As the country’s need for power grows through the decarbonization of transportation, industry and space heating, the Liberal Party climate plan is proposing a clean energy standard to help Canada achieve a 100% net-zero-electricity system by 2035. 

The proposal echoes a report released August 19 by the David Suzuki Foundation and a group of environmental NGOs that also calls for a clean electricity standard, capping power-sector emissions, and tighter carbon-pricing regulations. The report, written by Simon Fraser University climate economist Mark Jaccard and data analyst Brad Griffin, asserts that these policies would effectively decarbonize Canada’s electricity system by 2035.

“Fuel switching from dirty fossil fuels to clean electricity is an essential part of any serious pathway to transition to a net-zero energy system by 2050,” writes Tom Green, climate policy advisor to the Suzuki Foundation, in a foreword to the report. The pathway to a net-zero grid is even more important as Canada switches from fossil fuels to electric vehicles, space heating and industrial processes.

While the NDP and Greens also call for a net-zero grid by 2030 (five years earlier than the Liberals), only the Liberals have promised to institute a clean electricity standard, which is the specific mechanism under federal law that would permit Ottawa to use regulation and carbon pricing to achieve its target. And while the Conservatives promise to upgrade the grid, their platform doesn’t include a net-zero electricity system target.

Under Jaccard and Griffin’s proposal, a clean electricity standard would be established to regulate CO2 emissions specifically from power plants across Canada. In addition, the plan includes an increase in the carbon price imposed on electricity system releases, combined with tighter regulation to ensure that 100% of the carbon price set by the federal government is charged to electricity producers. The authors propose that the current scheduled carbon price of $170 per tonne of CO2 in 2030 should rise to at least $300 per tonne by 2050.

In Alberta, Saskatchewan, Ontario, New Brunswick and Nova Scotia, the 2030 standard would mean that all fossil-fuel-powered electricity plants would require carbon capture in order to comply with the standard. The provinces would be given until 2035 to drop to zero grams CO2 per kilowatt hour, matching the 2030 standard for low-carbon provinces (Quebec, British Columbia, Manitoba, Newfoundland and Labrador and Prince Edward Island). 

Alberta and Saskatchewan targeted 

Canada has a relatively clean electricity system, with about 80% of the country’s power generated from low- or zero-emission sources. So the biggest impacts of the proposal will be felt in the higher-carbon provinces of Alberta and Saskatchewan. Alberta has a plan to switch from coal-based electric power to natural gas generation by 2023. But Saskatchewan is still working on its plan. Under the Jaccard-Griffin proposal, these provinces would need to install carbon capture on their gas-fired plants by 2030 and carbon-negative technology (biomass with carbon capture, for instance) by 2035. Saskatchewan has been operating carbon capture and storage technology at its Boundary Dam power station since 2014, but large-scale rollout at power plants has not yet been achieved in Canada. 

With its heavy reliance on nuclear and hydro generation, Ontario’s electricity supply is already low carbon. Natural gas now accounts for about 7% of the province’s grid, but the clean electricity standard could pose a big challenge for the province as it ramps up natural-gas-generated power to replace electricity from its aging Pickering station, scheduled to go out of service in 2025. Pickering currently supplies about 14% of Ontario’s power. 

Ontario doesn’t have large geological basins for underground CO2 storage, as Alberta and Saskatchewan do, so the report says Ontario will have to build up its solar and wind generation significantly or find a solution to capture CO2 from its gas plants. The Ontario Clean Air Alliance has kicked off a campaign to encourage the Ontario government to phase out gas-fired generation by purchasing power from Quebec or installing new solar or wind power.

As the report points out, the federal government has Supreme Court–sanctioned authority to impose carbon regulations, such as a clean electricity standard, and carbon pricing on the provinces.

The federal government can also mandate a national approach to CO2 reduction regardless of fuel source, encouraging higher-carbon provinces to work with their lower-carbon neighbours. The Atlantic provinces would be encouraged to buy power from hydro-heavy Newfoundland, for example, while Ontario would be encouraged to buy power from Quebec, Saskatchewan from Manitoba, and Alberta from British Columbia.

The Canadian Electricity Association, the umbrella organization for Canada’s power sector, did not respond to a request for comment on the Jaccard-Griffin report or the Liberal net-zero grid proposal.

Liberal-NDP battle over climate policy

The proposed clean electricity standard is part of a Liberal-NDP battle over climate policy in the current election campaign, prompted in part by an assessment by Jaccard of the parties’ climate platforms. Jaccard has rated the overall Liberal climate plan as 8/10, which is not surprising given that his own recommendations for carbon pricing and the more recent clean electricity standard are in the plan. At the same time, he ranked the NDP’s climate platform at 2/10, saying it was hobbled by unrealistic burdens on industry to pay for decarbonization.

Ironically, the NDP plan calls for the kind of strong regulation and stringent carbon pricing throughout the economy that Jaccard specifically recommends for the electricity system in his net-zero electricity report.

Just how much more clean power will Canada need? 

The proposal has also kicked off a debate about exactly how much additional electricity Canada will need in coming decades.

In his 2015 report, Pathways to Deep Decarbonization in Canada, energy and climate analyst Chris Bataille estimated that to achieve Canada’s climate net-zero target by 2050 the country will need to double its electricity use by that year.

Jaccard and Griffin agree with this estimate, saying that Canada will need more than 1,200 terawatt hours of electricity per year in 2050, up from about 640 terawatt hours currently.

But energy and climate consultant Ralph Torrie (also director of research at Corporate Knights) disputes this analysis.

He says large-scale programs to make the economy more energy efficient could substantially reduce electricity demand. A major program to install heat pumps and replace inefficient electric heating in homes and businesses could save 50 terawatt hours of consumption on its own, according to a recent report from Torrie and colleague Brendan Haley. 

Put in context, 50 terawatt hours would require generation from 7,500 large wind turbines. Applied to electric vehicle charging, 50 terawatt hours could power 10 million electric vehicles.

While Torrie doesn’t dispute the need to bring the power system to net-zero, he also doesn’t believe the “arm-waving argument that the demand for electricity is necessarily going to double because of the electrification associated with decarbonization.” 

Eugene Ellmen writes on sustainable business and finance. 

The post Cleaning up Canada’s electricity is critical to meeting climate pledges appeared first on Corporate Knights.

The good news is that humility brought massive changes in behaviour to limit the risk and unlocked enormous public and private resources to resolve it. Social distancing buys time. A vaccine puts the boundary back in place. Our collective response is a moral one: we took on staggering costs in the blink of an eye to protect ourselves. A united public sector is arbiter of that moral dimension. It defines the framework by which we act, and only it can provide the foundation upon which the economy recovers.
That unlocks a once-in-a-lifetime opportunity: as the global corporate world leans – once again – on the public purse for recovery, we might demand in return a renewed “climate capitalism,” a sustainable economy built for the 21st century.

Climate risk looks a bit like COVID-19, if you squint. Climate risk is the mother of systemic risks. We’re changing the planetary-scale boundary conditions under which civilization evolved: the patterns of weather and water that dictate how we get our food and where we build our cities. Inaction on climate risks our security, civic infrastructure and institutions. The response to climate risk is thus also a moral one: we act to keep ourselves safe. The public sector is director of the show, the private sector its actors.

COVID’s threat feels closer than climate, though – right? That’s why we called a political truce and acted with urgency. We want to protect our aunts, dads and friends – today. And climate’s still way over the horizon. Well . . . did COVID feel so immediate a few months ago? The risk of a pandemic was always there; we just ignored it. And the climate threat feels less distant with each new firestorm, flood or drought. Ask an Australian how up-close and personal climate risk feels, or someone whose home burned in Fort McMurray or California. A new generation, led by Greta Thunberg, certainly feels an immediate sense of insecurity.

We have to invent a vaccine for the climate crisis – it’s called climate capitalism

There’s one crucial difference no amount of squinting can reconcile. Worst case on COVID is we screw up on social distancing but still resurface in a year or so when a vaccine comes along. We can fail on COVID and recover. Failure on climate is forever. There’s no putting planetary boundaries back once they shift to more energetic and dangerous states. It’s a one-way trip. There’s no equivalent of social distancing to buy time, marshal resources and plan a counter-attack. So we have to invent a vaccine in advance. That’s climate capitalism: a vaccine to anticipate climate risk.

Left and right united under COVID – Trudeau and Ford working together! – because people won’t tolerate leadership that can’t protect them, whatever their political stripes. You don’t have to be a lefty to appreciate a strong public sector today. Neither must you be a Wall Street titan to understand market forces; big corporations and private capital are powerful tools to solve wicked problems – if given focus. We see that with COVID: the private sector scales up needed tech – tests, vaccines, treatments – when coordinated and incented by the public sector. Climate capitalism is no different: the private sector can and will act decisively on climate but only when incented and directed by an empowered and united public sector.

But on climate the political divide grows wider. Many on the far left – led by Naomi Klein – blame capitalism itself for climate risk and would have us throw it out. This is misguided in three ways. First, we can’t possibly rebuild energy systems without private capital, innovation and all the complex activity only markets can organize.

Greenhouse gases aren’t DDT – you can’t just ban them. Second, radicalizing the politics of climate hinders the work of building the large tent needed for decisive action in a democracy. Third, it sets arbitrary limits on what capitalism can look like. If Klein’s target were limited to American-style free-market fundamentalism, she’d have many allies, including me.

On the other side of this cultural divide sit reasonable people, civic and business leaders who understand that climate risk is real but prefer an incremental approach. They fear radical intervention in the economy. Instead, it’s proposed we nibble around the edges. That too is misguided – a bit like lifting COVID’s social distancing restrictions too soon because you fear short-term pain. The reduction in risk is illusory. It’s the long game that matters. It’s too late to nibble around the edges; only deep, radical cuts in emissions will do. Incrementalism feeds into Klein’s radical narrative: “See? Capitalists won’t do what’s necessary. Let’s bring it all down!

Nothing can redeem COVID. But it offers us a once-in-a lifetime window to fund that vaccine.

Capitalism isn’t monolithic. It means different things to different people. For an ordinary person, it might mean owning your own bakery, working for options in a tech start-up or watching your RRSP grow so you can retire in comfort. It can mean Russia’s anarcho-capitalism, Indonesia’s crony capitalism or China’s state capitalism. Sweden is as much a capitalist country, on this view, as America. There’s no preordained role for the public sector. Roosevelt’s New Deal didn’t make the U.S. any less capitalist. Nor is private capital sacred – it moves under a legal framework that citizens endorse. There’s no predetermined moral dimension: it’s neither good nor bad, but reflects human complexity.

Climate capitalism is a rewiring of the economy using whatever works to put a cork in emissions – whether they come from the left, right or anywhere else. Economic radicalism is not the same thing as political radicalism. We harness as many existing institutions as possible for the sake of expediency. We don’t throw out the machinery of capitalism; we replace the fuel.

Twenty years ago, the story would start and end here: price carbon – start low, ratchet it up slowly, keep it revenue-neutral so it’s not a government cash grab. Sit back and watch the market work its magic. Optimally efficient, it’s the incrementalist’s dream! Unfortunately, it’s too late for that soft landing. If your house is on fire, you don’t care if the hose leaks; you just want lots of water. Speed matters more than efficiency.

We need shortcuts – even if they’re less efficient. Here are some ideas.

Has anyone fought an election over efficiency regulations? Car mileage standards or the carbon content of fuel? Sustainable energy professor Mark Jaccard points out that the heavy lifting on emissions reductions thus far, whether in Canada or California, was borne by regulations. Many define an outcome – say, energy use in buildings – without defining how to get there. Jaccard calls them “flex-regs.” Fast, effective, often under the political radar.
Remember “Own the Podium” back in the Vancouver Olympics? We picked athletes who competed at an international level and gave them resources to train. Do the same for cleantech. Back companies with demonstrated traction in global markets with loan guarantees for production and project finance. Today, old stuff gets cheap capital, new tech doesn’t. Let’s flip that around. This isn’t the government picking winners; it’s the government backing winners – a big difference.

Teach young CFOs that energy costs are of strategic importance. Why? Because capital budgets are reserved for core investments – more T-shirt machines for a T-shirt company, bigger holes in the ground if you’re a miner. Energy retrofits are stuck begging from operating budgets, which means they need paybacks in a year or so. Most efficiency fruit remains unpicked, across the economy. Yet rare is the CFO who gets more than 15 to 20% on core capital, and efficiency pays twice that! No policy required, just fresh thinking.

Fund low-carbon infrastructure with green bonds, with a twist. The government raises cheap capital with a Canada Savings Bond–like instrument. The private sector bids on the right to deploy it. A public mandate incents those private money managers with a single metric: maximize carbon reduction at minimum cost to Joe Public. A green bank, done right, combines the public cost of capital with the private sector’s nose for profit.
Finally, use the most powerful institutions we have. We gave up a degree of sovereignty to the World Trade Organization. It has real teeth that impinge upon national governments. Leverage those teeth. The WTO (and World Bank and IMF) reflects the priorities of those who negotiated it. If Trump can upend NATO, imagine how an empowered group of national leaders might reform the WTO to level the playing field between countries by forcing climate laggards to bear carbon tariffs.

Nothing can redeem COVID. It’s a nasty little thing. But maybe it’ll help us hear experts on climate risk and reconcile the priority of long-term stability over short-term cost. We might also use the strongest public hand we’ve had in a long time and write a new climate contract between citizens, our governments and the private sector. If so, we’ll emerge the stronger for COVID, however horrid its impacts.

Tom Rand is a cleantech investor and author of The Case for Climate Capitalism: Economic Solutions for a Planet in Crisis.

The post Can climate capitalism cure what ails us? Fighting climate change in the age of COVID appeared first on Corporate Knights.