The Canadian targets highlighted below are ambitious and will likely not happen without the significant CCS projects planned for Alberta. The CCS opportunity will drive down energy and chemical (heavy industry) based emissions meaningfully and could also be the basis for new power generation capacity to allow the transport industry reductions that the country is looking for – either through EVs or hydrogen-based transport.
The back-end loading of the power projects for the US for 2022, as shown in the chart below leaves us somewhat skeptical concerning how much will come online this year. Supply chain problems and materials costs and availability are causing all sorts of problems with renewable power projects and installed capacity expectations for 2021 were too ambitious. We believe that companies are pushing projected start-ups later in the year to give them more of a chance of completion, but this creates the risk that they slip into 2023 or beyond. The most significant issue here is that as these plans get delayed, natural gas demand goes up, as one of the swing suppliers. This is fine as long as the US natural gas industry and shale oil industry is investing so that gas availability rises. Otherwise, we could see gas prices spike in the US next winter and another year where we use more coal than we expected. For more see this week's ESG and Climate report.