Canada's Oil Expansion Plans Risked by Changing Global Demand

University of Sussex professor Peter Newell warns that Canada's push to expand oil and gas production is at risk due to changing global demand. In a new paper, Newell examines why several countries have adopted measures to limit fossil-fuel supply, including Costa Rica, Colombia, Denmark, and the United Kingdom.

Newell says that countries like Canada should test their plans against the possibility of costly infrastructure becoming stranded assets as energy demand shifts. He notes that governments can compound this risk by requiring extensive taxpayer support for major projects.

According to Newell, successful transitions require credible alternatives for regions heavily dependent on fossil-fuel production. Denmark's transition from North Sea oil reserves to a major wind industry is cited as an example of effective diversification.

Newell also emphasizes the need for consistent government signals and long-term policy support to encourage investment in cleaner technologies. He suggests that investors require 'long, loud and legal' signals before capital decisively shifts away from fossil fuels.