Canada’s Energy Future And The Perils Of Dangerous Optimism

In recent weeks, media attention has centred on the Alberta convoy to Ottawa, the National Energy Board’s reconsideration report on Trans Mountain and Alberta Premier Rachel Notley’s senate testimony on Bill C-69.

In the midst of all this, the visit to Canada of International Energy Agency head Fatih Birol did not even register a blip. Birol spoke to a well-attended event in Ottawa, but his presentation received no media attention.

In fairness, the attractiveness of a data-driven IEA presentation pales in comparison to trucks jamming downtown Ottawa, street protests in Vancouver or a premier pushing back on the feds, but it pointed to some of the reasons Canada’s experiencing such heated politics on energy.

It also underscored why seasoned energy observers are often frustrated at what passes for debate — and sometimes policy — on energy and climate.

Some views are dangerously optimistic when it comes to the nature and speed of energy transition. Many seem to think Canada can meet its Paris targets by ramping up wind and solar power, increasing electrification of the energy system and rapidly reducing — if not outright shuttering — oil and gas production.

A hard-nosed look at domestic and global energy and energy-related emissions explains why these views raise red flags. Recent experiences at home and abroad with community, citizen and consumer backlash on everything from energy prices to carbon taxes to renewable power projects also drive concerns about dangerous optimism.

Start with electrification. Currently, electricity accounts for a slim 20 per cent of Canada’s primary energy demand. The rest is fossil fuels. Turning that ship around will take time and money — a lot of it. Yes, the cost of solar and wind has declined substantially, but they still account for only five percent of the country’s electricity mix. And that’s just their share of electricity — in total energy demand, they account for roughly one per cent.

One per cent.

That’s a long ways from calls for ‘100 per cent renewable’.

Even if Canada’s vast hydropower resources are included, the share of the nation’s energy mix accounted for by renewable electricity is still a fraction of overall energy demand — less than 15 per cent. Add in non-emitting nuclear and the proportion crawls up a little further, but it is still less than 20 per cent.  

Rigorous scenarios like those in the Trottier Energy Futures Report suggest that for Canada to meet its 2050 GHG reduction commitments, among other measures, the country would need to more than double its electricity capacity — from about 150 gigawatts to over 300. This whopping increase equates to building more than 150 projects the size of British Columbia’s Site C hydro dam.

One hundred and fifty.

Can Canada build 150 Site Cs in three decades? The Site C experience, to put it mildly, suggests not.

It’s important to be optimistic, but it’s perilous to be dangerously so.

Wind, solar and other distributed energy sources will certainly play an important role going forward, but they are not immune from opposition. Will citizens and communities accept the vast infrastructure builds — and their associated costs — to generate electricity and transport it to consumers? If this means higher prices, how will consumers react?  

None of this means Canada’s energy future should be business as usual, but rather, that the country needs to take a sober look at what is feasible in the real worlds of politics, economics, citizen demands, consumer expectations and investor confidence. Otherwise, Canada risks taking one step forward and two or more back.

What about the future of oil and gas?

The IEA projects that global energy demand will continue to grow, including demand for oil and gas. Taking into account existing and planned policies, the IEA projects that global demand will grow by more than 25 per cent between 2017 and 2040, driven mainly by Asia. It forecasts that renewable energy will meet 45 per cent of the increase, but natural gas is not far behind, at just over 35 per cent.

In fact, demand for natural gas is projected to increase 43 per cent between 2017 and 2040. Oil consumption is also expected to grow through to 2040, from 95 million barrels per day in 2017 to 106 million in 2040. All told, fossil fuels are expected to constitute almost three quarters of global primary energy demand in 2040, a mere seven per cent reduction from 2017.

But this is not enough to meet Paris targets. The IEA produces a scenario that incorporates Paris, and it likewise projects that fossil fuels will continue to be the main energy source going forward, representing some 60 per cent of global demand in 2040. Oil and gas alone are expected to account for almost half of demand in 2040.

Half.

It’s a far cry from 100 per cent renewable.

And it’s difficult to reconcile with calls to land lock Canadian oil and gas. If the country can produce oil and gas with a competitive emissions performance and displace higher emitting sources of energy elsewhere, why should they not be part of the world’s — and therefore Canada’s — energy future?

Finally, take language. Dangerous optimism seems to be baked into the terms of art. When it comes to climate policy, the goal is clearly ‘low emissions,’ but somehow the term ‘low carbon,’ which tilts towards fuel determinism — no to fossil fuels period — has come to dominate the lexicon. Similarly, ‘clean energy,’ often used to refer to renewable sources of energy, fosters fuel determinism by suggesting that energy sources can be categorized as ‘clean’ or ‘dirty,’ when all forms of energy have environmental impacts. Why not keep language focused on emissions and let energy sources compete on that basis?

Canada has tough choices ahead on energy in an age of climate change. It is important to be optimistic — a positive attitude will be needed when the going gets tough, which it surely will at times. But dangerous optimism serves no one — not those looking to develop energy resources nor those looking to reduce their climate impacts.

So how can Canada avoid the perils of dangerous optimism?

First, recognize that such a thing exists and that it hamstrings the country’s ability to effectively address challenges and seize opportunities.

Second, be sure debates about energy and climate position Canada in its domestic and global circumstances.

Third, pay attention to language and avoid terms that foster dangerous optimism.

Finally, make climate policy as if energy mattered (and vice versa). Climate action that does not adequately take into account the economic, environmental, political, social and security imperatives of energy is likely to fail.

All told, maybe it’s time for a different kind of optimism about Canada’s energy future, one that fosters forward steps — not missteps — in the years ahead.