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Setting the record straight on oil and gas

Hardly 'zombie' energy: Our oil and natural gas industry is a vital source of jobs, investment and economic growth in Canada.

There have been some arguments that the use of fossil fuels since the industrial revolution has been tantamount to conducting a 200-year experiment on the climate. But the inconvenient truth for many, is that the use of fossil fuels has reduced energy poverty and is something several countries around the world today are still working to achieve. 

Shannon Joseph is vice-president government relations for the Canadian Association of Petroleum Producers. Photo by Andrew Mah.

Recently, Senator Rosa Galvez wrote an article condemning Canada’s oil and natural gas sector, calling it subsidized and at risk of supplying “zombie” energy that’s dependent on government assistance.

It’s time to set the record straight.

Canada’s oil and natural gas industry provides an average $12 billion annually in revenues to federal, provincial and municipal coffers through royalties and taxes. It is also one of the largest sources of private capital investment in Canada, with spending at $43 billion in 2017, down from $81 billion in 2014. 

The industry also spurs economic activity through a value chain that includes businesses across Canada, and creates hundreds of thousands of jobs vital to communities of all sizes.

Canada’s oil and natural gas industry is an economic contributor, not a taker.

In Newfoundland and Labrador, the oil and natural gas industry has helped by providing employment to help keep talented professionals and their families in the province. In Western Canada, oil sands producers work with Indigenous communities and spent in aggregate of about $3.33 billion between 2015 and 2016 on Indigenous-owned businesses.

Canada’s oil and natural gas industry is an economic contributor, not a taker.

Like all businesses in Canada, our industry is able to deduct certain expenses through tax measures designed to encourage and support exploration, and advance technology by recognizing industry’s unique challenges. These provisions are consistent with those available to other industries requiring significant up-front capital investments.

Beyond the benefits to Canada, our oil and natural gas industry can play a more positive role globally. 

The standards of living in countries like China and India is increasing and, with it, global energy demand. All forms of energy, including oil and natural gas, will be important to the rapid improvement in the quality of life being pursued by billions of people.

Even the rise in renewable energy will need oil and natural gas in its value chain to mine materials, and to manufacture, transport, operate and decommission equipment like wind turbines, solar panels, or batteries. 

Renewable energy is not free as Senator Galvez suggests, nor is it fossil-fuel free, or free of other environmental impacts such as tailings ponds or threats to wildlife. There are environmental trade-offs associated with all forms of energy. Pitting one form against another is not only misguided, but it lacks vision. 

The International Energy Agency projects that global energy demand will rise about 30 per cent by 2040 – the equivalent of adding two Chinas to the energy mix. During this time, the energy supply from renewables like wind, solar and modern biomass will increase but only contribute 13 per cent to global supply. Oil and natural gas will remain the dominant sources at 52 per cent, helping to displace coal and meeting more than half of the world’s energy needs. 

Like all businesses in Canada, our industry is able to deduct certain expenses through tax measures designed to encourage and support exploration, and advance technology by recognizing industry’s unique challenges.

Canadian oil and natural gas can be the global supplier of choice. It has a long history of innovation and technological advancements aimed at reducing its environmental footprint, as outlined in the Canadian Association of Petroleum Producers’ 2018 Economic Report Series, Competitive Climate Policy: Supporting Investment and Innovation. Through organizations like Canada’s Oil Sands Innovation Alliance, oil sands producers have invested $1.4 billion to develop 981 distinct technologies to improve environmental performance, reduce emissions, minimize land impacts and reduce water use.

Canada’s oil and natural gas sector is made up of environmental leaders always looking for ways to improve. The petroleum industry and its byproducts – from toothpaste to mobile phones to medical devices – has helped make lives better. As we strive to further reduce energy poverty and improve our environmental performance, it’s important to remember that our energy successes will make us climate change leaders.