Caught between climate warnings and economic realities, Canada and the world face tough fossil fuel choices

The UN's latest warning about the world's climate goals slipping away is looming over a pending decision on whether a large offshore oil project will go ahead off Newfoundland, promising a much-needed boost for the province's economy but potentially moving the world further away from avoiding climate disaster.

The report on climate mitigation from the Intergovermental Panel on Climate Change says that limiting global warming to 1.5 C above pre-industrial levels this century, one of the goalposts of the global Paris agreement signed in 2015, is all but out of reach without massive and immediate emissions cuts, along with technology to capture and store carbon emissions at industrial facilities.

In fact, to reach even the less-ambitious target of limiting warming to 2 C, carbon emissions around the world have to reach their zenith by 2025 — three years from now — and start declining after.

That means some tough decisions for governments weighing economic development against cutting emissions.

"Politicians have to always make decisions among competing priorities, and they have a lot in front of them and really complex decisions to make," said Sarah Burch, professor at the University of Waterloo in Ontario and a lead author on the report's chapter on sustainable development.  

"But what the report shows us is just how important it is to move away from the extraction and combustion of coal, especially, immediately, but also oil and natural gas to electrify transportation, to make our buildings more efficient, to enable active transportation, and to scale up carbon capture and storage."

The report also warns that as the world cuts emissions, oil and gas projects may become "stranded assets" — projects with no buyers for the resource they produce.

"Investing in new fossil fuel infrastructure is moral and economic madness," UN Secretary General Antonio Guterres said at the report's release Monday.

"Such investments will soon be stranded assets, a blot on the landscape, and a blight on investment portfolios."

Barely a week after the release of the report, the Canadian government is due to decide whether to approve one such potential asset: Bay du Nord, a massive offshore oil drilling project proposed about 500 kilometres east of Newfoundland. 

The province's government and its MPs in Ottawa are staunch supporters of the project, and the governing Liberals will have to carefully consider the economic consequences to Newfoundland if Bay du Nord is scrapped.

"I think our work as a government and as a responsible government is to ensure that the transition happens as smoothly as possible. And obviously, if we end up with a lot of stranded assets in the coming years or decades to come, then it will probably be an indication that we haven't been able to do that," federal Environment Minister Steven Guilbeault said at a news conference following the release of the IPCC report.

Guilbeault did not indicate which way his government will go on the Bay du Nord decision, but said he was confident that Canada's climate plan will reduce emissions from the oil and gas sector, even if it increases production. The plan includes policies to reduce methane emissions, which leak from equipment on oil and gas sites, a clean fuel standard, which is aimed at progressively reducing the emissions from fossil fuels when they are burned, and a cap on oil and gas emissions.

"I know of no other countries in the world, especially not a large oil and gas producer like us, that has made a commitment and is in the process of developing a cap on emissions of the oil and gas sector," Guilbeault said.