Canada will need to overhaul its economy to achieve net zero carbon emissions. But cultural change might prove even harder

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The International Energy Agency prescribes tough medicine for moving the world to net-zero carbon emissions, and for Canada it would mean a complete overhaul of an economy that’s enjoyed the spoils of fossil fuels.

One obstacle to getting there is will. Rallying Canadians behind such an effort looks to be a near-impossible task as Western provinces continue with years-old arguments about pipelines while one of the major federal political parties can’t agree that climate change is a problem. At least today.

Even for those who believe that such a massive transition to renewable energy is necessary, it will not be easy, given the costs for technology and infrastructure – many as-yet unproven – and the dislocation of jobs the IEA acknowledges it all would bring.

Last month, Prime Minister Justin Trudeau’s Liberals toughened Canada’s greenhouse gas emission reduction target for 2030, moving from 30 per cent to 45 per cent below 2005 levels. In the IEA’s 2050 scenario, Canada and its industrialized allies must undergo a transformation of energy and financial systems on a scale that’s hard to grasp.

Following this roadmap would be “perhaps the greatest challenge humankind has ever faced,” according to the IEA’s executive director Fatih Birol. This, from the agency that was created as the West’s protector during the first energy crisis of the 1970s. Now, it says that the use of oil itself is one of society’s existential threats.

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Action on a global scale is needed now if countries are going to achieve their Paris agreement goal of net-zero emissions by 2050, the IEA said. That’s what scientists say is required to keep the rise in global temperatures to 1.5 C, and stave off some of the worst effects of climate change.

Oil, gas and coal use will have to fall to just 20 per cent of energy supply, down from 80 per cent currently. What remains of fossil fuel production will need to be accompanied by carbon-capture technology.

Under the IEA’s scenario, new investments in oil and gas fields or coal mines won’t be needed. Instead, the global energy mix will be dominated by renewables. Fortunately, Canada is undergoing a financing and development boom in clean tech.

The oil industry in a net zero world looks a lot different. One stark prediction is, proportionally, the Organization of Petroleum Exporting Countries will have more control of global supply. Under the IEA projection, crude oil use falls to just over 21 million barrels a day from more than 90 million barrels in 2020. OPEC’s share of that climbs to 52 per cent from 34 per cent now.

Also, demand for natural gas, often touted as a relatively cleaner fuel to use while transitioning to renewable technologies, increases until 2030. But then it drops off precipitously.

The IEA has presented a detailed set of forecasts and solutions, but its work still has uncertainties. One of the biggest is that innovations that will push the world into a clean energy future have yet to be proven - or even invented in many cases.

The technology to make the deep emissions cuts necessary by 2030 is available today. But for the following two decades, half of the gear and ideas needed improve clean energy efficiency is currently at the prototype or demonstration phase. And it all comes with massive cost – at least US$90-billion in public money, the IEA estimates.

The question is: How realistic is all of the change for Canada’s energy-producing provinces like Alberta? Its current United Conservative Party government was elected partly on its pledge to fight back against any incursions into its fossil fuel wealth (dwindling though that may be). Federally, the government has tried to strike a balance between oil and gas production and environmental protection, and it has faced pushback from the left and the right.

Much of the recent debate has been over Canada’s vulnerability to disruptions in petroleum supply, given the threat of closing Enbridge Inc.’s Line 5 through Michigan. It has rekindled arguments over whether there should be an all-out effort to build more pipelines domestically to ensure security of supply. Under the IEA’s prediction, their shelf life will be limited in a push to net zero.

Meanwhile, consumers, many of whom have bristled at carbon taxes and other moves, would have to embrace a whole range of new heating and transportation options, and the costs are not yet known.

The IEA has laid out a path to allow the developed world to achieve its targets at a time when hard decisions have to be made. In Canada, the cultural change necessary to follow the directions will surely be one of the hardest parts.

Jeffrey Jones writes about sustainable finance and the ESG sector for The Globe and Mail. Email him at jeffjones@globeandmail.com.

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