If there was ever any doubt that net-zero finance was the way of the future, former Bank of Canada and Bank of England governor Mark Carney cleared it up in a March 29th tweet. “Huge announcement today that the core of the global asset management industry, managing over $32 trillion in assets, is committing to addressing climate change [and] delivering the goals of the Paris Agreement.” When you start talking about that many trillions of dollars, even the most ardent skeptic is forced to sit up and start listening.
We’re often told that we need to do a better job of telling our stories. There are plenty of narrative opportunities to be explored within the energy sector and yet, despite an emerging consensus around the importance of storytelling, it’s often difficult to identify and breathe life into the stories that shape our companies, technologies or relationships with energy. So in this post, I’ll explore a few practical approaches to storytelling that we can draw on to spark curiosity, empathy and action within Canada’s energy sector.
Alberta’s hydrocarbon sector faced an uncertain future in a world moving towards lower-carbon energy before the pandemic, with existing trends accelerating since March 2020. This uncertainty towards the future of the sector offers both risks and opportunities. The province’s rich natural resource wealth and highly skilled workforce have potential to capture a growing share of the clean technology market, and play a pivotal role in reaching climate targets.
Planning for the future is complicated. We don’t know for sure what the future will look like. That means — and forgive me for being a little nerdy here — defining “future fitness” is a probabilistic question: we have to assess “fitness” across a range of possible futures. At the same time, the future also isn’t entirely out of our control. Policy choices we make now can influence which futures are more (or less) likely to come to pass.
Around the world, countries, corporations, and people are picking up the call for a net-zero future. This global rallying cry is highlighting that we need to do more to reach a lower emissions future and we need to do it at an exponential pace. We cannot close the gap between our reality today, and our aspirations for what is possible, without developing and deploying technologies that both manage our greenhouse gas emissions and add value to our economy.
A shift towards a world with drastically lower carbon emissions appears to be in the cards. The UNFCC noted that global commitments to reach net-zero emissions from regions, cities, corporations, and countries has doubled since September 2019, and that was before China, Japan, and South Korea all pledged to reach net-zero emissions by 2050 or 2060.
We are surrounded by technical achievements — often near-miraculous, even if they may get taken for granted. The electricity grid that delivers a safe, constant and predictable stream of on-demand energy. Communication systems that allow real-time conversations with people on the other side of the earth. Networks of food delivery that allows us to enjoy fresh, safe, and relatively inexpensive produce in all seasons.
The outbreak of COVID-19 has triggered a global economic crisis that was unimaginable even two weeks ago, and perhaps nowhere is that being felt more acutely than in Alberta. In addition to the obvious consequences of social distancing on businesses and industry, we’re also dealing with a gut-wrenching collapse in oil prices that’s being driven in part by a deepening conflict between Saudi Arabia and Russia. Taken together, the combination of falling oil prices and a temporary collapse in the broader economy will put Alberta’s community and business leaders to the toughest test they’ve ever faced — one that they cannot afford to fail.
Sitting in his kitchen with a ballpoint pen and a small coiled notebook, Walter considers his expenses. With December looming around the corner, he laments the fact that his furnace, after all these years, has chosen to retire on the heels of winter. With his natural gas furnace no longer working, Walter has purchased two electric heaters to warm his home. These new additions leave him feeling unsure of how best to tackle his energy bills and this nervousness inspires him to investigate his home’s various electrical needs. In his son’s room, shelves decked with plastic dinosaurs and superhero posters adorn the walls. A small boy by the name of Brooks sits in the corner with a laptop propped over his knees. Walter approaches and unplugs the computer cord, telling the boy to finish his homework by hand. The boy’s teacher, he assures, won’t mind. Little does Walter know that the cost of powering his son’s laptop is of little significance, especially when compared to the oversized electric heaters he’s had running since the furnace died. Still, these days he hopes to divert whatever savings he can.
As a second COVID wave hits the province with full force and the impacts of prolonged economic repercussions become clearer, Alberta faces challenges that will ask us to reimagine what it means to bring our ingenuity, expertise, and innovative spirit to bear. In a province already reimagining the future of its energy sector, COVID-19 has shocked demand and disrupted expectations we might have had about what the future could look like. This turbulence has been accompanied by an accelerated commitment among financial institutions to scrutinize their investment portfolios and other activity through a climate science lens. The UN Principles for Responsible Investment initiative, a leading body pushing towards low-carbon pathways, has reported that signatories have more than $100 trillion in assets under management, and the Bank of Canada has made recent public statements about how we will need to decarbonize many facets of our lives in order to mitigate the worst impacts of climate change. Global investors are demanding a more stringent reckoning with an emerging consensus that prioritizes climate risk. With all of this as backdrop, several leading oil and gas companies have reduced the reported value of their assets by more than $80 billion in the first three quarters of 2020.