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Canadian Energy Centre

What’s next? With major projects wrapping up, what does Canada’s energy future hold

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From the Canadian Energy Centre

By Mario Toneguzzi

‘This is the first time Canada will enter the global marketplace as a global player, so it is an incredibly important change for the industry’

With the recent completions of the Trans Mountain expansion and Coastal GasLink pipelines, and the looming completion of LNG Canada within the next year, there are few major energy projects with the green light for one of the world’s largest and most responsible energy producers.

Which leaves a lingering question: In a world that has put a premium on energy security, what’s next for Canada?

Heather Exner-Pirot, a senior fellow and director of the natural resources, energy and environment program at the Macdonald-Laurier Institute, said Natural Resources Canada’s major projects inventory “has been in a pretty sharp decline since 2015, which is concerning.”

“It’s not just oil and gas but also mining, also electricity . . . It’s the overall context for investment in Canada,” said Exner-Pirot, who is also a special adviser to the Business Council of Canada.

“When we look at BC, we see TMX, Coastal GasLink, very soon LNG Canada will be finishing up. That’s probably in the order of $100 billion of investment that that province will lose.

“So you do start to think about what happens next. But there are some things on the horizon. I think that’s part of it. Other LNG projects where maybe it wasn’t politically popular, it wasn’t a social license, and maybe the labour force was also constrained, and now is opening opportunities.”

recent analysis conducted by Exner-Pirot found that between 2015 and 2023, the number of energy and natural resource major projects completed in Canada dropped by 37 per cent. And those that managed to be completed often faced significant delays and cost overruns.

One notable project Exner-Pirot expects to fill the void is Ksi Lisims LNG, which is being developed on the northwest coast of Canada to export low-carbon LNG to markets in Asia. The project represents a unique alliance between the Nisga’a Nation, Rockies LNG and Western LNG.

Ksi Lisims LNG is a proposed floating LNG export facility located on a site owned by the Nisga’a Nation near the community of Gingolx in British Columbia.

The project will have capacity to produce 12 million tonnes of LNG per year, destined for markets in the Pacific basin, primarily in Asia where demand for cleaner fuels to replace coal continues to grow.

Rendering of the proposed Ksi Lisims floating LNG project. Image courtesy Ksi Lisims LNG

As well, the second phase of the LNG Canada export terminal in Kitimat, B.C. shows increasing signs of moving forward, which would roughly double its annual production capacity from 14 million tonnes to 26 million tonnes, Exner-Pirot added.

While nearby, Cedar LNG, the world’s first Indigenous-owned LNG export facility, is closing in on the finish line with all permits in place and early construction underway. When completed, the facility will produce up to three million tonnes of LNG annually, which will be able to reach customers in Asia, and beyond.

According to the International Energy Agency, the world is on track to use more oil in 2024 than last year’s record-setting mark. Demand for both oil and natural gas is projected to see gradual growth through 2050, based on the most likely global scenario.

Kevin Birn, chief analyst for Canadian oil markets at S&P Global, said despite the Trans Mountain expansion increasing Canada’s oil export capacity by 590,000 barrels per day, conversations have already begun around the need for more infrastructure to export oil from western Canada.

“The Trans Mountain pipeline, although it’s critical and adds the single largest uplift in oil capacity in one swoop, we see production continue to grow, which puts pressures on that egress system,” he said.

Photo courtesy Trans Mountain Corporation

Birn said Canada remains a major global player on the supply side, being the world’s fourth-largest producer of oil and fifth-largest producer of natural gas.

“This is a really important period for Canada. These megaprojects, they’re generational. These are a once-in-a-generation kind of thing,” Birn said.

“For Canada’s entire history of being an oil and gas producer, it’s been almost solely reliant on one single export market, which is the United States. That’s been beneficial, but it’s also caused problems for Canada in that reliance from time to time.

“This is the first time Canada will enter the global marketplace as a global player, so it is an incredibly important change for the industry.”

Exner-Pirot said Canada has the ability to become a major exporter on the energy front globally, at a time when demand is accelerating.

“We have open water from B.C. to our allies in Asia . . . It’s a straight line from Canada to its allies. This is a tremendous advantage,” she said, noting the growth of data centres and AI is expected to see demand for reliable energy soar.

“We are seeing growing electricity demand after decades of plateauing because our fridges got more energy efficient and our washers and dryers got more energy efficient. Now we’re starting to see for the first time in a long time more electricity demand even in developed countries. These are all drivers.”

Alberta

REPORT: Alberta municipalities hit with $37 million carbon tax tab in 2023

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Grande Prairie. Getty Images photo

From the Canadian Energy Centre

By Laura Mitchell

Federal cash grab driving costs for local governments, driving up property taxes

New data shows the painful economic impact of the federal carbon tax on municipalities.

Municipalities in Alberta paid out more than $37 million in federal carbon taxes in 2023, based on a recent survey commissioned by Alberta Municipal Affairs, with data provided to the Canadian Energy Centre.

About $760,000 of that came from the City of Grande Prairie. In a statement, Mayor Jackie Clayton said if the carbon tax were removed, City property taxes could be reduced by 0.6 per cent, providing direct financial relief to residents and businesses in Grande Prairie.”

Conducted in October, the survey asked municipal districts, towns and cities in Alberta to disclose the amount of carbon tax paid out for the heating and electrifying of municipal assets and fuel for fleet vehicles.

With these funds, Alberta municipalities could have hired 7,789 high school students at $15 per hour last year with the amount paid to Ottawa.

The cost on municipalities includes:

Lloydminster: $422,248

Calgary: $1,230,300 (estimate)

Medicine Hat: $876,237

Lethbridge: $1,398,000 (estimate)

Grande Prairie: $757,562

Crowsnest Pass: $71,100

Red Deer: $1,495,945

Bonnyville: $19,484

Hinton: $66,829

Several municipalities also noted substantial indirect costs from the carbon tax, including higher rates from vendors that serve the municipality – like gravel truck drivers and road repair providers – passing increased fuel prices onto local governments.

The rising price for materials and goods like traffic lights, steel, lumber and cement, due to higher transportation costs are also hitting the bottom line for local governments.

The City of Grande Prairie paid out $89 million in goods and services in 2023, and the indirect costs of the carbon tax have had an inflationary impact on those expenses” in addition to the direct costs of the tax.

In her press conference announcing Alberta’s challenge to the federal carbon tax on Oct. 29, 2024, Premier Danielle Smith addressed the pressures the carbon tax places on municipal bottom lines.

In 2023 alone, the City of Calgary could have hired an additional 112 police officers or firefighters for the amount they sent to Ottawa for the carbon tax,” she said.

In a statement issued on Oct. 7, 2024, Ontario Conservative MP Ryan Williams, shadow minister for international trade, said this issue is nationwide.

In Belleville, Ontario, the impact of the carbon tax is particularly notable. The city faces an extra $410,000 annually in costs – a burden that directly translates to an increase of 0.37 per cent on residents’ property tax bills.”

There is no rebate yet provided on retail carbon pricing for towns, cities and counties.

In October, the council in Belleville passed a motion asking the federal government to return in full all carbon taxes paid by municipalities in Canada.

The unaltered reproduction of this content is free of charge with attribution to the Canadian Energy Centre.

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Canadian Energy Centre

Ignoring the global picture and making Canadians poorer: Energy and economic leaders on Ottawa’s oil and gas emissions cap

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From the Canadian Energy Centre

By Deborah Jaremko

The federal government’s draft rules to cap emissions – and by credible analysis, production – from Canada’s oil and gas sector will make Canadians poorer, won’t reduce world emissions, and are a “slap in the face” to Indigenous communities.

That’s the view of several leaders in energy and the economy calling out the negative consequences of Ottawa’s new regulations, which were announced on November 4.

Here’s a selection of what they have to say.

Goldy Hyder, CEO, Business Council of Canada

“At a time when Canada’s economy is stalling, imposing an oil and gas emissions cap will only make Canadians poorer. Strong climate action requires a strong economy. This cap will leave us with neither.”

Deborah Yedlin, CEO, Calgary Chamber of Commerce

“Canada would stand as the only country in the world to move forward with a self-imposed emissions cap.

“Given that our economic growth numbers have been underwhelming–and our per-person productivity lags that of the United States by $20,000, one would expect the government to be more focused on supporting sectors that are critical to economic growth rather than passing legislation that will compromise investment and hamper our growth prospects.

“…If the Canadian government wants to reduce emissions, it should follow the private sector’s lead – and strong track record – and withdraw the emissions cap.”

Stephen Buffalo, CEO, Indian Resources Council of Canada

“Over the past four decades, Canadian governments urged and promoted Indigenous peoples to engage in the natural resource economy. We were anxious to break our dependence on government and, even more, to exercise our treaty and Indigenous rights to build our own economies. We jumped in with far more enthusiasm and commitment than most Canadians appreciate.

“And now, in a bid to make Canada look ecologically virtuous on the world stage, the Liberal government imposed further restrictions on the oil and gas sector. This is happening as Indigenous engagement, employment and equity investment are growing and at a time when our communities have had their first taste of real and sustainable prosperity since the newcomers killed off all the buffalo. Thanks for nothing.”

Trevor Tombe, professor of economics, University of Calgary School of Public Policy

“[The emissions cap] is a wedge issue that’s going to be especially popular in Quebec. And I don’t think the [federal government’s] thinking goes much further than that.”

Kendall Dilling, president, Pathways Alliance

A decrease in Canadian production has no impact on global demand – meaning another country’s oil will simply fill the void and the intended impact of the emissions cap is negated at a global level.

“An emissions cap gives industry less – not more – of the certainty needed to make long-term investments that create jobs, economic growth and tax revenues for all levels of government. It simply makes Canada less competitive.”

Michael Belenkie, CEO, Advantage Energy

“Canada’s emissions profile is not unusual. What’s unusual about Canada and our emissions is we seem to be the only exporting nation of the world that is willing to self-immolate. All we’re doing is we’re shutting ourselves down at our own expense and watching global emissions increase.”

Kevin Krausert, CEO and co-founder, Avatar Innovations

“The emissions cap risks delaying – if not derailing – a whole suite of emissions-reduction technology projects. The reason is simple: it has added yet another layer of uncertainty and complexity on already skinny investment decisions by weakening the most effective mechanism Canada has in place.

“…After nearly 15 years of experimenting in a complicated regulatory system, we’ve finally landed on one of the most globally effective and fungible carbon markets in the world in Alberta, called TIER.

“What the federal emissions cap has done is introduce uncertainty about the future of TIER. That’s because the cap has its own newly created cap-and-trade system. It takes TIER’s 15 years of experience and market knowledge and either duplicates functioning markets or creates a whole new market that may take another 15 years to get right.”

Dennis Darby, CEO, Canadian Manufacturers & Exporters

“The federal government’s announcement of a cap and trade on oil and gas emissions threatens Canada’s energy trade, economic interests, and national unity.

Adam Legge, president, Business Council of Alberta

“The oil and gas emissions cap is a discriminatory and divisive policy proposal—the epitome of bad public policy. It will likely cap Canadian prosperity—billions of dollars and tens of thousands of jobs lost for no benefit, and the burden will be borne largely in one region and one sector.”

Lisa Baiton, CEO, Canadian Association of Petroleum Producers

“The result would be lower production, lower exports, fewer jobs, lower GDP and lower revenues to governments to fund critical infrastructure and social programs on which Canadians rely.”

Statement, Canadian Association of Energy Contractors

“The Trudeau government does not care about Canadian blue-collar, middle-class energy workers who rely on the industry to support their families. It does not care about small, medium and Indigenous energy service businesses that operate in rural and remote communities across Western Canada. And it certainly does not care about supporting our allies who are desperate for oil and gas from sources other than regimes such as Russia or Iran.”

Peter Tertzakian, executive director, ARC Energy Research Institute

“Focusing on a single sector while ignoring others is problematic because each tonne of emissions has the same impact on climate change, regardless of its source. It makes little sense to impose potentially higher economic burdens on one economic sector when you could reduce emissions elsewhere at a lower cost.”

Shannon Joseph, chair, Energy for a Secure Future

“Canada continues to pursue its climate policy in a vacuum, ignoring the big picture of global emissions. This places at risk our international interests, tens of thousands of good paying jobs and important progress on reconciliation.”

Adam Sweet, director for Western Canada, Clean Prosperity

“Layering on a new cap-and-trade system for oil and gas producers adds uncertainty and regulatory complexity that risks undermining investment in emissions reductions just as we’re getting close to landing significant new decarbonization projects here in Alberta.”

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