Climate Crunch: How to fast-track $350B worth of energy projects

Issue #10

• Why (almost) everyone’s hating on the Impact Assessment Act

• Natural gas is the sector’s emission-busting star

• Tracking the Trump train. Plus, the big one set to come April 2!

Hot takes

➔ Natural gas is Canadian oil and gas sector’s emission-busting star. The subsector’s emissions have fallen 30% since 2005, the steepest drop within the wider oil and gas sector, according to the latest National Inventory Report. Canada’s total greenhouse gas emissions fell 8.5% in 2023 (from 2005 levels)—its lowest level in 27 years. Electricity led the declines among sectors with a 58% drop compared to 2005, while oil and gas was the laggard with emissions up 7%. That was mostly due to the oilsands, which saw emissions jump 143%, even as the rest of the sector (including pipelines, refining and conventional oil) saw a 25% drop.

➔ Ontario could be home to North America’s first cobalt sulphate refinery. Ottawa intends to provide $20 million in funding to Toronto-based Electra Battery Materials to transform its Temiskaming Shores facility into a cobalt sulfate refinery—the continent’s first. The funding adds to the $20 million grant Electra secured from the U.S. Department of Defense last September, as Washington looks to loosen China’s grip on the global cobalt market. South Korea’s LG Energy Solution will purchase 80% of the refinery’s output, aimed at facilitating the production of around one million EVs. The refinery is part of Electra’s wider ambition, which includes building a battery recycling refinery adjacent to its cobalt refinery. Electra is also eyeing a cobalt sulfate facility in Bécancour, Quebec, and a nickel sulfate plant.

Further reading: The New Great Game: How the race for critical minerals is shaping tech supremacy

➔ Greenpeace is facing an existential crisis. A North Dakota jury ordered the environment group to pay US$660 million in damages for leading protests against Energy Transfer’s Dakota Access oil pipeline in 2016-17. The eco-group, which traces its roots to Vancouver back in 1971, could face bankruptcy, ending more than 50 years of activism. The ruling has had a chilling impact on environmental scrutiny by non-governmental groups, but Greenpeace has vowed to fight on.

➔ The great American billionaire climate retreat is underway. The Bill Gates-backed  Breakthrough Energy’s laid off dozens of staff involved in solving climate issues, highlighting the crumbling fight against climate change. It follows fellow billionaire Jeff Bezos’s Earth Fund halting funds for climate projects. Presumably, both are reactions to the U.S. government dismantling several key climate policies. Deep-pocketed philanthropic support and funding for climate initiatives was supposed to ride out political ebbs and flow—instead, it’s been like a weather vane—changing direction at the first sign of shifting winds.

How to fast-track $350B worth of energy projects

Sensing an opportunity, 14 oil and gas executives wrote to Canada’s major political parties—that are now in campaign mode—to “Build Canada Now,” notably oil and gas pipelines and liquefied natural gas export terminals. That playbook could well extend to all kinds of other infrastructure, including mining and clean energy projects.

What stood out from the industry’s five recommendations? A call to overhaul and simplify the Impact Assessment Act. Industries and provinces have railed against the IAA over its short existence and even the Supreme Court has problems with parts of it.

Critics say the IAA, in its current form, intrudes into areas of provincial jurisdiction and injects uncertainty as it covers many social factors beyond environmental effects, leading to project delays.

With Canadians in the mood to build big projects again, billions in capital can be unlocked quickly if the IAA and myriad other provincial and federal permitting rules can be streamlined. The Major Projects Inventory counts 231 energy projects valued at $351 billion energy that are either in review, planning or proposal stage, according to Natural Resources. Add several billion worth of projects that are twinkles in the eyes of corporate executives, and we could be looking at capital north of $400-billion ready to be pledged or deployed.

Also read John Stackhouse’s take on the industry’s 5 recommendations on accelerating project building in Canada.

Trump Tracker

Action # 1: Executive order. President Trump invoked the Defense Production Act to ramp up domestic production of critical minerals and curb China’s resource dominance.

Upshot: Facilitates financial support and streamlines permitting processes to boost domestic mining industry. The U.S. has been scrambling to secure critical minerals, including reportedly eyeing Canada’s resources, Greenland’s riches, and minerals deals with Ukraine.

Action # 2: The Environmental Protection Agency cancelled US$20 billion for clean energy projects being developed by non-profits and community organizations.

Upshot: Implemented. The Greenhouse Gas Reduction Fund created under the Inflation Reduction Act, was aimed to leverage green banks and community lenders to propel private capital investment into clean energy projects. EPA cancelled the grants amid concerns over lack of oversight.

Action # 3: Marine archaeological resources rules eased.

Upshot: Implemented. The move aims to cut red tape and accelerate America’s “Energy Dominance” ambition. The original rules required offshore oil and gas developers to conduct archaeological survey and report any new oil and gas activities that could disrupt the seafloor.

Action # 4: Reciprocal tariffs set for April 2.

Upshot: Announcement to come. They will be part of a slew of trade orders and actions that would hit Canada and the rest of the world, apparently on a sliding scale. Some Washington insiders think some key industries may be spared—for now.

RBC Briefings

Insights from RBC analysts that straddle climate, trade, economy—and everything in between.

• Trade, unsettled: John Stackhouse on how Canada thrive in the new economic order

• Carrots, not sticks: Myha Truong-Regan on how building sector will cope in the post-consumer carbon tax era

• Heavy Lifting: Vivan Sorab on how Canadian manufacturers can decarbonize despite trade turmoil

• Make Energy Great Again: Eight questions coming out of CERA Week.

• Letter to Washington: Canada proposes ways it can help the U.S. tackle trade, tariffs and China—together

ICYMI

• C. spent $3.5B to reduce carbon emissions over 7 years. That plan has failed (The Narwhal)

• The North Dakota court battle testing free speech in Trump’s America (Financial Times)

• S. LNG has half the life-cycle emissions of coal (Woodmac)

• Global energy demand reaches record levels driven by electricity consumption (IEA)

• Tesla owners are trading in cars at record rates amid Musk backlash (The Washington Post)