don’t intend to transition away from oil and natural gas.”
Elsewhere in Canada, provinces are fundamentally unaligned with IEA projections. In British Columbia, new liquified natural gas export terminals are being built, despite projections that gas demand will peak within the next 10 years. In Saskatchewan, Premier Scott Moe has said net-zero power grids by 2035 are “impossible” and “unaffordable,” even as the IEA’s findings this week emphasize that clean power grids are crucial for capitalizing on the rapidly growing demand for electricity. And in Ontario, new gas plants are being planned as Enbridge works to lock gas infrastructure in for decades to come, despite the IEA projections that gas demand will peak within this decade.
Taken together, it is clear Canada faces increased risk through the energy transition because the country is highly exposed to the fossil fuel sector. Specifically, the IEA’s findings imply many Canadian financial institutions are over-invested in fossil fuels because the assets they’re investing in (new pipelines, export terminals and power plants) are at increased risk of becoming worth less, if not worthless, as the energy transition significantly eats into fossil fuel demand.
“Canada’s biggest banks, like the Royal Bank of Canada (RBC) and its public pensions, like the Canada Pension Plan (CPP), remain amongst the largest financiers and investors in oil and gas in the world,” Richard Brooks, Stand.earth climate finance director, said in a statement. “We run the risk of falling behind and being increasingly part of the problem rather than [the] solution.
“And with more than 18 million hectares of forest having burned in Canada this past year, we can’t afford to keep making the problem worse,” he said. “There are massive societal and economic benefits unfolding before us and Canada’s banks and pension funds are holding us back.”
The IEA’s findings come a month before the annual United Nations climate change negotiations (COP28) hosted this year by the United Arab Emirates. It is widely expected the negotiations will focus on phasing out fossil fuel production, although with major fossil fuel producing countries in influential positions, it is unclear how successful the negotiations might be. Nonetheless, climate advocates say the latest findings from the IEA make clear how important it is to effectively manage the wind-down of fossil fuels.
“For both economic and climatic reasons, phasing out fossil fuels is a necessary element of the inevitable transition,” said Amiera Sawas, head of research for the Fossil Fuel Non-Proliferation Treaty Initiative, in a statement. “The IEA’s executive director himself asserts that it’s no longer a question of ‘if’ but of ‘how’. This is why it is necessary for governments to adopt a Fossil Fuel Non-Proliferation Treaty, i.e., a plan to redouble international co-operation efforts to: keep 1.5 alive, prevent the economic impacts of the upcoming global energy mix, and support communities most dependent on fossil fuel production.
“This new report provides more scientific proof and guidance to decision-makers who will be meeting next month at COP28 in Dubai, as climate disasters continue to escalate,” she said. “It’s time for the international community as a whole to follow the leadership of the eight countries that already support the fossil fuel treaty proposal, the legal mechanism that will enable us to transform the transition into an opportunity for a safe, sustainable and fair future for all.”
