CALGARY — A new energy forecast from Deloitte Canada identifies a series of steps Canadian hydrogen stakeholders and governments must take to enable Canada to become a global leader in the transition to a hydrogen economy.
Canada has an opportunity to pull to the front of the pack as a global leader in the hydrogen economy, says Deloitte. The forecast from Deloitte Canada’s Resource Evaluation and Advisory group says governments need to do more to de-risk hydrogen investments and unlock private-sector funds. Given the link between water and the future of energy systems, developing a hydrogen-based economy will depend on better water management, availability and infrastructure, stated a release.
“There’s really not a lot of time to make the necessary decisions so Canada can meet its decarbonization targets for 2030 and 2050,” said Andrew Botterill, national oil, gas and chemicals leader at Deloitte Canada, in a statement. “Much of the current challenges relate to cost, so governments have to invest in ways to drive down the cost of technologies and create the market demand for hydrogen to support private-sector firms as they move to a net-zero future.”
The forecast also noted that Canadian oil producers are achieving all-time production highs and generating record cash flow despite declining global crude oil prices and a widening differential between the U.S. oil market and the Middle East, European and African oil markets.
But Canada’s natural gas producers are facing a more volatile situation as production levels risk outpacing demand, resulting in deeply discounted prices and a significantly widening differential to U.S. pricing.
“Canadian crude oil production remains at all-time highs, even though rising interest rates and continuing COVID-19 lockdowns in China are prompting concern about a possible recession and lower demand for oil,” said Botterill. “Natural gas production in Canada is also rising as global prices remain extremely elevated, but Canadian producers aren’t benefitting as much as others around the world, with some even announcing production shut-ins because of the lower prices they’re receiving.”
Botterill stated European efforts to replace Russian-supplied natural gas and build up gas in storage before this winter increased demand for liquified natural gas (LNG). At the same time, an explosion at the Freeport LNG facility in the United States cut off about 20 per cent of the country’s LNG exports. With the Freeport facility expected to only partially resume operations this month, global LNG prices have been rising consistently throughout the summer.
China remains the world’s largest LNG importer.
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