Almost two weeks ago, the International Energy Agency released a new report which said that the world would need to have an immediate stop to oil and gas investments to reach net-zero. The International Energy Agency’s original mission was to act as an organization that would respond to disruptions in the oil market. In recent years, the IEA increasingly has been concerned with clean energy and reaching net-zero. Turning its original mission completely on its head, this call for no more oil and gas projects makes a fatal error.
This new report makes the critical mistake of assuming that technology in the oil and gas industry will stay the same even as they assume green technology will improve greatly. The IEA vision for the future is seemingly already out of date with current trends in the oil and gas industry. The environmental technology being used for oil and gas extraction and production continues to improve every day, and by 2050 will also be infinitely better than today.
This apples and oranges comparison assumes that technology like carbon capture deployed in the industry today will not continue to improve and be deployed in more places at lower costs to make more oil and gas production net-zero. In addition, emerging circular economy technologies hold the promise of true sustainability for oil and gas. Real zero production and consumption technologies are already beginning to take shape like the Whitecap Resources carbon capture project in Saskatchewan and Questerre Energy’s circular economy project in Quebec that uses and recycles hydrocarbons throughout the lifecycle.
Another interesting predicament put out by the IEA is that it also assumes technology not yet in existence will solve the materials problem for renewables. Another recent report from the IEA found that a global energy transition would result in demand for minerals such as lithium, graphite, nickel, and rare-earth metals rising by 4,200%, 2,500%, 1,900%, and 700%, respectively, by 2040. This would require mining around the world at a historically unprecedented scale requiring new discoveries and technology to manage the massive environmental and social impacts.
This sharp turn from the IEA’s original mandate also goes against its own energy demand scenarios which still show the significant role oil and natural gas will need to play past 2040. Oil supply will be required to reach over 100 million barrels per day to meet the world’s growing energy demand. But oil is not the only energy source that is seeing continued growth despite global calls for ending its use. China is expected to build a new coal power plant each week for the foreseeable future as it continues to expand its energy supply. But based on non-OECD countries’ development of coal alone, the IEA scenario is counter to the reality of demand for reliable energy in developing countries.
As an energy agency meant to counter the influence of OPEC on the oil market, this prediction from the IEA takes the cake. In their net-zero report, OPEC producers will become the main supplier of oil. This shift would be counter-intuitive to promoting the values of ESG. BMO’s report from 2020 on oil producers confirms that Canada has the highest ESG ranking for major oil-producing countries. Thus, this roadmap is counterproductive to the IEA’s general goal with its roadmap as it will allow the global energy supply to shift to countries that are more polluting, less transparent, less sensitive to societal pressures, and less committed to emissions reductions.
As the anti-oil and gas crowd cheers on the IEA’s new prediction for oil and gas production, none of them consider the impacts of the shift. It is abundantly clear that even if we reach net-zero, the world will still rely on oil and gas for some form of energy use.
If we’re going to talk about an energy transition, that’s fine, but we need to be talking about the impacts of it too. Oil and gas will also need to be a major part of that discussion and we will need to take into consideration where we get our oil and gas from. My preference is producers like Canada who are making concerted efforts to produce energy and ensure that it is done responsibly with the lowest impacts on civil society.