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Flat copper, EV glut, imploding wind power equal green crash


4 minute read

From the Frontier Centre for Public Policy

By Ian Madsen

Large fissures are appearing in the ‘Green Transition’ story climate crusaders tell themselves.  They are trying to foist it on a reluctant public and skeptical business world. One recent such crack is the carve-out on carbon taxes for heating oil in the politically-fickle Atlantic provinces.  Provincial premiers are trying to get the same treatment for other fossil fuel heating fuels.

Yet, politicians who still hew to the Climate Crisis orthodoxy remain unrepentant.  Montreal’s city council has announced that all new buildings of three stories or less will not be permitted to use natural gas heating. Taller buildings would face the ban later.  Several cities and states in the United States are also trying to restrict natural gas use.  Their efforts seem desperate.

A recent U.K. study concluded that heat pumps are much more expensive than employing natural gas (also true in Canada), and resistance heating is even worse.  Due to the study and public pushback, the planned U.K. heat pump mandate was cancelled – and ‘Net Zero’ postponed beyond 2035.

Extreme policy adopted by voting-block-pandering politicos notwithstanding, other constituents of the artificially-sustained Green Transition show signs of weakness.  For some, notably wind power, outright impending collapse looms.

Wind turbine companies’ share prices have slumped.  The main reason is that wind power contracts are being cancelled in many places.  A large project off the New Jersey coast is the latest example.  Component and material costs are the main culprits. They caused wind developers to raise requested electricity prices to unaffordable levels, and higher interest rates made capital costs rocket skyward. Recent revelations about the high costs of recycling wind turbine blades have soured governments and the public on this dubious ‘alternative energy’.

Electric vehicles, ‘EV’s’, are another darling of the climate lobby.  There is now a large accumulation of unsold EV’s on dealer lots, not just in North America but in China.  It takes a very large ‘rebate’ to get anyone to consider buying one – an indication of fundamental unpopularity.

It takes many minutes to recharge the battery pack at a ‘supercharge’ station; or, sometimes, hours at a regular charging station.  The former is expensive, the latter is an unacceptable time and opportunity cost for owners.  The bigger issue is a woeful lack of chargers for highway driving yet over reaching politicians are pushing a fantasy ban on gasoline  vehicles by 2035.  Forget that, it won’t be happening.

However, the best indication that the Green fever dreams of excitable politicians and disingenuous so-called Climate activists are becoming a nightmare is the price of copper.  Slow expansion of copper production and the increasing demand for it in Green Transition technologies such as EV’s, wind turbines, and solar panels and for all the grid connections and upgrades that they entail should force the copper price to soar.  Yet, it is just about where it was three years ago.

Mining companies are reluctant to buy or develop new copper deposits, or expand existing operations, with no visibility for a substantially higher copper price.  Costs have risen, too, and particularly for fuel and financing, making future positive returns look implausible.

Energy consumers, households and businesses, are rejecting the hysterical climate extremism that attempts to compel the use of uneconomic and unreliable energy forms and technologies, and the rejection of proven, affordable ones. Politicians should listen, and change.

Ian Madsen is the Senior Policy Analyst at the Frontier Centre for Public Policy

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Indigenous Loan Program Could Pave the Way for More Natural Resource Economy Ownership

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By Resource Works

“We want to be part of the oil and gas industry”

Ottawa has promised a loan program for Indigenous communities to buy equity stakes in natural resource projects, but many questions are still unanswered.

Ottawa is currently under scrutiny as it prepares to incorporate an Indigenous loan-guarantee program into its 2024-2025 budget, aimed at assisting Indigenous communities in acquiring equity stakes in natural resource projects. This commitment was made in Finance Minister Chrystia Freeland’s fall economic statement on November 21.

The government will advance development of an Indigenous Loan Guarantee Program to help facilitate Indigenous equity ownership in major projects in the natural resource sector. Next steps will be announced in Budget 2024.

The federal budget is typically presented to Parliament in either February or March, with the 2023-2024 budget having been announced on March 28 last year. While Ottawa has engaged in consultations with Indigenous leaders and organizations, there remains a notable lack of specific details, including a critical issue – whether the program will permit investment in oil and gas projects.

The First Nations Major Projects Coalition, boasting over 145 members, strongly advocates for Indigenous peoples to have the autonomy to determine their investment choices without constraints imposed by Ottawa. Although the government did assert its commitment to ensuring Indigenous communities benefit from major projects within their territories on their own terms, First Nations groups worry that the loan-guarantee program might mirror the green restrictions of the current Indigenous loan program provided by the Canada Infrastructure Bank.

This existing program allows equity stakes only in infrastructure projects aligned with the bank’s investments, such as clean power, green infrastructure, broadband technology, and transportation. For some time, the First Nations Major Projects Coalition (FNMPC) and the Indigenous Resource Network have been at the forefront of campaigns urging federal loan guarantees to facilitate Indigenous participation in natural resource projects.

Sharleen Gale, Chair of FNMPC, argues that fossil fuel investments must be a component of any federal loan-guarantee program, as equity in the oil and gas industry can empower First Nations to thrive in alignment with their values.

“We want to be part of the oil and gas industry,” says Gale.

In 2022, the Indigenous Resource Network (IRN) initiated the “Ownership Changes Everything” campaign, advocating for Indigenous ownership in resource projects. This campaign calls upon Ottawa to implement a loan program modeled after similar initiatives in Alberta, Saskatchewan, and Ontario. Robert Merasty, highlights the challenges faced by Indigenous communities due to the Indian Act, which prohibits First Nations from using their land and assets as collateral. Consequently, they lack the necessary at-risk capital to secure favorable interest rates.

“The problems our communities are facing is that there are few mechanisms to access the necessary capital for investing in projects and having equity,” says Merasty.

In 2023, FNMPC penned an open letter to Finance Minister Chrystia Freeland, emphasizing the significance of advancing major resource projects for a successful energy transition and economic growth benefiting all Canadians. They also pointed out that the Indian Act remains a significant hurdle, preventing First Nations from leveraging their assets and land for borrowing.

FNMPC estimates that over the next decade, 470 major projects impacting Indigenous lands will require more than $525 billion in capital investment, with approximately $50 billion needed for Indigenous equity financing. An illustrative case from Alberta involved energy giant Enbridge, which partnered with 23 First Nation and Métis communities to sell an 11.57% interest in seven pipelines in northern Alberta. This partnership was made possible through a loan guarantee from the Alberta Indigenous Opportunities Corp., which provides financing to Indigenous communities seeking commercial collaborations, alongside various other financial supports.

Greg Ebel, CEO of Enbridge, has joined the campaign for a national program.

“Investment in the entire energy sector and many others could be accelerated by the immediate implementation of a federal Indigenous loan-guarantee program to ensure Canada’s Indigenous Peoples have a seat at the table while also having equity that helps them secure a more prosperous future,” says Ebel.

As we await further developments, the question remains: Will a federal loan-guarantee program come to fruition, one that encompasses loan guarantees for investments in natural gas and oil? We are hopeful for a positive outcome.

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Canadian Energy Centre

Nine major insights from Shell’s latest global LNG outlook

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A worker at Shell’s Hazira LNG import terminal, about 250 kilometers from Mumbai, India. Photo courtesy Shell

From the Canadian Energy Centre

By Deborah Jaremko

Led by growing demand in China and the need for energy security, LNG is playing an increasingly important role in global gas supply

Global energy giant Shell has released its latest outlook for world liquefied natural gas (LNG) supply and demand through 2040. Here are nine key insights about what to expect in the future.

1. LNG is playing an increasingly important role in global gas supply. Total world LNG demand is set to continue growing beyond 2040.

2. Global LNG trade reached 404 million tonnes in 2023, an increase of 7 million tonnes compared to 2022. Over the last five years, LNG demand grew by 45 million tonnes, or 13 per cent.

3. In 2040, the world is expected to consume up to 685 million tonnes of LNG, an increase of nearly 70 per cent compared to 2023.

4. The United States became the world’s largest LNG exporter in 2023, shipping 86 million tonnes, followed by Australia, Qatar, Russia and Malaysia.

5. By 2030, North America will supply about 30 per cent of global LNG demand, led by natural gas from major basins including the Appalachia (Marcellus) play in the eastern United States and the Montney play in Alberta and British Columbia. But the global gas market is increasingly exposed to U.S. risks like the Biden administration’s pause on new LNG approvals.

6. China is likely to dominate LNG demand growth as the country’s industries seek to cut carbon emissions by switching from coal to gas. With China’s coal-based steel sector accounting for more emissions than the total emissions of the UK, Germany and Turkey combined, gas has an essential role to play in tackling one of the world’s biggest sources of carbon emissions and local air pollution. China’s gas demand is expected to rise by more than 50 per cent by 2040.

7. Natural gas, delivered as LNG, provides flexibility to balance intermittent solar and wind power generation. In countries with high levels of renewables in their power generation mix, gas provides short-term flexibility and long-term security of supply. Gas provides grid stability, enabling a higher share of renewables in power grids.

8. LNG continues to play a vital role in European energy security, with European nations importing more than 120 million tonnes in 2023, assisted by new regasification facilities. Europe will continue to rely on LNG to support its energy mix through 2030, even as total European natural gas demand is expected to decline by about 25 per cent.

9. South Asia and Southeast Asia are emerging as major LNG import regions, with Vietnam, and the Philippines starting to import LNG to backfill domestic gas declines. From less than 10 million tonnes in 2020, LNG imports to Thailand, Bangladesh, Vietnam and the Philippines are expected to rise to about 40 million tonnes in 2030 and more than 60 million tonnes in 2040. 

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