We aren’t out of the pandemic yet. Though vaccinations have been rolling out and life has started to return to “normal,” we still have a long way to go.
Here in B.C. but around the world, this has brought increased demand for regular goods and services we enjoyed pre-pandemic. While it’s nice see signs of a recovery, we’re now facing new challenges: growing inflation, weakened supply chains and global energy instability.
Understandably, our focus has been intently inward, so it was hard to think about global issues. But we are now seeing the realities of shifting global energy markets and geopolitical obstacles.
Several major trends and poor policy decisions have led to increased costs and uncertainty around the globe. Goldman Sachs significantly raised their price forecast for oil, as they see a coming global supply crunch due to weak growth and investment into production from countries outside of OPEC+.
While countries like Iraq, Saudi Arabia, and Russia ramp up production capabilities, free and democratic nations, like Canada, committed to emissions reductions, are experiencing policy barriers to investment.
This policy approach is starting to have repercussions around the world. For example, after banning new oil development on federally owned lands and canceling the Keystone XL pipeline that would supply more Canadian oil to the United States, President Joe Biden asked OPEC+ and Russia to increase production. The reason: to help lower gasoline prices in the U.S.; the rising cost of transportation is jeopardizing their economic recovery.
Practically, this policy has meant the loss of thousands of jobs in the U.S. and Canada along with a responsible supply of oil from its largest trading partner, turning instead to dictatorships to help with a growing domestic energy crisis.
In Europe, decades of growth and pipeline construction have led Russia to become the largest supplier of natural gas across the continent. In 2018, around 40% of EU natural gas imports came from Russia.
Now with prices spiking ahead of colder temperatures in winter, many European countries are very much at Russia’s mercy. Natural gas prices in Europe recently hit a record high at €76.875 per MWh, equal to $113.52 Canadian dollars! Europe’s natural gas crisis has prompted European fertilizer producers to curb output, which could send food prices soaring, and has also sparked warnings of blackouts and factory shutdowns.
The International Energy Agency has called on Russia to increase its natural gas production and exports to Europe. For weeks they refused with Vladimir Putin only stating on October 6 that they would increase supply. Europe’s focus on a transition away from fossil fuels to renewable energy sources has reduced reliable baseload electricity generation. Now, to afford to heat their homes, run their factories, and afford to buy food this winter, Europeans may have to rely on goodwill from Russia.
Recent announcements from the Chinese government about ending financing to foreign coal fired power plants is positive for the world’s climate. However, it’s worth noting that nearly 26% of global emissions come from within China.
While ending financing for global coal is positive, it’s also a sleight-of-hand. A recent report shows that China is planning to build 43 new coal-fired power plants and 18 new blast furnaces – equivalent to adding about 1.5% to its current annual emissions. This is a problem, which they are also attempting to solve with bridge fuels like natural gas imported as liquefied natural gas (LNG). Even with this growth, China is currently also facing an energy crisis that has seen the supply chains that produce parts for Apple and Tesla come to a halt.
There is a real possibility that this energy crisis will hit Canadian pocketbooks this winter. We have already seen dramatic increases in both natural gas heating and gasoline prices. But as one of the world’s largest natural gas and oil producers, we should be doing better.
With abundant resources and continuous emissions reductions in its upstream production combined with pipelines under construction that will give better access to world markets, Canada can be a leader on climate by contributing to net global emissions reduction, while providing reliable energy to countries that need it.
Contrary to the claims of some groups, LNG does not displace renewables. On the whole, LNG replaces coal and other higher emission sources of power. LNG from the LNG Canada project, when exported to China, will emit approximately 35 to 55% lower greenhouse gas (GHG) emissions than China’s domestic coal.
There are also major projects proposed that could export LNG from the East Coast, including the first Indigenous participation agreement in a Newfoundland and Labrador offshore energy project with the Miawpukek First Nation and the First Nations Major Projects Coalition.
British Columbia has been a major proving ground for such Indigenous partnerships through projects like Cedar LNG, the Haisla Nation’s very own LNG project. These First Nations-led projects are just beginning to find a footing that creates equity and immediate benefits for Indigenous communities.
These global trends are challenging. But Canadians have always had the vision and the hard work to challenge the odds. With export projects in B.C. under construction today and projects on the horizon, we can help ease energy prices, reduce global emissions – while supporting Canadians and our economic recovery at home.
Jack Middleton is an Advisor for Citizen Engagement and Outreach in B.C. with CAPP.
- Jack Middleton last wrote that with all hands on deck, energy projects pitch in to help with firefighting capacity across B.C.
- Ken Baerg: Canada's economy is underpinned by a healthy resource sector - and as necessary stimulus and relief spending adds up, we'll need it more than ever.
- Frank Peebles' series on ports ventured north up to the Alaska border to Stewart.