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An energy-thirsty world will need ‘every drop’ of growing production in Canada’s oil sands, but the industry will need to reassure a skeptical public that development can be done in an environmentally sustainable way, the International Energy Agency’s chief economist says. (Caterpillar Inc.)
An energy-thirsty world will need ‘every drop’ of growing production in Canada’s oil sands, but the industry will need to reassure a skeptical public that development can be done in an environmentally sustainable way, the International Energy Agency’s chief economist says. (Caterpillar Inc.)

OIL AND GAS

World needs oil sands crude, IEA economist says Add to ...

An energy-thirsty world will need “every drop” of growing production in Canada’s oil sands, but the industry will need to reassure a skeptical public that development can be done in an environmentally sustainable way, the International Energy Agency’s chief economist says.

With countries gathering in Qatar this week for the annual United Nations climate change talks, Canada’s expanding oil sands production is again in the spotlight. Canada is routinely vilified at such meetings for being a laggard in battling global warming and for developing one of the world’s most emissions-intensive sources of crude.

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In an interview Monday in Ottawa, IEA chief economist Fatih Birol said booming oil sands production can be consistent with global progress on climate change, which requires a greater focus on energy efficiency and reducing emissions from coal-fired electricity, especially in places such as China and India.

“If the necessary [mitigation] measures are taken in terms of the production and transportation of oil sands, this will not have any significant impact on CO2 emissions growth,” Mr. Birol said. “Compared to the major emitting countries, this is not peanuts, it is a small fraction of peanuts.”

Canada accounts for only 2 per cent of the world’s greenhouse gas emissions, while China emits 10 times Canada’s levels and is growing quickly. And while the oil sands represents the fastest-growing source of greenhouse gases in Canada, it accounts for just 0.1 per cent of global emissions, according to Government of Canada figures.

The energy economist was in town Monday to meet with Natural Resources Minister Joe Oliver and senior bureaucrats to brief them on the agency’s recent global energy outlook, and to give a presentation on it at Carleton University.

The Paris-based agency – which advises rich countries on energy policy – forecasts that Canada’s oil sands production will grow from 1.6 million barrels per day last year to 4.3 million by 2035. But Mr Birol said that optimistic outlook depends on two key assumptions: that the industry can maintain its “social licence” by addressing environmental challenges, and that Canada can access fast-growing Asian markets by constructing pipelines to the Pacific Ocean.

The IEA garnered headlines around the world earlier this month with its forecast that, by 2017, the United States would become the world’s largest oil producer and that within 20 years, North America will be a net oil exporter. At the same time, declining oil demand in the U.S. and booming consumption in Asia will mean fundamental shifts to the world’s energy map.

He said Canada needs to act to capitalize on the changing markets.

“The global energy foundations are shifting and there are countries that are going to win from that, and there are countries that are going to lose from that,” he said. “But there are some countries who have the potential to win but if they do not take the necessary steps, they can be losers. And I believe Canada is one of them.”

In its long-term energy outlook released earlier this month, the International Energy Agency warned that the world has a mere five-year window in which to take action to stabilize emissions and hold rising temperatures to 2 degrees Celsius.

But Mr. Birol said there appears little momentum to achieve much progress in Qatar, as global leaders are more focused on short-term economic problems than a long-term climate crisis.

“The later we have agreement, the more costly it will be and the more costly it will be, the more difficult it will be get an agreement. So we are getting into this vicious circle,” he said.

Canada’s Environment Minister Peter Kent is scheduled to leave for the UN summit next week and attend its second week. Mr. Kent is due to announce Tuesday that Ottawa plans to match aggressive U.S. fuel-efficiency standards, which would take effect after 2016.

One area of promise is in energy efficiency.

The IEA estimates that the world has implemented only a third of the economically profitable energy efficiency measures available to it. But Mr. Birol said governments need to take concerted action, including the full pricing of greenhouse gas emissions through a carbon price or regulations to ensure adequate investment in energy-saving technology.

Follow on Twitter: @smccarthy55

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