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There was an earthquake in Alberta on Tuesday, albeit one most people couldn’t see or feel. A new report from the Canadian Energy Regulator and the future it describes could soon upend lives and livelihoods, along with most of the province’s political conversations, for decades to come. The question now is whether the province and its conservative government will actually acknowledge its existence, much less do anything to stop it.

The report from the Canadian Energy Regulator modelled, for the first time, what demand for oil and gas would look like if either Canada or its global trading partners met their stated goal of reaching net-zero emissions by 2050.

It’s not pretty.

If both Canada and the world stay on their current course in terms of climate policy, one that would lead to disastrous levels of warming, demand for Alberta’s oil would increase moderately and peak around 2035. That’s the best-case scenario for Alberta’s oil and gas industry, if you can even call it that.

In the Canada Net-zero Scenario, oil demand peaks by the end of the decade and falls to 3.9 million barrels per day by 2050. Fossil gas production follows a similar trajectory, rising modestly into 2030 before declining by almost 40 per cent over the next two decades. For an industry, and a province, that seems to still believe demand will rise indefinitely, this would be a major shock to the system.

But it’s the Global Net-zero Scenario that should have every policymaker in Alberta awake at night. It envisions a world where oil prices sit at $35 a barrel in 2030 and just $24 per barrel two decades later, resulting in a 76 per cent decline in Canadian oil production by 2050 from 2022 levels. “In our analysis, shortly after the total operating costs of a facility exceeds its revenue, it shuts down for the remainder of the projection period,” the report concludes. “Oilsands facilities that have the highest operating costs begin shutting down early in the 2030s. As oil prices continue to drop, more and more facilities shut down production, and only the lowest-cost projects are still producing in 2050.”

Fossil gas doesn’t fare much better, with 2050’s production expected to fall by two-thirds compared to 2022 levels. LNG exports aren’t about to save the day for Alberta here, either. After plateauing at two billion cubic feet per day in 2029, the Canadian Energy Regulator expects them to fall off dramatically beginning in 2045. By 2050, they could be as low as 0.3 bcf/day.

The UCP and its allies in the Postmedia pundit class will continue to pretend the world achieving net-zero emissions by 2050 isn’t realistic, even as they’ve committed to the same net-zero timeline. They will continue to insist they can reach their emissions reduction targets by exporting more LNG, a fantasy that the federal government is apparently now willing to at least humour. “Credit for LNG deals with other countries is essential to Alberta’s emerging policy to go net zero by 2050,” the Calgary Herald’s Don Braid wrote. “Without that agreement, the province would have to radically reduce oil and gas production.”

But if Braid had actually read the full report, he’d understand that federal policy isn’t the real threat here. Instead, this is a verdict being rendered by the thing conservatives are supposed to worship: the market. “This analysis underscores that Canada’s economic prospects will be profoundly affected by global forces outside our control, especially as market demand shifts in response to accelerating technological change and other countries’ policy ambitions,” the Canadian Climate Institute’s Dale Beugin says. “The global transition toward net zero will have big implications for Canada’s new and existing export markets — even if the world acts too slowly to stabilize warming at 1.5 C.”

Conservatives keep pretending that Justin Trudeau wants to "phase out" Alberta's oil and gas industry. But as a new report from the Canadian Energy Regulator shows, it's the rest of the world they should probably be worried about, @maxfawcett writes.

And make no mistake: while Alberta’s leaders aren’t willing to get serious about the energy transition, other parts of the world are. China remains focused on cornering this huge new market, with ever-more massive investments in electric vehicle production, battery technology, wind turbines and solar panels. The United States threw nearly $400 billion at carving out its own piece of this multitrillion-dollar pie last year with its Inflation Reduction Act. And Europe continues to aggressively wean itself off both oil (through electric vehicle mandates) and Russian gas imports (through energy conservation and the rapid deployment of renewables).

The biggest risk here to Alberta, then, is clearly to the downside — and that’s before even contemplating the inevitable shift in OPEC’s market management strategy away from cutting production to drive up prices. Once they decide to start pumping as much as they can before the fossil fuel era comes to a close, there’s no telling how low prices might get.

In other words, Alberta has a few years to get its house in order when it comes to both its finances and environmental liabilities before things get really, really real. What it needs right now is a sophisticated conversation about the opportunities associated with the energy transition and how best to balance their pursuit against the need to help impacted communities adapt and evolve. What it’s probably going to get is yet another exercise in petulant navel-gazing and scapegoating, one that begins and ends in Ottawa.

If the Alberta NDP wants to chart a course back to power in 2027, it has to take on the leadership role here that the UCP will almost certainly abdicate. It needs to explain what’s really at stake here for Albertans and their kids, which policies can help them manage the growing uncertainty around the future, and why addressing the province’s huge inventory of unreclaimed wells and oilsands tailings ponds can’t wait until the companies responsible for them go bankrupt or walk away.

That won’t be easy. Many people would rather ignore the truth here than confront its long-term implications. The UCP, for its part, will continue to pretend this is the federal government’s fault. And the mainstream media in Alberta, or what’s left of it, will struggle to put this issue in its proper context, leaving many people stuck in low-information silos where this issue will be written off as either a globalist conspiracy or the legacy of two prime ministers named Trudeau.

The days of fighting over pipelines, at least, are finally over. But an even bigger fight is now on our collective hands: the battle between an uncomfortable truth and some convenient fictions. Albertans had better choose wisely.

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Fawcett: "The UCP and its allies in the Postmedia pundit class will continue to pretend the world achieving net-zero emissions by 2050 isn’t realistic, even as they’ve committed to the same net-zero timeline."

As Max neglects to point out, the federal party and government he supports — the Liberals — are also banking on global failure to meet 2050 net-zero climate targets.

Trudeau's Liberals are committed to climate failure.
Why else buy and build a pipeline —TMX — that requires decades to recoup its capital costs?
Why else invest tens of billions of dollars in white elephants like carbon capture (CCS) to keep the oilsands industry afloat?
*
Fawcett: "The [UCP] will continue to insist they can reach their emissions reduction targets by exporting more LNG, a fantasy that the federal government is apparently now willing to at least humour."

That the Liberals are willing to give the O&G industry climate credits for exporting fossil fuels — which in Canada's case at least are as bad for the climate as coal — reflects the Liberals' own failure to grasp reality.
Under Liberal leadership, Canada will continue to be a climate laggard. Not on track to meet our inadequate targets. Paying lip service to science. Transferring billions of dollars from public coffers to largely foreign O&G shareholders. Making the public pay for O&G carbon control, as well as clean-up and reclamation.
A travesty.

The new denialism. Just as delusional as the old kind but more insidious. And far more dangerous.
"The New Climate Denialism: Time for an Intervention" (The Narwhal, 2016)

Recall also that Max Fawcett supports new taxpayer-owned pipelines and taxpayer-funded carbon capture, both of which perpetuate fossil fuels.

"In the early days, as a supporter of the Trans Mountain pipeline, Fawcett disagreed with some of the ways CNO covered fossil fuels, one of the main drivers of climate change."
"How Canada's National Observer helped bring climate change into the mainstream" (18-Jan-23)

The former editor of Alberta Oil Magazine and Liberal Party cheerleader has previously argued for the Trans Mountain Expansion project and taxpayer-funded carbon capture:
"Should the government kill the Trans Mountain pipeline project?" (2022)
"Killing TMX won't mean that oil doesn't get consumed, or the emissions from it won't be released into the atmosphere. It just means they'll get to market by different — and more expensive — modes of transportation."
Fawcett's talking points come straight from CAPP (Canadian Association of Petroleum Producers).

"Steven Guilbeault leads Canada through the hard choices on the road to net-zero" (National Observer, April 18th 2022)
Fawcett: "Yes, Canada could move to wind down oil and gas production more aggressively, but that would only create an opportunity for other producing nations — or OPEC, which has spent the last few years deliberately restricting its supply — to fill the resulting supply gap."
The same argument the Conservatives make. The same arguments Canada's asbestos industry used for years.
"If we don't sell it, someone else will." The drug dealer's defence. "Why should I stop selling crack? Someone else will just take my place."

"The idea of public money flowing to companies that are as profitable as they've been recently is surely unsatisfying to most environmentalists in this country, including Guilbeault. But if we're actually going to get there, the road to net-zero is going to be paved with hard choices, not easy answers."
Huge infrastructure projects like pipelines and CCS lock us into a fossil fuel future.
Fawcett also advised us not to get our hopes up for the rapid decline of fossil fuel production dictated by the best available science:
"Instead, it's an example of the hard choices that have to be made in a country like Canada, where progress on climate change is more about evolution than revolution."

"Suncor goes back to the future with its new CEO. Are its net-zero ambitions next?" (2023)

Imagine a world in which the lead columnists of Canada's leader in climate journalism do not support new oil pipelines.

The logic of this article (which I support) should lead to an immediate "cease work" on both the TransMountain and CGL pipeline projects. Neither are economically viable--sunk costs are no reason to keep throwing money at a losing investment.