Cross Country Checkup

High oil prices could speed up Canada's transition to renewable energy, experts say

The shift to greener energy sources will come as a response to concerns about sourcing oil and gas from “less stable” countries, according to Jackie Forrest, executive director of the ARC Energy Research Institute in Calgary.

‘Oil markets can be too volatile': energy researcher

Experts say that a need for greater energy security could spur faster investment in Canada's renewable energy sector. (Charlie Riedel/Associated Press)

Amid an oil supply crunch due to Russia's invasion of Ukraine, some energy watchers believe the current situation could fuel faster development in renewable energy.

The shift will come as a response to concerns about sourcing oil and gas from "less stable" countries, according to Jackie Forrest, executive director of the ARC Energy Research Institute in Calgary.

"As we go out two, three, four years, we probably are going to see a faster energy transition than we would have had otherwise," she told Cross Country Checkup.

"The good thing about renewables and clean energy is a lot more of it is domestically produced and has more energy security attributes to it than oil and gas from many countries." 

Warren Mabee, Canada research chair in renewable energy, is similarly optimistic but acknowledges the shift won't happen overnight.

"This should actually spur investment in renewables," said Mabee, a Queen's University professor and director of the school's Institute for Energy and Environmental Policy.

"For me, the overwhelming lesson that we can learn from what's happening in the oil markets today is that oil markets can be too volatile. They can really damage local and national economies." 

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With gas prices hitting record highs, energy experts say an immediate infusion of oil and gas into the market will be needed to temper prices — and Canada could play a role by ramping up production.

That approach could have an impact on the Canadian government's goals to mitigate climate change and reach net-zero emissions by 2050. 

"It is completely possible at this moment in time when we are facing so much uncertainty that we're going to have leaders … who want to commit to a long-term build in the fossil fuel sector, and that's where I think there's a risk and a danger," said Mabee.

He cautioned against increasing capacity, and instead called for a focus on greater production from existing sites. As a "short-term tactic to respond to a humanitarian and security crisis," such a move would make sense, he said.

Gasoline prices have skyrocketed since Western countries slapped Russia with sanctions targeting, among other things, its banking and oil and gas industries. Canada and the U.S. have also banned imports of Russian fuel.

Energy analyst Jennifer Forrest says pipeline and transport capacity means Canada will be limited in how much more it can export to other nations, including European countries. (Jennifer Gauthier/Reuters)

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Elon Musk, CEO of electric vehicle manufacturer Tesla, tweeted a call earlier this month to increase oil and gas production in response to the shortage imposed by sanctions on Russia, writing "Extraordinary times demand extraordinary measures."

Alberta Premier Jason Kenney has promoted his province's potential to supply more energy to markets. Speaking at the CERAWeek energy conference in Houston earlier this month, Alberta Energy Minister Sonya Savage said the province has pipeline and rail capacity to ship crude oil to the United States.

Forrest says there is likely some capacity to boost oil production in Canada, which could be delivered to the U.S.

"It is pretty limited what we can do in the short term because we do have a limited takeaway capacity. That's been an issue for Canada for a long time," said Forrest, referring to limited pipeline capacity.

Building additional infrastructure to supply Europe's oil needs as they turn away from Russia is doubtful, however, given the country's historically slow progress on energy projects, she added.

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With more money in the coffers of energy companies thanks to the high price of oil, the Pembina Institute's Chris Severson-Baker argues now is the time for strategic investments in renewables led by the federal government.

"The government could mandate emission reduction requirements and the industry would have both the technologies and the money to implement those technologies to actually achieve those emission reduction targets," he said. 

That's needed now more than ever, said Severson-Baker.

"We've used up all the time that we once had to address the climate crisis," Severson-Baker told Checkup.

"If we don't make some decisions in the next few months, we're not going to be able to meet targets that are critical to meet in order to keep the climate from moving beyond a dangerous level."

Written by Jason Vermes with files from Steve Howard.