Natural gas prices have increased in Europe, and China is facing its own issues with coal, leading to energy shortages on both continents.
Understanding the likelihood of skyrocketing energy prices in Canada takes some understanding of the factors at work, and to shed light on the situation, Brendan Cooke, policy analyst at Canada West Foundation, recently joined Shaun Haney on RealAg Radio.
“I think what really plays into this is it’s all supply and demand, being natural gas in Europe, or coal in China, we’re really dealing with fuel shortages,” says Cooke.
Cold winter and spring months in Europe depleted stocks, followed by natural gas demand reductions throughout the pandemic lead to lower investment in capacity. Now, entering the winter heating months and the subsequent economic recovery, demand is taking off again and the supply just isn’t there anymore, says Cooke. China is dealing with the same issue, except with coal and all of this is leading to power shortages.
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Cooke isn’t totally sold on the fact that Europe is trying to aggressively transition to green energy, creating an energy crisis.
“I think when climate change and energy transition are related, you’re going to have a lot of opinions on both sides,” he says, adding that the complexity of the situation should be highlighted, but globally, the reliance on fossil fuels can’t be changed overnight.
Canada is a natural gas exporting nation that doesn’t rely on natural gas (with the exception of Alberta and Saskatchewan) for power production, and Canada supplies its own natural gas. Cooke doesn’t see the same thing that’s happening in Europe, happening here, necessarily.
“What we really need to be focusing on is how we can satisfy our heating and power needs right now, with what we have available for infrastructure, pushing forward with innovation and building out those systems that are required to make those climate promises, but we can’t have one without the other,” says Cooke.
Is it easier to invest longer-term in green energy than in fossil fuel production, in relation to where the government winds are blowing?
Cooke says that the companies that see a big risk in investing in fossil fuels, and the demand not being there in the future, leads to investing in green energy, or away from capacity in fossil fuels, which is driving supply issues.
So what can be expected for the North American market?
“I don’t think anyone is really going to try and predict what’s going to happen with gas prices,” says Cooke, but adds that what might happen in North America will be different for a few reasons.
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