Key Takeaways
- Canada’s national energy regulator has postponed its report on future demand for fossil fuels due to an "evolving energy and policy landscape"
- The move comes after Ottawa and Washington have scrapped numerous climate rules, and Prime Minister Mark Carney has promoted oil and gas projects as "nation-building" endeavors
- The regulator’s previous report found that oil production in Canada would begin to decline as early as next year and drop off significantly over the next three decades in a net-zero carbon emissions scenario
- The federal government has noted the urgency of shifting to clean energy to combat climate change, but the oil and gas industry in Canada has been setting records for production and posting billions of dollars in profits
Introduction to the Postponed Report
Canada’s national energy regulator has postponed its report outlining future demand for fossil fuels, citing an "evolving energy and policy landscape." The move comes as both Ottawa and Washington have recently scrapped numerous climate rules, while Prime Minister Mark Carney has promoted oil and gas projects as "nation-building" endeavors. The regulator had expected to issue updated projections for "early in 2025," but it’s been more than a year since it released the results of its public consultations for that report. Now, it has decided to hold off publishing for the time being, according to communications officer Amanda Fedorchuk.
The Impact of the Previous Report
When the regulator put out the most recent version of its "energy future" report in 2023, it caused a major stir. The report found that, in a world aiming for net-zero carbon emissions and easing away from fossil fuel dependency, oil production in Canada would begin to decline as early as next year and drop off a cliff over the next three decades. The regulator noted that the push for emissions reductions would mean Canadians and others around the world would switch to electric vehicles and heat pumps, actions that would leave countries oversupplied with petroleum and lower demand for Canadian fossil fuels. This shift to clean energy is meant to combat a rapidly heating planet caused by the emissions from burning fossil fuels, as well as the extraction, refining, and transporting necessary to produce gasoline, diesel, and natural gas.
The Current State of Climate Policy
The federal government has noted the urgency of this shift in a report released last week examining Canada’s progress on climate goals. The report highlights the devastating impact of climate change on communities across the country, including more frequent and severe weather events, damaging homes, increasing the cost of living, affecting health, and raising insurance costs. In response to the report, Rick Smith, president of the Canadian Climate Institute, stated that the country is "significantly off track" from meeting its emissions targets and the federal government needs to take greater action over the next six months to correct course. Meanwhile, the oil and gas industry in Canada has been setting records for production, driven by the oilsands expansion and the government-owned Trans Mountain pipeline expansion, and Canadian oil producers are posting billions of dollars in profits.
The Shift in Energy Policy Under the New Government
The last energy forecast was released during the Trudeau and Biden era, when the federal government under former Prime Minister Justin Trudeau had put in place its Emissions Reduction Plan, which called for Canadians to switch to electric vehicles and green their homes, while the government also planned to clean up electricity grids and cap oil and gas emissions. However, with the inauguration of Donald Trump as U.S. president in early 2025, his administration immediately launched a campaign to embrace fossil fuels, wipe away emissions rules, and dismantle scientific research into climate change, among other changes. The Trump administration also pressured the International Energy Agency to change its forecasts to show a brighter future for fossil fuel demand. In Canada, Prime Minister Mark Carney has rolled back some of the country’s climate policies and promoted new fossil fuel projects, including a new oil pipeline and new natural gas facilities.
The Regulator’s Decision to Postpone the Report
Fedorchuk said the Canada Energy Regulator had not faced any similar political pressure and that the scenarios it prepares are "based on what is relevant to the Canadian energy dialogue." The regulator’s decision to postpone the report is likely due to the significant shifts in North American energy markets and policy context, which have created an uncertain environment for forecasting future demand for fossil fuels. The regulator’s previous report prompted questions about whether Canada’s bet on fossil fuels in a net-zero future was too risky, and whether the country should be investing more in renewables. The postponed report will likely take into account the new policies and developments in the energy sector, including the Carney government’s climate competitiveness strategy, which aims to promote clean technology use and reduce emissions in the oil and gas sector.