Canada’s energy future

Below are highlights from a speech given by Maria van der Hoeven, International Energy Agency, Executive Director at the Energy and Mines Ministers’ Conference.

“Indeed despite the unique nature of each of the provinces, territories, and distinct cultures and societies that make up this nation, Canada remains a federation. And as a federation, Canada must speak with a unified voice, and while taking into account the complexities of geopolitics, act with unified policy on the international stage, particularly on energy. On 17 July Canadian Premiers presented such a unified voice by reaching an historic agreement on a Canadian energy strategy. This is an accomplishment to be applauded. It is now in your hands, dear Ministers, to implement the goals and measures necessary to make this strategy a reality. For there are a series of challenges that this country must face and address smartly, efficiently, and effectively if it wishes to live up to its ambitions as an energy superpower in the 21st century and beyond.

“First, Canada must adapt itself to a rapidly changing energy landscape in North America, in combination with the low price outlook for global oil and gas markets…Second, there is today an abundance of gas globally, including LNG supplies…And third, there is the price of oil.”

North America

“So today, for Canadian production, the main issue is how fast and how competitively US Northeast gas can penetrate the Midwest market, a market which accounts for about a quarter of total US gas consumption, and possibly Central and Eastern Canada. While Canadian production will remain challenged, there are limits to the degree of displacement that can take place, particularly looking towards the end of the period. Consumption in the US is also set to grow. If the US can keep adding large quantities of gas at a price that remains competitive compared to Canadian volumes, then more displacement will occur. However, with export demand for US gas set to increase rapidly, Canadian production might ultimately find some room in the North American supply system to feed into a growing call from abroad.”

“When it comes to oil, make no mistake: despite today’s prices, the world is not set to wean itself off this critical fuel quite yet. Today, tight oil production is making the US the largest oil producer in the world, and it stays that way in our projection until the late 2020s. But, by then, US production is already starting to fall back and, by 2040, output is back to where it is today.”

Oilsands

“It is the oilsands in Canada that takes over as the main source of North American supply growth.”

“Ladies and gentlemen, the Canadian oilsands can have a bright and stable future. I have been to Fort McMurray and I have seen the innovations being pursued. But this bright future is not guaranteed. For it to be realised, this industry must reconcile itself with the reality of a world that is setting increasingly ambitious targets to combat climate change. Because despite what some say, many of these energy resources are vulnerable not by cost implications of more stringent carbon policy but in fact by a lack of stringent and predictable carbon policy.”

“To speak plainly: if Canada’s energy resources are to be fully exploited and the benefits enjoyed for years to come, the government of Canada, and the provincial governments, will need to implement additional GHG reduction policies and measures. Governments will have to switch their priorities from how can we make GHG policies compatible with our resource production goals, to how can we make our resource production goals compatible with our GHG targets.”

Climate goals

“For now, it is the provinces that are leading the way on climate goals, and indeed on the innovations necessary to meet those goals.”

“Across the country, several energy intensive industries, including metals, paper, print and pulp have made progress towards more efficient and innovative processing. Since 2009, the government of Canada has taken action, in cooperation with the provinces and territories, towards more stringent federal energy efficiency standards in a number of sectors.”

“Another area where innovations and provincial leadership can make a difference is with renewable energy. From a certain perspective, Canada is a world leader in renewables.”

“Ladies and gentleman, there is substantial potential for renewable energy. For now, this is in your hands. Federal policy on renewable energy is limited to research and development funds and accelerated tax depreciation. In the US, both federal tax incentives and state level incentives were drivers of renewable energy development.”

Conclusion

“As the owners of energy resources, you the provinces, clearly are, and must continue to be, critical players in the evolution of Canada’s energy system and in your country’s response to the global challenge of climate change. Canada is known today as a country with an ambition for setting targets. Let it also be known as a country with an ambition for meeting them.”

Edited from speech by Claira Lloyd

Published on 27/07/2015


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