“Staggering” decline of fossil fuels reported by International Energy Agency

The complexity of the global energy landscape has been changed profoundly, according to the  International Energy Association’s flagship publication, the Global Energy Review , released on April 30.  It forecasts a minimum 6% decline in global energy demand for 2020, (9% in the United States and 11% in the European Union),  stating, “The projected 6% decline would be more than seven times the impact of the 2008 financial crisis on global energy demand, reversing the growth of global energy demand over the last five years. The absolute decline in global energy demand in 2020 is without precedent, and relative declines of this order are without precedent for the last 70 years.”   The accompanying press release describes the decline of fossil fuels as  an “historic shock to the entire energy world” and “staggering”, especially for coal, oil and gas. The IEA forecasts that renewables will be the only energy source to grow in 2020.

Here are a few of the many recent news articles which sum up the dire impacts on oil and gas in Canada:

In “For oil and its dependents, it’s code blue” (The Tyee, April 18), Andrew Nikoforuk predicts that the “great price collapse of 2020 will topple companies and transform states”.

Fossils Expect Permanent Losses, Renewables Keep Growing As Pandemic Crashes Global Energy Demand”  in The Energy Mix (May 3);

What rock-bottom natural gas prices mean for Canada’s aspiring LNG industry” in The Narwhal (May 1);

“‘We are in crisis mode’: Newfoundland calls on Ottawa to fund oil and gas exploration” in the Globe and Mail (April 29);

And Canadian Press stories reprinted by the National Observer on May 1 include:  “Precision Drilling down almost 3000 employees due to oil and gas downturn” (May 1);  “Oil and gas drilling forecast revised to 49-year low”; “Teck Resources leaves energy group CAPP citing cost cutting” ; and “Alberta oil and gas company reports include a loss of $1.3 billion for Vermillion Energy” (April 29) .

Fatih Birol, Director of the International Energy Agency has promoted clean energy in several public statements, including  a March 14 commentary: “Put clean energy at the heart of stimulus plans to counter the coronavirus crisis”, which states, “Governments are drawing up stimulus plans in an effort to counter the economic damage from the crisis. These stimulus packages offer an excellent opportunity to ensure that the essential task of building a secure and sustainable energy future doesn’t get lost amid the flurry of immediate priorities ”   The IEA promises a World Energy Outlook special report in June “that will quantify how clean energy policies and investments can create jobs, support economic recoveries and achieve emissions reductions. The report’s findings and recommendations will inform the high-level discussions at the IEA Clean Energy Transitions Summit on 9 July.”

A review of Just Transition academic research, and the contribution of think tanks, advocacy groups and unions – corrected

Correction: The research paper listed below, Who is included in a Just Transition? Considering social equity in Canada’s shift to a zero-carbon economy. by Hadrian Mertins-Kirkwood and Zaee Deshpande , was co-published by the Canadian Centre for Policy Alternatives and the Adapting Canadian Work and Workplaces to Climate Change Project (ACW) in August 2019. It is one of several co-publications by these two organizations on the theme of Just Transition.


The Smart Prosperity Institute published a Working Paper in April as the latest in its Clean Economy Series.  A systematic review of the key elements of a just transition for fossil fuel workers  is written by three academics from the University of British Columbia, and sets out to answer the question: “What elements of a just transition for fossil fuel workers and their communities do scholars in different academic fields identify?”  The research is intended  to “provide policymakers, environmental and trade union organizations who are already invested in creating just transition strategies insight on the kinds of issues they can target in their efforts.”

The paper is the result of a systematic literature review of academic articles, along with “government commissions and international organizations”, published between 2000 and 2019, and focused on a just transition for fossil fuel workers and their communities. The authors found a total of 520 documents and selected 33 for analysis, representing varied locations— most from the United States, some international, six from  Australia , and the remainder from other countries. From Canada, only the federal Task force on Just Transition in 2018 was included in the analysis.  The authors note that most articles concern OECD countries and coal workers; they were unable to find articles focused solely on Saudi Arabia, Brazil, India, or oil and gas workers.  They conclude: “Collectively, the articles we reviewed identify 17 key elements (or strategies) of just transition ranging from requirements of long-term planning to importance of retraining. Moreover, these 17 elements vary in terms of the type of justice they further (distributional, procedural, recognition & restorative justices), spatial scales, and timeframe.”

A systematic review of the key elements of a just transition for fossil fuel workers  is a solid academic treatment of a huge and ever-growing literature. However, it does not recognize the considerable contributions of advocacy organizations, think tanks, nor labour unions – all of which have been active globally and in Canada.

Below  are a few of those documents which add important viewpoints to the  Just Transition policy debate  in Canada: (in reverse chronological order)

 

Canada’s report to the UNFCC shows an increase in GHG emissions

ghg emissions_NIR 2018As required by the United Nations Framework Convention on Climate Change (UNFCC), Canada submitted its National Inventory Report on April 14, available from the U.N. website.   The Executive Summary   at the Canadian government website  announces that the Canada’s greenhouse gas (GHG) emissions were 729 million tons of CO2 and equivalent in 2018, (the latest figures available).  This is an increase of 15 million tons from 2017, and a reduction of only 1 million tons from 2005 – making Canada’s Paris Agreement target of a 30% reduction from 2005 levels a very challenging goal. The Executive Summary attributes the 2018 performance  to “higher fuel consumption for transportation, winter heating and oil and gas extraction.” The Toronto Star summarizes the official report in  “Canada’s emissions count jumped 15 million tonnes in 2018 from previous year, report shows” (April 15) ; a summary also appeared in The National Observer, focused on British Columbia.  The federal Green Party press release points out that Canada has missed the February deadline to submit its new target for Nationally Determined Contributions, and calls for Canada  to reduce our GHG’s to 60 per cent below 2005 levels by 2030.  (In comparison, the latest EU target under debate is a 55% reduction by 2030  ).

The full National Inventory Report presents statistics since 1990, and analyses trends by region and according to industries – including energy, industrial processes, agriculture, land use (forestry) and waste management. It also measures emissions in 2018 by important gases, including carbon dioxide, nitrous oxide and methane. Carbon dioxide (CO2) accounted for 80% of Canada’s total emissions. Nitrous oxide (N2O) emissions (76% of which come from agriculture) accounted for 5%  in 2018, a 2.4% decrease from 1990 levels. Synthetic gases (HFC’s, PFC’s, SF6 and NF3) constituted slightly less than 2% of national emissions.

Canada’s other big polluter: methane

According to Canada’s National Inventory Report, methane accounted for 13% of Canada’s total emissions in 2018, an increase of  1% since 1990.  43% of those emissions are attributed to fugitive sources in oil and natural gas systems and another 31% from agriculture.  The  International Energy Agency  also tracks methane emissions from the oil and gas industry here , and in February 2020 summarized and critiqued Canada’s new policies to reduce methane emissions attributable to the oil and gas industry.   Methane (CH4) is a growing concern for global GHG emissions – as reported in an article in  Scientific AmericanMethane levels reach an all-time high” (April 12) , which summarizes recent reports by the U.S. National Oceanic and Atmospheric Administration (NOAA) .

Canada’s Ecofiscal Commission issues final annual report

ecofiscal final 2019 reportIn November 2019, Canada’s Ecofiscal Commission announced that their five-year mandate was coming to an end with the release of their final research report,  Bridging the Gap: Real Options for Meeting Canada’s 2030 GHG Target , which recommended quadrupling of Canada’s carbon tax by 2030.   On April 22, the Commission released their  2019 Annual Report , with research summaries of their work,  and metrics which attest to their strong influence on Canada’s policy debate over their five years of operation.  With a mission to: “identify and promote practical fiscal solutions for Canada that spark the innovation required for increased economic and environmental prosperity”, the Commission’s major focus was on carbon pricing –  expressed in research, publications, educational events, and in 2019, in supporting the constitutionality of carbon pricing in the court cases brought by Saskatchewan and Ontario.   Although not stated explicitly, the final Letter from Director Chris Ragan implies that the resources of the Commission will be archived – the Ecofiscal Commission website is here.  Many of the principal authors at the Ecofiscal Commission are finding a new home as part of the new government Institute for Climate Choices , announced in April 2019 – for example, Don Drummond, Stewart Elgie, Richard Lipsey, Mike Moffatt and Nancy Olewiler.  Chris Ragan (formerly Executive Director of the Ecofiscal Commission) and Mel Cappe  are both members of the Board of Directors of the Institute for Climate Choices.

Fossil fuel and LNG subsidies in B.C., and an alternate viewpoint on the issue

The International Institute for Sustainable Development (IISD) maintains an ongoing initiative, the Global Subsidies Initiative , to research fossil fuel subsidies worldwide.  Their most recent publication relating to Canada is  Locked In and Losing Out: British Columbia’s fossil fuel subsidies. The authors calculate that BC’s fossil fuel subsidies reached  $830 million Cdn.  in 2017–2018, with no end in sight. Despite B.C.’s clean energy image, the report documents the significant new support granted by the current B.C. government to encourage the liquefied natural gas (LNG) industry.  Locked In and Losing Out calls for the provincial government to create a plan to phase-out its own subsidies, and coordinate with the federal government in its current  G20 Peer Review of fossil fuel subsidies, launched in 2019 and administered by Environment and Climate Change Canada.   In August 2019, the IISD also released its Submission to Environment and Climate Change Canada’s Consultation on Non-Tax Fossil Fuel Subsidies calling for Canada to re-affirm its long-standing  G7 commitment to reform fossil fuel subsidies by 2025 and provide a detailed action plan to achieve the goal.  

new labor forumAn alternate view

Sean Sweeney of Trade Unions for Energy Democracy takes an alternate view on fossil fuel subsidies in “Weaponizing the numbers: The Hidden Agenda Behind Fossil-Fuel Subsidy Reform” appearing in the January 2020 issue of  New Labor Forum. As might be expected, Sweeney challenges the findings and assumptions of the International Monetary Fund (for example, in a 2019 working paper by David Coady ). He also takes issue with some progressive analysis – notably, he cites  Fossil Fuel to Clean Energy Subsidy Swaps: How to Pay for an Energy Revolution (2019) and Zombie Energy: Climate benefits of ending subsidies to fossil fuel production (2017)  – both published by the International Institute for Sustainable Development (IISD).  After a brief discussion of the main concepts, Sweeney concludes:

“For activists in the North, making fossil-fuel subsidies a key political target is a mistake. It buys into the IMF’s obsession with “getting energy prices right” which targets state ownership and regulation of prices. Such an approach may lead to a more judicious use of energy, but it would not address the mammoth challenges involved in transitioning away from fossil fuels, controlling and reducing unnecessary economic activity, or reducing emissions is expeditiously as possible.

The problem is fossil fuel dependency, not underpriced energy. Raising the price without alternative forms of low-carbon energy available for all will not produce the kind of emissions reductions the world needs. This does not mean that progressive unions and the left should support subsidies for fossil fuels—especially when the beneficiaries are large for-profit industrial users or billionaire Lamborghini owners cruising the strips in Riyadh or Shanghai. But there is a need to be aware of what the IMF and the subsidy reform organizations are proposing, and what these proposals might mean for workers and ordinary people, especially in the Global South.”