Under last December’s Pan-Canadian Framework on Climate Change and Clean Growth, carbon pricing will come into effect nationwide next year, making it the primary policy tool across the country for reducing greenhouse gas (GHG emissions.
But energy experts believe carbon pricing alone will not achieve the country’s 2030 emission reduction targets and needs to be combined with complementary policies including better use of electricity and natural gas to meet Canada’s energy needs.
Jason Langrish, president of the Energy Roundtable, a private sector forum launched in 2004 to help define the Canadian energy sector’s role in domestic affairs and international markets, says with carbon regulations rolling out across Canada, the business case for technological innovation and energy management is stronger than ever.
He points out that 80 per cent of electricity generated in Canada is GHG-free and that the electricity sector has reduced emissions by 30 per cent since 2005. While hydro remains the primary generator of electricity, natural gas is set to replace coal as coal-fired power stations are phased out over the next few years, particularly in Alberta.
“Natural gas is inexpensive, flexible and clean and can play a significant role in reducing Canada’s carbon usage,” says Mr. Langrish. “We need to be looking at strategies to help green both the electricity grid and industrial activities while reducing emissions.”
However, several technical challenges need to be addressed to accelerate the uptake in low-carbon energy, including the storage of renewable energy, grid interconnectivity and enhanced information technology, he adds.
“For renewables to gain truly widespread application, we need to develop effective energy storage that allows renewable energy to become baseload energy,” says Mr. Langrish. “We also need to rationalize our grid so that surplus power, much of it carbon-free, can more easily be sold across provincial and international borders. Right now we remain fragmented into a series of provincial markets.”
Using big data and information technology to develop low-carbon business models can help improve efficiency and reduce waste, he says.
But the right infrastructure needs to be in place for electricity to play its part in helping Canada meet GHG reduction targets, according to Canadian Electricity Association president and CEO Sergio Marchi.
“There’s no getting around it; like our EU, American and Japanese friends, our critical infrastructure is approaching an end of life cycle,” he told a recent Conference Board of Canada (CBoC) meeting.
He pointed out that a Conference Board study a few years ago estimated that renewing Canada’s existing electricity infrastructure would require $350-billion by 2030.
“However, as their latest study noted, this figure could be tripled and pushed out to 2050, under a deep decarbonization and electrification strategy,” Mr. Marchi said. “As an industry, we are meeting the first challenge head on. For the last several years, our members have been spending in the range of $13-billion annually just on infrastructure renewal and modernization.”
He too believes that new processes and technologies will be increasingly important in lowering emissions, promoting economic growth and propelling Canada to the forefront of a green, knowledge-based economy, but he wants to see long-term policy predictability and no political U-turns.
“For example, by 2030, coal-fired electricity will effectively cease operations in Canada;” he told the CBoC. “This means that there will be a great deal of power generation capacity that needs to be replaced in several of our provinces. And what fills that vacuum?
“From a carbon standpoint, it would make sense to replace all that capacity with renewables, but because these are intermittent sources, to maintain reliability, we have to back up that renewable generation with constant power sources. That’s a real, technical limitation we have to work with, and it will have a direct bearing on what we can realistically do in the short term.”
While natural gas could be part of the solution, Mr. Langrish says there’s currently no national consensus on how to make it happen.
For example, natural gas producers in Western Canada could counteract the reduction in exports to the U.S. by selling more of their product into central Canadian markets, which currently rely on imports from the U.S. But price and provincial political considerations could override the benefit to the national economy.
“Producers in Western Canada believe there is an opportunity to move more gas into Central Canada, but there could be political resistance,” says Mr. Langrish. “On the one hand, you have Ontario’s environmental minister Glenn Murray wanting to phase out the use of natural gas, including for home heating, and, on the other hand, Alberta saying they need to find new outlets for their natural gas.”
Nevertheless, he believes there is a clear trend in Canada towards a low-carbon future.
“The issue is not climate change,” he says. “Industry recognizes that it’s happening and is adapting. The real challenge is the fragmented nature of the Canadian Federation and our apparent inability to get onto the same page when it comes to developing our energy resources and getting them to market. That’s the number one problem that continues to plague Canada.”
About The Energy Roundtable
The Energy Roundtable is a private sector forum that was launched in 2004 to help define the Canadian energy sector’s role in domestic affairs and international oil and gas markets. The Energy Roundtable delivers high-level, thematic conferences that:
Promote Canada as a stable and growing supplier of energy in a resource constrained world.
Profile innovative ideas on how to sustainably develop Canada’s vast energy resources domestically and get them to international markets.
Explore the commercial opportunities that this presents to investors and service providers.
The annual conference series gathers leaders in Toronto, Calgary and London, whose communities are invested in developing Canada’s energy future
For more information, visit www.energyroundtable.org.