A pumpjack draws out oil from a well head near Calgary on Sept. 17.Jeff McIntosh/The Canadian Press
Brian Porter is the president and chief executive of Bank of Nova Scotia.
It is becoming increasingly clear that too many people have forgotten, or failed to learn, the lessons of the 1970s. The most important lesson from that time being that energy security is national security. As the saying goes, “Those who cannot remember the past are condemned to repeat it.”
It is not an exaggeration to say that we are at a critical juncture in Canadian and world history. Policy makers and business leaders alike would be wise to remember the lessons of history, particularly as we navigate current geopolitical and economic realities while committing ourselves to a net-zero future.
Canada has the expertise and the capital to produce and export more LNG and other energy commodities. What we need is the political will to take real action and get more energy projects completed.
The transition to net zero is one of the most important issues we face. It’s also the easiest to get wrong.
We have forgotten that such a transition will require compromise, as we address real energy needs today, and investment, as we adapt to cleaner ways of producing energy tomorrow. A well-managed transition will see that the opportunities flowing from the transformation dramatically exceed these costs.
We are currently on a path to a disorderly transition that will not achieve our carbon-reduction goals but make the world even more vulnerable. We know that we are not investing enough in green technologies to meet the world’s energy needs. Those investments need to be multiples of what we are seeing today.
And even as we invest too little in cleaner alternatives, the phase-out of fossil fuels has accelerated while the global demand for energy continues to grow. Mismatches are particularly acute for the oil and gas sector, where declining investments within non-OPEC countries largely reflect a path to a net-zero future.
Recent geopolitical events have amplified looming disparities.
Today, fossil fuels make up approximately 84 per cent of all energy consumed on Earth. New research from Scotiabank Economics shows that 80 per cent of oil reserves are in countries with terrible ESG (environmental, social and governance) ratings. Net-zero plans are far from being a priority for those countries, as they would inhibit their ability to grow in power and influence.
Russia’s behaviour and the ripple effects across the European continent are stark reminders of our vulnerabilities. Saudi Arabia’s recent decision to cut oil production – ostensibly to support Russia – is another.
The harsh reality of the democratic world’s vulnerability to energy-producing powers that don’t share our values is starting to hit home. To her credit, Deputy Prime Minister Chrystia Freeland made that clear in speeches in Washington recently when she said, “Europe is bracing for a cold and bitter lesson in the strategic folly of economic reliance on countries whose political and moral values are inimical to our own.”
So, if the world still needs oil and gas in the years ahead, what is the best path to point our planet toward net zero?
The answer is clear: The world must look to responsible producers for our energy needs as we undertake the necessary transition to a net-zero economy.
The world must look to Canada.
Canada is a well-governed country with strong values. Our ESG ratings are among the highest in the world, and we aspire to have the lowest carbon intensity per barrel of oil in the world. We have an abundance of different types of energy. Natural gas, in particular, is a critical transition fuel.
We recognize the importance of working, over time, to reduce carbon emissions, and our domestic ambitions on the climate front are well-intentioned. But we cannot act as if nothing has changed in the world over the past year. Positioning ourselves to be the preferred supplier of responsibly produced energy to the world is good for our allies and good for all Canadians.
To put it another way, if we are to eventually move beyond oil, the last barrel produced should be a Canadian one. The world will be a better, safer place for it.
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