Political developments this year and last will influence the much-discussed energy transition in little-discussed but powerful ways.
In its World Energy Outlook 2018, the International Energy Agency last November emphasized the role of regulation—and, by association, politics—by projecting energy demand through 2040 under two scenarios.
Under current and currently planned policies, the world would need oil production to be 11% higher in 2040 than it was in 2017, IEA estimated.
With policies needed for compliance with Paris Climate Agreement targets, 2040 oil production would be 27% lower.
By this metric, climate-change policies will determine whether oil remains a growth business.
For climate policy-making itself, though, growth looks altogether doubtful.
Protests erupting in Paris last November chastened French President Emmanuelle Macron, a celebrity of climate politics, into rescinding a fuel tax imposed to lower emissions of greenhouse gases.
His was just the latest European government to soften climate policies under political duress.
Also last year, failure to pass climate legislation toppled the government of Prime Minister Malcolm Turnbull in Australia, where a carbon tax enacted in 2012 was repealed in 2014.
In Canada, expensive climate remedies are fracturing politics.
Voters in Ontario last June replaced a Liberal government that had enacted a carbon tax with one led by a Progressive Conservative who promptly scrapped the levy.
This year, Alberta Premier Rachel Notley faces a tough challenge from United Conservative Party Leader Jason Kenney, who thrashes her enactment of a carbon tax in an ill-fated swap for federal acceptance of oil-sands projects. That election might occur before its May 31 due date.
Scheduled for Oct. 21 is the Canadian federal election, in which policies reflecting Liberal Prime Minister Justin Trudeau’s Macron-like ambitions for climate leadership have come under attack from Conservative challenger Andrew Scheer.
Political repudiation of climate policies punishing to energy consumers already is a trend. Election losses by Notley and Trudeau would amplify a welling expression of popular will too long ignored by the pooh-bahs of climate.
(From the subscription area of www.ogj.com, posted Jan. 7, 2019. To comment, join the Commentary channel at www.ogj.com/oilandgascommunity.)