The last few weeks have been bad for the oil industry. The defeats went on and on: Exxonmobil’s investors mounted a campaign to elect climate-friendly directors to its board, a court in the Hague ordered Royal Dutch Shell to cut emissions, Chevron investors defeated management by pushing the company to cut indirect emissions, and the Keystone XL pipeline project was finally terminated.
The International Energy Agency, meanwhile, released its report Net Zero by 2050 detailing what it called the “narrow” path in front of us to prevent global temperatures from rising beyond 1.5 degrees Celsius. The central message was clear: to reach net zero by 2050, the next decade must involve a rapid transition to clean energy. The transition must happen not tomorrow, not next year, but today.
In its charting of a realistic path towards net zero, the IEA states that no new oil drilling projects would start after 2021, and that sales of internal combustion engine passenger cars would halt by 2035. Unabated coal and oil power plants would be phased out by 2040, with the exception of plants equipped with carbon capture, utilization and storage (CCUS) technology to reduce emissions. To stay on track, the agency said that the world must triple its investment in clean energy and install the equivalent of the world’s largest solar park every day from now until 2030.
These deadlines are rapidly approaching if the world hopes to reach its targets. The transition, however, represents economic opportunity if managed well. For Canada’s innovation ecosystem, one section of the IEA’s report stands out: “Most of the reductions in CO2 emissions through 2030 come from technologies already on the market today,” it reads. “But in 2050, almost half the reductions come from technologies that are currently at the demonstration or prototype phase [emphasis mine].”
Building the capacity and networks to develop this new technology must be a key innovation priority for the next decade. Our correspondent Mark Lowey recently reported on Canada’s push to become a preferred supplier of critical minerals, which will be essential for clean technologies such as electric vehicles. China enjoys a near-monopoly in the global market for critical minerals — a state of affairs that Canada would be wise to address before demand increases many times over.
Other new technologies will have to be tested and adopted on a short timeline: increased energy storage capacity, carbon capture, agricultural techniques to manage carbon outputs, energy-efficient retrofits to buildings, hydrogen fuel, a massive scaling up of renewable energy sources such as solar and wind, and many others. None are guaranteed to succeed, nor will any be a silver bullet, but these technologies represent potential new markets and spaces where Canada can establish leadership.
What is clear is that the days of fossil fuels are numbered — even Exxonmobil’s own investors agree — and that all technology will be clean technology in the coming years. Whether Canada’s innovators and policymakers can manage this inevitable transition will be the defining challenge of the 2020s.