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Canada’s energy transition is looking a bit like a taxpayer-funded business-as-usual scenario with a green hue.

It’s early in a decades-long push to transform the economy into one with net-zero carbon emissions, but reports this week do little to instill confidence that enough concrete work is under way to meet the ultimate 2050 target, or an interim one of 2030. Now, world events are complicating matters.

Canada’s environment commissioner delivered scathing assessments of Ottawa’s climate policies, saying the government is failing to deliver on some of them and exaggerating the effectiveness of others. He criticized deficiencies in such areas as carbon pricing, hydrogen development and helping workers make the transition from fossil-fuel jobs.

Commissioner of the Environment and Sustainable Development Jerry DeMarco highlighted disorganization across federal departments, poor data and reporting, pie-in-the-sky assumptions related to the country’s hydrogen strategy, and questionable funding decisions.

Meanwhile, Royal Bank of Canada published a report saying the oil and gas sector could boost crude production by another 600,000 barrels a day by 2032, generating nine million tonnes more of CO2. It would cost up to $65-billion to meet Ottawa’s mandated 42-per-cent cut in oil industry emissions by 2030, and much is riding on carbon capture, utilization and storage, or CCUS, technology, RBC said.

There are a lot of mixed messages in all this, but they all dance gingerly around the fact that, at some point, the transition will have to involve a deliberate reduction in the production and consumption of fossil fuels. The question is how quickly, and that needs to be answered, or the transition will be an open-ended blob of time.

Scenarios spelled out by the Intergovernmental Panel on Climate Change and the International Energy Agency point to a massive shift in global economies if there is any hope of achieving a limit in temperature rise to 1.5 C above preindustrial levels. The IEA said last year that investment in new oil reserves won’t be needed. That was before Russia’s invasion of Ukraine. The sudden loss of Russian oil supplies sent energy security to the top of the agenda.

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Canada is not the largest emitter, but it has an influence on the global stage, and its record on emissions has been less than stellar. Since 2005, the only sizable declines have been during economic downturns, such as the first year of the pandemic, when commercial transport all but shut down.

The federal budget includes $9.1-billion in spending to reduce Canada’s emissions by 40 per cent below 2005 levels by 2030, as well as a series of tax credits and a new investment fund. From a financial standpoint, there’s a lot of pressure to keep things comfortable for businesses and consumers, and smooth out discomfort with public money.

In its report, RBC says it is possible for Canada’s oil and gas sector to both increase production and meet the target at the same time.

The bank calls it a “challenge.” That’s an understatement. It says meeting the need to build up capacity to capture 20 million to 30 million tonnes of CO2 is “ambitious” when you consider there is capacity for 40 million tonnes worldwide today.

The IEA has said CCUS will be a key part of the world’s transition to net-zero emissions. But there are some significant issues: The technology is so far unproven on such a huge scale, and it will drive up the supply cost per barrel in competitive energy markets. That last bit could be the biggest hurdle in Canada.

Ottawa has offered $2.6-billion in refundable tax credits for CCUS projects. But on Wednesday, Cenovus Energy chief executive officer Alex Pourbaix said the percentage on offer is not enough for major oil sands producers to start building projects. He said it would require more federal and provincial money.

So oil executives don’t want to risk shareholder dollars to build such facilities, and many environmental activists say CCUS is just cover for producing more oil rather than making the transition to green energy.

Globally, the transition is looking like it is stalling out. Sanctions and countermoves following Russia’s attack on Ukraine are hitting economies around the world with spikes in energy costs, and prompting leaders to call for increased output of oil, gas and coal in allied countries to try to limit inflation. It has also necessitated a focus on the humanitarian crisis Russian President Vladimir Putin’s aggression has wrought.

Canada aims to supply a world in dire need of new energy with its oil and gas. That makes the emissions targets all the more difficult to hit, especially the one Ottawa has called for in just eight years. Something’s got to give.

Jeffrey Jones writes about sustainable finance and the ESG sector for The Globe and Mail. E-mail him at

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