Coming to Jesus moment coming for Alberta oil bros

Plenty of Albertans get it, but there are still far, far too many energy transition heathens desperately in need of salvation

Somebody pitch a revival tent, Alberta oil bros are due for a “coming to Jesus” moment. The times are changing, but the hydrocarbon homies keep resisting the good word of the energy transition. And they’re desperately in need of enlightenment, especially since many Alberta political and business leaders are of a similar mind.

On a recent thread, I noted that most advanced economies were responding to the energy transition using some form of a three-pronged strategy: 1) grow clean energy supply; 2) grow clean energy demand; 3) rapidly build out the manufacture of the supply (eg solar panels, wind turbines) and demand (eg electric vehicles) technologies. Surprisingly, this argument generated a fair amount of pushback from hydrocarbon advocates, who denied wealthy nations were doing any such thing. 

Unfortunately, the evidence doesn’t favour their side.

For example, and there are plenty of examples, last week the International Energy Agency released the Tracking Clean Energy Progress, which revealed “remarkable gains in the past year.”

“Electric car sales reached a record high of more than 10 million in 2022, a nearly tenfold increase in just five years,” the agency said. But that’s nothing compared to what the next three years will bring. EV sales will jump to 27 million by 2026, according to BloombergNEF’s 2023 Electric Vehicle Outlook (see graph above). That’s 30 per cent of global new passenger vehicle sales. 

Keep in mind that BNEF adjusts EV sales forecasts several times a year because it can’t keep up with the growth of EV manufacturing. Why? The answer is found in a Reuters report that global automakers will spend $1.2 trillion by 2030 to switch from building gas-powered vehicles to EVs.

The IEA study also reported that clean energy investments rose to $1.6 trillion USD last year, adding 340 gigawatts of new generating capacity. Renewables now comprise 30% of global electricity generation and that percentage is set to climb exponentially for the rest of this decade. 

Source: World Energy Outlook 2022, International Energy Agency, P. 243.

As the graph to the right shows, the world’s energy supply mix will be changing rapidly this decade, led by advanced economies.

“The world’s biggest energy economies share some universal attributes for decarbonization. All benefit from the same technology cost curves for wind power, solar modules, lithium-ion batteries, and hydrogen electrolyzers,” writes BNEF’s Nat Bullard in a recent blog post.

“These economies have large, liquid, and generally robust capital markets that can finance the trillions of dollars needed to decarbonize their economies. They also have the technical capability to integrate new power generation resources, and new molecular energy carriers like hydrogen.”

Those advanced economies are busy transitioning despite the odd outlier. Japan, for instance. Power generation is still dominated by coal and nuclear, while the world’s leading automaker, Toyota, and the other Japanese car companies are dragging their heels on switching to EVs. 

The petroleum proselytizers inevitably point to the US as another laggard, simply ignoring the roughly $1 trillion the US government has committed to various facets of the energy transition in three pieces of groundbreaking legislation (Inflation Reduction Act, CHIPS and Science Act, Infrastructure Act). Less than a year in and already that funding is having a profound impact on the American energy system. The power grid, for example, is rapidly being modernized as the adoption of wind, solar, and energy storage accelerates.

The United States has finally awoken to the economic and geopolitical threat posed by China’s dominance of the clean energy economy. “In the face of this dramatically transformed strategic environment, our economic priorities are clear: ensuring that the U.S. builds the talent, technologies, and manufacturing capabilities necessary to lead the global economy in the 21st century…” Secretary of Commerce Gina Raimondo said in a late 2022 speech. 

While the US continues to be the world’s largest oil and gas producer, it is also building the necessary clean energy supply, demand, and industrial might to compete with China. When your only customer (99% of Alberta’s hydrocarbon exports flow to American markets) begins switching to your competitor’s product – electricity, supplemented by low-emission fuels like hydrogen – it’s time to re-engineer your business model instead of denying market messages.

Listen to my Energi Talks podcast with veteran Alberta oil and gas journalist Bill Whitelaw for a civilized conversation about Alberta oil and gas narratives. Bill gets that change is here. Not getting on the plane, but landed on the runway and already disembarking. 

To be fair, plenty of Albertans also get it. But there are still far, far too many energy transition heathens desperately in need of salvation.

Can I get an amen?


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