No one cares what Alberta thinks of dangers of anthropogenic global warming. What matters is what global policy makers and markets think

Humans have just 10 years to implement “far-reaching and unprecedented changes in all aspects of society” if we hope to limit global warming to 1.5°C, according to a new IPCC report. Why should Alberta care? Because other nations care. And there is a very good chance that in response to continued warnings they will enact more stringent emissions-limiting policies, which in turn will reduce demand for Alberta’s carbon-intense heavy crude oil.

I regularly speak to Alberta groups (oil companies, unions, political parties, etc.) about the transformation of the global system by thousands of new technologies that are in their infancy today, but whose adoption rate will steadily increase over the next decade or two.

The key issue for the Canadian energy sector is the pace of adoption.

Source: IPCC.

If adoption occurs at historic rates, the change will be gradual and take most of this century, according to the many experts interviewed by Energi News over the past five years. But in my presentation I identify four “disruptors” (super-batteries, Mobility as a Service using autonomous electric vehicles, the impact of China’s manufacturing prowess, and policy) that could speed up adoption.

Any one of the disruptors could significantly affect adoption rates. If all four disruptors occur, and especially if they occur to maximum effect, then a 100-year timeline (we’re probably already 20 years into the transition) could be compressed to four or five decades.

Policy is the most interesting of the disruptors because it has the potential to affect the other three.

As Dr. Jessica Jewell observed in an Energi News interview, policy “bends the S-curve.” That is, government legislation and regulation can goose the accelerators (those things that speed up technology adoption) and mute the constraints (those things that slow down adoption), improving a technology’s economics and speeding up its acceptance by consumers.

The more stringent the policy, the more potential for a straighter S-curve and faster adoption.

For instance, Norwegians have the highest rate of electric vehicle adoption (over 50% of new cars sold in 2017) in the world because of generous subsidies that lower the cost of an EV to that of a gasoline-powered car, as well as policies that give EVs parking and driving advantages.

The subsidies have caused huge budget deficits, perhaps not a serious issue for a country with a trillion dollar sovereign wealth fund, but a cautionary tale for others contemplating similar policies.

What might make national governments copy Norway’s approach? More dire forecasts from the Intergovernmental Panel on Climate Change might do the job.

“One of the key messages that comes out very strongly from this report is that we are already seeing the consequences of 1°C of global warming through more extreme weather, rising sea levels and diminishing Arctic sea ice, among other changes,” says Panmao Zhai, co-chair of IPCC Working Group I.

The only way to avoid even more dire climate consequences is “rapid and far-reaching” transitions in land, energy, industry, buildings, transport, and cities that would achieve net-zero global emissions by 2050, according to the report.

“The good news is that some of the kinds of actions that would be needed to limit global warming to 1.5°C [above pre-industrial levels] are already underway around the world, but they would need to accelerate,” said Valerie Masson-Delmotte, Co-Chair of Working Group I.

Industry is already predicting Peak Oil Demand as early as the mid-2030s (Canada’s largest integrated energy corporation, Suncor, thinks it will arrive as early as 2038).

Accelerated electrification of cars, trucks, freight haulers, delivery vans – all of which has begun in earnest – by using policy to bend the S-curve for that technology could upend oil markets and throw the Alberta economy into a tizzy similar to the recent downturn.

What might the brave new electric world look like?

Probably like the International Energy Agency’s sustainable development policy scenario, the most aggressive approach to achieving the 1.5°C  by 2100 and one that includes greatly enhanced policy support for auto fuel efficiency standards (by far the biggest threat to oil consumption between now and 2040) and electric vehicles.

If global governments are jolted into action by the IPCC’s ever more dire forecasts, is Alberta prepared?

Maybe.

The three big oil sands producers (Suncor, Cenovus, CNRL) are frantically lowering their greenhouse gas emissions and the carbon-intensity of their heavy crude oil in anticipation of a “carbon-constrained future,” as they describe it.

Suncor claims in its latest sustainability report that it remains profitable through stress tests under even the most onerous global policy and market scenarios over the next 50 years.

That’s the good news. The bad news is that continued profitibility under more onerous global policy scenarios requires the appropriate Alberta energy and climate policies.

Are the current Alberta energy and climate policies sufficient?

Again, maybe.

A column later this week will report on the dispute inside and outside government about whether oil sands producers can stay under the 100 megatonne emissions cap.

But what happens if a new government after next spring’s provincial election discards or dilutes the existing policies? What then?

We don’t have an answer to either of these questions. But Alberta should begin discussing them posthaste.

Change is coming and the real threat to the future viability of the oil and gas sector is looming from outside the country. Alberta should hope for the best but plan for the worst.