(Bloomberg). Canada faces challenges to maintain its position as an international oil and gas leader in a world that is moving toward zero carbon emissions at the mid-century mark, according to the International Energy Agency. 

The country seeks to remain “a major global oil and gas supplier” beyond 2050 even as countries, including Canada itself, push toward emission cuts, the agency said in its Canada 2022 Energy Policy Review Thursday. 

Holder of the world’s third-largest oil reserves, Canada’s largest producers pledged to zero out carbon emissions from their operations by the middle of the century, primarily through the use of carbon capture and storage, in a bid to preserve the sector. But those targets don’t include anything about the much larger volumes of emissions that result from burning the fuel they produce by refineries, factories, vehicles and homes. 

While the IEA lauded Canada’s leadership in policies to cut emissions, it added the country “should pay close attention to shifting demand for oil and gas globally.” 

Many countries are pushing for a significant reduction in fossil fuels over the next decade, possibly reducing demand for oil or gas.

“Canada must focus on significantly carbonizing its and gas sectors while at the same time ensuring competitiveness in increasingly well-supplied world markets,” the agency said.

The country’s own oil sands will pose a further challenge even as “Canada scores well on overall ESG indicators relative to many other oil and gas producers,” the IEA said. Many banks and funds have stopped funding the Canadian oil sands industry in recent years. This is where the oil that’s most carbon-intensive oil in the world can be extracted.

“The environmental profile of oil sands production, in particular, will become a greater focus for importing countries and warrants action,” the IEA said. 

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