Energy has been in the news a lot recently. Here are four important messages that Canadians can take away from some recent events.<\/p>\n\n\n\n
#1. Energy security and resiliency matter most <\/strong><\/p>\n\n\n\n European governments ignored fossil-fuel supply diversification while prioritizing climate change over energy security. Now skyrocketing energy prices have left them scrambling to secure fossil fuels (including coal), pushing to slash energy usage, capping prices, and providing emergency relief spending approaching a trillion dollars. They hope for a warm winter but it\u2019s going to get uglier as the costs mount and damages to their industrial core grow, all with no end in sight.<\/p>\n\n\n\n This was not all due to the Ukraine war, as politicians like to claim. The seeds were sown by years of Western government hostility towards fossil fuels leading to producers scaling back investments<\/span><\/a> and production, reducing global supply and reserves<\/span><\/a>. Then Europe\u2019s energy shortages worsened as a cold winter followed by a hot, dry, less windy summer undermined renewables-heavy power systems. <\/p>\n\n\n\n Last year Texas experienced a severe winter storm, triggering widespread power outages while coming close to a total power grid collapse. In California, grid emergencies<\/span> <\/a>and power outages, (again) brought on by a hot dry summer, resulted as their power system struggled. In both cases, resiliency-deficient systems combined with large-scale wind and solar power share were the root cause. <\/p>\n\n\n\n In Atlantic Canada, hurricane Fiona underscored the urgent need for improved power system resiliency. <\/p>\n\n\n\n In a future where more energy will be grid-delivered, resiliency will matter much more. Yet aging power systems and gross underfunding is widespread. It turns out that shunning fossil fuels before reliable\/affordable alternatives are widely available is bad energy policy.<\/p>\n\n\n\n #2 Wind\/Solar – not cheaper<\/strong><\/p>\n\n\n\n Ontario\u2019s electrical system operator recently estimated the cost to replace natural gas power with wind\/solar at over $27 billion<\/span><\/a>, which would push residential energy bills up an estimated 60 percent. This was considered an \u201coptimistic scenario\u201d, leading to blackouts, while removing less than one percent of Canada\u2019s GHG emissions. Yet opposition parties oppose gas plants<\/span><\/a>, including replacing base-load power lost as our nuclear power plants go through refurbishments, and instead push for more wind, solar, and battery power. <\/p>\n\n\n\n Large grid-scale wind and solar power deployment is costly and much more so if government subsidies are removed. The reason behind this is their intermittency. Power output shortfalls can persist for months, as Europe and California have experienced, so duplicate on-demand power sources are needed. Their distributed nature also means additional costly grid upgrades are needed. These costs are seldom included. As the grid share of wind & solar power rises, so too do utility rates. In California, they are double Canada\u2019s and in most of Europe it\u2019s more than triple, as wind\/solar grid shares range between 20 to 40 percent.<\/p>\n\n\n\n Despite claims of continuing cost declines, the reality is they are headed higher. Solar panels<\/span><\/a>, wind turbine<\/a>s<\/span>, batteries<\/span><\/a> and the rare-earth materials<\/span><\/a> required have been largely off-shored to low-cost developing countries, especially China. As deglobalization continues, costs will rise. Then consider that their manufacturing and construction uses far more commodities per unit of energy<\/span><\/a> generated, meaning shortages will only grow over time, pushing costs higher. Example – solar panel costs are up by half since 2020<\/span><\/a>. Expect this trend to continue.<\/p>\n\n\n\n #3. A Nuclear renaissance? <\/strong><\/p>\n\n\n\n As renewables struggle, nuclear power\u2019s star may be rising<\/span><\/a> again, notably in Europe and the US. This, after a 20 percent decline over two decades in OECD countries, resulting in ceding of global leadership to Russia<\/span><\/a> and China<\/span><\/a>, who led the 50 percent expansion of nuclear power in non-OECD countries.<\/p>\n\n\n\n Canada has a successful nuclear power track record, but it has not grown for a decade, and it\u2019s set to decline this decade. Canada\u2019s Federal government commitment to it remains mixed, investing $27 million in Westinghouse\u2019s eVinci\u2122 Micro Reactor<\/span><\/a> development while explicitly excluding nuclear from their recent $5 billion Green Bond announcement<\/span>.<\/a> Not good enough.<\/p>\n\n\n\n #4. Non-OECD countries matter more <\/strong><\/p>\n\n\n\n Over two decades, non-OECD (Organisation for <\/strong>Economic Co-operation and Development) countries added 1.7 billion<\/span><\/a> people and tripled their GDP, doubling their fossil fuel consumption. Their producers, mostly in OPEC+ countries dominated by National Oil Companies, own 87 percent of global oil & gas reserves. My graph shows their fossil fuel production grew by 80 percent, but exceeded domestic consumption by a narrowing margin, meaning they are exporting a shrinking share to OECD countries. The West\u2019s sanctions on Russia have accelerated this trend, as Putin squeezes European energy flows in retaliation, and pivots to Asian countries. Then recently Saudi Arabia ignored US President Biden\u2019s pleas for increased production by leading an OPEC+ 2 million barrels crude oil cut, placing more upward pressure on oil prices, and supporting export revenues.<\/p>\n\n\n\n My graph also shows the WEF\u2019s Great Reset<\/span><\/a> is nowhere in sight, as fossil fuel consumption strongly rebounded last year. That Reset called for a \u201cnew social justice contract\u201d anchored on green renewable energy. It\u2019s ambitious, but coming from jet-setting elites, it\u2019s also hypocritical. In developing countries affordable energy remains a top priority, critical to their economic development and poverty reduction goals. Fossil fuels remain core to that, supplying 86 percent of their primary energy today. Their Energy\/Capita is just a third that of OECD countries, while in Africa it\u2019s a paltry 9 percent, so they see the disparity and hypocrisy. That said, a very different Reset may be forming as the energy crisis persists.<\/p>\n\n\n\n My chart also shows non-OECD countries’ world share trends, including my 2050 projection where their recent trends continue Business-As-Usual (while OECD countries transition) leading to a doubling of GDP and energy consumption, with 60 percent fossil fuels. The cost to shift to a 15 percent fossil fuels future tops $120 trillion in energy-system capital spending alone, roughly 7 percent of their GDP yearly. A very hard message indeed.<\/p>\n\n\n\n All of the above, especially the impacts from botched European and US energy policy, send clear messages. Despite this, our Federal Government continues to repeat many of the same failing policies. A change is now needed to better manage Canada\u2019s energy transition.<\/p>\n\n\n <\/p>\n\n\n\n <\/p>\n\n\n\n Dave Wilkin is a Professional Engineer, with a master\u2019s degree in Electrical Engineering from the University of Toronto. His career spans over 40 years in Information Technology, banking,<\/em> and energy. He is currently a co-owner in a small energy consulting company and lives in Huntsville, Ontario.<\/em><\/p>\n\n\n\n <\/p>\n\n\n\n <\/p>\n\n\n\n <\/p>\n\n\n![\"\"\/](\"https:\/\/lh4.googleusercontent.com\/qiEazRMLjcOH_shSqqmmSq103XDIN6n8aPd_hC9gJUejikbsa4lVuUTkqAWqwmfZCaRZ_KLubtg8cAehbjvPgITyBG085jipDsVEgfsvHjJF5l58vqgGffuZDEg2UohNS9w3BBFYXNvo1TEkdamQzcs4sSE1aYlVieCSE7w4nnYUCBhcnFGVlEucwwbI0vAnqu-1iw\")
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