Canada should be prepared to increase oil production in the short term to address security needs, a report from RBC says.
While Canada can still meet its long-term net-zero goals, the journey is likely to be a bumpy one, the report said.
Despite recent pledges to combat emissions — both in the climate plan released last month, and the latest federal budget — the report suggests the federal government may have to accept rising emissions from the energy sector in the short term.
“[T]o secure more energy supplies, Canadian policymakers should signal greater comfort with a short-term rise in oil emissions — as long as emissions start to fall in other areas, or oil production starts coming offline beyond 2030,” the report said.
Rising emissions from the oil sector can potentially be offset with more dramatic cuts in other areas, it said, “such as by accelerating renewable power infrastructure and building decarbonization, and improving energy efficiency.”
“The economic benefit of rising oil production can help offset the cost of accelerating other sectors’ decarbonization, especially buildings and electricity, where supply chain bottlenecks may be less severe than transportation,” the report said.
Longer term, however, for Canada to meet its emissions goals, there will need to be action to curb emissions in the energy sector too.
“Canadian oil producers will need to cut not just industry-average emissions, but overall emissions in each type of production,” the report said. “Making the long-term investments needed to do so requires clarity, and there’s no better clarifying moment than an energy crisis.”
Ultimately, the long-term plan must include investing in decarbonization technologies and processes for all new projects, shifting away from oilsands to conventional production, developing new abatement technologies and uses for oil that don’t involve combustion (such as using them in lubricants, waxes and asphalt), and diversifying energy investment.
“While oil and gas will be key fuels for climate transition, electricity and new energy technologies such as hydrogen are gaining momentum,” the report said. “Canada’s energy firms should aspire to broaden their asset portfolio and develop expertise in low-carbon and sustainable technologies that would complement fossil fuel exports.”