The last few years have not been good for pipeline projects in Canada. The much-delayed Keystone XL pipeline continues to be plagued by delays, TransCanada made big news by axing the Energy East pipeline. Now, Kinder Morgan has cut spending on the critical Trans Mountain expansion project to protect its shareholders.
After each pipeline setback, oil and gas opponents react with glee and deliver yet another self-righteous speech about the end of the fossil fuel economy.
The problem is these activists are delivering a eulogy to the oil economy that is as premature as the obituary that was delivered for Swedish chemist Alfred Nobel, the originator of the famous Nobel prizes.
The need for oil and gas – and especially natural gas – will continue for many decades. Energy consumption and projected needs will continue well into the future. The origins of this energy demand, however, is not where many expect.
A new report by the Canadian Association of Petroleum Producers (CAPP) called Canada’s Role in the World’s Future Energy Mix points out that global energy demand is expected to increase by 30 percent from today to 2040. Unless a miraculous new energy source or technology completely replaces fossil fuels, oil and gas will continue to play a dominant role in that energy mix.
The International Energy Agency (IEA) affirmed that this is the equivalent to adding another China or India to current consumption.
In fact, the study points out that the IEA estimates that oil will continue to be the largest share of any fuel source: “This continued high demand for oil will be driven largely by the transportation sector, including aviation and shipping, plus industrial and petrochemical uses.”
The IEA also said that this energy demand will increase despite the expected introduction of electric vehicles.
So, where is all this new energy demand coming from? Well, it is not coming from the industrialized West, which is becoming more and more energy-efficient through various technologies.
The report mentioned that the world’s population is expected to grow by nearly two billion, reaching about 9.2 billion people by 2040. This means that the global middle class will double in that same period. This means GDP will also grow exponentially.
All of this growth will continue over the next few decades in developing and emerging economies. Their populations are urbanizing and industrializing and many of their citizens are joining the middle class. Growing incomes and improved access to electricity is also creating higher demands for energy.
Of course, these improving incomes and economies should be major causes for celebration. Why should we be against more people in the developing world having access to modern labour saving household appliances and computers that make our lives easier? This also means more people from these countries can access air travel. They will have their lives opened-up to the wider world just like we have.
Most joyfully of all, the report explains that energy use in African countries will increase, signaling growing economies in that most impoverished part of the world.
So, why are environmentalists and critics of pipelines cheering when more Canadian petroleum products are land-locked in this country?
Why wouldn’t we want Canada to play a major role in helping these emerging economies industrialize and enjoy our standard of living?
Simply put, what do environmentalists and oil and gas pipeline cynics have against the world’s most poor that they want to keep them poor?
These activists may think they are scoring a real moral victory when they stop pipelines from being built, but they are only preventing oil and gas products from eventually getting to economies that need them the most. In the absence of Canadian oil and gas – which is world recognized as having some of the best environmental and human rights records – other less-than-stellar producing countries will fill the void.
Eulogizing oil and gas is premature, delusional. Oil and gas has a big role to play in improving the lives of many people living in the most desperate economies.
It’s time to tell pipeline cynics who they are really hurting—the world’s poorest economies.
