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Canadian Energy Centre

European governments are reassessing EU-directed green policies amid public unease

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From the Canadian Energy Centre

By Shawn Logan

How ‘greenlash’ is forcing Europe to scale back ambitious net zero policies

European governments are beginning to sound the retreat on some foundational net zero policies in the wake of “greenlash” from increasingly overburdened citizens.  

Russia’s invasion of Ukraine in 2022 prompted European governments to begin pivoting away from cheap Russian natural gas, which Europe increasingly relied on to backstop a laundry list of ambitious green policies. 

But despite pledges by the European Union to “divest away from Russian gas as quickly as possible,” nearly 15% of overall EU gas imports still came from Russia in the first half of 2023, while the amount of liquefied natural gas (LNG) imported from Russia actually increased by 39.5% compared to the same period in 2021, prior to the Ukraine invasion. 

Energy security and affordability have become central issues for Europeans amid a persistent global energy crisis, and that’s translated into a rethink of what had once seemed like unassailable green policies across Europe. 

Here’s a look at how some countries are dealing with the new global reality: 

Germany 

Nothing is more symbolic of Europe’s retreat from its net zero ambitions than Germany seeing a wind farm dismantled to make room for the expansion of a lignite coal mine just outside of Dusseldorf. 

And no European country has been more affected by the changing energy landscape than Germany, which introduced its multi-billion dollar Energiewende program in 2010, calling for a broad phaseout of fossil fuels and nuclear power, replacing them primarily with wind and solar power. 

Today, without cheap and reliable natural gas backups due to sanctions against Russia, Germany has gone from Europe’s economic powerhouse to the world’s worst performing major developed economy, facing “deindustrialization” due to skyrocketing energy costs. 

In addition to extending its deadline for shutting down coal plants until 2024, the German government has also scrapped plans for imposing tougher building insulation standards to reduce emissions as well as extending the deadline on controversial legislation to phase out oil and gas heating systems in homes, a decision the government admits will make it impossible to reach the country’s 2030 emissions targets. 

A major car manufacturer, Germany’s opposition to an EU-wide ban on the sale of new combustion vehicles by 2035 softened the legislation to allow exceptions for those that run on e-fuels. 

Germany’s quest for reliable energy exports prompted Chancellor Olaf Scholz to travel to Canada to make a personal appeal for Canadian LNG. He was sent home empty handed, advised there wasn’t a strong business case for the resource. 

Great Britain 

Britons have grown increasingly concerned about the cost of net zero policies, despite being largely supportive of striving for a greener future. 

YouGov poll in August found while 71% generally favoured Great Britain’s aim to reduce carbon emissions to net zero by 2050, some 55% agreed that policies should only be introduced if they don’t impose any additional costs for citizens. Only 27% agreed reaching the goal was important enough to warrant more spending. 

That shift in public sentiment prompted Prime Minister Rishi Sunak to pump the brakes on some key policies enacted to reach the U.K.’s legally binding target of reaching net zero emissions by 2050. 

In September, the government delayed its looming ban on new gas- and diesel-powered cars by five years to 2035, while also extending its phaseout of gas boilers in homes and suggesting exemptions for certain households and types of property. 

“If we continue down this path, we risk losing the British people and the resulting backlash would not just be against specific policies, but against the wider mission itself,” Sunak said of the potential consequences of maintaining strict net zero policies. 

The U.K. government also gave the green light for hundreds of new North Sea oil and gas licences, citing the need to bolster both energy security and the nation’s economy.  

France 

France’s net zero ambitions enjoy an advantage compared to its European peers due in large part to its significant fleet of nuclear power stations, which provide around 70 per cent of its electricity. 

However, President Emmanuel Macron has often opted for a more pragmatic approach to reaching climate targets, noting any energy transition can’t leave citizens disadvantaged. 

“We want an ecology that is accessible and fair, an ecology that leaves no one without a solution,” Macron said in September after ruling out a total ban on gas boilers, instead offering incentives to those looking to replace them with heat pumps. 

Macron also famously dropped a proposed fuel tax in 2018 that sparked sweeping yellow vest protests across France when it was announced.  

France has also extended the timeframe of its two remaining coal plants to continue operating until 2027, five years later than the plants were originally set to be shuttered. 

Italy 

Feeling the impacts of the global energy crisis, Italy has begun reassessing some of its previous commitments to transition goals. 

Earlier this year, Italy pushed back on EU directives to improve the energy efficiency of buildings, which Italy’s national building association warned would cost some $400 billion euros over the next decade, with another $190 billion euros needed to ensure business properties met the required standards. The Italian government has called for exemptions and longer timelines. 

Italy also warned the European Commission it would only support the EU’s phase out of combustion engine cars if it allows cars running on biofuels to eclipse the deadline, while further questioning a push to slash industrial emissions 

Paolo Angelini, deputy governor at the Bank of Italy, warned a rapid abandonment of fossil fuel-driven industries could have a devastating impact. 

“If everybody divests from high-emitting sectors there will be a problem because if the economy does not adjust at the same time, things could blow up unless a miracle happens in terms of new technology,” he said. 

Poland 

Like Italy, Poland has dug in its heels against some EU net zero initiatives, and is actually suing the EU with the goal of overturning some of its climate-focused legislation in the courts. 

“Does the EU want to make authoritarian decisions about what kind of vehicles Poles will drive and to increase energy prices in Poland? The Polish Government will not allow Brussels to dictate,” wrote Polish Climate and Environment Minister Anna Moskwa on X, formerly known as Twitter, in July. 

In addition to looking to scrap the EU’s ban on combustion engine cars by 2035, Warsaw is also challenging laws around land use and forestry, updated 2030 emissions reduction targets for EU countries, and a border tariff on carbon-intensive goods entering the European Union. 

With some 70% of its electricity generated by coal, Poland is one of Europe’s largest users of coal. And it has no designs on a rapid retreat from the most polluting fossil fuel, reaching an agreement with trade unions to keep mining coal until 2049. 

Netherlands 

The political consequences of leaning too far in on net zero targets are beginning to be seen in the Netherlands. 

In March, a farmer’s protest party, the BBB or BoerBurgerBeweging (Farmer-Citizen Movement), shook up the political landscape by capturing 16 of 75 seats in the Dutch Senate, more than any other party, including the ruling coalition of the Labor and Green Parties. 

The upstart party was formed in 2019 in response to government plans to significantly reduce nitrogen emissions from livestock by 2030, a move estimated to eliminate 11,200 farms and force another 17,600 farmers to significantly reduce their livestock. 

What followed were nationwide protests that saw supermarket distribution centres blockaded, hay bales in flames and manure dumped on highways. 

In November, Dutch voters will elect a new national government, and while BBB has dropped to fifth in polling, much of that support has been picked up by the fledgling New Social Contract (NSC), which has vowed to oppose further integration with EU policies, a similar stance offered by the BBB. The NSC currently tops the polls ahead of the Nov. 22 election. 

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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Alberta

Low emissions, Indigenous-owned Cascade Power Project to boost Alberta electrical grid reliability

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The Cascade Power Project. Photo courtesy Kinetcor

From the Canadian Energy Centre

By Will Gibson

New 900-megawatt natural gas-fired facility to supply more than eight per cent of Alberta’s power needs

Alberta’s electrical grid is about to get a boost in reliability from a major new natural gas-fired power plant owned in part by Indigenous communities.  

Next month operations are scheduled to start at the Cascade Power Project, which will have enough capacity to supply more than eight per cent of Alberta’s energy needs.  

It’s good news in a province where just over one month ago an emergency alert suddenly blared on cell phones and other electronic devices warning residents to immediately reduce electricity use to avoid outages.  

“Living in an energy-rich province, we sometimes take electricity for granted,” says Chana Martineau, CEO of the Alberta Indigenous Opportunities Corporation (AIOC) and member of the Frog Lake First Nation.  

“Given much of the province was dealing with -40C weather at the time, that alert was a vivid reminder of the importance of having a reliable electrical grid.” 

Cascade Power was the first project to receive funding through the AIOC, the provincial corporation established in 2020 to provide loan guarantees for Indigenous groups seeking partnerships in major development projects. 

So far, the AIOC has underwritten more than $500 million in support. This year it has $3 billion  available, up from $2 billion in 2023.  

In August 2020 it provided a $93 million loan guarantee to the Indigenous Communities Consortium — comprised of the Alexis Nakota Sioux NationEnoch Cree NationKehewin Cree NationOChiese First NationPaul First Nation, and Whitefish (Goodfish) Lake First Nation — to become equity owners. 

The 900-megawatt, $1.5-billion facility is scheduled to come online in March. 

“It’s personally gratifying for me to see how we moved from having Indigenous communities being seen as obstacles to partners in a generation,” says Martineau. 

The added capacity brought by Cascade is welcomed by the Alberta Electrical System Operator (AESO), which is responsible for the provinces electrical grid. =

“The AESO welcomes all new forms of generation into the Alberta marketplace, including renewables, thermal, storage, and others,” said Diane Kossman, a spokeswoman for the agency.  

“It is imperative that Alberta continue to have sufficient dispatchable generation to serve load during peak demand periods when other forms of generation are not able to contribute in a meaningful way.” 

The Cascade project also provides environmental benefits. It is a so-called “combined cycle” power facility, meaning it uses both a gas turbine and a steam turbine simultaneously to produce up to 50 per cent more electricity from the same amount of fuel than a traditional facility.  

Once complete, Cascade is expected to be the largest and most efficient combined cycle power plant in Alberta, producing 62 per cent less CO2 than a coal-fired power plant and 30 per cent less CO2 than a typical coal-to-gas conversion.  

“This project really is aligned with the goals of Indigenous communities on environmental performance,” says Martineau. 

The partnership behind the power plant includes Axium InfrastructureDIF Capital Partners  and Kineticor Resource Corp. along with the Indigenous Communities Consortium. 

The nations invested through a partnership with OPTrust, one of Canada’s largest pension funds.  

“Innovation is not just what we invest in, but it is also how we invest,” said James Davis, OPTrust’s chief investment officer. 

“The participation of six First Nations in the Cascade Power Project is a prime example of what is possible when investors, the government and local communities work together.” 

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