Oil and gas needs to see the low-carbon shift as an opportunity: Conference Board

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Canadians seem increasingly ready to accept and vote for low-carbon change that does not severely constrain quality of life or lifestyles, says a newly-released Conference Board of Canada report.

However, adds the report, Canada must articulate and develop an overall framework for reshaping towards a low-carbon economy, as greenhouse gas (GHG)-reduction goals bring a commitment to improve the way Canadians produce energy, as well as transport and consume it.

“Canada’s transition to a low-carbon economy should aim for steady, progressive change over time building on a strategy including a strong energy sector,” said Conference Board senior fellow Glen Hodgson.

“This [report] really is a piece to define what a research agenda would look like, and the different things you would want to examine on an ongoing basis.”

According to Shaping the Canadian Low-Carbon Economy, an array of policy tools must be developed and enhanced to enable a successful, articulated strategy for transforming toward low carbon while sustaining sufficient, inclusive economic growth.

These tools include carbon pricing, which the CBOC believes still faces some prominent challenges in its design, notably with how federal and provincial carbon pricing systems will interact.

Other policy tools cited in the report include standards and regulations, policy spending and investment, low-carbon government procurement, as well as carbon credits.

“I tend to view the [instruments] as a package, but I am also an economist and a member of Canada’s Ecofiscal Commission, and so I do think price signals matter,” said Hodgson.

“That is why economists invariably start with carbon pricing as a way to signal to consumers and producers a transformation is going to happen, but I don’t think it stops there.”

He added: “You link that to smart regulations that are complimentary. There are [regulations] as varied as building codes, fuel standards for vehicles and various things like that. I also think government can play an important role through its procurement practices. At the end of the day, though, business has to embrace this and see a business opportunity. That is perhaps the piece that has been missing to my mind.”

Energy production and generation is one of the Conference Board's cornerstones for transitioning to a low carbon economy. The discussion paper stated that transforming how Canada produces energy is essential to a low-carbon strategy, and it would be foolish to neglect the energy production sector and supporting sectors as global demand for oil and gas is still rising. However, Canada’s hydrocarbon producers are working to reduce the energy they use to produce energy.

“It is really the centrepiece of finding the smartest way possible to ‘fuel’ a transition,” noted Hodgson.

“Certainly, the Conference Board has no interest in stranded assets and people making decisions today and having them frustrated over time, but we also want to see the right kind of framework created to allow the transition to happen. The energy sector is right at the centre of the discussion.”

Overall, the Conference Board believes Canada’s oil and gas production environmental footprint is shifting, but it will take time as industry aims to minimize stranded assets and lost investments and jobs. De-carbonization through such measures as carbon capture and storage offer important potential business opportunity for Canadian technology development.

“Frankly, it is going to take a whole bunch of things, including finding the most efficient, smartest way of actually extracting energy from resources, from renewables, being very smart in how we do it and being mindful that we want to be a step ahead of the competition,” Hodgson said.

“If we can become a world leader in lower carbon extraction technology, for example, if we look at how the in situ plants operate in northern Alberta, can we reduce the energy required to actually heat the oil and extract if from the oilsands? Can we become world leaders in all phases, including selling advice to the rest of the world?”

Canada could position itself as a world leader on energy research and development, diversification of energy production, green technology and low-carbon managerial and technical expertise. Other low-carbon transformation cornerstones noted in the report include energy consumption, energy efficiency and engaging firms on low-carbon business opportunities.

The framework outlined in the Conference Board paper will help define research programs for the board’s Centre on the Low-Carbon Growth Economy, which is an initiative aimed at informing the policy and business conversation in Canada on how to shape the low-carbon growth economy.

“We would like to start marketing and attracting members to create a centre based at the [CBOC] that would bring together business, government, foundations and academia to talk about the policy and business choices we will have [to] make as we move forward,” Hodgson said.

“We are doing a lot of research right now, for example, modelling various policy options. Our hope would be to attract a critical mass of funders, and then have dedicated human resources and dedicated financial resources, and be able to develop a multi-year research plan. That is the hope of the centre.”

On April 11-12 in Ottawa, noted Hodgson, the Conference Board has a conference planned that will consider the opportunities and impacts of reducing the country’s GHG emissions.

“We will be rolling out a lot of our research at the conference. This is not a one hit wonder for the Conference Board. We are going to be doing research on an ongoing basis.”

For more information about Reshaping Energy 2017: Opportunities and Impacts of Reducing Canadian GHG Emissions and to register, click here.