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Alberta Government’s Objections No Longer Matter after IEO Roadmap, ‘Cataclysmic’ Week for Oil

Alberta’s predictably hostile, defensive reaction to the International Energy Agency’s (IEA) landmark Net Zero by 2050 roadmap shows it no longer matters what the Kenney government or its fossil industry allies think about the drive to decarbonize the global economy and hold average global warming to 1.5°C.

The IEA’s call for no future investment in new fossil infrastructure was reinforced scarcely a week later, when three of the world’s biggest oil companies faced deeply humbling challenges from the courts and their own shareholders.

The combined impact is crystal clear: If Alberta’s own policy-makers don’t move to diversify the province’s economy and plan for a managed fossil fuel decline, financial and other institutions that make future project development possible will make the decision for them.

Oil Demand to Fall 75%

One pivotal paragraph in the IEA’s 224-page report heralds an unfamiliar, new world for Alberta, British Columbia, Saskatchewan, Newfoundland and Labrador, and any other jurisdiction that has centred its economy on oil, gas and coal.

“Beyond projects already committed as of 2021, there are no new oil and gas fields approved for development in our pathway, and no new coal mines or mine extensions are required,” the IEA writes. “The unwavering policy focus on climate change in the net-zero pathway results in a sharp decline in fossil fuel demand, meaning that the focus for oil and gas producers switches entirely to output—and emissions reductions—from the operation of existing assets.”

Continuing to pour money into “junk investments” in oil and gas could throw countries off their carbon reduction targets, IEA Executive Director Fatih Birol told Sky News.

And that’s just the beginning. The IEA scenario has all coal- and oil-fired power plants phased out by 2040—just around the corner for an industry whose multi-billion-dollar infrastructure projects are built and financed to last decades. The only exceptions will be facilities that can take on the added cost of carbon-capture technologies that are as yet expensive and unreliable.

Related — The Slow Painful Death of Fossil Fuel

The report shows oil demand falling 75% between 2020 and 2050, to 24 million barrels per day, with OPEC nations providing 52% of a “much-reduced global oil supply” and production becoming “increasingly concentrated in a small number of low-cost producers.” Gas demand is expected to fall 55%.

With Alberta well-recognized as an expensive producer, “this will have a significant impact on the price and therefore production levels of oil and gas,” said Pembina Institute Alberta Director Chris Severson-Baker. And “purchasers of oil and gas products will increasingly direct their spending to oil and gas produced with the lowest upstream emissions.”

A ‘Cataclysmic Day’ for Oil and Gas Companies

The fossil fuel industry and its political allies could have been forgiven for imagining the worst was behind them once the IEA had issued its report. That was before a flurry of court and shareholder decisions on May 26 that The Guardian declared a “cataclysmic day” for oil and gas companies.

In the space of 24 hours, a court in The Hague ordered Royal Dutch Shell—whose greenhouse-gas emissions would make it the world’s fourth-biggest carbon polluter if it were a country—to boost its 2030 emissions-reduction target from 20 to 45%. Hedge fund Engine No. 1 won two seats on the ExxonMobil board with a challenge to the company’s shoddy response to the climate crisis. And shareholders representing 61% of Chevron stock instructed the company to address the downstream Scope 3 emissions that result when customers use its product as directed.

“Game-changer is an overused metaphor, but surely this is one,” said U.S. Environmental Defense Fund president Fred Krupp.

“This will be seen in retrospect as the day when everything changed for Big Oil,”

“This will be seen in retrospect as the day when everything changed for Big Oil,” Andrew Logan, senior director, oil and gas at shareholder advocacy non-profit Ceres, told the Financial Times. “How the industry chooses to respond to this clear signal will determine which companies thrive through the coming transition and which wither.”

“It wasn’t just a bad day for Big Oil. It was a great day for life on Earth,” added U.S. climate journalist Emily Atkin. “It offered proof that fossil fuel CEOs aren’t the sole deciders of who gets to live and thrive on future planet Earth.”

Speaking with the New York Times, University of Alberta energy and environmental economist Andrew Leach said the legal and shareholder action raised a provocative question for the Alberta industry: “What does my business model look like in a net-zero world? That’s where things get really complex.”

A ‘Stunning Evolution’

But even before last week’s news, the IEA’s new roadmap marked a stunning evolution for an international agency formed in 1974 to protect the interests of oil-consuming countries. Fossil fuel companies could routinely count on IEA analysis to justify their often fevered claims that oil and gas demand will continue growing through 2040 or beyond.

Until now, the IEA’s fossil-fuel-friendly analysis has had a severe, damaging impact on international climate action. In the five years since the Paris Agreement was signed, 60 of the world’s biggest banks invested US$3.8 trillion in new fossil fuel projects—largely because the IEA told them they could.

While the Paris-based agency styled its annual World Energy Outlook (WEO) as the “gold standard of energy analysis,” IEA watchers said the agency’s work was giving cover and legitimacy to new fossil fuel infrastructure. IEA analysts steadfastly maintained the WEO was a projection, not a prediction. And they cast the Sustainable Development Scenario (SDS), a secondary energy projection recently added to the agency’s annual outlook, as being compliant with the goals of the Paris Agreement.

But “if you look at oil and gas company annual reports, you’ll see constant references to IEA scenarios, including references to the SDS, claiming that even in the IEA’s climate scenario, we need to keep investing in new oil and gas fields,” Oil Change International analyst Kelly Trout said in an interview. Now “there will be a shift. If companies are serious about 1.5°, they’d better adjust their plans to the IEA’s new scenario that actually aligns with that.”

The New ‘Gold standard’

Just as important as the IEA’s top-line conclusion—and just as challenging for Alberta’s vision of a fossil fuel future—was a tectonic change in the agency’s modelling approach.

“This is a backcast, not a forecast, and that’s a major shift,” Corporate Knights Research Director Ralph Torrie said in an interview. Typically, forecasters start with historical fossil fuel consumption and investment trends, project them into the future, and decide how far they dare bend the curve. This time, the IEA’s analysts situated themselves in 2050, cast their minds back to today, and asked themselves what could realistically be done to get from here to there.

“Asking what has to happen to stay within 1.5°C is a real game-changer,” Torrie said. “That question makes a world of difference in where you end up, because now you have no choice but to push really hard on anything that will help you get to 1.5.”

Which means that, after steadily relying on the IEA’s analysis to justify a carbon-intensive industrial strategy that subjects their province to dizzying economic booms and busts, Alberta politicians suddenly had to react to an agency intent on tackling a crisis even more dangerous to humanity than the COVID-19 pandemic.

They didn’t take it well.

Fair-Weather Friends

Sonya Savage, Minister of Energy and Deputy House Leader

The IEA’s net-zero roadmap is “unreasonable,” “unfeasible,” and “driven by activists,” Alberta Energy Minister Sonya Savage, a former pipeline executive, said in a statement.

The notion that the IEA, with a solid complement of former fossil fuel industry staffers on its roster, is “driven by activists” would no doubt come as news to Alok Sharma. He’s the minister in British Prime Minister Boris Johnson’s Conservative government who’s set to chair this year’s United Nations climate change conference, COP26. The Net Zero by 2050 roadmap was commissioned by the COP presidency.

And just last year, Savage was happy enough to amplify the IEA’s findings, citing the WEO as “proof” that the world’s energy markets will continue to demand oil “decades” into the future.

It remains to be seen how quickly the IEA’s new analysis and the reactions to the court and shareholder action will filter through the global finance and investment community. But the message is crystal clear.

“Finance institutions can no longer justify lending, underwriting, insuring or investing in coal, gas, or oil expansion projects, or the infrastructure that facilitates that expansion,” Adam Scott, director of Toronto-based Shift Action for Pension Wealth and Planet Health, said in an interview. “This isn’t an optional pathway. It’s a roadmap showing the direction we must take in order to prevent the worst impacts of the climate crisis from becoming reality.”

As that realization dawns, Savage, Kenney and their colleagues will, of course, still be free to stand their ground. But no one will believe them. And sooner or later, oilpatch voters will begin to notice the rest of the world prospering from the shift to a decarbonized future and ask why their province is being left behind.

This article by The Energy Mix publisher Mitchell Beer first appeared on Policy Options and is republished here under a Creative Commons licence.

Alberta to charge $90 annual access fee for Kananaskis Country

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Fact Checker Scorches Kenney’s Keystone Claims as Premier’s Political Woes Deepen

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Keystone XL photo by AB Gov on Flickr(CC BY-NC-ND 4.0)

The Edmonton-based Parkland Institute is out with a detailed fact check of Premier Jason Kenney’s recent pronouncements on the cancellation of the Keystone XL pipeline, while Maclean’s magazine speculates on whether this is the job Kenney was looking for when he sought the Alberta premiership.

Ever since U.S. President Joe Biden kept his promise and rescinded Keystone’s presidential permit on his first day in office last month, “Kenney and others continue to spread misinformation about KXL, the oil sands industry, and the energy transition,” Parkland Research Manager Ian Hussey writes on the organization’s blog. “Unfortunately, some media commentators are repeating Kenney’s talking points without fact checking.”

But contrary to those talking points, Hussey says Alberta fossil producers don’t need KXL (or the Trans Mountain expansion), the pipeline would not have reduced tar sands/oil sands producers’ operating costs, and the construction project would have created far fewer jobs than Kenney and other KXL proponents have been claiming.

“Alberta has so much to offer Canada and the world,” Hussey writes. “We need our elected officials to begin to take seriously the need to support these economic diversification possibilities and others that may arise through the ingenuity of Albertans.”

Hussey takes a close look at a half-dozen claims Kenney has been making on behalf of the now-defunct pipeline project, beginning with the “devastating consequences” he insists tar sands/oil sands producers will face in its absence. Citing analyst David Hughes, Hussey says the industry has enough “takeaway capacity” with existing pipelines, plus other expansions and “optimizations” that have already been announced, a reality that undercuts demand for Trans Mountain as well as KXL.

Former Husky Energy CEO Art Price said as much in a comment on Biden’s Keystone decision. “Pipelines today make no sense,” he stated. “There’s a surplus in the market. Stop trying to focus Alberta’s economy on growing oil production. Drop it. The industry has.”

While Kenney has been calling the cancellation “a gut punch for the Canadian and Alberta economies,” Hussey says the pipeline wouldn’t have reduced transportation costs for Alberta bitumen producers, and its cancellation won’t open the door to “retroactive” cancellations for other pipelines between the U.S. and Canada, as the premier has claimed.

“Line 3 and Line 5 have been facing legal and regulatory issues for years,” he writes. “Right now, the main sticking point for both pipelines pertains to water issues—permits, easements, and concerns about drinking water.” That’s why Michigan Governor Gretchen Whitmer has been casting a critical eye on operation of the 68-year-old Line 5. And in that political context, “it certainly isn’t helpful to Alberta or Canada that Premier Kenney suggested in November that Governor Whitmer is ‘brain dead’” for trying to shut the line down. Particularly not when Whitmer “was the national co-chair of Joe Biden’s presidential campaign.”

Hussey takes aim at Kenney’s “tall tale” that the U.S. will replace Canadian tar sands/oil sands imports with product from Venezuela or the Middle East, points to the many other economic diversification options Alberta could take advantage of, and puts the pipeline’s direct employment in Alberta at 1,400 during construction—a far cry from the 59,000 the Alberta premier has been claiming. Read the blog post to get all the numbers and details.

While Parkland takes aim at Kenney’s facts and arguments, Maclean’s writer Jason Markusoff says the premier doesn’t appear to be having a very good time in his latest gig. “He returned from Ottawa with a suitcase full of ideas about who Albertans are and what they want from their premier,” the magazine writes. But now, a “seemingly perfect political match” looks to be going wrong.

Markusoff chronicles Kenney’s five-year “quest to restore the province” by merging two right-leaning political parties, defeating Rachel Notley’s New Democratic Party government, and holding fast to Alberta conservatives’ consistent promises to balance budgets and “use government muscle to boost the [fossil] energy sector’s reputation and might. He bombed around the province in a blue pickup truck and told supporters at rallies: ‘We get ‘er done.’” And “the formula appeared to work, at least electorally.”

But governing has turned out to be a lot tougher than spinning an election win.

“Nearly two years into Kenney’s stint as Alberta premier, nothing is what it seemed,” Markusoff writes. “The disorientation runs deeper than the common, pandemic-induced challenges and public malaise that have undone the political agendas of leaders around the world; deeper even than the profound hardship and unemployment inflicted by the downturn of the [fossil] energy economy. Albertans are coming to realize they’re in the midst of a deeper, structural change, not another bust to be succeeded by another boom. Kenney has taken halting steps toward that new era. But he’s largely stuck with his pre-pandemic agenda—drawing outcry from Albertans angry about cuts to the public sector or government spending on private interests.”

After running on a platform that contained 375 specific policy commitments, “this is not the Alberta that Jason Kenney came back for,” Markusoff says. “It’s different in outlook, and in its reception to the Great Right Hope he presented himself as. He has time in his mandate to figure out what Albertans want, but a track record with so many missteps leaves him with so much more to fix.”

Markusoff goes deep on the mix of challenges Kenney must contend with in the two years before he has to face the voters—more than half of whom now believe their province’s best days are behind it. The premier has “the benefit of time before Alberta’s 2023 election—time to figure out how to balance his rural base’s demands with those of urban moderates, and bring the economic revival he’d promised, and manage a structural fiscal crisis without alienating everyone who relies on public services and salaries, and figure out a way forward for the energy economy, either through transition or steely resilience,” he writes.

But it’s going to be a tough slog. “When he set off on his complicated quest to swoop in and unite two warring conservative parties and lead this united group to victory, political watchers’ refrain was: if anybody can do it, Jason Kenney can. With problems all around him, who’s saying that now?”

Article used with permission from The Energy Mix

Ecojustice Goes to Court Against Alberta’s ‘Foreign-Funded Influence’ Panel

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A judge in Calgary was to hear arguments this week over whether Alberta’s public inquiry into the purported foreign funding of environmental charities is a valid defence of the province’s ailing oil industry or an attempt to silence dissent.

Court of Queen’s Bench Justice Karen Horner was to hear a challenge from environmental law charity Ecojustice on Thursday and Friday, The Canadian Press reports. The hearing’s initial April date was delayed because of the COVID-19 pandemic.

“I can’t recall an issue that has prompted so much public interest in recent times for an Ecojustice case, and overwhelming support,” said Executive Director Devon Page.

The inquiry was one plank in a “fight-back” strategy touted by the United Conservatives on the 2019 election campaign trail. Forensic accountant Steve Allan was tapped that summer to be commissioner with an initial C$2.5-million budget and July 2020 deadline. Allan’s report is expected on May 31 after three extensions and a $1-million budget increase.

Page called the inquiry a “political stunt that’s not based in reality” and wants it shut down.

Ecojustice argues in its brief that the inquiry was called for an “improper purpose,” which it says was “targeting, intimidating, and harming organizations that have raised concerns about the environmental impacts, including climate change impacts, of oil and gas development in Alberta.”

Page said shortly after the inquiry was announced, he took a call from a Nova Scotia resident who worried about being called before it because of a letter to the Alberta government opposing the Trans Mountain pipeline expansion.

“Will there be a report that says Canadian charities have acted in un-Canadian or anti-Albertan fashion?” Page asked. “That prospect is real. It may not be legitimate, but it’s real.”

Steve Allan

The Alberta government counters in its submissions that cabinet is “entitled—and mandated” to decide what’s in the public interest and what matters are deserving of a public inquiry. The Allan inquiry, it says, “concerns the economic viability of the entire province and the efficient and responsible development of Alberta’s natural resources.”

A consortium of pro-industry interveners back that view in a joint brief. The Indian Resource Council, the Explorers and Producers Association of Canada, and oilpatch entrepreneur [and serial provocateur] Brett Wilson together argue that “public interest requires a generous interpretation” of what the inquiry’s purpose should be.

Ecojustice argues the inquiry has a “reasonable apprehension of bias.” It cites numerous comments Premier Jason Kenney has made asserting the province must fight back against foreign funders of anti-oil campaigns. “The inquiry is being used as a political pawn to support predetermined government actions,” the law charity says in its submissions.

The government says it’s important to draw a distinction between a politician’s partisan comments and the commissioner’s presumed impartiality.

Ecojustice points out that Allan donated to the campaign of Doug Schweitzer, who would go on to become a UCP cabinet minister, as evidence of bias. A brief submitted on Allan’s behalf notes he has donated to parties across the political spectrum.

“His experience and dedication on both a professional level and as a ‘good citizen’ in his community, with matters of public interest across the political perspective, qualify him to act objectively, fairly, and with integrity in the inquiry,” his lawyer wrote.

Ecojustice contends the inquiry is outside Alberta’s jurisdiction because it deals with matters of interprovincial commerce and trade, as well as the regulation of charities, while the province argues defence of its natural resources industry is well within its purview.

Late last year, Ecojustice lost a court bid to have Allan’s work paused until there was a ruling in its lawsuit. Page said the group would make the same request at the upcoming hearing.

“The actions of an organization who seeks to undermine and discredit one of Canada’s largest economic subsectors speaks for itself,” said Alberta Energy spokesperson Kavi Bal.

“Alberta’s government was pleased to see the courts strike down a nuisance injunction application by Ecojustice, earlier this year, designed to slow down the public inquiry into foreign-funded campaigns.

“We will see this inquiry through to its completion.”

This report by The Canadian Press was first published February 10 10, 2021. Reprinted with permission from The Energy Mix.

Environmental groups targeted by Kenney’s ‘baseless conspiracy theory’ say they still have not been contacted by his ‘anti-Alberta’ Inquiry

Despite pouring millions of tax dollars into a public inquiry investigating “foreign funding of Alberta anti-energy campaigns,” many environmental groups targeted by Alberta Premier Jason Kenney and his right-wing allies say no one from the Inquiry has ever bothered to contact them.

Last week, Alberta’s Energy Minister announced the Inquiry’s final report would be delayed by another four months and require an additional $1 million cash infusion to complete its work after Commissioner Steve Allan missed his July 2 deadline. [Open for Discussion]

Alberta’s 1976 coal policy reinstated

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Steve MacLellan

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Tag Archives: Kenney

Alberta Government’s Objections No Longer Matter after IEO Roadmap, ‘Cataclysmic’ Week for Oil

Alberta to charge $90 annual access fee for Kananaskis Country

Fact Checker Scorches Kenney’s Keystone Claims as Premier’s Political Woes Deepen

Ecojustice Goes to Court Against Alberta’s ‘Foreign-Funded Influence’ Panel

Alberta’s 1976 coal policy reinstated

Oil Demand to Fall 75%

A ‘Cataclysmic Day’ for Oil and Gas Companies

A ‘Stunning Evolution’

The New ‘Gold standard’

Fair-Weather Friends

Critics say UCP piling expenses onto Alberta families

Environmental groups targeted by Kenney’s ‘baseless conspiracy theory’ say they still have not been contacted by his ‘anti-Alberta’ Inquiry

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