How Canada can be a leader in the new global net zero pathway

The International Energy Agency has examined what exactly the phrase net zero by 2050 means in practical terms. Stewart Muir takes a close look.

How could Canada go ahead and lead with the new net-zero approach?

The concept is outlined in a report from the International Energy Agency issued in May 2021.

It turns out to be a goal of staggering difficulty. Yet, with a level playing field in place, countries like Canada have the resources to get us there.

What does net zero by 2050 mean?

If the IEA's urgings are followed, the world will need:

  • Seven times the production of copper, cobalt, manganese and various rare earth metals by 2030.
  • The equivalent to installing the world’s current largest solar park, roughly every day.
  • The equivalent of adding a new battery gigafactory every 18 days for the next ten years.  

Countries like Canada have the resources to help us reach these goals. Resource Works divides these resources into two broad categories:

  1. Ready to go resources
  2. Transformative resources

Ready to go resources are materials and opportunities that need little or no adaptation for use in the net zero world: The metals and minerals needed for batteries and electric motors; uranium for nuclear power; water resources for hydropower; renewable plant-based inputs for biomass and biofuel solutions; and solar, wind and geothermal resources.

All of these are abundant in Canada's huge land area.

Transformative resources are materials that exist in abundance, but produce emissions that must be reduced or eliminated in the energy systems of the future. 

Again, these are also plentiful in Canada. The challenge is to evolve these resources for a carbon-constrained future through the development and application of transformative technologies. This cannot be dismissed as pie in the sky, unless you also dismiss the IEA plan as being hypothetical, since almost half of the reductions needed by 2050 dependent on technologies the IEA readily admits are currently little used or in development.

Natural gas and oil are good examples of transformation resources. So is coal, which the IEA net-zero report says is okay with using for electricity generation, as long as emissions are captured.

Canada is already a leading jurisdiction globally in energy transformation, with numerous projects underway for zero-emission blue hydrogen, ammonia, and carbon capture that will allow for hydrocarbons to be adapted for the new reality. Critics love to sound off about our oil sands, but have you noticed they go very quiet when it is pointed out that aggressive emissions intensity reduction in the sector has been quite successful and will continue to achieve large gains?

And what about the politics?

Apart from technology, the challenge for Canada's transformative resource is to ensure that non-discriminatory policies are developed that allow for such improvements to happen.

There are already worrying signs that the IEA is seeking to discriminate in favour of nations that have low human rights and environmental standards, that show little commitment to emissions innovation, but can boast of massive oil and gas reserves. Dictator regimes that belong to OPEC (Organization of the Petroleum Exporting Countries) should, the IEA argues, be given preferential treatment over other nations as long-term oil producers.

The IEA's net-zero document argues that as part of the grand vision, OPEC countries like Iran, Saudi Arabia and Venezuela should be able to increase their petroleum market share to "a level higher than at any point in the history of oil markets."

For an initiative that is supposed to be about “rapid, far-reaching and unprecedented changes in all aspects of society," this is a puzzling inclusion.

Yet the drafters of the IEA plan cheerfully state: "Making net‐zero emissions a reality hinges on a singular, unwavering focus from all governments – working together with one another, and with businesses, investors and citizens."

Why would countries with low rankings for their ESG (environment-society-governance) performance be given preferential treatment over those who rate highly? Ahead of Fall 2021's important climate gathering in Glasgow, it's almost like the IEA itself has planted a poison pill in its own ambitious target document.

The IEA's surprise recommendation to back only OPEC dictator oil ensures that non-OPEC countries with high ESG rankings will face strong public backlash at home if asked to sign agreements in this direction. 

It will go something like this: "Wait, you want us to shut down our [Norwegian/ Canadian/ American] oil industry, and buy all of our oil instead from Saudi Arabia? The country led by Mohammed bin Salman, who the Biden administration says personally ordered the 2018 murder of journalist Jamal Khashoggi? Really?"

Imagine the reaction at the Pentagon when generals read this report and realize that the IEA is calling for Iran, an OPEC member which is closely allied with Russia, to assume a privileged position in a global petroleum cartel.

International reaction

Norway's oil minister, Tina Bru, struck a note of skepticism.

A May 23 report in the Financial Times quotes Bru saying that it would not “make a difference from a global perspective” if Norway stopped its oil activities. She argued that the biggest petroleum producer in Europe could produce oil and gas with lower emissions than many other countries.

Japan and Australia were both quick to dispute the plan's findings, and will continue fossil fuel investment despite the agency’s advice.

One leading energy executive has already dubbed the IEA plan "a scenario on a piece of paper" when what is needed is more action. 

Canada's Natural Resources Minister Seamus O’Regan reacted saying the energy transformation is about lowering emissions and that this needs to happen "effectively and urgently, but orderly, by not leaving the oil and gas sector behind", according to a Newfoundland news report on May 20.

Some editorialists are swooning over the plan. However, it's not enough to produce a report that is an interesting thought experiment. For it to become an action plan means it must also be able to endure the rigors of realpolitik. The net-zero blueprint is a helpful and very timely first draft. 

Getting it right for 2050

The experience of major project proponents in Canada would suggest that we don’t quite succeed at tailoring our energy policies to the reality of markets anyways. Decision makers are routinely confused on whether our regulatory system exists to enable projects that satisfy world-class conditions, or to serve as a pressure-release valve for deferred climate worries.

There is an easy way to fix the perception that the IEA has seen fit to make propping up OPEC petro-states a pillar of its ambitious net-zero plan. The world cannot afford geopolitical mistakes of this magnitude at such a critical juncture for climate.

Nor can Canadian policymakers make decisions on the basis of what others should be doing. Our approach to energy and climate must continue to be based on anticipating and responding to real market demands – what major energy consumers are doing and how Canada can best help. 

ESG rankings of oil producer countries, whether they are part of OPEC or not, should be the primary determining factor in who is still producing petroleum products in 2050. It's a very simple approach and feels like the only fair way to go. 

Let's be honest, it's a lot easier for countries like Canada to create and achieve net zero goals than developing countries. There is no excuse not to invest aggressively in emissions innovation. 

Net zero ambitions will be great for Canadian critical minerals exploration and mining. Transformation-ready products like natural gas, LNG, ammonia, hydrogen and, yes, even oil will continue to be essential and all of this means the country can prosper into the future. Out of necessity, politically realistic net-zero emissions methods that also recognize the laws of physics will be brought forward.

One thing is for sure: Global investors have trillions of dollars in capital ready to put into energy transformation. Whether in terms of ready-to-go resources, or those that require transformation, the world will move toward net zero much faster if Canada is recognized, respected and included in the change. 

Stewart Muir has written about energy and natural resource issues since the 1990s. He is the founder of the Vancouver-based Resource Works Society.

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