For oil demand, the hits just keep on coming

FedEx goes net-zero by 2040, Volvo kills the non-electric car by 2030, and cleantech entrepreneurs in the US get a powerful new ally with a $40 billion budget

Oil prices are enjoying quite a rally right now, with Saudi Arabia’s decision to roll over its voluntary supply cut of 1 million barrels per day through April adding more fuel to the fire. As it happens, I’ve been bullish on near-term oil prices for a while now, and continue to believe that the next 12 - 36 months could be very good ones for oil and gas stocks.

But while the short-term keeps looking more bullish for those companies, the long-term picture is actually getting more bearish by the day. Case in point: the recent announcement by FedEx that it intends to reach net-zero emissions by 2040. This is, after all, a company whose entire business revolves around driving things around from Point A to Point B, and fuel is one of their biggest operating costs. If they can reach net-zero emissions by 2040, there’s no reason why other companies — or even countries — can’t do the same.

And FedEx is hardly alone here. Google, which uses enormous volumes of electricity to power its server farms and other digital infrastructure, wants to go carbon-free by 2030.

Then there’s Volvo, which announced recently that it will completely eliminate fossil fuel vehicles from its inventory of models by the same year.

All of these announcements by major corporate players are forming a snowball of financial and cultural momentum — one that’s going to hit the oil and gas industry far sooner than it may want to believe. Here in Alberta, we have a choice: get behind the snowball, or stand in front of it. So far, at least, we’re still squarely in its path.


The speed of business, eh?

For all the jokes that get made about Doug Schweitzer’s ill-fated statement that his government would “move at the speed of business” (and, to be clear, I make at least 75% of them), this is exactly the speed at which business is moving on climate. And while his government has failed to keep up with it, at least it’s finally moving in the general direction of business. As part of the Government of Alberta’s recent budget, it announced that it would be creating an “ESG Secretariat” and investing $2 million in its operations.

But while Premier Jason Kenney insisted that the government was “upping its game” on this particular file, it sounds a lot more like it will be running the same failed one.

“We really think we don’t get a fair shake when it comes to many – especially European – investors, who hear only the negative side of the oil sands,” he told the Globe and Mail’s Emma Graney. “Part of our message is: To focus only on emissions in the broader ESG spectrum is not the right path.”

Telling people that they’re not focusing on the right thing is generally a good way to lose their attention, but that’s never stopped Jason Kenney from doing it before. But this seems far more like a repackaging of their existing argument — that Canada’s oil is more “ethical”, and therefore more worthy of investment — than a genuine effort to address the concerns of the growing community of investors who are pricing ESG issues into their holdings. It will almost certainly ring hollow, given that the government continues to fund a war room and an inquiry into environmentalists and refuses to drop its appeal of the federal carbon tax. But at least it’s a step, however timid and ineffective, in the right general direction.

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Show them the money

If the Kenney government wants to know what the speed of business really looks like, it need only look south to the Biden administration. That’s because canceling Keystone XL is going to look like a drop in the climate bucket compared to what’s coming next. Jennifer Granholm, the former Governor of Michigan and recently-confirmed Secretary of Energy, has tapped cleantech entrepreneur Jigar Shah to run the Department of Energy’s $40 billion loan program. And while that program sat mostly dormant during the Trump era, it’s clear that Shah intends to make up for lost time.

For cleantech entrepreneurs in the United States, this is great news. But for the ones here in Canada, to say nothing of the fossil fuel industry, it presents a pretty obvious challenge. For four years under Donald Trump, that space was largely unsupported by the most powerful government on earth. Now, it has its full and enthusiastic backing — and the competition that will produce should be fierce.

Let’s hope we’re up to it here in Canada — and that all of our governments give our cleantech entrepreneurs the support and backing they need to win.


One cool thing: electric ferries

In the spirit of adding some regular features for this newsletter, I’m going to share one cool thing at the end of every issue — in part because I want to leave you with a bit of optimism, and in part because it’ll make it easier for me to write this thing.

This week, it’s electric ferries, which are now a (big) thing in Norway. If nothing else, it’s just one more thing that the oil and gas industry’s Norwailers get to complain (and worry) about.


Get on it, BC Ferries!

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