The transition to a low-carbon economy can appear as a threat to livelihoods in the oil patch, and this perspective can be an obstacle to climate efforts, a Canadian executive said on a panel at the World Petroleum Congress in Calgary.
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"If you live, as I do, in a region of a country with a large oil industry—so big you call it 'oil country'—the realities in the energy transition are very different than if you don't," Chris Severson-Baker, the executive director of the Pembina Institute, said on a Sept. 19 panel about the societal shift toward low-carbon energy. The institute's mission is to reduce the impact of fossil fuels and support the transition to a cleaner energy system while maintaining a high quality of life.
"Most places in the world are concerned about having a cheap, secure, and, ideally, clean supply of energy," Severson-Baker said. "They don't want energy that fluctuates in price. And they don't want energy that is controlled by another jurisdiction. Even if that other jurisdiction is a safe and friendly place like Canada, these countries want to get off the gas."
And this last urge makes oil- and gas-rich regions like Alberta uneasy, Severson-Baker said.
"Oil and gas is the central pillar of the economy here, as it has been for my whole life," Severson-Baker said. But because of wildfires this summer, "climate change was in your face every single day this summer," he said. "Tens of thousands of Albertans had to flee their homes, as vast areas of the province burned."
But people in the province, like those in other petroleum regions, still worry that either the government or the commodity markets will drive away the employment and economic benefits of the oil and gas industry, Severson-Baker said.
While Albertans support carbon reductions, they worry that demand for oil and gas will peak in this decade, Severson-Baker said. "Albertans strongly favor the status quo," he said. "They want wealth that comes from the industry to continue."
On the sidelines, Severson-Baker said he has three specific objectives that he would like to see the provincial and federal governments achieve, starting with Alberta ending the permit moratorium on new low-carbon efforts. Next, he would like the national government to make a decision on a proposed price cap for oil and gas. Finally, he would like Alberta and Canada to adopt a 50-50 cost-sharing mechanism between the private sector and the government for the development of carbon capture and storage facilities.
Awareness of both the urgency and the challenges of transitioning to low-carbon energy to fight climate change and reduce its impact is everywhere, from Climate Week in New York to an International Energy Agency report. Climate scientists warn that the world is running out of time to address the threat.
"We're at a critical point in the energy transition," said consulting firm Accenture's Managing Director and North American energy transition services lead Caroline Narich. "We are seeing unprecedented action being taken with a slew of commitments and phenomenal levels of policy and funding support being made available for the first time in the US," and it will not be enough to head off climate change, she said.
"Japan's Green Transformation program and the EU's Green Deal have each pledged to make over $1 trillion available over the next decade," Narich said. "But as Chris [Severson-Baker] alluded to, this level of support is not consistent across the globe. And it's not enough. The challenge ahead really does remain monumental."
'Long way to go'
"I'm not sure there is a silver bullet," Narich said in an interview after the panel.
In addition to basic management of carbon emissions, the energy industry and connected communities must collaborate to train the more than 22 million workers that will be needed if climate goals are to be met, Narich said. Training and retraining the workforce to avoid stranding workers in shrinking industries will be essential, Narich said.
At the same time, energy companies and communities must be creative in their financing, by stacking government incentives with non-governmental grant money and private capital, Narich said.
The cost of the transition to lower-carbon fuels is estimated to exceed $3 trillion annually, dwarfing the $1 trillion already pledged to reduce climate change, Narich said. "Achieving US energy transition goals alone, just for the US, will require capturing and storing between 4,000 and 7,800 mt of CO2 annually by 2050," she said. "Today, we only have 1%-5% of this capacity [in the US]. So, we have a really long way to go."
S&P Global Commodity Insights reporter Bill Holland produces content for distribution on Capital IQ Pro .