Thank you, Madam Chair and committee members, for including CAPP in this important discussion.
The Canadian Association of Petroleum Producers produces about 80% of Canada's oil and gas. We're proud to be one of Canada's largest employers and Canada's largest private sector investor. Pertinent to this committee, oil and gas make up Canada's largest export.
Consistent with the last couple of speakers, I will keep my comments to energy trade and to the larger dynamics that are currently making trade with the Ukraine challenging and some of the dynamics that are driving that in Europe and in the Ukraine.
As a quick background, the Ukraine lost about 80% of its oil and gas potential when Russia annexed the Crimea in 2014. According to the International Energy Agency, Ukraine has one of the most energy-intensive economies in Europe. They have worked very hard over the last decade to become more self-sufficient with gas, and today they produce about 70% of the natural gas domestically and need to import the other 30%.
Like the rest of Europe, their energy needs and their gas needs make them heavily reliant on Russia. Back in 2016, Russia, in the midst of a dispute, cut off gas supplies to the Ukraine for a day. The devastating effects of energy insecurity are something that no country should have to live with.
When we look at the primary energy demand in the Ukraine, natural gas makes up about a third of all the energy they use, coal is 30%, nuclear is 20% and petroleum, gasoline and diesel fuel about 18%.
The Ukraine has worked to get what they call a flowback mechanism to get some gas coming back out of Europe into the Ukraine so they aren't solely dependent on imports from Russia.
A quick reflection on the realities of energy in Europe shows that over the last several years Europe has become increasingly dependent on Russia and on imports that globally.... Maybe I'll start globally.
The last several decades has seen dramatic increases in the demand for oil and gas. This has been a very positive impact on the world's poorest nations, meaning better diets, warm houses in winter and more freedom of movement. The International Energy Agency predicts an increase in global demand by about 30% out to the end of their forecast in 2040.
Europe has made some energy policy choices that I think have made them very vulnerable, and I'll go over them right now. I think those vulnerabilities have a direct impact on their ability to play a relevant role in the current conflict that seems to be amassing in the Ukraine. Europe has taken policy decisions. They have seen production of their domestic natural gas fall off dramatically. The North Sea and Norway have both seen substantial declines in the last several decades, and though the onshore resource is substantial in many parts of Europe and the United Kingdom, they have put policies in place that have made it very difficult for them to develop it.
As I mentioned earlier, it is life changing when the world's poorest nations get access to energy, oil, gas, coal, nuclear, wind and solar for the first time. It is truly phenomenally beneficial. It is also devastating, expensive and dangerous when the world's wealthiest nations lose access to reliable energy. The policy decisions that Europe has made in recent years have left them extremely vulnerable. They have shut down their nuclear facilities in several countries or are in the process of doing so. They have shut down several coal-fired power plants. They have limited their ability to develop their resources for oil and gas, and they have become more reliant on imports from the Middle East, Russia and Africa. They have also built out some infrastructure for LNG, and that is a bit of a lifeline today, as they are facing some very high prices and insecurity coming out of Russia.
This insecurity has left Europe in a very vulnerable position, where they seem to be unwilling to take a strong stand. Being more secure in their energy supplies would enable them to take more principled stances.
Europe has gone from—