April 2024Supporting the Oil & Gas Industry’s Leap to Net Zero
In many ways oil and gas production is the elephant in the room, or at least the elephant on the pie chart, when it comes to Canada’s climate change emissions. On one hand, the industry contributes 28% of our total emissions, far outweighing those of any other industrial sector, and is one of the few sectors whose emissions have grown significantly since 2005, offsetting the progress being made in almost every other part of Canada’s economy.
And yet, we don’t talk about the elephant very much. That’s because a number of factors make it a difficult conversation to have.
For one, Canada’s oil and gas industry continues to provide sizeable economic benefits – in 2022 it paid more than $30 billion in royalties to Canadian governments (according to CAPP) and provided more than 150,000 jobs. Hence, disruption in that industry inevitably means disruption for the livelihoods of many Canadians.
Second, the industry is concentrated overwhelmingly in one province, making any attempts to rein it in appear discriminative against a specific region, and naturally triggering defensiveness among the people who live and work there.
The result is that Canadians tend to stay away from the subject.
The same instinct applies to many in Canada’s philanthropic community. We recognize the imperative to tackle the oil and gas industry’s emissions, but everywhere we look we see polarization and we see risk.
So how to proceed?
Over the past few months, the Clean Economy Fund has taken cautious first steps, alongside funding partners, to find high-impact projects that support a responsible transition for Canadian oil and gas production toward net zero. While limited, this experience has taught us, at the least, that such projects do exist. In fact, many such projects do exist. But how can we make it easier for charitable funders to find them and support them?
After reaching out to sectoral experts, interviewing funders with experience granting in the oil and gas space, convening discussions, and commissioning a landscape analysis, the Clean Economy Fund has identified 7 potential entrypoints for speeding up the oil and gas industry’s transition to net-zero.
From clean technology to worker retraining, from sustainable finance to youth engagement, this 7-entrypoint framework is there to help funders begin the journey of identifying high-impact projects that fall within their comfort zones. Once a funder selects their entrypoint(s), there are of course a series of next steps needed to identify specific projects and partners, but the framework can at least set you off in the right direction. And the Clean Economy Fund is on hand to help.
Entrypoint #1 is Federal & Provincial Policy. Government policy, regulations and investments have the ability to incentivize and force compliance for emissions reductions in the oil and gas sector. Experts note that both federal and provincial regulations like industrial carbon pricing, an oil & gas emissions cap, clean fuel regulations, and methane regulations are particularly powerful and needed at this time. Many eligible non-profit organizations are doing exciting work to research and advocate for these policies.
Entrypoint #2 is Clean Technologies. Modeling is clear that technologies could do a lot of heavy lifting in taking the sting out of oil and gas emissions. But these technologies are either insufficiently tested or expensive (or both), and the oil and gas sector typically drags its feet in implementing them at the speed required. Research points to high-impact opportunities in adoption of methane reduction, carbon capture utilization and storage, hydrogen, and carbon removal technologies. Progress can be made by supporting non-profit led initiatives that research and advocate for these technologies.
Entrypoint #3 is Finance. The oil and gas industry has historically been the recipient of easy and low-cost finance from banks, investors, and governments. This finance is becoming increasingly more risky as the world transitions to a low-carbon economy. Yet Canada does not yet have the mechanisms in place to align the finance sector with a net-zero future. Important work is needed in the non-profit sector to research and advocate for mandatory climate disclosure, green taxonomy, elimination of government subsidies, and other policies supported by forward-thinking financial leaders (see: Expert Panel on Sustainable Finance and Sustainable Action Finance Council).
Entrypoint #4 is Public Engagement. One thing the oil and gas industry has been very effective at is marketing its products. This has led to a dramatic increase recently in the number of Canadians who support oil and gas production. It’s critical that Canadians hear the other side of the story. Yet climate and clean-energy communications, education and marketing campaigns are notoriously underfunded in Canada. Philanthropic funders have the power to change that.
Entrypoint #5 is Labour & Jobs. While the oil and gas industry employs many Canadians, these workers care about the future of their work and the future of their planet. A recent report by the Alberta Federation of Labour, which represents 170,000 unionized workers, underscores the commitment of workers to that future. Many organizations are focused on mapping out the jobs case for a net-zero transition and supporting the re-skilling and re-training of oil & gas workers.
Entrypoint #6 is Industry Engagement. Some environmental organizations will bristle at the idea of working collaboratively with an industry that has historically been combative in the face of climate change. But analysis shows that it remains important to educate and influence industry decision-makers, to nurture leadership, to create fertile ground for government regulations, and to ensure that the industry’s existing commitments, while insufficient, actually get implemented.
Entrypoint #7 is Indigenous Leadership. Indigenous communities have been disproportionately impacted by the oil & gas industry. Meanwhile, powerful Indigenous-led initiatives exist that are aimed at economic reconciliation, protecting land and securing reparations.
Together these strategic entrypoints cover a range of opportunities for funders and philanthropy to engage constructively and successfully in the net zero transition of Canada’s oil and gas industry. Is the list exhaustive? No. But these are the areas in which Clean Economy Fund is convinced philanthropy can have a positive and major impact right now and the areas in which we intend to support our funding partners over the coming months.
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