Bay du Nord is NOT a Solution for NL’s Economy: Global Oil & Gas Demand is set to Decline

As Canada sets Targets for Nation Building Energy Projects – an Newfoundland and Labrador Renewable Transition is Needed Now…

Global demand for oil and gas is set to peak this decade and then decline, and there are enough projects already underway to meet that demand – meaning there’s no economic case for additional projects like Bay du Nord. Forecasts that predict a shallow decline in demand are based on unrealistic scenarios, ignore the most reliable research, and even a shallow decline spells trouble for global oil markets (even a shallow decline can dump prices).

Towns like Placentia, NL are already feeling the lack of readiness as oil and gas companies such as Cenovus Energy move on from completed project phases without concrete plans to extend work through expansion.

As a result of the coming decline in demand, global oil and gas corporate exploration budgets are already shrinking and oil and gas investment is shifting to short term gains. This is why, right now, it’s important for Canada to unite as a leader in clean, safe, and sustainable energy that puts Canadian communities first. As we build our nation it’s important that we do not lose sight of the future, and that means working with industries that support the economy and protect the natural beauty of our country.

Projects that do not offer leadership in clean energy nor stable jobs for future generations, like  Bay du Nord are unviable, and the prospect of doubling oil and gas production off the coast of NL is impossible and irresponsible from an economic and environmental perspective. Bay du Nord is so unstable that in 2024 Equinor’s stock was actually downgraded due in part to its continued consideration of Bay du Nord. A 2024 report by the The Australasian Centre for Corporate Responsibility (ACCR), a leading research and shareholder advocacy organization headquartered in Australia, also cast doubt on the cost competitiveness of all Equinor’s unapproved international oil and gas projects including Bay du Nord.

As Kassie Drodge, our Energy Transition and Advocacy Coordinator  in St. John’s put it recently:

“We don’t need a repeat of the cod fishery collapse where thousands of us were left behind to find alternative job opportunities, we need a real plan that builds up renewables in Newfoundland and Labrador, that invests in complementary sectors and projects like data centres that will drive the energy demand of the future.”

But communities across Canada are being sold projects like Bay du Nord without an economic future by oil and gas corporations that are desperate to maintain the appearance of expansion. As a key energy journalist wrote recently:

“Every fossil company everywhere wants investors, governments, and citizens to think, even against the thinnest of evidence, it will be the last one standing as its business steadily crashes. But times are already tough, and the tell comes from two of the industry’s biggest voices…. The problem is that citizens, rather than fossil companies and their shareholders, might be stuck picking up the tab.”

The world is going renewable and Newfoundland and Labrador can go renewable too – something that would provide a lot of local benefits. Renewables create far more jobs than oil and gas projects, it’s easier to localize renewable jobs in communities in places like Alberta and NL, and renewables are more reliable than oil and gas. In fact, one of the biggest ‘obstacles’ to renewable energy growth is not having enough workers. Additionally, 81% of renewables offer cheaper energy than fossil fuels. 

Other countries are taking action: Vietnam’s wind and solar generation exceeds gas-fired power generation. Demand for Liquified Natural Gas is estimated to have already peaked in Europe and South Korea and China has already surpassed its 2030 renewable energy ambitions. Plastics alone would never sustain the oil and gas industry in terms of anything close to current demand. In fact, China installed more wind and solar power in a single year than the total amount of renewable energy currently operating in the United States. Canada actually risks losing out on the renewable future of energy and ending up reliant on China if we don’t build our own independent renewable supply chains.

We already have renewable solutions for when the sun does not shine or the wind does not blow like interconnected grids, energy efficiency, and energy storage, but oil projects like Bay du Nord are inherently volatile due to international fluctuations in oil and gas prices beyond our control.

There’s a lot of support across the country for a transition to renewable energy: 72% of Albertans wish to maintain or increase federal climate action and action to transition the country to clean energy. In March polling showed ​​65% of Canadians want renewables instead of oil & gas development and polling in June confirms 67% now prefer renewables and clean energy generally to oil and gas development. But Canada is spending three times more backing oil and gas than renewables, even though renewables are a better investment.

Bay du Nord also comes with a 16% chance of a extremely large oil spill, putting fisheries at risk.

Oil and gas corporations have also seen huge profits while Canadians by contrast faced hard economic times As of 2023, for every additional dollar of inflation in Canada, 25 cents of that has gone to oil and gas and mining extraction profits. The majority of those profits go to the richest 1% and very little of those profits end up in things like pension funds. Average world incomes will drop by almost a fifth within the next 26 years as a result of the climate crisis, and the costs of damage will be six times higher than the price of limiting global heating to 2C.

Now is the time to go renewable.

Youth protest against investment in Bay du Nord in St. John’s NL and for a different path than oil and gas.