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'We could get lapped here by the Americans': Enbridge exec urges Ottawa to respond to U.S. climate package

·3 min read
FILE PHOTO: FILE PHOTO: Pipelines run to Enbridge Inc.'s crude oil storage tanks at their tank farm in Cushing
FILE PHOTO: FILE PHOTO: Pipelines run to Enbridge Inc.'s crude oil storage tanks at their tank farm in Cushing

The clock is ticking on Canada’s climate targets and the federal government will have to come up with an answer to the Biden administration’s recent climate package or risk falling behind in the clean energy boom, according to one of leaders of North America’s largest pipeline company.

“We could get lapped here by the Americans,” Colin Gruending, an executive vice-president at Enbridge Inc., said at the Energy Disruptors conference in Calgary this week. “Let’s get started. Otherwise we’ll have not much done by 2030.”

During a wide-ranging panel discussion on Canada’s energy future, Gruending praised the incentives built into the US$369-billion Inflation Reduction Act (IRA), which some say could pave the way for an explosion in renewables and clean energy infrastructure south of the border over the next decade.

Calgary-based Enbridge’s pipeline business dwarfs what it’s doing in renewables. Still, Enbridge is so big that its green operations still rank among the largest in Canada, so its views carry weight in Ottawa and elsewhere. Enbridge has said previously that it will invest increasing proportions of its capital in natural gas and renewable energy projects as part of its approach to the energy transition.

Canada was strong out of the gate with its implementation of carbon pricing and an investment tax credit for carbon, capture, utilization and storage (CCUS), Gruending said. However, Prime Minister Justin Trudeau’s government must respond to the IRA or risk losing investment that could help Canada meet its own climate goals. Gruending suggested the federal government should look at ways to remove uncertainty over future carbon prices through instruments such as contracts that would allow companies to hedge agains the risk of future price changes, or power purchase agreements that could assure a fixed carbon price over a given period of time.

Gruending is part of a growing chorus that has been urging the Trudeau government to respond to the IRA. In a recent Financial Post op-ed, former industry minister Navdeep Bains, currently vice-chair of global investment banking at Canadian Imperial Bank of Commerce, wrote that the speed and scale of President Joe Biden’s clean energy package could lead to discomfort in Canada. “Capital is fluid and it will flow to the U.S. if the investment opportunities are there, and with these measures they will be there in abundance,” he wrote.

Canadian energy companies are also waiting for Ottawa to roll out an investment tax credit for the adoption of clean technology, including net-zero technologies, battery storage solutions and clean hydrogen — something that the Liberal government promised in the April budget but has yet to deliver.

Gruending and Tourmaline Oil Corp. CEO Mike Rose both rebutted Trudeau’s recent skeptical remarks about the business case for exporting liquified natural gas to Europe.

Last month, while hosting a visit from German Chancellor Olaf Scholz, Trudeau appeared cool to the idea that Russia’s invasion of Ukraine had revived the case for previously dormant gas projects on Canada’s East Coast.

The prime minister’s words weren’t welcome in the oilpatch, where leaders had hoped to hear that Ottawa would be willing to expedite approvals for natural gas export projects.

Natural gas, “is the fastest growing energy segment,” Rose said at the conference on Sept. 20. “And it will be supplied by a jurisdiction with much higher emissions than we have. If we don’t supply it, it’s actually, on a net-net basis, worse for the global atmosphere.”

Rose added: “There’s an outstanding business case. Full stop.”

Gruending argued that Canadian natural gas, with its lower emissions intensity, is in significant demand and should be exported to displace the use of coal in other jurisdictions.

“Perfection is probably unrealistic,”Gruending said. “It’s a relative game of incremental wins: LNG beats coal, and Canada LNG beats other LNGs. It’s that simple.”

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