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Canadian Gas Association Writes a Letter to Prime Minister Justin Trudeau Highlighting the Importance of Natural Gas Energy Choice for Canadians

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From EnergyNow.ca

On January 29, 2024, the Canadian Gas Association (CGA) sent a letter to Prime Minister Justin Trudeau, emphasizing the significance of the natural gas energy option for Canadians, a need underscored by the recent severe weather conditions in Western Canada.

The letter reads as follows:

Canada’s energy delivery companies had their work cut out for them over the last few weeks, ensuring the country could get through a period of extreme cold temperatures. The polar vortex that locked in across the continent only underscored how important an energy system with many options is to our overall well-being. I thought I would expand on this point in my first letter to you in 2024.

The second week of January saw temperatures in parts of the country drop well into the minus 40s, with windchill in the minus 50s. This triggered alerts from various authorities to reduce electricity use. Around 4 pm in Alberta on January 12th wind and solar generation facilities were operating at only a few percentage points of their capacity. But power was desperately needed. Luckily, a combination of in-province and neighbouring jurisdiction power sources – like natural gas-powered plants – could help meet the power needs of the province.

It is worth drawing attention to the fact that the alerts were all about a single energy system – the electricity grid. While that grid was under strain due in part to low renewable energy generation availability, the natural gas delivery system (a separate system that delivers gas energy, not electrons) was delivering approximately 9 times the energy and operating without any alerts required.

The contribution of the gas system is really worth emphasizing.

Nationally, over an average year, electricity meets just over 20% of our energy needs.  Natural gas directly delivered to customers – residential, commercial and industrial – meets almost twice that amount, or just under 40% and liquid fuels like gasoline and diesel meet the balance.  But at certain times of the year, such as during the recent January freeze, the differential between what natural gas and electricity deliver grows dramatically.  At points earlier this month Alberta had use of roughly 12,000 megawatts of electric power and over 110,000 megawatts of gas energy equivalent.

And yet it was the electric system, not the natural gas system, that was threatened.

Media coverage during and after the freeze referenced how the electric system is threatened by extreme weather and needs to be built out to meet demand. But to suggest that the electric system could ever meet the energy delivered by natural gas over the gas delivery system is simply unrealistic. Do those who advocate for the electrification of all energy, especially peak heating needs, pretend that we have either the means, the resources, or the dollars, to build out an electric system that could meet roughly nine times the load of the gas system?  Do advocates of natural gas bans appreciate that banning natural gas power generation would leave us in situations of actual shortage – a terrifying spectacle in the event of minus 50 degree weather?

Again, the point here is to underscore the value proposition of natural gas and the infrastructure that delivers it: the reliability these provide is extraordinarily important. This value is particularly well demonstrated when severe weather – a Canadian reality – hits us.  We have to stop talking about eliminating the choice of energy options like natural gas, and relying exclusively on one energy delivery system, like electricity. Each delivery system has its own advantages, and natural gas is particularly well suited to meet heating needs. That should never be overlooked, as this month’s weather events reminded us.

Prime Minister, when it comes to energy – in supply options, and in delivery systems – diversity truly is our strength in Canada.  We must maintain natural gas as an option for reliability, for affordability, and for sustainability – all of which are essential for our country’s energy security and the wellbeing of the Canadian consumer.

Respectfully,

Timothy M. Egan
President and CEO, Canadian Gas Association
Chair, NGIF Capital Corporation

About CGA

The Canadian Gas Association (CGA) is the voice of Canada’s gaseous energy delivery industry, including natural gas, renewable natural gas (RNG) and hydrogen. CGA membership includes energy distribution and transmission companies, equipment manufacturers, and suppliers of goods and services to the industry. CGA’s utility members are Canadian-owned and active in eight provinces and one territory. The Canadian natural gas delivery industry meets 38 per cent of Canada’s energy needs through a network of almost 584,000 kilometers of underground infrastructure. The versatility and resiliency of this infrastructure allows it to deliver an ever-changing gas supply mix to 7.6 million customer locations representing approximately two-thirds of Canadians. CGA members ensure Canadians get the affordable, reliable, clean gaseous energy they want and need. CGA is also working to constantly improve that gaseous energy offering, by driving forward innovation through the Natural Gas Innovation Fund (NGIF).

SOURCE Canadian Gas Association

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Economy

Latest dire predictions about Carney’s emissions cap

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From the Fraser Institute

By Kenneth P. Green

According to a new report from the Parliamentary Budget Officer (PBO), the federal government’s proposed oil and gas emissions cap will curtail production, cost a not-so-small fortune and kill a lot of jobs. This news will surprise absolutely no one who’s been paying attention to Ottawa’s regulatory crusade against greenhouse gases over the past few years.

To be precise, according to the PBO’s report of March 2025, under the proposed cap, production for upstream industry oil and gas subsectors must be reduced by 4.9 per cent relative to their projected baseline levels out to 2030/32. Further, required reduction in upstream oil and gas sector production levels will lower GDP (inflation-adjusted) in Canada by an estimated 0.39 per cent in 2032 and reduce nominal GDP by $20.5 billion. And achieving the legal upper bound will reduce economy-wide employment in Canada by an estimated 40,300 jobs and fulltime equivalents by 54,400 in 2032.

The federal government is contesting the PBO’s estimates, with Jonathan Wilkinson, federal minister of Energy and Natural Resources of Canada, claiming that the “PBO wasted their time and taxpayer dollars by analyzing a made up scenario.” Of course, one might observe that using “made up scenarios” is what making forecasts of regulatory costs is all about. No one, including the government, has a crystal ball that can show the future.

But the PBO’s projected costs are only the latest analysis. 2024 report by Deloitte (and commissioned by the federal Treasury Board) found that the proposed “cap results in a significant decline in GDP in Alberta and the Rest of Canada.” The main impacts of the cap are lower oil and gas activity and output, reduced employment, reduce income, lower returns on investment and a higher price of oil.

Consequently, according to the report, by 2040 Alberta’s GDP will be lower by 4.5 per cent and Canada’s GDP will be lower by 1 per cent compared to a no-cap baseline. Cumulatively over the 2030 to 2040 timeline, Deloitte estimated that real GDP in Alberta will be $191 billion lower, and real GDP in the Rest of Canada will be $91 billion lower compared to the no-cap (business as usual) baseline (in 2017 dollars). Employment also took a hit in the Deloitte report, which found the level of employment in 2040 will be lower by 2 per cent in Alberta and 0.5 per cent in the Rest of Canada compared to a no-cap baseline. Alberta will lose an estimated 55,000 jobs on average (35,000 in the Rest of Canada) between 2030 and 2040 under the cap.

Another 2024 report by the Conference Board of Canada estimated that the “oil and gas productions cuts forecasted lead to a one-time, permanent decline in total Canadian real GDP of between 0.9 per cent (most likely outcome) to 1.6 per cent (least likely outcome) relative to the baseline in 2030. This is equivalent to a loss of $22.8 to $40.4 billion (in 2012 dollars)… In Alberta, real GDP would fall by between $16.3 and $28.5 billion—or by 3.8 per cent and 6.7 per cent, respectively.”

Finally, a report by S&P Global Commodity Insights (and commissioned by the Canadian Association of Petroleum Producers) estimated that a “production cut driven by a stringent 40% emission cap could cause $75 billion lower upstream spend and $247 billion lower GDP contribution (vs. a no cap reference case).”

All of these estimates, by respected economic analysis firms, raise serious questions about the government’s own 2024 Regulatory Impact Analysis, which suggested that the proposed regulations will only have incremental impacts on the economy—namely, $3.3 billion (plus administrative costs to industry and the government, estimated to be $219 million). According to the analysis, the “proposed Regulations are expected to result in a net decrease in labour expenditure in the oil and gas sector of about 1.6% relative to the baseline estimate of employment income over the 2030 to 2032 time frame.”

But according to the new PBO report, the costs of the government’s proposed cap on greenhouse gas emission from Canada’s oil and gas sector will be costly and destructive to the sector, it’s primary province (Alberta), and its employees in Alberta and across Canada. All this in the face of likely-resurgent U.S. oil and gas production.

Now that policymakers in Ottawa have seemingly recognized the unpopularity of the consumer carbon tax, a good next step would be to scrap the cap.

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Economy

Welcome to the Era of Energy Realism

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The Honest Broker Roger Pielke Jr.

Every year for the past 15 years, JP Morgan publishes an outstanding annual energy report by Michael Cembalest. Last week JP Morgan published its 2025 edition and today I share five important figures from the many in the report, which I highly recommend.

Cembalest’s top line:

[A]fter $9 trillion globally over the last decade spent on wind, solar, electric vehicles, energy storage, electrified heat and power grids, the renewable transition is still a linear one; the renewable share of final energy consumption is slowly advancing at 0.3%–0.6% per year.

You can see that in the figure below — my graph using data from the 2024 EI Statistical Review of World Energy — which shows the proportion of global energy consumption from all carbon-free sources. Since 2012, that proportion has increased from about 14% to a bit over 18%. Exactly as Cembaest observes — that increase has been linear. At that rate of change the world would hit 100% carbon-free sometime after 2200.

Let’s take a look at some of the figures I found most interesting in the JP Morgan Report.

Solar Reality Check

“. . . when you boil it all down, solar power accounts for ~2% of global final energy consumption, a figure we expect to reach 4.5% by 2027. Even if these solar trends continue into the 2030’s, human prosperity will be inextricably linked to affordable natural gas and other fossil fuels for many years.

Human prosperity, in places where it thrives, relies heavily on steel, cement, ammonia/fertilizer, plastics, glass, chemicals and other industrial products which are energy- intensive to produce. . . these products currently rely on fossil fuels for 80%-85% of their energy.

And remember, prosperity itself is energy-intensive: among the tightest relationships in economics is the connection between a country’s per capita GDP and its per capita energy consumption.”

I remain very bullish on solar, but it won’t displace much fossil fuels anytime soon.

Electrify Everything is Proceeding Slowly

“Remember this key aspect of the energy transition: until an energy use is electrified, it’s hard to decarbonize it using green grid electrons. And while grid decarbonization is continuing at a steady pace, the US has made little progress increasing the electricity share of final energy consumption for the reasons discussed in last year’s “Electravision” piece. One major obstacle: transmission line growth is stuck in a rut, way below DoE targets for 2030 and 2035. Another obstacle: shortages of transformer equipment, whose delivery times have extended from 4-6 weeks in 2019 to 2-3 years. . . “

The panel on the rgiht above indicates that the U.S. was never going to meet the emissions reduction targets of the Biden Administration — which has been clear for several years now.

“The US is not unique with respect to the slow pace of electrification, although a few countries are making faster progress. Over the last decade China made the largest advance, bringing it in line with the OECD.

Part of the challenge may simply be the long useful lives of existing industrial plants, furnaces, boilers and vehicles. In other words, electrification might accelerate as their useful lives are exhausted. But the high cost of electricity compared to natural gas (particularly in places without a carbon tax) is another impediment to electrification that is not easy to solve since this ratio reflects relative total costs of production and distribution.”

(In order to coerce users, a carbon tax is necessary)

Energy Dependence and Independence

“The US has achieved US energy independence for the first time in 40 years while Europe and China compete for global energy resources. China’s imports are similar to Europe in energy terms but half as much as a share of domestic energy consumption. Energy intensive manufacturing has shifted to the developing world since the mid 1990’s. China is negotiating with Russia and Turkmenistan regarding future gas pipeline projects. China has the benefit of time: China gas imports are projected to reach 250 bcm by 2030 vs 170 bcm in 2023, almost all of which can be met by already contracted supplies. What was Taiwan thinking by shutting down nuclear power which has fallen from 50% to 5% of generation? Taiwan is now one of the most energy dependent countries in the world, resulting in rising economic costs if China were to impose a blockade.”

The Trump administration’s trade war with Canada risks upending North America’s energy dominance. What can they be thinking?

Fossil Fuels Falling and Rising

“Fossil fuel shares of final energy are falling faster in China, Japan and Europe than in the US. Growth in fossil fuel consumption is slowing but no clear sign of a peak on a global basis. Hydraulically fractured oil and gas account for 60%+ of US primary energy consumption. Global LNG export capacity is set to expand by one third by 2030. Coal consumption is roughly flat in final energy terms as rising EM consumption offsets falling OECD consumption.”

US Secretary of Energy Chris Wright spoke at an energy conference in Houston, and his remarks have been transcribed by Robert Bryce. Here is an excerpt:

Let’s do a quick survey of energy access today. Roughly one billion people live lives remotely recognizable to us in this room. We wear fancy clothes, mostly made out of hydrocarbons. We travel in motorized transport. The extra lucky of us fly across the world to attend conferences. We heat our homes in winter, cool them in summer, store myriad foods in our freezers and refrigerators, and have light, communications and entertainment at the flip of a switch.

Pretty awesome.

This lifestyle requires an average of 13 barrels of oil per person per year. What about the other seven billion people? They want what we have. The other seven billion people, on average, consume only three barrels of oil per person per year versus our 13. Africans average less than one barrel.

We need more energy. Lots more energy. That much should be obvious.

Read Wright’s speech alongside Cembalest’s energy analysis — We are at long last in an era of energy realism.

The Honest Broker

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