• The Book
  • by davidm
  • December 9, 2018
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Crank Up The Power: Canada’s Astounding Opportunity for Success Through Electrification and Decarbonization

At a per capita emissions rate of 19.4 metric tonnes of COequivalents per person, Canada’s intensity of greenhouse gas emissions is 3-fold greater than the global average and ranks near the top among OECD countries.1,2 Canada’s oil and gas sector accounts for a disproportionally high percentage of national emissions when compare to most other advanced economies.

Under the International Energy Agency’s Sustainable Development scenario, global demand for oil should peak prior to 2025.By 2030, demand for oil is projected to decline by 10% advancing to about a 30% decline by 2030. The IEA anticipates that global demand for natural gas will increase by 10% over the next 20 years as gas replaces coal as a thermal fuel in many countries.

Given the importance of the oil and gas sector to the national economy, a simplistic assessment could lead one to conclude that continued demand for traditional energy products over the next 11 years will limit Canada’sability to control emissions. Projecting forward over the mid-term climate change mitigation period from 2030 to 2050, the Sustainable Development scenario is characterized by deep decarbonization of practices and one could express concern over the health of Canada’s economy as the global demand fortraditional energy products diminishes.

Simplistic conclusions as to impact of Canada’s oil and gas sector on short-term opportunities to cut emission and on the long-term economic outlook of the country under the Sustainable Development scenario, are erroneous and ignore the importance of Canada’s vast energy resources outside of fossil fuels. Canada is, in fact, ahead of almost all advanced economies in transitioning to a low carbon economy and is well positioned for success through cost-efficient early adoption of decarbonized practices.

Under Sustainable Development, the pillars of transition for advanced economies are near complete decarbonization of the electricity supply sector over the next 20-30 years, improved energy efficiencies across economic sectors, progressive electrification of transportation and many industrial practices, and fuel switching to zero and low carbon alternatives.

Sustainable development begins with universal access to electricity produced by zero emissions energy sources. In 2017, coal provided 45% of the world’s energy used to produce power.3 Globally, 484 g of carbon dioxide are released per kWh and this intensity of emissions is largely the result of coal combustion.3 Under the Sustainable Development scenario, this intensity of emissions is projected to decline by 86% over the next 20 years as coal power plants are phased out and replaced by zero and lower emissions options.3 This transition occurs along with a massive switch to electric vehicles and electrification of many industrial processes. With Sustainable Development, the IEA forecasts 930 million electric vehicles (equivalent tohalf of the global fleet) on the roads by 2040.3 Charging these vehicles with emissions-free electricity is an essential component of the technical pathway that limits future surface warming to well below 2°C.

In North America, a continuation of current practices will increase the demand for electricity by about 20% above current levels.3 However, with the projected improvements in the efficiency of energy and material use under the Sustainable Development scenario, the demand for power will be restricted to about an 8% increase.3 Improvements in energy efficiency will largely offset much of the higher demand coming from wide-spread electrification of transportation and industrial practices.

Canada has a competitive advantage under the Sustainable Development scenario, based on a wealth of zero-emissions, hydro, renewables, nuclear and biomass resources, along with expertise in commercial scale carbon capture and storage. With clean electricity, decarbonization of practices can be completed over a shorter time period and at minimal cost with maximum benefits. Eighty percent of Canada’s population lives in provinces that produce near zero emissions electricity. The intensity of emissions from the aggregate of power production in Ontario, Quebec, BC, Manitoba, Newfoundland and Labrador, and PEI is currently 14 g CO2/kWh.4,5 This figure is 3% of the global average and electricity production in these provinces can rightly be classified as emissions free.3 Coal and natural gas are major contributors to power supply in Alberta, Saskatchewan, New Brunswick and NovaScotia. When these emissions are averaged with zero emissions sources across the country, the net intensity of emissions from the production of electricity in Canada is 25% of the global average.3,4,5   

When compared to the challenges facing most industrialized countries, the time-frame and costs for an orderly transition to a fully decarbonized electricity grid across Canada are far less onerous. A green corridor of transmission from BC to Manitoba would facilitate the flow of zero-emissions hydro electricity to grids that are currently lacking access. This system could be supplemented with increased grid penetration by renewables. Saskatchewan has made a substantial investment in developing expertise in commercial scale capture and storage of carbon emissions from thermal power production. Conceivably, this expertise could facilitate conversion of coal-fired power plants to BioEnergy with Carbon Capture and Storage (BECCS). BECCS would function to withdraw atmospheric carbon dioxide with permanent isolation and storage in geological formations. An electricity supply mix consisting of hydro, renewables and BECCS would switch the production of electricity in Saskatchewan and Alberta from a source of significant emissions to net atmospheric drawdown of carbon dioxide. With carbon pricing in place, BECCS utilities could be paid per unit of carbon withdrawn from the atmosphere.

BC has recently updated the provincial climate action plan such that market-based systems of carbon pricing are supplemented by low-carbon fuel standards, methane reduction targets applied to the oil and gas sector, and a cap and trade system applied to quotas for automakers to sell zero emissions vehicles.6 A rebate system will be available to emissions-intensive trade exposed industries whereby carbon fees paid by these industries will be partially or wholly rebated through implementation of advanced technologies that reduce the intensity of emissions. Carbon pricing and other complimentary “technology neutral” market-based systems applied to industry and transportation will encourage electrification and fuel switching to zero and low emissions options. BC has established a year 2040 target of 100% zero emission new vehicle sales.Rather than impede the economy, BC’s aggressive and ambitious climate action is anticipated to stimulate new financial opportunities.  

The consumer that purchases an EV in Quebec or BC or otherwise switches to electrified transportation will substantially cut their personal carbon footprint. The energy efficiency and cost differentials are such that this consumer will realize at least about an 80% saving in operating an EV when compared to a conventional gas or diesel fueled vehicle.7With clean electricity, as the price of carbon goes up so does the incentive to switch to zero or low emissions options for personal transportation.

The concentration of oil and gas sector activities in Canada does not impede electrification and decarbonization of the transportation,industry and building sectors across Canada. While demand exists, oil and gas rich provinces have every right to continue with extraction and sales of product. If Canada were to “turn off the tap” on oil and gas production, demand would be met from other sources with no effect on global emissions. In Canada, under a Sustainable Development scenario, transport of traditional energy products may well warrant new pipeline construction. Twinning of the Trans Mountain pipeline could be justified provided that the economics of pricing and duration of demand are favorable, and the project meets environmental standards. Traditional energy industries must, however, contribute to the national efforts by minimizing emissions from their operations. In BC, the massive energy-intensive liquified natural gas project will be powered by GHG-free electricity rather than traditional fossil fuels.  

Within Canada, an efficient process of emissions reduction over the next 11 years will not be characterized by a uniform 30% cut in emissions from 2005 levels in each province. Ontario, Quebec, BC and Manitoba produce clean electricity and are not encumbered by a substantial portion of provincial emissions coming the oil and gas sector. The short-term abatement costs are much lower in these provinces when compared to Alberta and Saskatchewan. As such systems of carbon pricing and supplementary policies would result in market-drive fair share of burden across the country based on regional circumstance. Deeper cuts in Ontario, Quebec, BC and Manitoba would compensate for higher rates of emissions from Saskatchewan and Alberta. As the transition to complete zero-emissions electricity supply is extended across the country, additional abatement opportunities will become available in Alberta, Saskatchewan, New Brunswick and Nova Scotia. Ultimately, under a global Sustainable Development scenario, as economies decarbonize over the longer term extending to mid-century and beyond, declining demand for oil and eventually natural gas will inevitably lead to adown turn in Canada’s traditional energy sector.

References:

  1. Government of Canada. Greenhouse gas emissions. https://www.canada.ca/en/environment-climate-change/services/environmental-indicators/greenhouse-gas-emissions.html.
  2. CLIMATEWATCH. GHG emissions. https://www.climatewatchdata.org/ghg-emissions?source=31&version=1.
  3. International Energy Agency. World Energy Outlook 2018. OECD/IEA.
  4. Government of Canada. National Energy Board. https://www.neb-one.gc.ca/nrg/ntgrtd/mrkt/nrgsstmprfls/ab-eng.html.
  5. Statistics Canada. Data. Population estimates,quarterly. https://www150.statcan.gc.ca/t1/tbl1/en/tv.action?pid=1710000901.
  6. Government of British Columbia. Clean BC.  https://www2.gov.bc.ca/assets/gov/environment/climate-change/action/cleanbc/cleanbc_2018-bc-climate-strategy.pdf.
  7. Canadian Automobile Association. Driver Costs Calculator. https://www.caa.ca/carcosts/.

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