Western Hemisphere 2021 Energy Landscape and Outlook

by what they see as Eastern liberal elitism and anti-oil industry policies. The East – mostly Ontario and Quebec liberals - with a more diverse economy and energy sources tend to favor strong government action to combat the risk caused by climate change. The proposed strategy sees a strong role for “blue hydrogen”, which is hydrogen produced from natural gas and other fossil fuels but requires carbon capture. Alberta is well-positioned due to its large low-cost natural gas reserves, plenty of carbon storage capacity, a large pipeline infrastructure and a well-developed oil and gas industry that can pivot to a hydrogen industry. From the East, Canada vast hydroelectric infrastructure makes an optimal supplier for “Green hydrogen”, hydrogen produced using electricity from renewable sources. The strategy sees strong opportunities for hydrogen fuel cell trucks, buses, pitchfork, and other transportation means in which EV batteries are not optimal. In short, the hydrogen strategy can be read more as an “industrialization strategy” with something for everybody. The economic potential is significant: expected annual revenue from domestic demand of C$50 billion by 2050, 350,000 new jobs created, and an abatement of up to 190 Mt of Co2 among others (Natural Resources Canada 2020). The strategy includes a C$1.5 bn of seed funding to help attract private investment (Bennett 2021).

There are still numerous challenges ahead, many recognized in the document. The main issue is cost. To make hydrogen viable in addition to carbon pricing mechanisms regulations such as a Clean Fuel Standard are required. Politically the strategy can also be victim of buyers’ remorse in a post-COVID world. Having reached record high fiscal deficits because of the COVID-19 pandemic response, pressure could mount to rein on fiscal spending, reducing resources available for the deployment of strategy. Finally, the strategy requires global coordination to ensure there are no carbon leakages in foreign trade. The Canadian administration may be hopeful from the political changes that could be expected from the Biden administration.

INSTITUTE OF THE AMERICAS

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