CALGARY – Enbridge Inc., North America’s largest pipeline company, is shifting its asset mix to reflect the energy transition underway across the world.
Al Monaco, chief executive officer of the Calgary-based company, said his company is taking a “gradual” approach to energy transition. While it will continue to invest in oil pipelines, the company will also 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.
We think having a diversified approach, having a gradual approach to the transition through natural gas and renewables makes a lot of sense
Enbridge CEO Al Monaco
“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 per cent of our assets,” Monaco said in an interview with the Financial Post.
Currently, 55 per cent of the company’s earnings are generated from its liquids pipeline business, roughly 40 per cent from its gas transmission and storage business and 4 per cent from renewables, which consist primarily of offshore wind projects in the U.K. and Germany.
The company has also identified a number of renewable opportunities off the coast of France.
The Enbridge Tower in Edmonton, Alberta.
Enbridge has identified offshore wind opportunities in North America as well, but Monaco said the company currently believes there’s a better supply chain and more attractive 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,” Monaco said.
“I think the U.S. could be a good opportunity for the future. We’ve chosen to focus on Europe because that’s where the big prize is for us at the moment,” he said.
The International Energy Agency’s 2019 World Energy Balances data set shows that oil continues to make up the largest single component of global energy consumption, with 32 per cent of the total, followed by coal (28 per cent), natural gas (22 per cent), biofuels (9 per cent), nuclear (5 per cent), hydro (2 per cent) and wind and solar (1 per cent).
However, the IEA also expects rapid growth in natural gas and renewable power generation globally – including a fivefold increase in solar and threefold increase in wind power consumption by 2040 – and an eventual decline in oil consumption.
The IEA’s World Energy Outlook shows that “offshore wind has the technical potential to meet today’s electricity demand many times over,” including in major industrialized countries like the U.S., China and India. In the U.S., IEA data shows electricity demand totals 4,011 terawatt-hours in 2018 but the country has the potential to produce 8,086 Twh.
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