Liberals have fumbled green energy transition, and Conservatives have zero interest

TORONTO—Let’s face it. The Trudeau government has done a clumsy job in leading Canada through the transition to a new energy economy. While the government's aspirations have been high-sounding, its implementation has been confused and contradictory, with over-investment in the oil and gas industry through tax incentives and direct subsidies, and under-investment in supporting the entrepreneurship that can take us into the clean energy world. We are still far from the needed trajectory to achieve net-zero emissions by 2050. But failure is not an acceptable option. The Russian invasion of Ukraine and the rising level of conflict in the Middle East have necessarily focused greater attention on energy security worldwide. But this should not mean any let-up in the transition to a clean energy future, with its much-reduced role for fossil fuels, and much greater focus on the switchover to renewable energy to address climate change as the International Energy Agency (IEA) underlines in its new World Energy Outlook 2024. Quite the contrary: energy security and climate action “go hand-in-hand.” As the IEA argues, “deploying cost-competitive clean-energy technologies represents a lasting solution not only for bringing down emissions, but also for reducing reliance on fuels that have been prone to volatility and disruption.” To take one example, the European Union is not simply replacing natural gas it previously bought from Russia with natural gas from Qatar and the United States. It is sharply reducing its use of natural gas altogether, since it is a source of greenhouse gas emissions. It is replacing it with renewable sources of energy as well as accelerating the adoption of electric vehicles and trains, and more energy-efficient buildings and industrial processes. As the IEA says, “clean electricity is the future." Based on its own best estimates drawn from extensive consultations with energy providers and users around the world, the IEA forecasts—even in its most conservative scenario—that clean energy meets “virtually all” growth in energy demand between 2023 and 2030, leading to “an overall peak in demand for all three fossil fuels before 2030.” There will still be a demand for some time for fossil fuels, but a there will be excess supply in a world of shrinking demand. The world’s spare capacity in oil, for example, was 3 million barrels per day (mbd) in 2019, is 6 mbd today and slated to reach 8 mbd by 2030. Existing planned investments in LNG projects are expected to lead to a surplus of supply over demand until 2040, so that there is no need for additional projects. This implies lower fuel prices as supply exceeds demand, the IEA says, raising questions about taxpayer-subsidized future investments in relatively higher cost Canadian oil sands and LNG projects. By 2030, almost half of all new vehicles sold could be electric while demand for electricity will soar. Yet despite growth, the existing transition underway is not enough. “The world is still a long way from a trajectory aligned with climate goals,” while “Decisions by governments, investors and consumers too often entrench the flaws in today’s energy system, rather than pushing it towards a cleaner and safer path,” the IEA warns. In Canada, despite its boast of green credentials, the Trudeau government is planning billions of dollars towards support for the oil sands industry. But how far should we go in subsiding the fossil fuel industry? Should we not be spending less on subsidies for oil and gas, and more on the transition to the electric age, and the many technology and commercial opportunities that can be seized? The oil industry is demanding that Canadian taxpayers take on a greater share of the risk in carbon capture and storage while it spends billions of dollars on share buybacks to enrich shareholders. A second IEA report—Energy Technology Perspectives 2024—shows how a new global energy economy is emerging, illustrating this by growth in six major clean technologies: solar photovoltaic (PV), wind, electric vehicles, batteries, hydrogen electrolysers, and heat pumps. Their markets are expected to soar over the next decade tripling by 2035 to more than US$2-trillion, the same as the annual global oil market in recent years. Clean energy systems are becoming more economically and environmentally attractive than fossil fuels. This growth, the IEA says, “can offer many benefits and opportunities, including new manufacturing industries, job creation, lower energy bills, improved energy security, cleaner air and emissions reductions.” But where will Canada be in this transition? Will we be spending too much on our role as a petrostate and too little on the new energy economy? One way in which clean energy technologies are better, the IEA report points out, is that “while fossil fuel supplies need to be replenished as soon as they are consumed, importing clean technologies provides a durable stock of energy equipment.” For example, “a single journey by a large container ship filled with solar PV modules can provide the means to generate electricity equivalent to the amount generated from the natural gas onboard more than 50 large LNG tankers, or the coal onboard 100 large ships.” This helps explain why countries are investing heavily in solar manufacturing. In fact, under its subsidy programmes, the U.S. has mobilized US$230-billion of investment in clean technology manufacturing through to 2030. Overall, global manufacturing capacity for clean energy technologies is accelerating. Between 2021 and 2023, production capacity increased from just over 450 GW to 1.2 TW in solar PV modules, 125 GW to 180 GW for wind, 10.5 to 22.5 million units for electric vehicles, 1.1 TW hours to 2.5 TWh for batteries and triples to 25 GW for electrolysers. Based on announced expansions, by 2030 we could see manufacturing capacity worldwide of 1.6 TW in solar PV, 260 GW for wind, 9.3 TWh for batteries and 165 GW for electrolysers. The transition to a new energy world will not be cheap or easy. But it will deliver great economic opportunity and a more environmentally sustainable world. We need to be part of that world, but we are not there yet. The Liberals have fumbled it. The Conservatives don’t even seem interested. David Crane can be reached at crane@interlog.com. The Hill Times

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Liberals have fumbled green energy transition, and Conservatives have zero interest

We are far from the needed trajectory to reach net-zero emissions by 2050, but failure is not an option.

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