What’s ahead for Canadian climate and energy policy in 2021?

The Canadian government has a full climate change agenda ahead when it reconvenes Parliament on January 25, not the least of which will be the debate and passage of Bill C-12, the Net-Zero Emissions Accountability Act , analyzed by the Climate Action Network here.  After its introduction in November, C-12 was criticized for lacking urgency and specific plans – for example, in an article by Warren Mabee in The Conversation which calls for three per cent to four per cent GHG reductions “every year, starting now.”

On December 11, the government  released its latest climate plan,  A Healthy Environment and a Healthy Economy, previously discussed in the WCR and noted primarily for its proposed carbon tax hike to $170 per tonne by 2050. According to  “The good, the bad and the ugly in Canada’s 2030 climate plan” (The National Observer, Jan. 18):  “The good news is that …The government’s recently announced A Healthy Environment and a Healthy Economy plan contains enough new climate policy proposals that, if implemented, will allow Canada to reach its 2030 target. The bad news is….Climate laws enacted by Canadian politicians to date don’t come anywhere close to meeting our 2030 target. With time running out and a gigantic emissions gap to close, Canada needs to enact climate laws now.”

Clean Fuel Standard, Hydrogen, and Small Nuclear Energy Policies released

On December 19, the government released the long-awaited draft regulations for a Clean Fuel Standard, triggering a 75-day consultation period, with final regulations expected in 2021, to take effect in 2022.   According to the government Q&A  website, the new regulations differ from previous drafts in that they apply only to liquid fossil fuels : gasoline, diesel and oil.  Producers and importers of fossil fuels will be required to reduce their carbon content by 2.6% by 2022 and by 13% by 2030 over 2016 levels.  Clean Energy Canada compiled the reactions of several environmental groups here .  The Pembina Institute called the regulations “both fair and cost-effective” in a press release reaction.  Their report , The Clean Fuel Standard: Setting the Record Straight (Nov. 2020) stated: “ The Clean Fuel Standard is expected to create as many as 30,000 jobs as new clean fuel facilities are built, supplied and operated. While some job losses could result from choices made under the CFS, robust modelling shows a net gain for Canadian workers: Energy-economic modelling suggests the CFS will yield a net employment gain resulting in between 17,000 and 24,000 additional jobs.” These projections are taken from on a technical analysis, conducted by Navius and EnviroEconomics consultants before the switch in scope to liquid fossil fuels only.  

Next, on December 16, the Minister of Natural Resources Canada released A Hydrogen Strategy for Canada: Seizing the Opportunities A Call to Action, another long-awaited strategy document which is the result of three years of study, analysis, and consultations, along with collaboration with industry associations: the Transition Accelerator, the Canadian Hydrogen and Fuel Cell Association (CHFCA), the Canadian Gas Association, and others . The report states that the government will now establish a Strategic Steering Committee, with several targeted task teams, to implement recommendations.  Key highlights of the Hydrogen Strategy are here; the government’s Hydrogen website is here . 

From page 86, a glimpse into the thinking behind the report:

“The energy transition will fundamentally shift the Canadian economy and alter value chains in many related sectors. One shift of particular importance is the transition away from the direct burning of fossil fuels without carbon abatement. Canada’s energy sector accounted for 900,000 direct and indirect jobs as of 2017, with assets valued at $596 billion . This industry’s significant energy expertise and infrastructure can be leveraged to support the development of the future hydrogen economy in Canada. Hydrogen will be critical to achieving a net-zero transformation for oil and natural gas industries. It provides an opportunity to leverage our valuable energy and infrastructure assets, including fossil fuel reserves and natural gas pipelines, providing a pathway to avoid underutilizing or stranding these assets in a 2050 carbon neutral future. Leveraging these valuable assets will not only be instrumental in achieving the projected economic growth for the domestic market, but also presents the opportunity for Canada to position to become a leading global clean fuels exporter.”

Regarding regulatory changes, the report states: “Policies and regulations that encourage the use of hydrogen technologies include low carbon fuel regulations, carbon pollution pricing, vehicle emissions regulations, zero emission vehicle mandates, creation of emission-free zones, and renewable gas mandates in natural gas networks. Mechanisms to help de-risk investments for endusers to adapt to regulations are also needed.”  There is no mention of training or transition policies, although the report  forecasts a  job creation potential for hydrogen which might reach more than 350,000 jobs in 2050 at the upper end  – “a combination of new job growth and retrained and reskilled labour”. (pages 85 and 86).  

 An article in The National Observer discusses the strategy, the state of hydrogen initiatives in Alberta , and reaction of environmental groups, including a quote from  Environmental Defence, saying: “…. “a focus on fossil hydrogen only serves the interests of the oil and gas sector as they seek to create new markets for their products.” Similarly, Clean Energy Canada released a statement saying, “Canada’s long-awaited federal hydrogen strategy … falls short of what some other nations have put forward in terms of investment and ambition.”   A New Hope, published in October 2020, fleshes out Clean Energy Canada’s recommendations about hydrogen in Canada.

Finally, on December 18, Canada’s Minister of Natural Resources released a national Small Nuclear Reactor Action Plan (SMR) , which responds to the 53 recommendations identified in Canada’s SMR Roadmap from November 2018. The list of organizations endorsing the SMR Agenda reflects the entrenched “who’s who” of Canada’s “ 75-year nuclear energy heritage.”  Each of these organizations – governments, public utilities, Indigenous groups, and unions, contributed a chapter to the Plan – available here. Individual endorsements include: the International Brotherhood of Electrical Workers; The International Union of Operating Engineers ; Power Workers Union – which highlights the pending closure of the Pickering Nuclear Generating Station in 2025 and the need to transition that workforce; and the National Electrical Trade Council (NETCO) a workforce development organization for Red Seal electrical trades in Canada, jointly led by  the Canadian Electrical Contractors Association (CECA) and the International Brotherhood of Electrical Workers (IBEW) .

No new pipeline construction needed in Canada, and domestic fossil fuel consumption peaked in 2019

The key takeaway from a new flagship government report is that no new pipeline construction is needed in Canada, and  the current pipelines under construction – the TransMountain Expansion, Keystone XL, and Enbridge Line 3 Replacement- are sufficient to accommodate all future crude oil production.  The  new report, Canada’s Energy Future 2020: Energy Supply and Demand Projections to 2050, is the latest annual report by the Canada Energy Regulator CER- (formerly the National Energy Board) and discusses the future of all energy commodities under two scenarios – a Reference case and an Evolving Scenario, which includes a carbon price of $75 per tonne in 2040 and $125 per tonne in 2050.

Under the Evolving Scenario of increased policy intervention, Canada’s domestic fossil fuel consumption peaked in 2019 and by 2050, it will be 35% lower than the 2019 level. However, the report states that even under the Evolving Scenario, fossil fuel consumption is forecast to make up over 60% of Canada’s fuel mix in 2050.  It is worth noting that these CER reports have been criticized in the past for overestimating fossil fuel demand – for example, by the Pembina Institute in 2019, in “Why Canada’s Energy Future report leads us astray” . In 2020, Pembina calls for changes to the modelling assumptions for future reports, saying “the scenarios modelled in the report are still not aligned with commitments set out in the Canadian Net-Zero Emissions Accountability Act. This model of Canada’s energy future is not consistent with the future that Canada has committed to in the Paris Agreement.” Further, it points out “Canada’s Energy Future 2020 report does not reflect the range of recent scenarios for global oil demand, such as those recently released by the International Energy Agency and BP, where demand is predicted to fall by 50 to 75 per cent over the next 20 to 30 years in order to achieve net-zero emissions.”

Other reactions to the CER report focus on the forecast of declining need for pipelines , summarized in  “No Future Need for Trans Mountain, Keystone XL Pipelines, Canadian Energy Regulator Report Shows”  (The Energy Mix, Nov. 25), and even echoed in the conservative Financial Post .  Followers of David Hughes will recognize this argument that he has made many times, most recently in Reassessment of Need for the Trans Mountain Pipeline Expansion Project , published by the Canadian Centre for Policy Alternatives at the end of October .

The press release and summary from the Canada Energy Regulator report is here, with data sets and interactive tables here  and an archive of past annual reports here.  Beyond fossil fuel projections, this year’s Report includes a discussion of the transition to a  Net-Zero Emissions energy system, focusing on  personal passenger transportation, oil sands production, and remote and northern communities. It also briefly notes the impact of  the Covid pandemic, stating  “Canadian end-use energy demand will fall by 6% in 2020 compared to 2019, the biggest annual drop since at least 1990. Energy to move people and goods will fall the most due to less travel and increased remote work and learning.” (A report  published by the World Meteorological Office on Nov. 23 provides preliminary estimates of a reduction in the annual global emission between 4.2% and 7.5% because of Covid).

 

 

 

International Energy Agency roadmap for a sustainable recovery forecasts job growth led by retrofitting and electricity

The International Energy Agency, in cooperation with the International Monetary Fund, released a roadmap which would require global investment by governments of USD 1 trillion annually between 2021 and 2023 to create jobs and accelerate the deployment of clean energy technologies and infrastructure.  The World Energy Outlook Special Report: Sustainable Recovery , released on June 18th states:  “Through detailed assessments of more than 30 specific energy policy measures to be carried out over the next three years, this report considers the circumstances of individual countries as well as existing pipelines of energy projects and current market conditions.” The report data and analysis will form the basis for the IEA Clean Energy Transitions Summit on July 9 2020, where decision-makers in government, industry and the investment community will meet to discuss policy options for economic recovery post Covid-19.

From the report: ” Our new IEA energy employment database shows that in 2019, the energy industry – including electricity, oil, gas, coal and biofuels – directly employed around 40 million people globally. Our analysis estimates that 3 million of those jobs have been lost or are at risk due to the impacts of the Covid-19 crisis, with another 3 million jobs lost or under threat in related areas such as vehicles, buildings and industry. “ The recommendations promise to save or create approximately 9 million jobs per year, with the greatest number in building retrofitting for energy efficiency, and in the electricity sector.  The Sustainable Recovery Plan also seeks to avoid the kind of rebound effect which occurred after the 2008/2009 recession, claiming that it would stimulate economic growth while achieving annual energy-related greenhouse gas emissions which “would be 4.5 billion tonnes lower in 2023 than they would be otherwise”,  decreasing air pollution emissions by 5%, and thus reducing global health risks.

Under the heading of “Opportunities in technology innovation”, the report examines four specific technologies: “hydrogen technologies, which have a potentially important role in a wide range of sectors; batteries, which are very important for electrification of road transport and the integration of renewables in power markets; small modular nuclear reactors, which have technology attributes that make them scalable as an important low-carbon option in the power sector; and carbon capture, utilisation and storage (CCUS), which could play a critical role in the energy sector reaching net-zero emissions. We also compare the near-term job creation potential of some of these measures.” The IEA is preparing an Energy Technology Perspectives Special Report on Clean Energy Technology Innovation, which will be released in early July 2020.

Global reports call for renewables to lead a green recovery from Covid-19

Renewable Power Generation Costs in 2019 was released on June 2 by the International Renewable Energy Agency (IRENA), showing that “more than half of the renewable capacity added in 2019 achieved lower power costs than the cheapest new coal plants.” The analysis spans around 17,000 renewable power generation projects from around the world, and includes discussion of job impacts in the industry. A statistical dashboard is searchable by country  , including Canada, and by jobs statistics.

The report emphasizes the importance of renewables in a global economic recovery strategy, stating:

“Renewables offer a way to align short-term policy action with medium- and long-term energy and climate goals.  Renewables must be the backbone of national efforts to restart economies in the wake of the COVID-19 outbreak. With the right policies in place, falling renewable power costs, can shift markets and contribute greatly towards a green recovery.”

On June 10, the Global Trends in Renewable Energy Investment report was released by the U.N. Environment Programme, with a press release  with a similar message:  “As COVID-19 hits the fossil fuel industry, the GTR 2020 shows that renewable energy is more cost-effective than ever – providing an opportunity to prioritize clean energy in economic recovery packages and bring the world closer to meeting the Paris Agreement goals. ….. In 2019, the amount of new renewable power capacity added (excluding large hydro) was the highest ever, at 184 gigawatts, 20GW more than in 2018.” The 80-page Global Trends in Renewable Energy Investment  is an annual report commissioned by the UN Environment Programme in cooperation with Frankfurt School-UNEP Collaborating Centre for Climate & Sustainable Energy Finance, produced in collaboration with Bloomberg NEF, and supported by the German Federal Ministry for the Environment, Nature Conservation, and Nuclear Safety.

The argument for the cost advantage of clean energy is demonstrated with detailed modelling for the United States by researchers at the University of California Berkeley Goldman School of  Public Policy. Their new report,  2035: The Report: Plummeting solar, wind and battery costs can accelerate our clean electricity future  “uses the latest renewable energy and battery cost data to demonstrate the technical and economic feasibility of achieving 90% clean (carbon-free) electricity in the United States by 2035. “The 90% Clean case avoids over $1.2 trillion in health and environmental costs, including 85,000 avoided premature deaths, through 2050”… and “ supports a total of 29 million job-years cumulatively during 2020–2035. ….These jobs include direct, indirect, and induced jobs related to construction, manufacturing, operations and maintenance, and the supply chain. Overall, the 90% Clean case supports over 500,000 more jobs each year compared to the No New Policy case.”

renewables 2020Another report,  Renewables 2020 Global Status Report   was released by REN21 on June 16, with a  36-page summary of Key Findings . The report provides detailed global statistics re capacity and investment trends, and  also discusses the considerable impact of the coronavirus. There is much good news – for example, over 27% of global electricity now comes from renewables, up from 19% in 2010…. The share of solar photovoltaic (PV) and wind power has grown more than five times since 2009” .  But there is also an urgent call to end fossil fuel subsidies and for other policy actions under the heading: “Momentum in renewable power hides a profound lag in the heating, cooling and transport sectors”.  The report states:

“It would be short-sighted to celebrate advances in the power sector without acknowledging the alarmingly low shares and slow uptake of renewables in the heating, cooling and transport sectors. …. Renewable shares in heating and cooling are low (10.1%) and struggle to increase, even as the sector accounts for more than half of total energy demand. Similarly, energy demand in transport – which accounts for a third of total energy demand – is growing the fastest by far, yet renewable shares barely exceed 3.3%. Ongoing dependence on fossil fuels for heating, cooling and transport is related to a lack of policy support for renewables in these sectors. There is still no level playing field. Many countries continue to uphold fossil fuel subsidies, which in 2018 increased 30% from the year before. Global fossil fuel subsidies totalled USD 400 billion, more than double the amount that governments spent on renewable power. ….. The massive support for fossil fuels hinders the already difficult task of reducing emissions and must be brought to a halt. “ In 2019, a record 200 gigawatts (GW) of renewable power capacity was added, more than three times the level of fossil fuel and nuclear capacity. Over 27% of global electricity now comes from renewables, up from 19% in 2010.– a remarkable rise attributed largely to continued cost declines for these technologies.”

On  June 11, the U.S.  Solar Energy Industry Association released its Solar Market Insight Report for the 2nd Quarter of 2020, forecasting a 31% drop in solar installations in 2020 over 2019, mostly  as result of Covid-19.   The SEIA  press release estimates that 72,000 workers in the U.S. have lost their jobs .  The Executive Summary  discusses the impact of the coronavirus extensively; only the Executive Summary is available for free. The report analysis is done by Wood MacKenzie consultants, and the full report is pricey.

“Staggering” decline of fossil fuels reported by International Energy Agency

The complexity of the global energy landscape has been changed profoundly, according to the  International Energy Association’s flagship publication, the Global Energy Review , released on April 30.  It forecasts a minimum 6% decline in global energy demand for 2020, (9% in the United States and 11% in the European Union),  stating, “The projected 6% decline would be more than seven times the impact of the 2008 financial crisis on global energy demand, reversing the growth of global energy demand over the last five years. The absolute decline in global energy demand in 2020 is without precedent, and relative declines of this order are without precedent for the last 70 years.”   The accompanying press release describes the decline of fossil fuels as  an “historic shock to the entire energy world” and “staggering”, especially for coal, oil and gas. The IEA forecasts that renewables will be the only energy source to grow in 2020.

Here are a few of the many recent news articles which sum up the dire impacts on oil and gas in Canada:

In “For oil and its dependents, it’s code blue” (The Tyee, April 18), Andrew Nikoforuk predicts that the “great price collapse of 2020 will topple companies and transform states”.

Fossils Expect Permanent Losses, Renewables Keep Growing As Pandemic Crashes Global Energy Demand”  in The Energy Mix (May 3);

What rock-bottom natural gas prices mean for Canada’s aspiring LNG industry” in The Narwhal (May 1);

“‘We are in crisis mode’: Newfoundland calls on Ottawa to fund oil and gas exploration” in the Globe and Mail (April 29);

And Canadian Press stories reprinted by the National Observer on May 1 include:  “Precision Drilling down almost 3000 employees due to oil and gas downturn” (May 1);  “Oil and gas drilling forecast revised to 49-year low”; “Teck Resources leaves energy group CAPP citing cost cutting” ; and “Alberta oil and gas company reports include a loss of $1.3 billion for Vermillion Energy” (April 29) .

Fatih Birol, Director of the International Energy Agency has promoted clean energy in several public statements, including  a March 14 commentary: “Put clean energy at the heart of stimulus plans to counter the coronavirus crisis”, which states, “Governments are drawing up stimulus plans in an effort to counter the economic damage from the crisis. These stimulus packages offer an excellent opportunity to ensure that the essential task of building a secure and sustainable energy future doesn’t get lost amid the flurry of immediate priorities ”   The IEA promises a World Energy Outlook special report in June “that will quantify how clean energy policies and investments can create jobs, support economic recoveries and achieve emissions reductions. The report’s findings and recommendations will inform the high-level discussions at the IEA Clean Energy Transitions Summit on 9 July.”