Energy industry needs national strategy that includes pipelines and carbon tax, report says
Canada’s oil and gas industry has the potential to compete successfully in global markets over the next decades, but only if business leaders and governments craft a cohesive national energy policy, according to a report released Wednesday.
The PricewaterhouseCoopers report, titled 2019 Energy Visions, argues that Canada’s energy sector has emerged from a turbulent decade in good shape to compete in a market in transition, in part because companies have planned and innovated for the future.
Even though tens of billions of dollars in projects were delayed or canceled and tens of thousands of jobs lost during the recession, production increased and efforts to tackle environmental impacts improved, according to the report. .
The report notes that in situ operators have reduced their operating costs by 45% since 2014, and integrated mine operators have reduced their costs by 33%, according to Alberta Energy.
The intensity of greenhouse gas emissions has declined by 25% over the past decade, bringing the oil sands in line with US production, according to the report.
“In addition, the industry continues to invest in technology that keeps production competitive,” the report said.
“Despite the ups and downs of the past 10 years, our industry has shown resilience. She took on and met challenges responsibly. And our industry continues to contribute to Canada’s GDP, create well-paying jobs and transfer billions of dollars to provincial and federal governments. cash flow – while maintaining a global reputation for technical excellence. “
But over the past decade, the oil industry’s guiding narrative has changed fundamentally, the report says. And it will take a national strategy for Canada’s energy sector to succeed in the new reality, he argues.
The narrative has shifted from a matter of scarcity – that oil reserves were dwindling and demand would not be met – to the imminent arrival of peak demand and how to compete for market share.
Harvard Kennedy School professor Meghan O’Sullivan says the ability of Canada’s oil and gas industry to succeed in the new era of energy abundance will depend on further advancements in energy reduction technology, according to the report. costs and government policies that facilitate the construction of export infrastructure.
The lack of a coherent national strategy over the previous decade led to the failure of several pipeline construction plans and over 30 LNG export project proposals that would have diversified the options for the Canadian market. , argues the report.
“Eight years ago, industry leaders warned that the absence of a comprehensive energy strategy would lead to lost opportunities and leave energy policy to be environmental policy by default. Their predictions have been proven correct,” he said. declared the report.
The report lists several elements that it believes should be part of a national strategy, including a clearer infrastructure approval process, a role for government in alleviating geopolitical uncertainty, and a tax strategy. carbon.
“The industry supports a greenhouse gas reduction strategy that does not disadvantage Canadian exports. Carbon policies must be based on certainty and stability, ”the report says.
Growth in US supply
The report says the huge growth in US supply has fundamentally changed the energy landscape.
“The United States is now Canada’s biggest competitor,” says the report, which argues that it is increasingly urgent for Canada to get its oil and gas to Asia.
“Over the next two decades, the IEA (International Energy Agency) predicts that Asia will account for half of the global growth in demand for natural gas and more than 80% of the increase in demand for natural gas. oil. The environmental policies of many of these new markets are also propelling demand for low carbon energy sources like LNG. “
The report argues that the pipeline approval process requires strict timelines and should focus on the economic and environmental impacts of the project, and that broader issues like climate change need to be addressed through public policy, not through the project approval process.