BLUE VS GREEN H2

Canada's plans to help European energy woes may not have room for Alberta

Wed, August 24, 2022 

The CBC’s Vassy Kapelos interviews German Chancellor Olaf Scholz, in Toronto, on Aug. 23, 2022 during the European leader’s first trip to Canada. Scholz said he would like to see more natural gas exports from Canada to address energy woes. (Evan Mitsui/CBC - image credit)

The Russian war in Ukraine has had the side effect of cutting off a large portion of natural gas to Germany, and Chancellor Olaf Scholz was in Canada to sign a deal with Prime Minister Justin Trudeau on hydrogen energy.

While there is a desire from Germany to find more natural gas in the meantime, there appears to be little appetite to add the necessary infrastructure — including a plant for liquefied natural gas on Canada's East Coast.

"We would really like Canada to export more [liquefied natural gas, LNG] to Europe," Scholz told host Vassy Kapelos on CBC News Network's Power & Politics Tuesday.

But Scholz said there are no business cases at the moment, and Trudeau said it would be a costly endeavour with little upside as Germany looks to quickly move into renewable energy to become more self-sufficient.

Alberta produces over 60 per cent of Canada's natural gas, and this creates an uncertain future for the hopes of increasing buyers around the world. Currently, the United States is the biggest foreign buyer of Alberta natural gas.

In a statement, Alberta's Associate Minister of Natural Gas, Dale Nally, pushed back on the cool reception to the resource.

"There is a clear business case to increase market access for Canada's LNG off the east coast, and not acknowledging it is another case of the federal government refusing to act in the best interests of Albertans, Canadian, and the world."

Chris Young/The Canadian Press

'Very little import capacity'

With roadblocks in the way of adding export capacity in Canada and a lack of plans to improve the intake of natural gas in Germany, experts say Alberta is caught in the middle.

"There's very much a limit on how much of that can be done because of the import capacity that exists, and in Germany in particular there's very little import capacity," said Sara Hastings-Simon, assistant professor at the department of physics and astronomy at the University of Calgary.

LNG Newfoundland and Labrador Ltd.

Alberta's vision for the natural gas industry does set sights on two or three large-scale liquefied natural gas projects to improve exports, though this does not solve the immediate need for energy Germany faces.

Nally criticized previous governments for not capitalizing on opportunities to make the most of natural gas.

"Alberta and Canada already missed the first LNG wave, we cannot afford to miss the second. Several LNG projects are already operating in the U.S. with more under construction. Canada only has one LNG export project currently under construction: LNG Canada on the West Coast, which is getting nearer to completion," he added in an emailed statement to CBC News.

Natural gas can have a role to play in developing hydrogen energy, however this also does not create the true green version that Germany said it's looking for. Hastings-Simon said this can also leave Alberta out of the equation for supplying hydrogen overseas.

Amit Kumar, a professor in the faculty of engineering at the University of Alberta, helped advise the Alberta government on its hydrogen plans, and agreed there are significant hurdles for the province, as a country such as Germany wants to move more quickly into a clean energy system.

"We should keep in mind there are different baskets of options for decarbonization, and hydrogen is one of them, and we should initially transition with what is commercially available and cheaper," he said.

The future for hydrogen

Developing hydrogen production capacity in Alberta has been underway for some time, but the future role it could play locally and internationally in supplying the grid remains a question.

"It provides an option and alternative to natural gas," said Kumar. "But my sense is in the longer term, it will be part of the decarbonization of our Alberta energy system, but it will be an option along with other options of decarbonization."

Jeff McIntosh/The Canadian Press

The province has plans for more commercial capacity for hydrogen energy created with the help of natural gas by 2030. But it will also be faced with wait times for regulatory reviews and the high upfront cost of adding production capacity for the resource.

"It's much more expensive, it's much less energy dense, there are potential safety issues involved with hydrogen, and the infrastructure that we have in place is certainly inadequate to use it commercially," added Richard Masson, executive fellow at the University of Calgary School of Public Policy.

"There's a long way for us to go from here to there."

Looking at how to balance the books by exporting different forms of energy also brings another challenge to the forefront.

While hydrogen seems like a futuristic option to give green energy, there are still significant plans in place in countries like Germany to utilize more wind and solar energy.

"It's not going to be a one-for-one replacement for Alberta's or Canada's energy exports," said Hastings-Simon. "I think if we have that expectation, we are going to be disappointed