Energy, security, and climate: Canada in a changing world

ABSTRACT

For most of the last 75 years, Canada has been a supplier of fossil fuels to the world. More recently, growing concerns about the impacts of climate change have created challenges to a continuation of this role. Developments such as the COVID pandemic and the Russian invasion of Ukraine have made even more evident the tensions confronting energy systems around the world. The situation in Canada is no exception. Within this context, the contributors to this Special Issue explore a range of issues linked to energy, security, and the climate as well as factors that connect these three factors. The future role – if any – of fossil fuels in meeting Canadian and world energy needs is addressed as are the possible implications of a growing reliance on renewable forms of energy. The authors present a range of assessments and perspectives, anchored in an appreciation of the situation in Canada, our country’s evolving role in global energy relations, and its participation in international efforts to address climate change.

RÉSUMÉ

Pendant la majeure partie des 75 dernières années, le Canada a été un fournisseur de combustibles fossiles pour le monde entier. Plus récemment, les préoccupations croissantes concernant les impacts du changement climatique ont créé des défis à la poursuite de ce rôle. Des événements tels que la pandémie de COVID et l'invasion russe de l'Ukraine ont rendu encore plus évidentes les tensions auxquelles sont confrontés les systèmes énergétiques dans le monde. La situation au Canada ne fait pas exception. Dans ce contexte, les contributeurs à ce numéro spécial explorent une série de questions en rapport avec l'énergie, la sécurité et le climat, ainsi que les facteurs qui relient ces trois éléments. Le rôle futur – s'il en est un – des combustibles fossiles dans la réponse aux besoins énergétiques au Canada et dans le monde est abordé, ainsi que les implications possibles d'une dépendance croissante à l'égard des formes d'énergie renouvelable. Les auteurs présentent un éventail d'évaluations et de perspectives, ancrées dans une appréciation de la situation au Canada, de l'évolution du rôle de notre pays dans les relations énergétiques mondiales et de la participation du Canada aux efforts internationaux visant à lutter contre le changement climatique.

KEYWORDS:

• Energy markets
• energy security
• climate change
• greenhouse gas emissions
• energy and environmental policy
• international relations

For many of us, the cover photo of this Special Issue of the Canadian Foreign Policy Journal harks back to a vision of energy and energy markets centered on fossil fuels, extracted from the earth and used in a wide range of applications. Over time, this vision has come under increasing challenge, by developments emanating from within energy markets themselves as well as from sources external to these markets. Take the last few years, for example. As the COVID-19 pandemic unfolded across the globe, long-standing energy use patterns were upended and world energy consumption fell. Demand security – a key concern of energy producers – became more fragile, with corresponding increases in global market uncertainty. Two years or so later, the Russian invasion of Ukraine led to the weaponization of some energy sources and export flows. World energy supply patterns were now challenged, adding even more uncertainty to global markets. The result, argues Spencer Dale, Chief Economist of BP p.l.c., is that: “[t]he challenges and uncertainties facing the global energy system are at their greatest for almost 50 years, since the time of the last great energy shocks of the 1970s” (bp, 2022, p. 2).

Meanwhile, wildfires from Australia to California to Spain, floods from British Columbia to Germany to Pakistan, record-setting high temperatures from Antarctica to China to France serve to remind us that our climate is changing. The International Energy Agency (IEA) has noted that: “[t]he energy sector is responsible for almost three-quarters of the [greenhouse gas] emissions that have already pushed global average temperatures 1.1°C higher since the pre-industrial age, with visible impacts on weather and climate extremes” (IEA, 2021b, p. 15). Energy, security, and climate are all changing and are inexorably linked.

Over a period of about 30 months, we were starkly reminded that change is, indeed, the only constant. And that energy markets are no exception, hence the title of and themes explored in this Special Issue of the Canadian Foreign Policy Journal which comprises seven articles and four commentaries. In assembling these contributions, we wanted to bring to you – the readers of CFPJ – a wide range of voices and perspectives. Some of the authors, you will have read before in the pages of this Journal. Others you will be meeting for the first time. Some contributors hold academic appointments, others have distinguished careers in the public and private sectors. All are experts in their own right and each brings their own unique perspectives on the issues at hand. The result is a rich – through forcibly incomplete – representation of some of the major challenges facing producers, consumers, and policy-makers in Canada and around the world.

The order in which the articles are arranged was carefully chosen. Contributions addressing the broadest sets of issues appear first, followed by those dealing with more specialized topics. The same approach was applied to select the order in which the commentaries are presented. We hope that this will make the range of issues addressed by the authors more clearly evident to our readers.

An underlying premise of the first article, by Jeff Kucharski and Heather Exner-Pirot, is that the world has embarked on a sustained process of transition to low-carbon energy. They explore the role that Canada can play in ensuring that this transition is “responsible” – that it delivers affordable and environmentally sustainable energy to all the world’s inhabitants and does so without threatening global energy security. They argue that renewables are not poised to displace fully fossil fuels and meet these challenges. From this perspective, climate change goals, economic outcomes, and energy security concerns must be balanced. This leads the authors to outline a role for Canadian-produced “clean energy sources” (including fossil fuels produced and used in conjunction with carbon capture technologies) in furthering the world’s responsible energy transition and to discuss elements of policies that would support this role.

Petra Dolata charts the evolution of Canada–EU energy relations and points out that, especially since the world energy shocks of the 1970s, these relations have been strengthened by complementary energy trade positions (with Canada being a net exporter and the European Union, a net importer) and highly compatible positions on international matters. For decades, these mutually supportive positions contributed to enhanced EU energy security. Tensions began to emerge, however, as concerns about climate change increased at the international level and the European understanding of what constituted energy security itself began to change. The author argues that the Russian invasion of Ukraine has made these tensions more evident and served to highlight challenges that Canadian policy-makers are facing internationally and domestically. From a European perspective, access to liquified natural gas (LNG) sourced in Canada would clearly shore up energy supplies rendered much less secure by Russian actions to limit sharply natural gas exports to EU countries. The climate policy challenges associated with such a development would be felt principally in Canada, where the resulting higher volumes of natural gas production and (LNG) exports would make it more difficult for Canada to be a climate policy leader. As the author points out, this pattern of tensions would be mirrored domestically, with producing provinces favoring higher exports and low-emitting provinces focusing on the resulting higher greenhouse gas (GHG) emissions. In wanting to be a good transatlantic energy partner, Canada’s actions to help address European energy security concerns would create problems for our country both on the international stage and domestically in terms of climate policy and net-zero commitments. The article ends on a somewhat pessimistic note: situations like this one sometimes lead to long-lasting change that would, in this case, work to temper, or perhaps even reconcile, the opposing imperatives described above. However, the path to such changes and the likelihood of these occurring are unknown, which leads the author to conclude that the best we could do in the current context is to “hold our breaths”.

Energy security implications of increased reliance on renewable energy forms to meet demand requirements are the subject of the article by Matthew Foss. An increased role of renewables in meeting world energy needs would require greater reliance on critical minerals, key inputs in equipment and technologies used to produce energy (and energy services) from renewable sources. The author argues that such a development would change the nature of energy security but would not make energy supplies more secure because the current production of critical minerals is heavily concentrated in a few countries. The geopolitics of oil (and hydrocarbons more generally) would simply be replaced by the geopolitics of critical minerals. From that perspective, world energy security concerns would be better addressed by a supply mix that includes both fossil fuels and renewable energy. The author argues that such an approach can be consistent with an increase in average global temperatures of less than 1.5°C and highlights contributions that Canada could make to enhance global energy security and the security of critical mineral supplies.

What would it take for Canada to respect its commitment to net-zero GHG emissions by 2050? This is the question at the heart of the article by Simon Langlois-Bertrand. Using a large-scale numerical optimization model, the author identifies a number of pathways that would allow Canada to meet this challenge. Readers will note that the IEA has undertaken a similar exercise at the level of the world as a whole and reached the conclusion that: “[n]o new oil and natural gas fields are required in the NZE [Net-Zero Emissions by 2050 scenario] beyond those already approved for development … ” (IEA, 2021a, p. 175). The author shows that, in the case of Canada, the expected costs to society of achieving net-zero GHG emissions by 2050 would be lower if stricter restrictions on fossil fuel development than those proposed by the IEA were put into effect. Indeed, the lowest-cost pathway is characterized by reduced production from existing fields in Canada, which has the added benefit, argues the author, of making it more likely that the GHG emissions reductions necessary for international undertakings to be respected will actually occur.

The article by Annie Chaloux, Hugo Séguin, and Philippe Simard explores the scope for actions by sub-national jurisdictions to contribute to national undertakings flowing from the Paris Agreement. The specific cases considered by the authors are those of California and Québec. The Parties to the Paris Agreement are, of course, countries. As the authors argue, in and of itself, this does not prevent the governments of sub-national entities from undertaking actions that would aim to implement provisions of the Agreement within their own jurisdictions. Indeed, as the authors point out, the Paris Agreement calls upon “non-Party stakeholders” to become partners in global efforts to address climate change. Efforts by the governments of California and Québec to implement provisions of the Paris Agreement are described and assessed. The strengths and shortcomings of these efforts are identified and compared. The authors conclude that, despite evident weaknesses, actions by California and Québec are designed to fulfill most of the core provisions of the Paris Agreement. Sub-national governments – and possibly non-state entities – can thus be effective partners the global climate policy regime.

As Andrew Leach notes, Canada’s oil sands deposits have been centre stage in energy and climate policy discussions and actions for decades. Government policy at both federal and provincial levels has supported growth in output and export volumes, with accompanying increases in production-related GHG emissions. This, in turn, has created challenges for Canadian climate policy, both domestically and internationally. The author draws from work undertaken by the IPCC to argue that global action addressing climate change is likely to be more instrumental in determining the future of oil sands production than is domestic action to reduce GHG emissions. Global action will act to reduce total oil demand, thus decreasing the need for oil sands production. The underlying cause of this outcome is not the emissions-intensive nature of oil sands production activities, but rather the fact that it is not possible to reduce the carbon content of the oil itself. Combustion emissions – and not production-related emissions – will be the key barrier faced by Canada’s oil sands industry as countries around the world take action to address climate change.

It is widely understood that efforts to reduce GHG emissions and meet net-zero commitments will require deeper electrification of energy systems and the decarbonization of electricity generation. The article by Duane Bratt explores the scope for nuclear power, and especially small modular reactors (SMRs), to contribute to both these objectives in the Canadian context. The author notes that there is greater constitutional certainty about nuclear power, which leads to a situation that is more supportive of federal-provincial cooperation. Nuclear energy is under federal jurisdiction and energy, including electricity production, is under provincial jurisdiction. Given that, SMRs will only be developed and adopted in Canada if there is cooperation between the federal government and the governments of provinces interested in pursuing this option. Such collaboration is materializing. A memorandum of understanding (MOU) now regrouping Canada, Alberta, New Brunswick, Ontario, and Saskatchewan has led to the release of a strategic plan and the provision of funding in support of SMR development. The governments of four provinces that have strongly opposed federal carbon pricing policy have found it to be in their best interests to collaborate with the federal government on these initiatives in support of SMR development. In some sense, all of these governments are aligned on the need to reduce GHG emissions and SMRs offer a space where they can act in a mutually supportive manner. Are there other policy areas, the author asks, where the kind of deep collaboration characterizing the case of SMRs could be pursued in the Canadian federation?

The remaining four contributions in this Special Issue are commentaries, shorter pieces in which the authors offer their views on specific sets of issues. The first such piece is by Adam Sieminski who argues that the focus of climate policies, including the implementation of net-zero commitments, should be on managing GHG emissions and not on the elimination of hydrocarbon fuels. Recent events, including the Russian invasion of Ukraine, have highlighted the need for emissions reduction pathways that take account of energy security and sustainability. The author describes the aims of the Net-Zero Producers Forum – of which Canada is a founding member – and describes how it could provide a platform to advance “pragmatic and effective” means of addressing global climate challenges.

Elizabeth Chalecki outlines different elements to global efforts aimed at addressing climate change, ones that involve the development and deployment of geoengineering technologies, including direct air capture of carbon dioxide and solar radiation management (i.e., technologies that reflect sunlight out of the atmosphere). The author notes that both of these technologies have yet to be deployed at scale and that an international regime to guide their development and deployment is also lacking. According to the author, Canada, as a middle power, would be ideally situated to lead international efforts to develop such a governance regime.

The starting point for the contribution by Maryscott Greenwood is a reflection on Canada’s extraordinary endowment of energy resources and the challenges flowing from broadly inconsistent energy and environmental policies pursued by the federal government, resulting in pressures to keep the country’s crude oil and natural gas resources “in the ground.” This, in turn, has contributed to the globalization of energy production, the implications of which have been made increasingly clear by the fallout from the Russian invasion of Ukraine. The author urges Canadian policy-makers to consider adopting a different approach, one that would be anchored on federal-provincial collaboration, cooperation with the United States, and enable the development of Canada’s crude oil and natural gas resources in an environmentally sustainable way. The author also notes that a similar approach to critical minerals production would serve Canada and the world well.

Nobel-prize winning economist William Nordhaus has long studied policy responses to climate change. He has advocated for the establishment of climate clubs, where member countries adopt a similar approach to climate policy and impose import levies on non-members as a way of encouraging broad country-level participation in international efforts to address climate change. Paul Precht explores the question as to whether Canada should join such a climate club. In doing so, the author outlines characteristics of such clubs and the implications for countries to becoming members. German Chancellor Olaf Scholz has emerged as a key proponent of a climate club whose founding members would be the G7 countries. The author views favorably the establishment of a climate club with broader membership as a way to increase the likelihood of goals of the Paris Agreement being realized, while lowering the risks associated with Canada acting on emissions reduction without major trading partners doing the same.

Acknowledgements

The author would like to thank David Carment, Editor of the Canadian Foreign Policy Journal, for his support and contributions to this Special Issue. My thanks as well to Marshall Palmer, the Journal’s Managing Editor, for overseeing the production process and for keeping us all on track (and on time). Marshall also generously provided the photograph used on the cover of the issue from the archives of his grandfather, Harry Palmer, a renowned Canadian photographer. Finally, I am grateful to all the authors for responding quickly and effectively to reviewer comments and suggestions.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Additional information

Notes on contributors

André Plourde

André Plourde is Professor, Department of Economics, Carleton University where he was Dean of the Faculty of Public Affairs from 2011 to 2020. André has also held appointments at the University of Toronto, the University of Ottawa, and the University of Alberta. His career path includes periods in public service, with the federal Department of Finance and Natural Resources Canada. In 2007, he was President of the International Association for Energy Economics. André has also served in an advisory capacity to a number of federal and provincial government departments and para-public organizations.