Canada may soon lose its status as one of the world’s major oil-producing nations if the global economy continues to further emission reduction policies.
According to the IEA’s Canada 2022 Energy Policy Review published on Thursday, the country may soon run into challenges when it comes to maintaining its foothold as a power status in global oil markets, particularly as the world increasingly looks to cut carbon emissions. Although Canada has ambitions to remain “a major global oil and gas supplier” well past 2050, its own economy will even push towards substantially reducing emissions.
Canada, which currently has the third-largest oil reserves in the world, has seen its oil producers pledge to emit zero carbon emissions by the middle of the century via carbon capture and storage in an effort to maintain the sector’s appeal. However, the IEA warned that the country should be attentive to changes in the global demand for oil and gas; as an increasing number of developed countries look to reduce their consumption of fossil fuels over the next several decades, the demand for fuel could significantly shift— and likely not in Canada’s favour.
“Canada must focus on significantly carbonizing its oil and gas sectors while at the same time ensuring competitiveness in increasingly well-supplied world markets,” suggested the agency. Moreover, to make the matter more challenging, Canada’s oil sands could pose further implications despite the country scoring “well on overall ESG indicators relative to many other oil and gas producers.”
Indeed, the last several years have seen numerous banking institutions and funds withdraw their financial support from the oil sands sector due to its intensive carbon emissions. “The environmental profile of oil sands production, in particular, will become a greater focus for importing countries and warrants action,” the IEA said.
Information for this briefing was found via the IEA. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.