Caught between climate warnings and economic realities, Canada and the world face tough fossil fuel choices

The latest UN warning of slipping global climate goals looms over a pending decision on whether a major offshore oil project will go ahead off Newfoundland, promising a much-needed boost to the economy of the province, but potentially moving the world away from catastrophic climate avoidance.

the climate change mitigation report of the Intergovernmental Panel on Climate Change says limiting global warming to 1.5C above pre-industrial levels this century, one of the goals of the global Paris agreement signed in 2015 , is virtually out of reach without massive and immediate emission reductions, as well as technology to capture and store carbon emissions in industrial facilities.

In fact, to achieve even the less ambitious goal of limiting warming to 2°C, global carbon emissions must peak by 2025 – three years from now – and start declining afterward.

This means tough decisions for governments weighing economic development against reducing emissions.

“Politicians always have to make decisions among competing priorities, and they have a lot ahead of them and really complex decisions to make,” said Sarah Burch, a professor at the University of Waterloo in Ontario and lead author of the chapter of the sustainability report. development.

“But what the report shows us is how important it is to move away from mining and burning coal, especially, immediately, but also from oil and natural gas to electrify transport, to make our buildings more efficient, to enable active transportation, and to increase carbon capture and storage.”

United Nations Secretary-General Antonio Guterres has warned against further fossil fuel expansion while global climate goals are out of reach. (Andrew Kelly/Reuters)

The report also warns that as the world cuts emissions, oil and gas projects could become “stranded assets” – projects with no buyers for the resources they produce.

“Investing in new fossil fuel infrastructure is moral and economic folly,” UN Secretary-General Antonio Guterres said when the report was released on Monday.

“Such investments will soon be stranded assets, a blot on the landscape and a blight on investment portfolios.”

Decision on offshore project imminent

Barely a week after the report’s release, the Canadian government must decide whether or not to approve such a potential asset: Bay du Nord, a massive offshore oil drilling project proposed about 500 kilometers east of Newfoundland.

The Bay du Nord project is located in the Flemish Pass 500 kilometers east of St. John’s, with recoverable reserves estimated at approximately 300 million barrels of oil. (Equinor)

The provincial government and its MPs in Ottawa are strong supporters of the project, and the Liberals in power will have to carefully consider the economic consequences for Newfoundland if Bay du Nord is scrapped.

“I think our job as a government and as a responsible government is to make sure the transition goes as smoothly as possible. And obviously if we end up with a lot of assets stuck in the years or decades to come, then that’s probably an indication that we haven’t been able to do that,” federal Environment Minister Steven Guilbeault said at a press conference after the release of the IPCC report.

Guilbeault did not indicate which direction his government will go on the Bay du Nord decision, but said he was confident that Canada climate plan will reduce emissions from the oil and gas sector, even if it increases production. The plan includes policies to reduce methane emissions, which leak from oil and gas site equipment, a clean fuel standard, which aims to gradually reduce emissions from fossil fuels when they are burned, and a cap on oil and gas emissions.

“I don’t know of any other country in the world, especially not a major oil and gas producer like us, that has committed and is in the process of developing a cap on emissions from the oil and gas sector,” he said. Guilbeault.

“So what our plan clearly shows is that no matter what happens with production, we will meet our 2030 targets.”

Environment and Climate Change Minister Steven Guilbeault says a federal government decision on Bay du Nord is imminent. (Sean Kilpatrick/The Canadian Press)

Canada is not alone in grappling with these decisions. The UK is looking at on a large oil rig in the North Sea. Australia could extend fracking. Guyana is moving forward with a major offshore oil project. Qatar – the world’s largest natural gas producer – has embarked on a project that will further increase its production by 40%.

According to the IPCC, emissions from existing and currently planned fossil fuel projects would already push global warming beyond 1.5C, let alone new projects on top of these.

“We need this to move forward”

Dave Mercer, president of Unifor Local 2121, the union that represents offshore oil workers in Newfoundland and Labrador, said Bay du Nord was essential.

“We’re not talking about hundreds of jobs. We’re talking about thousands of jobs. We’re not talking about millions of dollars, we’re talking about billions of dollars,” he said.

“We need it for our education. We need it for our healthcare system. We need it to move forward. We need it for a just transition. We need it.”

Dave Mercer, president of Unifor Local 2121, says Bay du Nord is necessary for Newfoundland and Labrador’s economy and to fund a green transition. (Paul Daly/The Canadian Press)

Newfoundland and Labrador has the highest unemployment rate in Canada and its provincial government is in debt. A report commissioned by the provincial government last year suggested spending cuts, tax increases and streamlining of various public services to get out of the financial malaise.

But the report also suggests channeling oil and gas revenues into a future fund that could be used to fund a green transition and pay down debt.

Mercer echoed this idea of ​​a fund to help workers.

“Let’s use the money and the profits from it, put it together and start supporting some economic growth when it comes to making sure we have enough money to start the transition,” he said. he declares.

“I’m not against the green transition. I’m not against the transition at all. But I think using Newfoundland oil is going to get us to that transition and in a cleaner way, it’s not there’s no doubt, and make a lot of money doing it.”

Skeptical about the economic benefits

But Angela Carter, a leading researcher on Canada’s oil and gas industry who lives in Newfoundland, is skeptical of any lasting economic benefit to workers and the provincial economy if oil production is increased.

“We started producing oil in 1997. It’s supposed to be an economic miracle. It’s supposed to free us from what people have called underdevelopment and poverty,” she said.

“And here we are, a few decades later. And our society hasn’t really changed much.”

Angela Carter, who is from Newfoundland and studies the oil and gas industry in Canada, says it’s time for Newfoundland and Labrador to move away from fossil fuels for its future. (Submitted by Angela Carter)

Carter quoted research from Clean Energy Canada in 2021 who suggested that the renewable energy sector could better drive job growth than the fossil fuel sector over the next decade. Clean energy jobs are expected to grow by almost 50% by 2030, while fossil fuel jobs will fall by 9%, according to the report.

“If we keep doing what we’ve always done, we’ll keep getting what we’ve always gotten. And developing the oil sector hasn’t been a path to prosperity for this province,” Carter said.

“But the other side of that is that he’s also on the path to climate chaos and crisis. That plays into a very unstable climate future. That’s why the transition needs to happen.”

Guilbeault said the federal government will make a decision on Bay du Nord by mid-April. The project, if approved, will begin producing oil by 2028 and continue until around 2058.