The balancing act of oil and clean energy investment
Last year, both the United States and Canada have increased their oil and gas production, reaching record targets and profits. In fact, in December 2023, the U.S. became the largest oil producer globally, with 13.5 million barrels of oil produced per day (BPD). In early 2024, Canada produced 4.9 million barrels per day, becoming the fourth-largest oil producer behind the U.S., Saudi Arabia, and Russia. Both countries are expected to hit new records in 2024, with 14 million bpd and 5.4 million bpd, respectively.
While the politics of oil and climate are colliding, we should expect more green growth investment from both countries. In the U.S., the Inflation Reduction Act (IRA) is expected to generate US$1.2 trillion in clean technology (cleantech) investment, including cross-border renewable energy projects, carbon capture, and electric battery investments. In Canada, initiatives such as the Pathways Alliance has proposed a $16 billion carbon capture project, the largest in the world, though the first phase can be executed only with Canadian government financial support and by addressing some financial risks. While initiatives such as this are not nearly enough to correct these carbon intensive economies, they are positive longer-term efforts to decarbonize North America.
