A significant shift in global energy forecasting has emerged from the International Energy Agency's latest World Energy Outlook, which presents a scenario where worldwide oil and gas demand continues growing beyond 2050.
Three Pathways for Global Energy
The IEA's closely monitored report outlines three primary scenarios for future energy consumption. These include projections based on governments implementing their promised climate policies, pathways toward achieving net-zero emissions by 2050, and crucially, a third scenario examining outcomes if current policies remain unchanged.
The inclusion of this "current policies" scenario marks a notable change from recent years, when the agency had drawn criticism from the oil and gas industry and the Trump administration for not providing such analysis. This development comes just two years after the IEA suggested oil demand could begin declining by the 2030s due to climate-focused government actions.
Implications for Canada's Energy Sector
This new outlook carries substantial implications for how investors approach Canada's oil and gas industry. Richard Masson, executive fellow at the University of Calgary's School of Public Policy, noted that "part of the challenge we've had over the last bunch of years is this narrative that oil is not going to be required in a decade," which has created significant uncertainty around investment decisions.
The report arrives during a period when oil companies are spending considerably less than during the early 2010s boom. Over the past decade, investors have shown increasing reluctance to fund new oil and gas development, particularly projects requiring years to build and substantial upfront capital.
A Double-Edged Outlook
The IEA's decision to include the current policies scenario presents a complex picture for different stakeholders. For the oil and gas industry, it offers grounds for optimism by acknowledging the possibility that demand could continue growing. For environmental advocates, however, it confronts the troubling reality that the world may not make sufficient progress on climate change.
The agency emphasizes that none of these scenarios should be considered forecasts. Instead, they serve as tools that "allow readers to explore the implications of different choices and pathways" as the global community navigates the energy transition.
This nuanced approach provides valuable context for Canada's energy sector, particularly in Alberta where major facilities like the Imperial Oil Strathcona refinery and Kinder Morgan and Enbridge terminals represent significant components of the national energy infrastructure.
