Why Canada needs to pick up its game if it wants to play in the green energy big leagues

Published May 09, 2023 Like many Canadians, I’ll be watching playoff hockey and cheering for whatever Canadian teams remain in the hunt for that elusive Stanley Cup – now exactly 30 years since we last won it. It’s frustrating to see that trophy consistently residing beyond Canada’s borders. We’re a hockey nation, after all, with advantages that should mean we dominate on the ice. We’re also a richly endowed energy nation – in terms of the fuels that make up most of today’s global energy mix, and the lower-carbon alternatives the world is increasingly turning to. Yet here too we’re at risk of being out-skated and seeing the prize go elsewhere. My team at Trigon Pacific Terminals — a bulk export terminal in Prince Rupert, B.C. — is spending millions to transform our facility to deliver Canada’s first purpose-built berth to export emerging low-carbon fuels to Asia and be ready for Canada’s low-carbon future. This will include hydrogen-as-ammonia — a critical element of our existing Asian partners’ strategies to diversify away from full reliance on fossil fuels. We’ve already put shovels in the ground on this terminal expansion, in part thanks to a $75-million award from the federal government’s National Trade Corridors Fund.

Aggressive U.S. subsidies

In order for us and others like us to succeed, however, we need to know there will be products to ship. We clearly have the natural resources, established supply chains, and importantly, proven expertise to make that happen. But we need to get serious by setting aggressive export targets, and creating a competitive investment climate (particularly in relation to the U.S.) to hit them. In today’s reality, that requires well-structured and appropriately scaled tax incentives, and permitting processes that can keep pace with market developments. In her budget in March, Finance Minister Chrystia Freeland likened the challenge to a “global race” for investment. And we are pleased to see the government taking some concrete steps to enable Canada to compete with the extremely aggressive subsidies provided by the Biden administration. In this playoff series, though, what’s on offer right now won’t be enough to fully close the gap with the United States. So, that’s at least one other team that’s out-hustling us on the ice. By my count, there are at least 14 ammonia production projects in the U.S. that are at the front-end engineering stage or later, with a total expected capital outlay of as much as US$25 billion so far. Eight of those are scheduled to be up and running by 2027. The latest announcement came just a few weeks ago when Norway’s Yara International ASA, a fertilizer maker, teamed up with Enbridge Inc. to invest roughly US$3 billion to build a plant in Texas. In Canada, there are nearly a dozen ammonia production projects at the early assessment phase but nothing beyond that. At the current pace, it’s unlikely any of these projects will even receive permits before many plants are fully operational south of the border. And with well advanced export strategies in the Middle East and Australia, the U.S. is far from our only competition.

Budget put down key planks

I don’t want to diminish what the federal government is bringing to the table — they have made necessary and important strides. The recent budget put down some key planks needed to leverage Canada’s potential for green-energy export leadership. Those include extending proposed direct tax credits for hydrogen projects to the production of ammonia, as well as providing more details around subsidies for carbon storage, a necessary technology when producing hydrogen from fossil fuels. The federal government also announced plans to move ahead with contracts for differences, which will lock in the benefit of carbon-pricing incentives, and once in place could be a big difference-maker to solidify our lead position in the global game. We are closer, no question. But not yet close enough. The question of permitting efficiency is equally critical. Proponents looking to invest in low-carbon energy production here face regulatory timelines measured in years, and uncertainties on fundamental questions, such as which of the multiple approval pathways they will need to follow. On this point specifically, the federal budget was disappointing, going no further than promising a “concrete plan” to improve the permitting and regulatory process but not until the end of this year. At the pace the world is skating that’s simply too long. Right now, those around us are the energy transformation stars and they’re already scoring goals, which is a must, given the urgency of the climate change challenge. And in a much less stable geopolitical climate, energy security has emerged as a further driver of an accelerating shift to different forms and sources of energy. Canada should be among the dominant teams in this new arena. We’re starting from behind, but it’s not without hope. As with hockey, we’ve got several teams in the playoffs. It’s time to get behind them as a country and to bolster their natural advantages in every way we can. Go Canada Go. Rob Booker is chief executive of Trigon Pacific Terminals Ltd. See original article here.
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