Opinion: Canada’s banks join Mark Carney, signaling a shift from the West’s fossil fuel dependency and delighting OPEC

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Canada’s six largest banks became the latest global financial institutions last week to join former central bank governor Mark Carney’s efforts to shift from fossil fuel lending toward renewable energy investments.

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Carney, the United Nations Special Envoy on Climate Action and Finance, joined the Net-Zero Banking Alliance convened by the United Nations, with the big six banks formally shifting their debt from projects and activities that generate greenhouse gas emissions. are committed to. To align with the path to Net Zero by the middle of the century or earlier. “

While RBC, TD, CIBC, BMO, Scotiabank and the National Bank did not explicitly commit to divestment from the oil and gas sector, their move to join the NZBA ahead of next month’s COP26 climate conference in Glasgow earned them a share of their peers. Steps together. The developed world under pressure from shareholders and environmental activists into promising less investment in fossil fuels.

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Indeed, the International Energy Agency (IEA) warning In May that new fossil fuel development would have to be halted in order to reach global net zero by 2050, the list of banks and pension funds reducing or eliminating oil investments grew sharply. This now includes the Caisse de dépôt et Placement du Québec, which last month acquired oil sands leader Suncor Energy Inc. And a handful of foreign oil companies had announced plans to sell their shares.

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Depending on your point of view, the trend of oil and gas disinvestment in the West is either an urgent need, as the race to limit global warming to 1.5 C by 2050 enters its make-or-break phase, or on a virtuous sign. A misguided effort to empower a small number of undemocratic petrostates in the coming decades as energy demand increases in developing countries.

Until recently, the urgency narrative was winning over the misguided virtue thesis. But the sudden energy shortage has underscored how destabilizing Western fossil fuel supplies can be.

Energy shortages in Europe and China, which have sent oil, natural gas and coal prices through the roof – and protesters on the streets – risk becoming more common if renewable energy does not pick up the slack. In fact, state oil companies of Saudi Arabia, Kuwait, United Arab Emirates and other undemocratic countries seem to be relying on it. As free-world oil declines, the non-free world tends to profit.

“The world’s extremely encouraging clean energy pace is accelerating the stubborn power of fossil fuels in our energy systems,” IEA executive director Fatih Birol said last week. The Paris-based agency released its 2021. World Energy Outlook.

The IEA’s May report signaled its change from a neutral observer to a spiritual guide to the net-zero movement in the wake of growing criticism that its previous forecasts for long-term oil demand had spurred investments in clean energy by encouraging investment in fossil fuels. Delayed transition. But the agency also acknowledged last week that the world is nowhere near net zero by 2050.

“If all of today’s climate promises are fulfilled, the world will still consume 75 million barrels of oil per day by 2050 – up from about 100 million today,” the agency said last week. If countries followed a “path to net zero” by quadruple investment in renewable energy and halting the development of new fossil fuels.

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The US Energy Information Administration’s Latest International Energy Outlook proposals Dramatically different perspectives on future fossil fuel demand. It estimates that, “if current policy and technology trends continue,” global energy demand will increase by 50 percent by 2050 as population increases and living standards rise in developing countries. Under the EIA’s October 6 outlook, “both OPEC and non-OPEC oil production grow over the projection period, but OPEC production grows at nearly three times the rate of non-OPEC production between 2020 and 2050.”

US President Joe Biden’s recent call for OPEC members to raise oil production amid a slump in US crude oil production reflects the dilemma facing Western leaders as they reduce domestic emissions while easing price pain at the pump. promise to reduce Mr Biden, who revoked the president’s permit for the Keystone XL pipeline on his first day in office, has been criticized for turning to OPEC to solve his problems instead of facilitating more domestic oil production.

The EIA expects US oil production to average about 11 million barrels per day in 2021, down from about 13 million in 2019. US consumption this year is projected to increase by more than 1.5 million barrels per day to 19.7 million and another 900,000 barrels. One day in 2022.

The IEA’s Mr Birol said “there is a risk of further turmoil for global energy markets,” warning that a “major boost in clean energy investment” is needed to reverse the decline in fossil fuel investment in the West. Is.

Initiatives such as Mr Carney’s NZBA promise to make financing oil and gas production more difficult in democracies such as Canada. They can also help make people like Mr. Carney very popular in OPEC circles.

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