Canada’s energy reserves are unstoppable at the moment. The disruptions in the supply of oil, natural gas and coal due to the conflict in Ukraine that began last year are on an upward trajectory. The S&P/TSX Capped Energy Index, the benchmark for Canadian energy stocks, has risen more than 50% since January, while the broader S&P/TSX Composite Index is down 5% since then.
“Following the Russian invasion of Ukraine, energy security is a global priority, which has had a significant impact on Canada’s energy demand,” analysts at the Royal Bank of Canada (RBC) said in a recent report. They expect oil and gas production to last longer than previously thought, which now needs to be reconciled with the country’s climate goals. As countries, businesses and consumers grapple with high fuel and utility bills, environmental concerns have been forgotten. According to RBC economist Colin Guldiman, Canada must now manage the balancing act of covering high energy demand and simultaneously achieve climate neutrality by 2050 as planned. With regard to the country’s energy production, fossil fuels clearly dominate (see chart).
environmental protection with oil sand conveyor
The dichotomy is evident on the stock exchange as well. On the one hand, good prospects prevail for fossil energy, which is reflected in the performance of classic energy stocks such as Canadian Natural Resources and Cenovas Energy (see chart). On the other hand, companies relying on renewable energy are increasingly attracting investor attention. For example, Northland Power, based in Toronto, is one of the largest developers of offshore wind turbines in the world.
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