Thread by @bcshaffer

A chart from IEA World Energy Outlook that I always find fascinating in light of the dichotomy of meeting the Paris agreement and new oil production.

My offering to today's TMX punditry... Oil supply and demand under 2 scenarios:

1/n

The orange dashed line (NPS demand) is often touted by those justifying oil production growth by saying oil demand is increasing through 2040.

***This is the scenario that is *inconsistent* with meeting Paris. Those referencing this line are knowingly ignoring Paris' goals.

2/n

The green dashed line is oil demand under the "sustainable policies scenario", one that is consistent with Paris (although almost certainly not the 1.5C target). It begins to decline in the early 2020s.

3/n

BUT... note the filled areas below: that's oil production *with no new investment*. Steep decline rates for much of today's production means supply won't meet even the SDS demand in a very short amount of time.

*** New production is needed to meet Paris-consistent demand ***

The real debate then is over which barrels should fill that gap between the green dashed line and the declining current production.

This is where @PTertzakian's message comes in: for AB to justify its production, it needs to be cheaper and *cleaner* than its competitors.

Should oil sands fill the gap? That's a reasonable debate to have. We know average OS emissions are higher, but newer projects are coming with much lower emissions at the margin.

A strong carbon price to drive lower emissions can better justify AB's presence in the mix.

/end