Governments Won’t Get the Right Energy Answers by Asking the Wrong Questions

This blog was written by Mitchell Beer of The opinions expressed in this article are of the author’s, and are not necessarily reflective of the views of GreenPAC.

A presentation in Ottawa earlier this month by pioneering U.S. energy economist Daniel Yergin was all the proof you’ll ever need that you won’t get the right answers about energy and carbon by asking the wrong questions. Yergin is hard to criticize. He’s a Pulitzer-winning author and vice-chair of IHS, one of the handful of research, modelling, and analysis firms the fossil industry counts on to monitor today’s energy markets and anticipate tomorrow’s.

In his talk, hosted by Canada 2020 and moderated by Natural Resource Minister and GreenPAC endorsee Jim Carr, Yergin name-checked many of the trends and transformations that are sweeping the energy sector, helping to drive a fossil industry crisis that has wiped out 350,000 jobs so far, and more than US$1 trillion in investment by 2020. Yet he still expects oil demand to increase by five to six million barrels per day over the next five years, then continue growing through 2030 before it begins levelling off, with renewable energy only starting to make a dramatic difference by 2040 or 2050.

“The question is the speed,” Yergin said. “Oil was discovered in 1859,” but “it wasn’t until basically the 1960s that oil took over as a number one energy source.” While the future will see “much more diverse sources of energy coming out of the wall and otherwise,” IHS still expects that transformation to unfold “over decades”. If that’s the extent of the energy modelling insight available to federal and provincial/territorial governments over the next few months, you can expect much the same trajectory to underlie their forthcoming pan-Canadian climate plan.

How Energy Modelling Gets It Wrong

The basic problem with energy models is surprisingly simple. Whether they come from private firms like IHS or public bodies like the National Energy Board or the U.S. Energy Information Administration, they’re reasonably good at taking past trends and projecting them into the future. They’re often far less effective at weighing and combining the multiple, simultaneous, disruptive changes in technology, the economy, and the environment that are the hallmark of our times. And modelling doesn’t usually lend itself very well to picking a desired future—like the 1.5°C long-term global warming target that diplomats adopted at last year’s United Nations climate summit in Paris—and charting a course to make it a reality. The most basic energy model would take past trends for population and economic growth,project them two or three decades into the future, assume that energy demand will grow in lockstep with the economy (even though energy and GDP