According to a new report from RBC, global ambitions to tackle climate change are facing growing concerns over energy security, which is why oil and natural gas are going to be used for some time.
The Russian invasion of Ukraine has caused energy prices to skyrocket as there are supply issues for many commodities such as oil, natural gas and coal. While many countries grapple with issues of energy security and affordability, there is less focus on climate change.
That’s why the report’s authors say countries like Canada must now figure out how to produce more oil and gas in the near term, while trying to meet climate goals.
“Unless major additional action is taken, oil and gas will likely remain critical and controversial energy sources longer than some realize,” the report notes.
In recent months there has been a renewed thrust by countries like Canada and the United States for more oil and natural gas production. At the same time, some European countries are investing in liquefied natural gas terminals to import more natural gas and also consider coal and oil-fired electricity for reduce dependency on Russian gas.
Global demand for oil continues to rise and is expected to rise for several more years, according to the International Energy Agency.
RBC’s report highlights the number of governments around the world that are also offering subsidies to offset high gas and electricity prices, including “usual climate leaders” such as Germany, Californiaand British Columbia.
Climate change is still a priority, RBC economist Colin Guldimann said, but there isn’t as much momentum as it was six months ago after the UN climate conference.
“Many will agree that things have changed markedly, particularly in the energy field, over the past two months,” he said in an interview.
Canada must now thread the needle to meet climate goals while meeting energy needs.
Even after peaks in oil demand, Guldimann said “the pace of this decline, and how quickly this decline is occurring, is fundamentally uncertain.”
Investments in clean energy are underway, but instead of replacing fossil fuels, much of this energy is offset by growing consumption around the world as the population grows.
“We think the demand for energy is going to increase over the next two decades and how we meet those energy needs is really the crucial question today,” he said.
“I think countries are going to have a hard time moving very quickly from their energy systems to systems that don’t emit. Green infrastructure takes time to build, and technologies that can replace oil are still emerging. putting yourself forward.”
The RBC report calls for more ambition to reduce emissions, not only from the oil sector, but also from other sectors such as building renovations, subsidies for zero-emission vehicles and more transmission lines to move oil. clean energy across the country.
On Monday, ratings agency Moody’s said it expects oil producers to generate record profits and free cash flow this year – and oil prices could stay high for the next 12-18 month.
Oil prices fell more than 5% at one point on Monday as lockdowns in China dampen economic activity. As commodity prices fluctuate wildly, some oil companies may delay production increases.
“I wouldn’t be surprised if a lot of these companies are saying, ‘You know what, let’s defer this decision to where we need to increase spending,'” Raymond James analyst Jeremy McCrea said, “which ultimately will keep oil and higher gas prices, longer.”