How petro-nations are approaching the shift to net zero and the future of oil

As the world moves toward reducing greenhouse gas emissions and embracing low-carbon sources of energy, many oil-producing nations like Canada are grappling with the same balancing act. On one hand, they are striving to reach climate goals, while also weighing financial, economic and political considerations.

Considering the extraordinary wildfire season in Canada, coupled with record heat waves and record temperatures around the globe, there is motivation for some countries to move faster to reduce emissions.

However, others are hesitant, as the Russian invasion of Ukraine has caused turmoil for energy systems around the world and put more emphasis on the need for energy security, while keeping utility prices in check.

Around the world, oil-producing countries are taking different approaches to the problem, which highlights how the energy transition will happen at a different speed and scale from one nation to another as they each face contrasting financial challenges and viewpoints about the future.

"Countries have varying starting points and levels of responsibility and capabilities. Consequently, they have adopted various time frames for their net zero emissions pledges," the International Energy Agency (IEA) said in a new report released Tuesday.

Finland wants to reach net zero by 2035, while China and Saudi Arabia have a target of 2050. Other countries, like Kuwait and Qatar, don't have a target at all.

All of these competing priorities of oil-producing countries were on display in Calgary last week at the World Petroleum Congress, an oil and gas conference where many industry and government leaders shared their vision for the energy transition.

In Canada, the federal government has climate goals in place and has several initiatives aimed at curbing emissions from heating and cooling buildings and the transportation sector, among many others.

Ottawa plans to unveil an emissions cap on the oilpatch later this year, while also funding clean technologies in the industry and subsidizing the development of carbon capture and storage facilities.

Stateside, oil production is on the rise, but a clean energy renaissance could be on the horizon after the passing of the Inflation Reduction Act (IRA), a massive spending bill aimed at cutting emissions and promoting low-carbon sources of energy. 

"We're at a critical point in the energy transition," said Caroline Narich, a U.S.-based managing director focused on the energy transition with Accenture, a technology and consulting firm.

"In some places we are seeing unprecedented action being taken, with a slew of commitments and phenomenal levels of policy and funding support being made available for the first time."

While on stage at the World Petroleum Congress, Narich pointed to the IRA and other government programs providing "more than $450 billion available in loans, grants and tax credits to support decarbonization efforts."

The size of the IRA is larger than the total economy of some countries around the world, including Ghana, which has a history of financial struggles even after becoming an oil-producing nation in 2010.