By Hugh Holland and Dave Wilkin
Canada ratified the Paris Climate Agreement on October 5th, 2016, and recently raised the 2030 emissions target to a 40 – 45% reduction and to reach ‘net-zero’ emissions by 2050. Our chart shows the Government’s current pathway to 2030.
So, what is Canada’s progress? Below, in order by emissions share, is a sector snapshot and some observations and thoughts:
- Oil and gas – 27%
The six largest oil sands producers that operate 95% of Canada’s oil sands production have joined together in an organization called The Pathways Alliance. Their vision: “To help Canada meet its climate goals, we’re working together on an ambitious, actionable plan to reduce greenhouse gas (GHG) emissions from oil sands production in phases, with the ultimate goal of net zero emissions by 2050. Canada has the opportunity to be the preferred supplier of responsibly-produced oil to the world.”
During the global transition to clean energy, Canada has an obligation to help other NATO democracies deal with unexpected energy shortages such as Russia’s recent weaponization of oil & gas against the EU.
The sector will make $32.8 billion in capital investments in 2022 (down from the 2014 $81 billion peak), including a rising share in:
- Carbon Capture, Re-use, Storage
- preparing to use SMRs (Small Modular Nuclear Reactors) to co-generate electricity and zero-emission heat for in-situ oil extraction, upgrading, and refining.
- hydrogen production to replace diesel and jet fuel for heavy transportation and mobile equipment.
The Alliance recently asked for and received a two-year extension to meet the 2030 goal but remains committed to the 2050 goal.
- Transportation and mobile equipment – 24%
Canada is limited in what it can do alone in these global industries but is engaged in the efforts by global manufacturers to eliminate emissions from the sector. Together, global car and truck companies have committed $515 billion over the next decade to replace gasoline-burning vehicles and mobile equipment with battery-electric technology that uses up to 70% less energy.
Similarly, global manufacturers of diesel and jet engines are investing hundreds of billions to run on low/zero-emissions hydrogen. Here are some examples: for heavy trucks (Caterpillar), for trains (Caterpillar, Ballard), for ships (Ballard), for aircraft (GE, Pratt & Whitney, Rolls Royce), and for mobile construction and farm equipment (Caterpillar, John Deere, Case, Volvo). The federal government has incentivised Zero Emissions Vehicles (ZEV) sales quotas, like other western countries, while working to avoid restrictive trade practices that could disadvantage/restrict Canadian sector exports.
3. Buildings and heavy industry – 23%
Zero-emission cold climate heat pumps are now available and can reduce the energy required for residential and commercial heating by about a third. Heating systems are typically replaced on a 20-to-30-year cycle and the incremental upfront cost is offset by savings in energy cost. Federal incentives are available for retrofits.
Canada has long and successful experience with safe and reliable nuclear power, as well as strong support from the federal government and most provinces. Several Canadian companies are engaged in the development of SMRs. They will be available in a variety of sizes by 2030 and are unique in their ability to simultaneously cogenerate clean electricity as well as manageable amounts of zero-emission heat for industrial applications.
4. Agriculture and forestry – 11%
Canadian farmers are leading the way in sustainable agriculture. No-till farming minimizes soil erosion, the release of soil carbon into the air, the use of fossil fuels for tilling, and conserves water. SMRs (Small Modular Reactors) can replace fossil fuels as a source of zero-emission heat to make fertilizers.
5. Electricity – 8%
Canada’s electricity sector is currently among the cleanest and most economical in the world, and in better condition than in many countries. 82% of our electricity comes from hydro, nuclear, wind, and solar. Coal provides just 6%, with Alberta targeting its replacement with natural gas by 2023 while looking to SMRs for zero-emission electricity and heat long-term. Saskatchewan, New Brunswick and Nova Scotia are somewhat behind, but appear to be on similar tracks.
Electrical sector expansion is critical to reaching emissions targets. Its significant growth will be driven largely by rising EV (Electrical Vehicle) charging, heat pumps, higher peak summer demands and a growing population.
Over the next eight years, baseload nuclear power is temporarily reduced as we cycle through the 10-year refurbishment of Ontario’s existing nuclear plants. Current plans have that power loss being filled by running the gas power plants longer. Consideration should also be given to increasing peak solar capacity to mitigate peak summer demand. Big-box stores, warehouses, factories, and government buildings could be incentivised to maximize roof-top solar rather than displacing carbon-absorbing farmland with utility-scale solar plants. Large-scale wind farms also have significant land-use downsides and intermittency issues, so their role will be limited as well.
Longer term, SMRs will be available in a variety of sizes and are unique in their ability to simultaneously cogenerate zero-emission electricity and heat. The first commercial SMR in North America is being installed at OPG (Ontario Power Generation) Darlington, scheduled to be operational in 2028.
The timelines and costs to improve & grow power grid infrastructure are large, and Canadian grids, Ontario’s included, are aging. New capacity to handle rising demand, smart technologies, strengthened security and higher resiliency to extreme weather further increases the urgency and costs.
Expanding grid interconnectivity between bordering provinces and states should be considered. However the ambitious & often proposed “nationwide” electricity grid looks to be a step too far given our spotty track record on interprovincial trade. To minimize bureaucratic delays, it seems best for each province to manage its own electricity grid.
So, the bottom line is that meaningful action is underway across the sectors, but the bulk of the heavy lifting lies ahead. 2021 saw global emissions rebound to reach a record high, and 2022 appears on track to surpass that. Canada’s emissions are likely to rise again too.
To reach the aggressive reduction targets, we will need all hands on deck and accelerated investment within a sustainable energy security/growth/fiscal balance.