It’s spring, a time of renewal – and that includes Canada’s natural gas and oil industry. Despite ongoing COVID-related challenges, there is growing optimism in the natural gas and oil sector focused on economic recovery and environmental progress.
This cautious optimism is good news for Canada’s economy and the nation’s climate goals, given that the natural gas and oil industry funds the majority of green innovation in Canada. It’s also good news for the federal government, which needs to find ways to both help Canada reach its climate objectives and put the country on the road to economic recovery.
The fact is, the natural gas and oil industry can implement important innovation and development of new technologies to reduce emissions intensity while also leading Canada to economic recovery by creating jobs, revenues and sustainable growth – including opportunities for Indigenous communities.
Throughout last year’s setbacks, from pandemic lockdowns to negative oil prices, Canada’s energy industry has been resilient. Earlier this year, the Canadian Association of Petroleum Producers (CAPP) projected a 14-per-cent increase in upstream natural gas and oil investment in 2021 – putting total investment around $27 billion. That’s an extra $3.36 billion of private sector funds injected into the economy compared to 2020 capital spending in the sector, making upstream energy production one of the few industries to increase investment in Canada’s struggling economy.
Although this level of investment is still less than the $35 billion invested in 2019, it’s a sign the long road to recovery is beginning.
Canada’s deficit-busting secret weapon
Driving down emissions intensity
A significant proportion of the industry’s investment is targeted to environmental protection. Despite the industry’s challenges, companies are continuing their drive to lower greenhouse gas emissions intensity with advanced technologies and innovations.
The upstream natural gas and oil industry is the foundation of Canada’s growing clean technology industry. According to a study conducted for the Clean Resource Innovation Network (CRIN), Canadian companies spend about $1.4 billion a year on clean technology investments – and 75 per cent of that comes from the natural gas and oil industry. This fact was also echoed in recent research from the Harvard Business School, which recognized traditional energy companies are among the most prolific and influential producers of green innovation.
Environmental protection: spending by industry
Recovering energy demand
Global demand for energy is growing and Canada, with improved market access, can help fill that demand with responsible energy products. Projections from the International Energy Agency (IEA) suggest significant opportunity for Canada’s oil and natural gas in world markets.
The IEA projects demand for natural gas will increase 30 per cent by 2040. This growth will be driven in part by using natural gas to replace coal for power generation, and because natural gas is a complement to electricity from renewable energy sources. This means in both the near and long term, there is opportunity for Canadian producers.
Growing global economic activity means energy usage is returning to pre-pandemic levels. However, investment in new projects is essential to keep up with global energy needs. New projects will increase Canada’s export potential, while creating jobs, generating government revenues, supporting an expansive national supply chain, and enabling new opportunities for Indigenous communities to participate in the sector.
Building on our strengths
One of Canada’s strengths in energy is our track record – for innovation, environmental performance, and continuous improvement in reducing emissions intensity. The IEA recognizes Canada as a leader in climate action and our strengths make us a clear choice as a stable supplier of affordable and responsibly produced energy.
It’s time to champion our own natural gas and oil industry, at home and on the world stage. Let investors know about our leading environmental, social and governance performance, infrastructure projects now underway, our track record in innovation and emissions reduction, and our ability to advance climate solutions on a global scale.
The opportunity is clear and it’s a strategy that can help Canada achieve two vital priorities: climate action and economic recovery.