A future-fit approach to the energy transition values hydrocarbons but uses them more efficiently, balancing climate change and desired social outcomes with competitive economic returns.
As major consumers and exporters of hydrocarbons, Canadians have a real reason to worry about our energy future. Fluctuations in oil prices in the wake of Russia’s invasion of Ukraine have jolted consumers at the pump and reverberated through to rising prices at the grocery stores. Global demand for fossil fuels is forecast to ultimately decline in the coming decades, but for now there is an urgent shortage of oil and gas. Addressing climate change requires a comprehensive change in policy, investment and operations that few people truly understand, let alone support.
This global energy transition occurs at an interesting time for Indigenous Peoples. Historically excluded from participating in resource-based prosperity, many Indigenous Nations are actively involved in the energy industry. With Canada preparing to implement the United Nations Declaration of Rights of Indigenous Peoples, Indigenous rights are appropriately front and centre; whether it be as service providers, employees or shareholders, Indigenous people are no longer seen simply as stakeholders in the energy industry.
However, with the inevitable decline of global consumption of traditional fossil fuels and the transition to a greener economy, many energy communities face the possibility of job losses and business closures. This issue is particularly acute for Indigenous Nations who rely heavily on resource development projects based on traditional hydrocarbon extraction activities.
If Canada is committed to addressing carbon emissions (and we have no choice but to do this), as well as supporting a sustainable, inclusive transition to a greener economy, it needs strategies that capitalize on existing strengths by building a “future-fit” hydrocarbon industry.
Building a “future-fit” energy system requires combining existing hydrocarbon assets with new technologies. It prioritizes environmental, social and economic outcomes, rather than taking a purely profit-driven approach.
A future-fit hydrocarbon industry must stand on its own economically, without relying on government subsidies, and it must internalize environmental, social and governance requirements. Foremost, the new economy must be built around the shared commitment to net-zero by 2050, endeavouring to meet or exceed national and international emissions targets well before this date while remaining profitable and agile in response to changes in the global energy system.
The good news is that the foundational elements of such an economy already exist here in Canada. Several operators are currently piloting late-stage, commercially viable technologies to reduce emissions and new carbon capture projects are progressing through the permitting process. But there is an urgent need to do more.
New energy sources, including various commercial forms of hydrogen, must be explored. On-ramps for early-stage technologies must be built, and collaborative partnerships strengthened across innovation hubs. A transition finance framework that is conducive to innovation must be developed and new, credible offset opportunities must be made accessible to businesses of all sizes. Finally, ESG reporting requirements must be standardized, mandated and continuously reviewed to ensure they are driving performance towards national and global sustainability targets.
The hydrocarbon industry, far from disappearing in Canada, can be the vanguard of the climate-driven revolution.
Canada has a unique but urgent opportunity to advance a future-fit hydrocarbon industry. The country must build an inclusive economy that produces major emission reductions while repurposing Canadian oil and gas assets within a revitalized and expanded industry. There is an opportunity to build a new economy that balances social and economic outcomes, while remaining profitable and competitive on a global scale.
We must all work together to create a regulatory, financial, and policy eco-system that will situate a growing future-fit hydrocarbon industry as a highly desirable investment target. A transformation of this nature and intensity will not be easy and requires an absolute focus and real commitment to restructuring and re-inventing our energy systems. It requires ambitious targets to be set, and performance to be adequately measured and challenged, in order for real change to be made. It requires government, industry and Indigenous Peoples to build an even greater level of trust and produce real and substantial change beyond the promises of co-operation.
Indigenous people can co-lead this transition.
Although the future is uncertain, Canada must acknowledge the value that we, as Indigenous people, provide the industry during this transition. Building a future-fit energy economy requires stakeholders to truly respect Indigenous rights and requires an unwavering commitment to collaboration, rather than simply focusing on securing consent.
From insights gained from our Traditional Ecological Knowledge Keepers, to the provision of skilled workforces in remote, resource-rich areas, Indigenous Peoples have the potential to be significant in-country participants and investors in this new energy future. We are ready to sit at the table to help develop effective policies and co-lead this transformation.
Indigenous Peoples are determined to be a part of the country’s economic future and we seek commercial opportunities that align with our inherent values and that balance sustainability and collective prosperity.
Adopting a strategy for “future-fit” hydrocarbons can set the country on course for global leadership in the energy transition that we all need and want. Exciting possibilities emerge that are practical and realistic, that balance urgent action on climate change with economic reinvention and reconciliation.
A future-fit hydrocarbon industry can build on existing assets and commercial strengths, while driving changes to reduce emissions and provide an inclusive future with Indigenous Peoples.
Raylene Whitford and JP Gladu are members of the Energy Futures Policy Collaborative’s Indigenous Advisory Committee, which just launched a report: Same Game, New Rules: How policy can unlock future-fit innovation in Alberta’s hydrocarbon sectors.