Yahoo Finance Report calls for 2034 halt to oil production as Canada looks to boost exports
With Ottawa set to spell out how much extra oil the country can export to help offset bans on Russian energy products, a new report suggests rich nations, including Canada, must end fossil fuel production by 2034 to up the odds of avoiding dire global climate consequences.
The 76-page report, led by Professor Kevin Anderson from the Tyndall Centre for Climate Change Research at Manchester University, adds up how much future oil and gas production is consistent with the Paris climate target of 1.5C of warming.
Researchers looked at the top 88 oil and gas producing countries. They determined that a fair global transition from fossil fuels would see wealthy countries like Canada, the UK, the United States, Australia, and the United Arab Emirates give up oil and gas production in the next 12 years, with a 74 per cent cut by 2030.
The poorest countries, which include India, Pakistan, Venezuela, and South Sudan, should be given 28 years (until 2050), with a 14 per cent cut by 2030, according to the report. The report calls upon Russia to end oil and gas production by 2039, with a 43 per cent reduction by 2030.
The resulting carbon budget, the researchers say, gives the world a 50 per cent chance of limiting the rise in global temperatures to 1.5C.
"The ongoing climate emergency requires a rapid shift away from a fossil fuel economy, but this must be done fairly," Anderson stated in a news release accompanying the report. "There are huge differences in the ability of countries to end oil and gas production, while maintaining vibrant economies and delivering a just transition for their citizens."
He notes the research was completed prior to Russia's invasion of Ukraine, and the recent volatility that has gripped the global commodity complex.
Canada is the world's fourth-largest oil producer. Earlier this month, Natural Resources Minister Jonathan Wilkinson said Ottawa is examining the country's role in helping to stabilize global energy markets by raising its oil exports. New details could be announced on Thursday, when Wilkinson is set to attend the International Energy Agency's meeting of energy ministers in Paris. According to a report from Reuters, the government has no intention of compromising on its climate goals in order to boost oil exports.
Anderson says the conflict in Ukraine highlights the need for a rapid shift to renewable sources to improve energy security, and avoid volatile prices and supply disruptions.
Shares of clean energy companies have pushed higher, alongside conventional commodities and oil and gas stocks, in the weeks since Russia's invasion. In Canada's energy patch, demand for drilling rigs has increased in recent weeks, according to a report from Bloomberg. However, this activity has been among smaller non-oil sands players, with quicker turnaround times than the largest operators.
Nicolas Piquard, vice-president, portfolio manager and options strategist with Horizons ETFs Management Canada, recently told Yahoo Finance Canada that the war will speed up global efforts to abandon fossil fuels, and cement Canada's role as a stable source of oil and gas in what's expected to be a decades-long energy transition.
"It places Canada in a very, very enviable position," he said in an interview. "Canada is one of the few countries that's a true democracy, and aligned with the Western world, that has high oil and gas reserves, and an ability to increase production."
However, Kevin Krausert, a Calgary-based oilfield service executive-turned clean energy venture capitalist, says he sees greater opportunity for Canada in exporting technology like carbon capture, aimed at helping the fossil fuel industry improve its emissions, rather than Canadian crude.
"What if we use one of the largest assets the country has, the oil sands, as the first customer to prove out some of these technologies, make them commercial, and export them to the world?" he asked in the latest episode of Yahoo Finance Canada's Editor's Edition. "I think that's an exciting story that all Canadians can get behind."
Jeff Lagerquist is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jefflagerquist.
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