While the Energy Transition is driven by new technologies, the pace of the transition will be influenced by consumer choices and government policies. Understanding the Energy Transition is key to making good choices and enacting sound policy, especially now that Canada is committed to decarbonization goals under the Paris Climate Accord. Get it right, and the Canadian and provincial economies can be stronger and more competitive in the low-carbon future. Get it wrong, and Canada can damage both its economy and its climate mitigation efforts.
Energy writer Markham Hislop takes Resource Works on a seven-part journey of understanding. This is the second part.
CANADIAN POLICY AND THE TWO SOLITUDES OF ENERGY/CLIMATE POLITICS
Any discussion of public policy and the Energy Transition must begin with the Paris Climate Accord, ratified by Canada in Oct. 2016. Prime Minister Justin Trudeau surprised most Canadians when he proposed a more aggressive target - 1.5C above pre-industrial levels instead of 2C - in Paris. At either number, Canada is going to struggle to meet its commitments.
Canada has pledged to lower annual GHG emissions from the current level of 726 Mt to 622 Mt in 2020 and 525 Mt in 2030.
According to Paul Boothe and Felix-A. Boudreault in their 2016 study “By the Numbers: Canadian GHG Emissions,” Canada’s emissions account for 1.6 percent of the global total. Canada is one of the largest developed world GHG emitters on a per capita basis; Alberta (68 tonnes) and Saskatchewan (67 tonnes) are the worst offenders, while BC, Ontario, and Quebec “are in the 10-14 tonne range, comparable to best performers in Western Europe.” Provincially, Alberta is tops at 267 megatonnes (Mt), while B.C. sits at 68 Mt.
Canada and the other nations basically agreed to a two-pronged strategy. One, decarbonize the existing energy systems as quickly as possible. Two, speed up the development and implementation of clean energy technologies - which in its simplest form means electrifying all facets of the global economy, which depends on coal, oil, or natural gas to supply more than 80 percent of its energy needs.
Canadians are on board with this strategy. An Oct. 2016 survey from Abacus Data asked how people would feel about a plan to “shift Canada’s energy use over the coming decades, including incentives to promote cleaner transportation and buildings, and pricing carbon to encourage a shift towards greater use of cleaner energy.” The pollsters found that 86 per cent support such a strategy, including majorities in every region of the country and across party lines.
“[The data] shows us that there are strong voices on either side of the energy and environment debate but for the most part, most average Canadians are somewhere in the middle,” said Abacus CEO David Coletto in an interview.
“They recognize the importance of our country dealing with the climate crisis, dealing with carbon emissions but, at the same time, they’re not willing to completely give up on the energy sector and see the importance of that to the country, that they almost want a balanced approach. We tested this hypothesis, that kind of balanced approached would find appeal, and that’s what we found in our survey.”
But the consensus identified by Coletto’s seminal poll doesn’t reflect the “two solitudes” of the Canadian energy and climate public debate, which is polarized between eco-activists (with the epicentre of the movement located in Vancouver) pushing hard for decarbonization and the transition to renewables, and energy boosters (centred in Calgary specifically and Alberta more generally) pushing for little or no regulation of GHG emissions.
Governments at all levels are stuck in the middle, pushed and pulled from both camps as they try to navigate the tricky job of managing the Energy Transition. This essential tension explains much of the political conflict around Canadian energy and climate policies.
Canada’s mid-century low greenhouse gas development strategy to 2050
In Nov. Environment Minister Catherine McKenna released Ottawa’s mid-century greenhouse gas reduction strategy: “The global economy is moving towards cleaner, more sustainable growth. Canada's mid-century strategy outlines how we will create the conditions for innovation and long-term growth, keeping Canadian businesses competitive and helping grow the middle class.
The strategy sets out four broad emissions abatement pathways related to the Energy Transition:
- Electrification “The electrification of end use applications that are currently using fossil fuels is fundamental, for example, using electricity to power certain cars, trucks, building appliances and heating systems, and energy requirements for some industries.” - P. 6
- Clean Energy Tech “Innovation in clean technologies, whether it is a breakthrough technology or one that improves the efficiency of an existing process, can lead to significant GHG abatement internationally as the new technology becomes utilised globally.” - P. 4
- Energy Efficiency and Demand-side Management “The International Energy Agency estimates that 38% of the required global emissions reductions associated with a 2°C pathway could be met through energy efficiency improvements.” - P. 6
- National Carbon Tax “Carbon pricing can provide the market signal required for private sector investment and innovation. Technology developers and users are best positioned to bring forward new technologies that will ultimately succeed.” - P. 4
Pan-Canadian Framework on Clean Growth and Climate Change
In early December 2016, Canada and eight provinces - Saskatchewan and Manitoba were hold outs - reached agreement on the Pan-Canadian Framework on Clean Growth and Climate Change. The centrepiece of the agreement was the national carbon tax, announced in Oct. and scheduled to go into effect in 2018 at $10 a tonne and rising $10 a year until it reaches $50 a tonne in 2022. BC Premier Christy Clark negotiated an eleventh hour compromise to pause increases at $30/tonne, the BC rate, in 2020 and have an expert panel review further increases. Each province is expected to design its own carbon tax. If a province chooses not to do so, Ottawa will impose the national levy and return all monies raised to the provincial government. The Prime Minister described the national levy as “a floor price for carbon pollution.”
Western provinces
Alberta and British Columbia present special challenges to Canada achieving national emissions reductions, BC because of its liquified natural gas (LNG) development objectives and Alberta because of the oil sands.
BRITISH COLUMBIA
BC introduced the first carbon tax in Canada in 2008. UBC Prof. Sumeet Gulati says voters were initially skeptical of the tax, not believing the governing Liberals’ claim it would be revenue neutral (meaning business and income taxes would be lowered by the amount raised by the carbon tax). “If you look at the numbers, we've always rebated in BC more than what we've collected,” he said in an interview. “Since then, any party that has run against the carbon tax has lost the election.”
The carbon tax was in the political crosshairs again last summer, when Clark released an updated climate plan. She ignored virtually all the recommendations made by her external advisors, earning her these tweets from eco-activist Tzeporah Berman: “Being asked as member BC’s Climate Leadership Team what I think of this plan: Pathetic and cowardly. U can quote me,” and “Number of our 32 recommendations accepted in full today? Zero.”
UBC professor George Hoberg says that Clark’s plan does not reduce emissions at all before 2030, which puts an unfair burden on other provinces to make up the difference. He argues the BC government should have adopted the leadership team’s recommendations wholesale: “They came up with a very sophisticated plan and the premier virtually ignored it when they introduced the climate leadership plan.”
Many of the recommendations were practical and relatively easy to implement. For instance, phasing out diesel generation in remote communities and replacing it with renewable or low-GHG electricity. Or bumping up the renewable energy from 93 percent (almost all hydro) to 100 per cent, though the controversy surrounding the Site C dam project suggests achieving this recommendation might not as easy as it seems. Reducing fugitive methane emissions is another obvious winner.
But a couple weren’t winners at all.
The team’s report praised the California zero-emission vehicle standard, suggesting that leading jurisdictions, “have used this standard to successfully drive electric vehicle adoption.” Only the California standard has not been successful. Despite generous subsidies from both state and federal governments ($10,000 per vehicle in total), only 270,000 EVs are registered in the state, which is less than one per cent of the state-wide auto fleet. Gov. Jerry Brown’s goal of 1.5 million electric vehicles by 2025 will not be met, according to a 2016 report from the Natural Resource Defense Council.
In British Columbia. as of Sept. 31, 2016 a grand total of 4,698 were registered in the province, according to the FleetCarma website, only 0.13% of the provincial auto fleet. To meet even Clark’s modest goal of five per cent of the BC fleet being electric or hydrogren-powered by 2020, 55 per cent of auto sales over the next four years would have to be EVs. If that sounds ridiculous, consider the climate leadership team’s recommendation for the BC zero-emission standard (not yet enacted) to encourage 10 percent of sales by 2020; 22.5 percent by 2025; and 30 percent by 2030. The targets are completely unrealistic given the high cost and low range of EV batteries, and the fact the next generation battery design won’t be ready for another 20 years
Berman and her colleagues were also upset by Clark’s decision to leave the BC carbon tax at $30/tonne until 2020. At the time the BC government’s revised climate plan was announced, the Canadian government was still discussing its climate strategy with the provinces. Why would BC commit itself to an aggressive acceleration of the carbon tax without knowing what other provinces intended to do?
LNG
The 2013 BC election was all about - or so it seemed at the time - the many benefits the Liberal vision of a big LNG industry build out on the West Coast. Since then, Woodfibre has made a final investment decision to proceed, Fortis is expanding its Delta facility, and there has been a “conditional final investment decision” on the $27 billion Pacific NorthWest LNG.
The BC Liberal 2017 re-election platform has the stated goal of “three LNG plants moving to construction by 2020”, while the trade group representing competing LNG developers says its members remain committed to their projects and have already spent billions. Not everyone is so certain. According to University of Calgary economist Jennifer Winter: “Canada has some benefits but we are a more challenging environment, especially because it is a new industry for BC.”
Support for Trans Mountain Expansion
Critics say the two are simply incompatible. And it didn’t help that Premier Clark finally supported the 525,000 barrels a day Trans Mountain Expansion pipeline project. “Many environmentalists and policy analysts believe her promotion of LNG production runs counter to reducing emissions,” says Prof. David Tindall in an email. “And they also believe her acceptance of the Kinder Morgan pipeline expansion also runs counter to reducing emissions.”
ALBERTA
The Alberta government introduced the Climate Leadership Plan in Nov. 2015. Supporters hailed it as the most aggressive climate mitigation policy in North America. Critics said it imposed unnecessary tax burdens on consumers, businesses, and the provincial fossil fuel sector.
The Alberta Climate Leadership Plan has four main components:
- Province-wide carbon price on greenhouse gas emissions: Unlike the BC carbon tax, the Alberta version is not strictly revenue-neutral because 60 percent will be rebated to lower and middle income households, while the remaining 40 percent will be applied to green energy programs, including helping the Alberta oil industry develop and adopt new technologies to lower the carbon-intensity of its processes and product. The $20-a-tonne levy will increase to $30 in 2018.
- End coal-generated electricity, more renewable energy: In 2015, coal made up 51 percent of Alberta power, natural gas was 39 percent, and wind was 5 percent. By 2030 coal will be entirely phased out, replaced two-thirds by wind and solar and one-third by gas.
- Capping oil sands emissions at 100 megatonnes per year: The oil sands are the single biggest source of greenhouse gas emissions in Canada. How to reduce their emissions so that Alberta and Canada can meet climate targets is a source of considerable political conflict between opponents (shut them down or severely limit growth) and supporters (do nothing or only decarbonize what can be done for nominal cost). Rachel Notley’s NDP government chose the middle road by imposing a 100 megatonnes cap (current annual emissions are 70 megatonnes) and providing “output based allocations” that act as a subsidy to innovative producers that use technology to lower emissions, and penalize those that don’t.
- Reducing methane emissions by 45% by 2025: Methane is from 25 to 84 times as potent a greenhouse gas as carbon dioxide. Both the American and Canadian government have committed to reduce their fugitive methane emissions by 40 to 45 per cent, mostly by reducing flaring during oil and gas production, and fixing leaks in processing facilities and distribution systems (e.g. transmission pipelines).
Despite the accolades heaped upon the Alberta plan outside the province - Prime Minister Trudeau said he couldn’t have approved the Trans Mountain Expansion pipeline without it - the carbon tax remains intensely unpopular within the province. Surveys conducted by Mainstreet Research found rural Albertans especially opposed, at just 16 percent approval. Support was somewhat better in the two big cities, but overall just 34 percent of Albertans liked the levy in the months immediately after it came into effect on Jan. 1, 2017.
CONCLUSION
The interplay between climate and energy policy and politics is complex. Canadian politicians - including Trudeau, Clark, and Notley - appear to be sincere in their commitment to reducing national greenhouse gas emissions. At the same time, Canada is a “hewer of wood and drawer of water” and extracting and transporting natural resources like oil, gas, minerals, forestry products tends to be energy-intensive. As is their historical wont, Canadians lean toward a middle way, a moderate approach to managing the Energy Transition. But the political voices leading the debate on the Energy Transition are fractious and polarized.