It’s definitely a case of ‘ring in the new’ in Canada with Prime Minister Justin Trudeau announcing his resignation on Monday (6th January) – and regardless of who the next prime minister is, he or she will face a federal election sometime on or before 20th October.
This presents an uncertain policy environment, exacerbated by the prospect of tariffs from the new US Republican administration. President-Elect Trump has pledged to impose a 25% tariff on all imports from Mexico and Canada as his first Executive Order on 20th January.
Whatever materialises, 2025 could provide Canadians with the chance of a reset, and opportunity to leverage its vast natural resources to pursue closer ties with the US and wider world.
Trump has called for the US to achieve “energy dominance” and Canada can offer itself as a willing partner in this mission.
Canada and the US are already close partners in the energy trade, and in 2023 two-way trade of oil, natural gas, uranium, and electricity reached a record value of $156bn.
“The next Canadian prime minister would be smart to position Ottawa not as an obstacle to ensuring US energy security, but as a close partner in achieving this goal,” writes Imran Bayoumi, an Associate Director with the Scowcroft GeoStrategy Initiative in the Atlantic Council’s Scowcroft Center for Strategy and Security.
“The relationship between Canada and the United States is one bound by shared geography, but also by close cultural, familial, and economic ties. Canada’s next prime minister should focus on these three areas to strengthen North American defense and economic security, as well as bilateral ties between the two nations during the second Trump administration.”
Sluggish but set for growth
The Canadian industrial gas market is the second-largest in North America, behind the US. It generated revenues of approximately $2,066.0m in 2023, according to gasworld intelligence. This is down from $2,141.4m in 2022, so the market has been sluggish.
However, within the 2023-2028 timeframe, forecast models predict market revenue growth between 7.9%-10.6% per annum – much faster than growth in the past decade. Accordingly, the gas market in Canada is expected to achieve revenues between $3,018.5m and $3,422.2m by the year 2028.
The largest gas company in Canada was Linde with estimated revenues of $836.7m – equating to a market share of 40.5%. The next largest companies were Air Liquide and Air Products with estimated revenues of $503.8m and $388.9m, equating to market shares of 24.4% and 18.8% respectively. To read the full report, click here.
Tariffs and industrial leadership
The use of tariffs, whether to curb illegal migration and drug trafficking or to reduce the trade deficit, must be evaluated based on the effectiveness in achieving these aims.
The National Institute of Economic and Social Research said it is unclear whether the next US administration will follow through on its tariff threats, but notes the potential economic risks to industries and sectors may outweigh the benefits, so any trade restrictions that compromise critical industries should be carefully considered.
Meanwhile across blue and green hydrogen, and hard-to-abate sectors, Canada is taking a lead.
ArcelorMittal Dofasco’s steel mill in Hamilton, Ontario is implementing a hydrogen-ready electric arc furnace projected to reduce C02 emissions by three million tonnes annually – about 60% of the plant’s emissions. Air Products’ Net Zero hydrogen energy complex will make Edmonton, Alberta the centre of western Canada’s hydrogen economy, while Newfoundland and Labrador has a wealth of resources which can position it to produce and export green hydrogen.
The Dow Fort Saskatchewan Path2Zero project is a $6.5bn project, excluding governmental incentives and subsidies, that includes an ethylene cracker and increasing polyethylene capacity by two million metric tonnes per annum as well as retrofitting the site’s existing cracker to Net Zero Scope 1 and 2 emissions.
McDermott has been awarded an Early Contractor Involvement (ECI) agreement from Abraxas Power Corporation for Canada’s first commercial green hydrogen and ammonia production facility, which will include the development of up to 530-turbine wind farm with the ability to generate 3.5 gigawatt (GW) of electricity and 150 megawatt (MW) solar photo voltaic (PV).
More recently, EDF and Abraxas Power have agreed to develop a green hydrogen and ammonia project in central Newfoundland, while EverWind Fuels plans a similar facility.
Its breadth of industrial expertise could make it a useful partner for the seven US Hydrogen Hubs, especially now clarity has been provided to 45V hydrogen credit rules.
Trudeau’s successor may be presented with a formidable in tray but the momentum it is building across the new energy sphere provides plenty of grounds for optimism too.
