From EV pricing to carbon-emission caps: Here’s what FP Energy has on its radar for 2023

Good morning and welcome to 2023.

The energy transition can often seem like a distant concept, one that is talked about by people who have very little to do with our everyday lives. But it is real and it barrelled along during 2022 in all its various forms and guises. The sought-after transition, however, still has a ways to go to reach its destination of net zero by 2050.

For example, as of the second quarter of 2022, 87 per cent of new vehicle registrations in Canada were for combustion engine automobiles. Battery electric registrations accounted for just over five per cent, hybrid electric, 6.4 per cent and plug-in hybrid, 1.9 per cent.

As the transition continues to take shape, here’s what members of the Financial Post’s energy team will be watching over the coming 12 months.

HYDROGEN

This may finally be the year that clean-burning hydrogen faces the music about its role in a low-carbon future. Proponents of hydrogen say it is so versatile and practical that it’s the world’s best bet to transition away from fossil fuels. Detractors say it’s a highly inefficient use of resources that will require massive investment, likely in the form of government subsidies flowing to fossil-fuel companies.

But there are signs that hydrogen could be gaining traction as a transportation fuel. For example, energy company HTEC in December announced it will begin producing 15 tonnes per day of clean hydrogen from a bleach-manufacturing plant. That’s enough to power all the buses in Vancouver and maybe other cities as well.

But many transportation modes, such as rail, remain in a trial stage, where hydrogen has been stuck for a decade. Critics say there are a lot of reasons why it’ll never progress from there. — Gabriel Friedman

ELECTRIC VEHICLES

Last year was a big one for electric vehicles (EVs). Politicians made strides in establishing Quebec, and Canada more broadly, as a one-stop-shop for EV batteries and components, with, for example, General Motors Co. agreeing to establish a plant for cathode active materials in Bécancour, Que. The materials are an integral component of EV batteries.

Across North America, EV subsidies are bridging the price gap between EVs and their gas-powered counterparts. Prices are nearing the “tipping point” where manufacturers will be able to build EVs that cost less than gas-powered cars and trucks over their lifetimes. Subsidies aside, EVs still cost more than their gas-powered equivalents.

Though EVs continue to gain popularity, there are still concerns that recent clean-vehicle mandates could drive up the cost of all vehicles. Nonetheless, an ever-narrowing price differential between gas and electric vehicles could dramatically increase EV uptake in the year ahead. — Marisa Coulton

THE OILPATCH

The oilpatch is anticipating an onslaught of highly consequential federal climate policies in 2023 (and we thought last year was busy when it came to policy, with the Emissions Reduction Plan, Clean Fuel Regulations and carbon capture investment tax credit all rolling out in 2022). 

This coming year will bring the long-awaited and controversial federal cap on emissions for the oil and gas sector, the potential introduction of carbon contracts for differences and the new Clean Electricity Regulations (CER) that will help drive progress on a net-zero electricity grid.

Also anticipated early this year is the Liberal government’s controversial Just Transition bill, which is designed to transition oil and gas workers to green energy jobs. — Meghan Potkins

That’s a lot to take in, but FP Energy will be there to keep up with the news and help fit developments into the bigger transition puzzle.

Stay tuned.

On a side note, our FP Energy colleague Naimul Karim is away on holiday, but will return next week to offer his thoughts on how the mining sector will respond to the energy transition in 2023. In the meantime, if you have any suggestions or ideas for us, please get in touch here.

Mandating zero-emission vehicles

Car prices have come into focus again after Environment Canada released its long-awaited zero-emission vehicle mandate, which dictates 20 per cent of all new automobiles sold in Canada by 2026 be clean vehicles, rising to 60 per cent by 2030 and 100 per cent by 2035. Zero emission currently means battery-powered electric vehicles, but some experts say the mandate will only push already-high prices even higher for both electric and combustion-engine vehicles. The Financial Post’s Gabriel Friedman reports.

THE DEBATE OVER CAR PRICES

• Related: Ottawa says 60% of all vehicle sales must be electric by 2030
• Watch: What net zero looks like and what it could mean for Canada

Oil at $100 again

Eric Nuttall, partner and senior portfolio manager at Ninepoint Partners LP, talks with the Financial Post’s Larysa Harapyn about why he believes US$100 oil will return in 2023.

Whitecap Resources’ very big year

Grant Fagerheim, one of the Canadian oilpatch’s biggest dealmakers, made 2022 a transformative year at Whitecap Resources Inc. He shepherded a blockbuster acquisition that promises to make the company a dominant player in the trillion-dollar Montney oil and gas play in northern Alberta and British Columbia. The Financial Post’s Meghan Potkins reports.

RECOGNIZE, PIVOT, IMPROVE

• More reading: Oil and gas stocks shine in miserable year for U.S. equities

Geopolitics, transition don’t mix

There is no place for geopolitics in the energy transition, says Sigma Lithium chief executive Ana Cabral Gardner, who argues the “planet can’t wait.” She invested in Sigma Lithium Corp. more than six years ago when the demand for the mineral that powers electric vehicles was nothing compared to today. “This is the one area where the world should be collaborating, because everybody brings something to the table. We don’t have time to waste. We need to accelerate it (the energy transition).”

‘THE PLANET CAN’T WAIT’

• More reading: Pierre Fitzgibbon wants to turn Quebec into an energy hub, but his green power play has its critics

Down to Business host Gabriel Friedman talks with Greg Twinney, chief executive of Vancouver-based General Fusion Inc., about his company’s efforts to replicate the power of the sun in a laboratory right here on earth.

Why the oilsands could be the ‘last barrel standing’ in North America (Pamela Heaven, Financial Post)

Superior Plus adds low-carbon fuels to its portfolio with $1-billion deal for Centarus (Reuters)

Canada vows to stop funding overseas oil and gas projects, but billions in support still on the books (Gabriel Friedman, Financial Post)

Namibian rare earth minerals project targets 2026 production

(Reuters)

Canadian oilpatch production expected to grow in 2023, exceeding 2022’s record output (The Canadian Press)

Extreme cold weather knocks out Suncor refinery until next March (Financial Post staff)

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FP Energy is edited by Gigi Suhanic. The Financial Post reporters documenting the energy transition are Meghan Potkins in Calgary, Gabriel Friedman and Naimul Karim in Toronto, and Marisa Coulton in Montreal. Want to get in touch? Send an email to [email protected].