Canada Needs Policy Conditions That Support Innovation and Change
By Jim Burpee, President and CEO, Canadian Electricity Association, 28/03/2012
CEA President and CEO Jim Burpee was invited to be a guest blogger on www.letstalkenergy.ca, a website for discussion on Canada’s energy strategy. This blog entry has been reposted with consent.
Electricity is fundamental to maintaining prosperity and meeting the needs of Canadians. From hospitals that Canadians depend on for health services, to home appliances, to personal electronics and communications – reliable electricity that is available on demand has never been more critical.
The renewal of Canada’s electricity infrastructure
There is currently no greater challenge to the electricity sector than investing in new and innovative infrastructure to renew our existing system, accommodate load growth, and meet the needs of our customers. Electricity infrastructure must be reliable and capable of handling a diverse range of fuel supply and demand options, including wind generation and smart grid technologies. The industry needs governments and communities to partner in and support these efforts to ensure a reliable and sustainable electricity system for generations. This means timely approval of new projects, better investment conditions, and greater acceptance of electricity infrastructure by stakeholders and the general public.
The Canadian electricity sector understands that it must address our infrastructure challenge in a sustainable manner. Sustainable development that encompasses environmental, societal, and economic impacts will be a cornerstone of the industry’s strategy for replacing existing electricity infrastructure and building new infrastructure. The electricity sector in Canada is working to continuously improve its performance on sustainability, and is committed to minimizing any adverse environmental, social and economic impacts. This can be accomplished through investments in innovative technologies and ideas; working in partnership with employees, Aboriginal Peoples, stakeholders, and communities; and maintaining a reliable electricity system for Canadians.
Electricity and the economy
Electricity is a fundamental driver of the Canadian economy.
Electricity constitutes almost one-quarter of all the energy used by Canadians. In most applications, there is no viable substitute. A reliable, cost-effective and sustainable electricity supply is vital for economic growth and to the future prosperity of our country.
For example, the August 2003 blackout in Southeastern Ontario and the North-eastern United States contributed to a 0.7 percent decline in Canada’s gross domestic product (GDP) during that month, along with a net loss of 18.9 million work hours. This example illustrates the importance of electricity reliability, both to the economy and to the quality of life of every Canadian.
The current economic downturn, while potentially causing a reduction in power consumption in some provinces in the short-term compared to forecast needs, is not expected to substantially affect long-term requirements. Despite the shift nationally from an industrial economy to a more service-oriented economy, economic and population growth continue to create new demand for electricity every day. Although household appliances have become more energy efficient, the number of electrical devices per household continues to grow. While business and industrial processes have gained efficiency, computing and Internet technologies have created new and growing forms of electricity demand, such as server farms and data centres. Plans to electrify traditionally fossil-based technologies, particularly in the transportation sector, will result in further increases in electricity demand.
Current policy challenges and opportunities
The Canadian electricity industry will continue to push for greater conservation efforts and the development of a conservation culture as we move forward with modernizing Canada’s electricity infrastructure. Regardless, Canada will still have to invest in new infrastructure to keep pace with growing demand and aging generation, transmission and distribution infrastructure.
While the industry works to modernize the grid, there is an opportunity for governments to establish a policy framework to encourage adoption of innovative technologies with the orderly turnover of existing generation assets. However, the continuing uncertainty surrounding climate change mitigation policy represents significant risk to this modernization exercise.
In 2010, Canada submitted its 2020 emission reduction targets under the Copenhagen Accord, aiming for a 17 percent reduction in emissions compared to levels recorded in 2005. Canada intends to contribute to the G8 goal of attaining global emission reductions by 50 percent in the year 2050. In an effort to make progress towards such aspiring goals, the Canadian government is enacting a sector-by-sector approach aligned with the U.S.
On August 27, 2011 the proposed Reduction of Carbon Dioxide Emissions from Coal-Fired Generation of Electricity Regulations was published in the Canada Gazette Part I. The proposed Regulations are, in essence, a coal-fired generation shutdown policy. Unfortunately, there are unintended consequences of this regulation. Namely, as a result of the lack of alignment with provincial requirements, there is a lack of flexibility for compliance, along with an unachievable performance standard. The federal government has provided the industry with few options for coal replacement.
Canada’s electricity sector is currently composed of over 80 percent non- CO2 emitting electricity generation, while the remaining non-emitting sources contribute to approximately 2 percent of total global Greenhouse Gas (GHG) emissions and 16 percent of Canada’s overall GHG emission levels. Today, coal remains a key component of Canada’s diverse energy supply, accounting for as much as 15 percent of electricity generation.
Further development and use of conventional and new clean forms of energy, as well as carbon capture and storage in certain regions, can play a significant role in maintaining diversity of generation and decreasing environmental impact. It is essential that new transmission interconnections be built to transport electricity from remote generation facilities, particularly related to renewable energy. However, governments must create policy conditions that support these investments and partner with industry on new technological solutions.
Despite continuing national, regional and international policy uncertainty on climate change, the electricity sector is pursuing significant investments in new generation options – including large hydro, clean coal, and renewables – to reduce its overall carbon footprint. Some of the new hydro clean-energy projects include the proposed 900-megawatt Peace River Site C facility in British Columbia, the 200-megawatt Wuskwatim facility in Manitoba, and the 3,074-megawatt Lower Churchill (Gull Island and Muskrat Falls) generation project in Labrador (we should include the Ontario Lower Mattagami project as well). The industry is also pursuing Carbon Capture and Storage (CCS) technologies, particularly in Western Canada. These projects include Boundary Dam CCS demonstration project in Saskatchewan, and Keephills 3 CCS project in Alberta. The industry is also investing in wind generation, which currently accounts for 5,265 MW of installed capacity. These investments, along with various government programs, will have a tremendous impact on the overall electricity supply options and GHG emissions.
The Canadian electricity industry faces numerous challenges and opportunities; however, we are determined to meet them with the support of stakeholders, including governments at all levels. It is imperative that governments, including the federal government, create the right policy conditions to support innovation and change.
We look forward to working with all stakeholders to ensure Canadians continue to receive reliable, sustainable and cost-effective power in the years ahead.