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Change is the Only Constant: Navigating the Energy Transition and Commitments to “Build Back Better”

Reading Time 5 minute read


Energy Bulletin

COVID-19, plummeting oil prices, economic downturns and a global realization, and desire, that the way in which the world is supplied with, and consumes, energy must undergo a transition from today’s model. Over the coming months, Fasken’s Global Energy Group, in a series of special bulletins titled “Energy in Transition”, will look at the challenges and opportunities facing the global energy sector as the world looks to a green and zero carbon emissions economy.

Even before the COVID-19 catastrophe, fundamental shifts were being experienced in the energy sector. Norway’s sovereign wealth fund is divesting from four large Alberta companies involved in the oilsands for reasons apparently relating to the ethical implications of carbon emissions. Enbridge Inc., North America’s largest pipeline company, is shifting its asset mix to reflect the energy transition underway by investing increasingly larger proportions of its capital to natural gas and renewable energy projects. While investors in the energy sector have been placing an increasing focus on environmental, social and governance (ESG) factors, the COVID-19 pandemic has also brought significant questions of energy supply, dependency and security to the fore. When we emerge from the current COVID-19 pandemic, the energy landscape is going to be totally different.

Energy demand has contracted globally. A price war and a demand crash have left the oil and gas industries reeling. Renewable energy appears to have demonstrated resilience in the face of the COVID-19 catastrophe, but will investment in renewable energy be maintained? Vehicle sales have been significantly impacted – will this provide an opportunity or a threat for the electric vehicle industry? In the face of lower revenues and more difficult trading conditions, it is difficult to see how companies will justify increased expenditure on energy efficiency and emissions reductions. 

New Zealand Prime Minister Jacinda Ardern has promised to achieve 100% renewable energy by 2030

What Can We Expect Next?

With capital spending budgets having been slashed, some green initiatives are now sitting on the backburner. In an attempt to keep greening their agenda, some governments are making the award of emergency financial aid conditional upon climate-related disclosure, demonstrating that the aid recipient is managing climate-related risks and contributing to achieving commitments under international commitments such as the Paris Agreement. At the same time, governments are presenting economic recovery plans centered on infrastructure projects that appear to have been designed in the post–World War II era.

In this dynamic environment, new players are emerging and old players are innovating. Major oil and gas companies are investing heavily in green energy and have already played a significant role in the advances that have resulted in renewables like wind and solar becoming economic and competitive on a large scale. New investments are currently being centered around renewable natural gas and hydrogen fuel, while at the same time the use of solvents to drastically reduce emissions in thermal oilsands production is being explored. Hydrogen and energy storage solutions are well positioned to benefit from government stimulus packages. Will this put these technologies on a similar growth trajectory to that experienced by solar and wind renewable energy technologies in the past decade or so?

A Speech from the Throne: Canada’s Vision for a Green Energy Future

On September 23, 2020, the government presented their Speech from the Throne outlining their agenda and political priorities as Parliament reconvened. The Speech underscored the importance of climate action, the place it has in Canada’s pandemic recovery, and included a segment that was focused entirely on a green future. The fall economic update later this year will set out measures to implement the government’s commitments.

To begin, the government pledged to exceed their previous 2030 climate goal and to legislate net-zero emissions by 2050. Infrastructure investments will be a priority, with investments in retrofitting homes to make them more energy efficient, projects that will lessen climate-related natural disasters like floods and wildfires, and create more transit options. The government will use the Clean Power Fund to help projects such as the Atlantic Loop transfer excess clean power to those regions shifting away from coal. And unsurprisingly, the government has pledged to continue to put a price on carbon with the Speech clearly declaring that “it cannot be free to pollute.”

We know the world is going towards greater energy efficiency. We know the world is going towards lower carbon We know that the world is moving towards more renewable energy. This is the way the world is going.” Canadian Prime Minister Justin Trudeau, 2020


The Speech promised to attract investments in zero-emission technologies through a new fund, and will cut the corporate tax rate for these products and eligible businesses. As they innovate clean solutions, the federal government is pledging to provide support to the energy sector in British Columbia, Alberta, Saskatchewan, and Newfoundland for these green projects.

Ultimately, the Speech committed to making Canada the most competitive jurisdiction for zero-emission products and clean-tech companies, and it is evident that the green future will be a priority for this government in the years to come.

Canadian Infrastructure Investments Coming

On October 1, the Canadian government laid out further details of their intended $10 billion in infrastructure spending plan, including:

  • $2.5 billion for clean power to support renewable generation and storage and to transmit clean electricity between provinces, territories and regions, including northern and Indigenous communities.
  • $2 billion to help connect about 750,000 homes and small businesses to broadband in under-served communities.
  • $2 billion for large-scale energy efficient building retrofits.
  • $1.5 billion for agriculture irrigation projects to boost production, strengthen Canada's food security and expand export opportunities.
  • $1.5 billion to speed up the adoption of zero-emission buses and charging infrastructure.

These taxpayer funded investments are intended to leverage investments from the private sector, stretching the value of each dollar.

Navigating the Energy Transition in Challenging Economic Times

The Canadian government’s commitment to “build back better” is only a microcosm, and similar commitments are being made by other governments everywhere. The global economy is at a crossroads and so is the energy sector.

We [China] aim to have CO2 emissions peak before 2030 and achieve carbon neutrality before 2060.”  President Xi Jinping 2020

What we are seeing shaping up is literally a new global energy supply mix. In a special series of bulletins titled “Energy in Transition”, Fasken’s Global Energy Group will look at the challenges and opportunities facing energy incumbents and new entrants in this new global energy supply mix.



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