As the world moves away from fossil fuels, Canada’s energy security may be at risk
Submitted to Energy security
This article by Noha Razek, an assistant professor and economist specializing in international finance and energy economics, identifies Canada’s vulnerability to global energy markets. She identifies ways to achieve Canadian energy security while easing the transition from fossil fuels to renewables.
“Although Canada must move away from using fossil fuels to produce energy, a transition that comes too fast could harm Canada’s economy. Policymakers must evaluate environmental, economic and social objectives to strike a balance between energy security and economic growth. Although Canada is rich in resources, its energy security is threatened in terms of supply and demand.
A report by the Office of the Parliamentary Budget Officer in March 2020 anticipated the combination of the COVID-19 crisis and low oil prices would be unfavourable. Actual data show record-low GDP growth of -13 per cent in June 2020, a 13.7 per cent increase in unemployment in May 2020 and a rise in the federal debt-to-GDP ratio to 53.98 per cent in 2020, which is expected to reach 72.17 per cent in 2021.
Canada is also vulnerable to the dynamics of the global oil and gas market, such as decisions made by Saudi Arabia, Russia, the United States and Qatar, and to being isolated by policies like the U.S. decision to curtail pipeline construction.
Canada does not have strategic petroleum reserves — an emergency supply of oil and gas — to decrease adverse economic effects of unexpected energy supply disruptions. It relies on imports because it cannot transport enough oil and gas from the west to the east, and it suffers from pipeline politics that hinder access to international markets.
Dismissing these issues in the short term rather than finding solutions will delay the goal of facilitating a smooth long-term energy transition.”
Is Canada’s energy security at risk?
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