Calgary-based pipeliner Enbridge Inc. is planning a “gradual” transition in its global project portfolio to meet consumers’ demand for lower-emitting forms of energy, but still expects to continue investing in oil pipelines, CEO Al Monaco told the Financial Post in an interview published earlier this week.
“We think having a diversified approach, having a gradual approach to the transition through natural gas and renewables makes a lot of sense,” Monaco said. “If you look at the energy supply/demand balance globally, we as a company kind of mirror that. We have a meaningful part of our business in renewables—the base is probably 5% of our assets.”
With C$170 billion in assets, Enbridge is North America’s biggest pipeline company, the Post reports. It produces 55% of its income from pipelines, about 40% from gas transmission and storage, and 4% from renewables, mainly offshore wind projects in the United Kingdom and Germany.
Monaco said the company will “invest increasingly larger proportions of its capital to natural gas and renewable energy projects as consumers around the world demand lower-emitting forms of energy,” the paper writes. But “repositioning its assets to reflect a larger mix of renewables in comparison with oil pipelines will require billions of dollars in investment—especially given that Enbridge isn’t looking to divest its oil pipeline business and its [Mainline pipeline] remains its single largest asset.”
A recent presentation on the company’s new investment plans for 2020 showed $3 billion for projects involving gas and gas utilities, $2 billion for oil and liquids pipelines, and $1 billion for renewables.
“There’s still lots of runway for oil and natural gas but it makes sense for us to mirror that global supply picture,” Monaco explained. “I think you’ll find most companies, or the vast majority of companies in our sector, are not positioned in that way.”
Monaco’s comments indicated a certain attentiveness to offshore wind markets in Europe and North America, with a preference for the level of industry development and more favourable power purchase agreements in Europe. “Supply chains are now extremely well developed in (Europe) in terms of engineering, equipment, and the sheer know-how of how to deal with offshore wind projects. We also know that from a public policy perspective, Europe is quite advanced and we see very good commercial models there,” he said.
While “the U.S. could be a good opportunity for the future,” he added, “we’ve chosen to focus on Europe because that’s where the big prize is for us at the moment.”
Citing critics of the industry, the Post says the pace of growth Canadian fossils anticipate for renewables points to “a long and slow move, at a time when renewable installations are set to grow dramatically and the world is looking to ease off heavier-emitting forms of energy at an accelerated pace.” For Enbridge, an effort to a shift from 5% to 50% renewables “would require a broad range of technologies—not just offshore wind projects—and take many years to complete.”
“Climate change is happening a lot faster and we’ve committed to a lot of warming already,” said University of Waterloo associate professor Juan Moreno-Cruz, the Canada Research Chair in energy transitions. But for Enbridge, “a plan is better than no plan.”
