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Q1 Newsletter: March 31, 2024

A WORD FROM THE PRESIDENT

Energy Transition – what does it mean to you?

Jacob Irving, President Energy Council of Canada

It’s impossible to read any news about the energy sector without encountering the term “transition”. The word is becoming one that is widely used, generally accepted, but with a range of interpretations. I mentioned once before (see Newsletter Vol.2 No.2) that I prefer the term “evolution” to describe the changes in the energy sector. But “transition” is ubiquitous, so I think that’s a battle lost. That’s not to say that everyone agrees on what it implies.

The International Energy Agency frames the issue by setting out pillars for action to create credible pathways keep the rise in global temperatures above pre-industrial levels to no more than 1.5 degrees celsius. The necessary changes affecting the energy sector are described as “decarbonizing electricity, accelerating energy efficiency, and electrification (of the economy)”.

In contrast, the Generation Energy Council Report to the federal government of Canada set out four “pathways to the energy transition”. There is some alignment with the IEA vision, both include increased energy efficiency, but that is all. Canada’s other pathways are: clean power, renewable fuels, as well as cleaner oil and gas. It’s not surprising that the report does not reflect the IEA’s emphasis on decarbonizing electricity. In a country with an electricity industry that is already 84% emission-free, the conversion of the last 16%, while still important, is less of a priority.

S&P Global, the financial information and analytics firm, describes the energy transition this way:

Energy transition refers to the global energy sector’s shift from fossil-based systems of energy production and consumption — including oil, natural gas and coal — to renewable energy sources like wind and solar, as well as lithium-ion batteries.

Energy transition, it would appear, means different things to different people. Sometimes they are profoundly different. S&P Global says it involves movement away from fossil fuels, whereas Canada’s Generation Energy Council includes cleaner fossil fuels as part of the transition. The common thread among the various definitions is that the way in which we produce and use energy currently is unsustainable due to the volume of greenhouse gas emissions that are emitted.

However the transition is to be accomplished, the common objective is to reduce emissions such that the rise in global temperatures is halted. There are two broad pathways to transition – use energy differently or use different energy, or both. The scale of the challenge, in whatever way you wish to define it, is enormous. In addition, how do we maintain the affordability, security, and reliability of the current energy systems while meeting transition objectives? It is a question that is often overlooked in the public discussion of re-vamping energy systems, but which is critical for energy customers

This year the Energy Council of Canada will explore in depth the nature of the energy transition in Canada. Our end-of-year publication, Canada’s Energy Story, will be devoted to the theme of energy transition. We invite energy sector participants and industry associations to contribute stories on their responses to the demands of the energy transition. Look for a formal request for contributions in the next few weeks.

CANADA ENERGY UPDATE 2024

Canada energy update 2024 Draws energy Leaders To Ottawa's NAC

On Wednesday, 31 January 2024 the Energy Council of Canada held its third annual Canada Energy Update. The event offers the opportunity for people in industry and government, as well as the general public to hear from leaders in the energy sector. Speakers were invited to share their assessment of 2023 and what their priorities are for 2024. The event, held at the National Arts Centre in Ottawa, drew participants from industry associations, academia, and multi-national companies with strong connections to the sector. The President & CEO of the ECC’s comparable organization in the US, the United States Energy Association, provided a sector outlook from his vantage point. In all, twelve speakers shared their thoughts over the course of the afternoon.

The conference featured a hybrid format. In person attendees joined with an online audience watching a livestream of the event. We estimate that over 350 persons followed the discussions.

The Energy Council received substantial support from our event sponsors. Toyota Canada participated as a Gold sponsor. Siemens Energy Canada and Electricity Canada were Silver sponsors. And 360Energy and the First Nations Power Authority provided support at the Bronze level.

To view a video of the entire event, click on the button below.

GUEST COLUMN

Ms. Shelley Babin, President & Chief Executive Officer, Atura Power

Building Ontario's Clean Hydrogen Economy

Our economy is driven by fossil fuels.

Fossil fuels power the factories that manufacture the products we use in our daily lives. They fuel the vehicles that move us from place to place. In many instances, those fossil fuels create electricity to power our homes, businesses and our economy.

But as much as fossil fuels are the energy-drivers, we are on the cusp of a significant transition. Emissions from the burning of fossil fuels contribute to climate change. We are at a point where nations like Canada are making commitments to decarbonize, with a target to reach net-zero emissions by 2050.

That means we have only 15 years to aggressively undo the energy system that has been in place for more than two centuries and replace it with one that is more reliant on clean sources of energy. We have a good foundation with nuclear and hydro power. But it will be necessary to expand our sources of low-carbon energy.

Low Carbon Energy

Key to that effort is low-carbon hydrogen.

“There are many moving pieces that have to fall into place for Canada to achieve its objective of a net-zero future, and low-carbon hydrogen is an important one,” says Kelly Grieves, Vice President of Hydrogen Business, Stakeholder and Indigenous Relations at Atura Power. “Nearly two-thirds of the greenhouse gas emissions that impact climate change come from two sectors — transportation and industry. Both are critically important economically and socially, so we are challenged to significantly reduce their carbon impact. Clean hydrogen is one of the answers.”

Hydrogen is the most abundant substance on the planet. Invisible, odourless, and tasteless, its only by-product when used as a fuel source in a fuel cell application is water vapour. However, while hydrogen is a critical tool in the effort to mitigate the effects of climate change, not just any hydrogen will do. Some processes of hydrogen production are carbon intensive – potentially as harmful as burning diesel fuel or propane.

Green Hydrogen

But the production of green – or clean – hydrogen is far less carbon intensive than incumbent production pathways, with the opportunity to approach nearly zero emissions. This hydrogen production uses renewable sources of electricity, such as wind, solar or hydroelectric power, to drive electrolysis of water — which is the use of electrolyzer technologies to split water into hydrogen and oxygen. The hydrogen gas created from this process is very versatile and can be stored as a compressed gas or liquefied and transported.

Clean hydrogen will reduce or offset emissions in a variety of applications, including as a low-carbon fuel substitute in high-emitting industrial processes, for blending with natural gas to reduce its carbon impact and powering fuel cells in vehicles which could replace diesel engines in the heavy-duty and long-haul trucking industry.

However, to date, clean hydrogen only accounts for about 0.5 per cent of the worldwide hydrogen production, but that is about to change.

Atura & Ontario’s Hydrogen Strategy

As part of the effort to help it meet the net zero 2050 objective, Ontario developed a low-carbon hydrogen strategy to substantially increase the production of clean hydrogen in the province and support getting it to market to ensure it meets its emissions-reduction potential.

Atura Power, a subsidiary of Ontario Power Generation, was designated by the province to pilot the development of clean hydrogen facilities and implement a low-cost, low-carbon hydrogen program. The flagship project in that effort is the Niagara Hydrogen Centre (NHC) in development.

“Ontario is building a hydrogen economy, and Atura Power is ready to play a key role in helping establish a safe, consistent and reliable supply of this low-carbon fuel,” says Shelley Babin, President and Chief Executive Officer of Atura Power. “Clean hydrogen will put heavy-emitting industries and the transportation sector on a clear transition path to lower carbon fuels. We look forward to working with our partners and industry leaders to help advance this clean technology, bringing the Niagara region to the forefront of the clean energy and hydrogen economy.”

Niagara Hydrogen Centre

Currently under construction with expected operation in 2025, the NHC will be Ontario’s largest green hydrogen production facility. Powered by unutilized, renewable hydroelectricity from the nearby Sir Adam Beck II generating station along the Niagara River, the facility will use electrolysis technology to split water into hydrogen and oxygen molecules. The 20-megawatt (MW) electrolyzer will be able to produce up to 2,000 tonnes of clean hydrogen each year — equal to removing more than 5,500 cars from the road annually.

The Niagara hydrogen facility will have municipal water and sewage connections as well as dedicated on-site water purification and process utilities to ensure the safe production, compression and loading of hydrogen into mobile tube trailers, with a once-through traffic design to ease the flow of traffic in and out of the site.

Green hydroelectric power from Sir Adam Beck II will be provided to the centre via a dedicated 3.5 km, 27.6-kilovolt (kV) electricity distribution line, with a tie-in to the existing 230 kV high-voltage connection between the generating station and Hydro One’s high-voltage switchyard to provide sufficient energy to power the facility. This electrical substation will include all necessary high-voltage equipment, including protection and control systems, to support the safe and long-term operation of the centre and Ontario’s electrical grid.

Hydrogen & Natural Gas Blending

Hydrogen produced at the NHC will be part of a pioneering pilot project by Atura Power at its Halton Hills Generating Station (HHGS) to blend clean hydrogen with natural gas in electricity production, reducing the carbon emissions from gas-fired power generation.

This project — with a $4.2-million contribution from Ontario’s Hydrogen Innovation Fund — will blend up to 15 per cent hydrogen with natural gas to feed two combined cycle gas turbines to explore impacts on operations, equipment functionality, turbine responsiveness and potential impacts to market participation.

Other Opportunities

Beyond the NHC and the industrial blending at HHGS, Atura Power is investigating a number of other opportunities that promote the advancement of the clean hydrogen economy in Ontario, including a Memorandum of Understanding with the Hamilton-Oshawa Port Authority (HOPA) — the largest ports operator on the Great Lakes — to support decarbonization of both the port’s operations and that of its customers. With facilities in Hamilton, Oshawa and Niagara, HOPA has the potential to store and distribute hydrogen, or hydrogen derivatives (ammonia, methanol, etc.), for industrial and transportation use.

A feasibility study is underway in the Windsor area with Atura Power and Plains All American exploring the possibility of a low-carbon hydrogen subsurface storage facility in conjunction with Atura Power designing, constructing and operating a 20 MW electrolyzer adjacent to its Brighton Beach Generating Station (BBGS), and Plains providing subsurface hydrogen storage service at its nearby Windsor salt-cavern product storage facility. Underground storage provides a significant opportunity to leverage hydrogen as an energy storage alternative with the scope and scale of this study representing the equivalent of a 25 GWh battery through storage of approximately 600,000 kilograms of hydrogen.

“Investigating sub-surface hydrogen storage at scale in Ontario is a crucial step to realizing hydrogen’s full net zero potential,” says Ms. Babin. “Hydrogen can be produced during off-peak times, daily or seasonal, and stored as a long-term energy source. That stored hydrogen can be used to decarbonize the Ontario economy in applications such as high-emitting industries, heavy-duty trucking and for long-term/seasonal storage of energy for the electricity grid.”

Atura Power also signed a Memorandum of Understanding with Imperial Oil to explore the possibility of clean hydrogen production in excess of five million kilograms per year in Nanticoke on the north shore of Lake Erie. With the electrolysis process likely to be powered by Ontario’s low-carbon electricity grid, and using the existing electricity infrastructure at the site of a former coal-burning power plant, a hydrogen facility would support reducing greenhouse gas emissions in the area’s surrounding industrial sector.

Hydrogen – A Multi-purpose Resource

Each of these projects is setting a foundation for a future clean hydrogen economy in Ontario. The transition to decarbonization will not be a simple process and must be done carefully to ensure we don’t cripple critical economic drivers. Clean hydrogen will be crucial in this regard as:

  • An alternative to power vehicles, particularly in heavy trucking and public transportation
  • A substitute for fossil fuels in high-emitting industries
  • Blended with natural gas to reduce the carbon emissions from electricity generation, and
  • As a carrier to deliver and store energy.

 

“Hydrogen with a very low carbon footprint provides the opportunity to displace other heavy emitting fuels or higher carbon intensity hydrogen sources,” says Ms. Grieves. “As the world moves toward net zero, hydrogen will be a critical tool in the fight against climate change.”

PROFILE - Harshivam Bawa

How growing up without reliable power in India helped shape

Harshivam Bawa’s passion for responsible Canadian energy

Bawa is the new chair of the Ottawa-based Young Energy Professionals Network

Harshivam Bawa learned about the importance of reliable, affordable energy at an early age while growing up in Punjab, a province in northern India where the temperatures in the summer months average in the mid-30s Celsius and can reach as high as 48C.

“We lived in an urban area that would regularly have unscheduled power cuts for 12 hours, 24 hours and sometimes even longer, due to the lack of reliability in the electric grid,” says Bawa, who moved to Canada in 2018.

“If your house didn’t have a diesel generator to keep the air conditioner running, you struggled to keep yourself cool during these brownouts and blackouts because it was very hot and extremely humid. You suffered.”

That sweltering experience shaped Bawa, who was recently appointed chair of the Ottawa-based Young Energy Professionals Network, a group of under-35s across the country who want to secure Canada’s future as a responsible energy developer …

ECC Q1 2024 ACTIVITIES

ECC President Gives Closing Address at USEA State of the Energy Industry Conference in Washington

In late January, Mark Menezes, President and CEO of the United States Energy Association invited ECC President Jacob Irving to give the closing address at the USEA’s State of the Energy Industry conference in Washington. Mr. Menezes subsequently spoke at the Canadian Energy Update in Ottawa.

Mr. Irving reviewed the close ties between Canada and the US, especially in the energy sector. He noted that our trading relationship in general and our close connections in the energy sector have served both our countries well.

ECC President Publishes Op Ed in The Hill Times - 28 February 2024

In late December The Hill Times newspaper published an article written by ECC President Jacob Irving. Following the close of the Conference of the Parties (COP 28) in Dubai. Mr. Irving offered his views on the decision to invite the oil and gas industry to the conference and highlighted how the industry has unique capabilities to help in the fight to reduce GHG emissions.

IN THE NEWS IN Q1 2024

Canadian Association of Petroleum Producers Forecasts a Marginal Increase in 2024 Capital Spending

In late February the Canadian Association of Petroleum Producers released its prediction for capital expenditures in the industry. The Association anticipates just over a 1% increase over 2023 spending (in nominal terms). Energynow.ca

Evidence That Alberta's Transition Away from Coal-fired Electricity Generation is Picking Up Speed

In early February, and then again in early March, the province of Alberta enjoyed periods of time in which no electricity was generated from coal for the first time in decades. The province has committed to eliminating coal-fired generation by 2030. These events suggest Alberta’s 2030 target is realistic. CBC

TC Energy Agrees to Sell Prince Rupert Gas Transmission Entities to Nisga'a Nation and Western LNG

TC Energy Corporation (TSX, NYSE: TRP) (TC Energy or the Company) announced on 14 March that it has entered into a binding letter agreement with Nisga’a Nation and Western LNG (the Buyers) regarding the purchase and sale of all outstanding shares in Prince Rupert Gas Transmission Holdings Ltd. and the limited partnership interests in Prince Rupert Gas Transmission Limited Partnership (collectively, PRGT). The transaction supports three of TC Energy’s strategic objectives, to: keep capital expenditures within their target range, maximize the value of its assets, and strengthen its balance sheet. – TC Energy Press Release

Energy Minister Wilkinson Sees Opportunity for Canadian LNG in Light of US Action

The Minister of Energy and Natural Resources Canada, Jonathon Wilkinson, has suggested that the US pause in LNG licensing might open opportunities for Canadian exports. He noted that the purpose of the US action was to allow for the development of regulations to stimulate low-emission production of LNG. The Minister pointed out that Canada has already put in place measures to meet that objective – BNN Bloomberg

Trans Mountain Pipeline Begins Filling in Preparation for First Delivery

The Trans Mountain Pipeline, which has been almost 12 years in the making, is nearing completion. Sections of the line are currently being filled. Industry and government officials foresee first deliveries through the system in the first half of 2024. As the project nears its final stage, it has raised many questions about its significance. The line has faced financing challenges, Indigenous relations issues, and environmental hurdles, to name only a few. Trans Mountain has caused many people in industry to reflect on how infrastructure can be developed in Canada in the future and what the line will mean for Canadian oil production, the environment, Indigenous communities, and the Canadian economy. – CBC