OPINION: Oil is Far From Dead

Oil and gas demand is set to keep growing through 2050, but the world must kick its oil addiction to save the planet.

By Uzodinma Ukagwu

Elizabeth May and Yves-Francois Blanchet really stepped in it when they declared oil to be dead in the middle of a pandemic, while arguing that the government should not make any investments in the oil sector. 

Cue the widespread outrage. 

From the glowering Jason Kenney responding angrily to their comments at his press conference, to pundits on TV declaring their comments to be disrespectful and insensitive, both politicians must have wished they could take back their words, or at least said things differently.

Oil is still tremendously important to the Canadian economy, contributing 5.6 per cent in GDP, and employing nearly 170,000 Canadians. Oil is even more important in Alberta and Saskatchewan, contributing about 16 per cent to both provinces’ economies.

The truth is that oil is far from dead. In fact, I started writing this with the opposite opinion in mind, but after careful research it became clear that the facts do not support the “oil is dead” theory. 

In fact, Barclays bank forecasts that global energy demand will rise between 40 and 75 per cent by 2050. This demand growth will be primarily driven by growth in the petrochemical sector (plastics and other oil derivatives), explosive population growth, and rising demand from the developing world.

Barclays Bank’s analysis posits that under any circumstances, the demand for oil and natural gas will be higher in 2050 than it is today. The only question is how much higher will it be, as renewable energy sources continue to proliferate?

“Canada’s oil sands are not the enemy.”

Among the main drivers of day-to-day oil and gas demand, only demand from cars will decrease slightly. Oil demand from trucking and aviation is set to grow substantially, while demand from petrochemicals is expected to almost double by 2050.

Should we cheer, as Canadians, at the news that oil demand is set to continue growing till 2050 and probably beyond? Definitely not! We know that production and use of oil, gas, and coal contributes to the bulk of greenhouse gas emissions, which are gradually warming our planet.

The truth is the world is hooked on non-renewables, and we, together as a planet, need to kick this addiction because our very survival depends on it.

What can Canada do? We need to focus on the demand side of the equation, not the supply side. Canada’s oil sands are not the enemy, but only exist by virtue of the world’s continuing demand for oil. Closing down our oil production will not solve our oil addiction.

Consumers will only buy from other sources. We need to redouble our efforts to solve our demand for oil and gas by switching to other sources of energy. 

Electricity and heat production (25 per cent), transportation (14 per cent) and buildings (6 per cent) collectively contribute 45 per cent to global greenhouse gas emissions. Renewable alternatives already exist in these areas and we need to speed up the transition to those alternatives.

The other growing demand-driver of oil and gas production is petrochemicals. The starting point is obviously single-use plastics and it is great that the government has already committed the country to transitioning by 2021

Beyond that, Canada and other governments around the world need to clamp down hard on the growth of petrochemicals because they are replacing oil demand that is being reduced in other areas.

There is an opportunity for Canada to emerge as a renewable and petrochemical alternative research hub, and the government of Canada should invest to take advantage of this opportunity. This will create high-paying jobs in Canada, as well as help us and the rest of the world kick our terrible oil addiction.

Copyright© 2020 by Uzodinma Ukagwu

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