Susannah Pierce, Shell Canada’s Country Chair and GM Renewables & Energy solutions and Canada’s Minister of Natural Resources Jonathan Wilkinson spoke on February 16 during a virtual event presented by the Canadian Fuels Association & Empire Club of Canada.
The discussion offered a window into possible elements of the Canadian government’s much-delayed plan to achieve net-zero, to be released at the end of March.
The discussion began with a nod to comments in the IEA’s Canada 2022-Energy Policy Review that gave Canada praise for its ambitions and potential to be a leader in low carbon energy solutions. Wilkinson noted that although it has not always been the case that the IEA has praised Canadian energy, the report was appreciative.
“Canada has developed a plan that is focused very much on reducing emissions in line with what science tells us that we need to do but we’ve done it in a way that also thinks forward in terms of seizing some of the economic opportunities that will arise through that kind of transition,” said Wilkinson. “We were the first country to adopt a number of the recommendations of the IEA, including reducing methane emissions in the oil and gas sector by 75%.”
He stressed the need to plan and consider economic elements. He said he’s been working on “the just transition” in which he prefers to talk about sustainable jobs – jobs of the future and how to ensure that workers in communities are going to participate in the future economy successfully.
Susannah Pierce commented from a company perspective, that when an oil and gas company looks at Canada, it looks at what are some of the preconditions are. They need to be examined in reference to some of the lower carbon investments that the company considers because companies have pretty clear commitments to get to net-zero by 2050.
She noted Canada has some favourable key ingredients or preconditions. Ensuring what policy regulations are and ensuring that those policies and regulations can be predictable is key. There’s a level of certainty that is also very important, she said.
“We’re at this phase where we see it, and now it’s about how do we make sure that we can increase the amount of investor certainty so that when we make some of these big investments, we can see that the economic returns will be there,” said Pierce.
“Because like many companies, I’m sure we have choices and places to invest. But I would just say right out the gate, Canada from this perspective is looking good. That doesn’t though, make the challenge of getting to these climate commitments any easier.”
Pierce mentioned that it had been stated that Canada is on the way to getting to its climate commitment of 40 to 45% reductions. This was the enhanced Paris Agreement target to reduce emissions by 40-45% from 2005 levels by 2030 as per the Canadian Net-Zero Emissions Accountability Act, which became law on June 29, 2021.
It enshrined Canada’s commitment to achieving net-zero emissions by 2050 in legislation. The Act was to ensure transparency and accountability as the government works to deliver on its targets. Part of that transparency was the expectation that the Minister of Environment and Climate Change would establish the country’s 2030 Emissions Reduction Plan within three months – by September 2021. That timeline was missed and extended to the end of March 2022.
Wilkinson said the department is “in the throes of actually finishing” the plan, adding “we have taken enormous strides through the initial Pan-Canadian Framework, but there’s still some work to do.” He pointed out that Canada’s target for reductions is a bit lower than the American targets and a bit lower than European targets. But on closer examination of the costs associated with abatement in Canada – the costs are much higher.
” We have the great luxury of actually having a largely clean electricity grid,” said Wilkinson. “In the United States, where they depend significantly on coal-fired power, the costs of the transition are much lower. We are working every day to figure out how to squeeze megatons from every sector of the economy. A couple of the key areas are the oil and gas sector and the transportation sector, which collectively are about 51% of Canada’s emissions.”
Pierce pointed out that looking at the transportation sector, there is a debate with respect to how much of the sector that is currently based on petroleum fuels can change to electric power vehicles. She noted that in a lot of the critical climate scenarios, organizations like the Intergovernmental Panel on Climate Change (IPCC)as well as IEA suggest that electrification is really only half of the solution and that we still need to depend on lower-carbon fuels.
Wilkinson agreed noting people may see Teslas and other electric vehicles on the road and assume that the transportation pathway is going to be a complete conversion to electricity. He pointed out that in terms of transition, biofuels are a critical component. There are applications where electrification is probably not going to be the answer like marine and aviation fuels. In areas like heavy-duty trucking, hydrogen may be the solution.
Wilkinson hinted at a role for natural gas to play in hydrogen production in Canada when discussing the geographical differences of resource advantages countries have.
“Think about Germany or Japan. Neither has an abundance of electricity and we are going to be seeing increasing demand for electricity. Neither of them has their own source of natural gas to be able to produce hydrogen either,” said Wilkinson.
“Those areas are going to be areas where you’re going to be looking at different solutions than you may look at in Canada. We need to have multiple tools that we can actually use to achieve the emission reductions because that’s ultimately what we’re trying to do.”
Maureen McCall is an energy professional who writes on issues affecting the energy industry.