Energy
Federal government’s ’carbon-free’ electricity target far-fetched
From the Fraser Institute
By Elmira Aliakbari and Jock Finlayson and Tegan Hill
A recent report by the Canada West Foundation, which analyzed 25 major projects that entered the federal government’s review process between 2019 and 2023, found that all 25 were still stuck in the early stages (phase 1 or 2) of the four-phase process.
Did you know that the Trudeau government wants to “decarbonize” Canada’s electricity generation by 2035? That is, make carbon-free sources (e.g. wind, hydro and solar) the sole power source for electricity generation in Canada.
Is this possible? No.
As of 2023 (the latest year of available data), nearly 81 per cent of Canada’s electricity came from carbon-free sources. To replace the remaining 19 per cent that relies on fossil fuels over the next 10 years, Canada would need to add a massive amount of generation capacity.
Specifically, we would need approximately 23 new large hydroelectric dams similar in size to British Columbia’s Site C project. Of course, due to regulatory hurdles and approval processes, it takes a long time to plan and construct major electricity generation facilities in Canada. The Site C project took approximately 43 years (from initial feasibility and planning studies in 1971) to secure environmental certification in 2014. Construction finally began on the Peace River in northern B.C. in 2015 with completion expected in 2025—at a cost of at least $16 billion.
Alternatively, we would need more than two large scale nuclear power plants the size of Ontario’s Bruce Power, which took nearly two decades to complete with billions of dollars in cost overruns.
Or we’d need approximately 11,000 new large wind turbines, which would require clearing approximately 7,302 square kilometres of land (that’s larger than Prince Edward Island and nearly nine times larger than Calgary). The new turbines would also require substantial investments in backup power systems due to the wind’s intermittency, which of course would further drive-up costs across the electricity system.
And remember, as Canada’s population grows, electricity demand will increase significantly. The infrastructure mentioned above would only decarbonize Canada’s current electricity needs, without accounting for the additional capacity required to meet future demand.
And yet, despite its aggressive plan to decarbonize, the Trudeau government in 2019 introduced the Impact Assessment Act (IAA)—also known as Bill C-69—which added layers of uncertainty and complexity to project reviews. A recent report by the Canada West Foundation, which analyzed 25 major projects that entered the federal government’s review process between 2019 and 2023, found that all 25 were still stuck in the early stages (phase 1 or 2) of the four-phase process.
In other words, while Ottawa’s electricity decarbonization plan requires an unprecedented wave of new energy projects, the government’s own regulatory regime will make it harder for new projects to get off the ground.
The total costs of the federal government’s plan are incalculable. But we do know who will get hurt the most. Three provinces—Alberta, Saskatchewan and Nova Scotia—depend most heavily on fossil fuels to generate electricity. In Alberta, approximately 85 per cent of electricity comes from fossil fuels, mainly natural gas, while carbon-free sources generate only 15 per cent. Clearly, Alberta and these other provinces will face the greatest challenges—and heaviest burdens—in decarbonizing their grids.
In light of the basic realities of project construction timelines, regulatory hurdles and the massive financial investment required, the Trudeau government’s target to achieve 100 per cent fossil fuel-free electricity by 2035 is far-fetched. But the costs of pursuing that target will be very real and felt by all Canadians, with the size of the costs depending largely on where you live.
Authors:
From the Fraser Institute
By Julio Mejía and Elmira Aliakbari
Major energy transitions are slow and take centuries, not decades… the first global energy transition—from traditional biomass fuels (including wood and charcoal) to fossil fuels—started more than two centuries ago and remains incomplete. Nearly three billion people in the developing world still depend on charcoal, straw and dried dung for cooking and heating, accounting for about 7 per cent of the world’s energy supply (as of 2020).
At the Conference of the Parties (COP29) in Azerbaijan, António Guterres, the United Nations Secretary-General, last week called for a global net-zero carbon footprint by 2050, which requires a “fossil fuel phase-out” and “deep decarbonization across the entire value chain.”
Yet despite the trillions of dollars already spent globally pursuing this target—and the additional trillions projected as necessary to “end the era of fossil fuels”—the world’s dependence on fossil fuels has remained largely unchanged.
So, how realistic is a “net-zero” emissions world—which means either eliminating fossil fuel generation or offsetting carbon emissions with activities such as planting trees—by 2050?
The journey began in 1995 when the UN hosted the first COP conference in Berlin, launching a global effort to drive energy transition and decarbonization. That year, global investment in renewable energy reached US$7 billion, according to some estimates. Since then, an extraordinary amount of money and resources have been allocated to the transition away from fossil fuels.
According to the International Energy Agency, between 2015 and 2023 alone, governments and industry worldwide spent US$12.3 trillion (inflation-adjusted) on clean energy. For context, that’s over six times the value of the entire Canadian economy in 2023.
Despite this spending, between 1995 and 2023, global fossil fuel consumption increased by 62 per cent, with oil consumption rising by 38 per cent, coal by 66 per cent and natural gas by 90 per cent.
And during that same 28-year period, despite the trillions spent on energy alternatives, the share of global energy provided by fossil fuels declined by only four percentage points, from 85.6 per cent to 81.5 per cent.
This should come as no surprise. Major energy transitions are slow and take centuries, not decades. According to a recent study by renowned scholar Vaclav Smil, the first global energy transition—from traditional biomass fuels (including wood and charcoal) to fossil fuels—started more than two centuries ago and remains incomplete. Nearly three billion people in the developing world still depend on charcoal, straw and dried dung for cooking and heating, accounting for about 7 per cent of the world’s energy supply (as of 2020).
Moreover, coal only surpassed wood as the main energy source worldwide around 1900. It took more than 150 years from oil’s first commercial extraction for oil to reach 25 per cent of all fossil fuels consumed worldwide. Natural gas didn’t reach this threshold until the end of the 20th century, after 130 years of industry development.
Now, consider the current push by governments to force an energy transition via regulation and spending. In Canada, the Trudeau government has set a target to fully decarbonize electricity generation by 2035 so all electricity is derived from renewable power sources such as wind and solar. But merely replacing Canada’s existing fossil fuel-based electricity with clean energy sources within the next decade would require building the equivalent of 23 major hydro projects (like British Columbia’s Site C) or 2.3 large-scale nuclear power plants (like Ontario’s Bruce Power). The planning and construction of significant electricity generation infrastructure in Canada is a complex and time-consuming process, often plagued by delays, regulatory hurdles and substantial cost overruns.
The Site C project took around 43 years from initial feasibility studies in 1971 to securing environmental certification in 2014. Construction began on the Peace River in northern B.C. in 2015, with completion expected in 2025 at a cost of at least $16 billion. Similarly, Ontario’s Bruce Power plant took nearly two decades to complete, with billions in cost overruns. Given these immense practical, financial and regulatory challenges, achieving the government’s 2035 target is highly improbable.
As politicians gather at high-profile conferences and set ambitious targets for a swift energy transition, global reliance on fossil fuels has continued to increase. As things stand, achieving net-zero by 2050 appears neither realistic nor feasible.
Authors:
From Resource Works
Heather-Exner Pirot of the Business Council of Canada and the Macdonald-Laurier Institute spoke with Resource Works about the transition to Donald Trump’s energy policy, hopes for Keystone XL’s revival, EVs, and more.
Do you think it is accurate to say that Trump’s energy policy will be the complete opposite of Joe Biden’s? Or will it be more nuanced than that?
It’s more nuanced than that. US oil and gas production did grow under Biden, as it did under Obama. It’s actually at record levels right now. The US is producing the most oil and gas per day that any nation has ever produced in the history of the world.
That said, the federal government in the US has imposed relatively little control over production. In the absence of restrictive emissions and climate policies that we have in Canada, most of the oil production decisions have been made based on market forces. With prices where they’re at currently, there’s not a lot of shareholder appetite to grow that significantly.
The few areas you can expect change: leasing more federal lands and off shore areas for oil and gas development; rescinding the pause in LNG export permits; eliminating the new methane fee; and removing Biden’s ambitious vehicle fuel efficiency standards, which would subsequently maintain gas demand.
I would say on nuclear energy, there won’t be a reversal, as that file has earned bipartisan support. If anything, a Trump Admin would push regulators to approve SMRs models and projects faster. They want more of all kinds of energy.
Is Keystone XL a dead letter, or is there enough planning and infrastructure still in-place to restart that project?
I haven’t heard any appetite in the private sector to restart that in the short term. I know Alberta is pushing it. I do think it makes sense for North American energy security – energy dominance, as the Trump Admin calls – and I believe there is a market for more Canadian oil in the USA; it makes economic sense. But it’s still looked at as too politically risky for investors.
To have it move forward I think you would need some government support to derisk it. A TMX model, even. And clear evidence of social license and bipartisan support so it can survive the next election on both sides of the border.
Frankly, Northern Gateway is the better project for Canada to restart, under a Conservative government.
Keystone XL was cancelled by Biden prior to the invasion of Ukraine in 2022. Do you think that the reshoring/friendshoring of the energy supply is a far bigger priority now?
It absolutely is a bigger priority. But it’s also a smaller threat. You need to appreciate that North America has become much more energy independent and secure than it has ever been. Both US and Canada are producing at record levels. Combined, we now produce more than the Middle East (41 million boe/d vs 38 million boe/d). And Canada has taken a growing share of US imports (now 60%) even as their import levels have declined.
But there are two risks on the horizon: the first is that oil is a non renewable resource and the US is expected to reach a peak in shale oil production in the next few years. No one wants to go back to the days when OPEC + had dominant market power. I think there will be a lot of demand for Canadian oil to fill the gap left by any decline in US oil production. And Norway’s production is expected to peak imminently as well.
The second is the need from our allies for LNG. Europe is still dependent on Russia for natural gas, energy demand is growing in Asia, and high industrial energy costs are weighing on both. More and cheaper LNG from North America is highly important for the energy security of our allies, and thus the western alliance as it faces a challenge from Russia, China and Iran.
Canada has little choice but to follow the US lead on many issues such as EVs and tariffs on China. Regarding energy policy, does Canada’s relative strength in the oil and gas sector give it a stronger hand when it comes to having an independent energy policy?
I don’t think we want an independent energy policy. I would argue we both benefit from alignment and interdependence. And we’ve built up that interdependence on the infrastructure side over decades: pipelines, refineries, transmission, everything.
That interdependence gives us a stronger hand in other areas of the economy. Any tariffs on Canadian energy would absolutely not be in American’s interests in terms of their energy dominance agenda. Trump wants to drop energy costs, not hike them.
I think we can leverage tariff exemptions in energy to other sectors, such as manufacturing, which is more vulnerable. But you have to make the case for why that makes sense for US, not just Canada. And that’s because we need as much industrial capacity in the west as we can muster to counter China and Russia. America First is fine, but this is not the time for America Alone.
Do you see provinces like Alberta and Saskatchewan being more on-side with the US than the federal government when it comes to energy?
Of course. The North American capital that is threatening their economic interests is not Washington DC; it’s Ottawa.
I think you are seeing some recognition – much belated and fast on the heels of an emissions cap that could shut in over 2 million boe of production! – that what makes Canada important to the United States and in the world is our oil and gas and uranium and critical minerals and agricultural products.
We’ve spent almost a decade constraining those sectors. There is no doubt a Trump Admin will be complicated, but at the very least it’s clarified how important those sectors are to our soft and hard power.
It’s not too late for Canada to flex its muscles on the world stage and use its resources to advance our national interests, and our allies’ interests. In fact, it’s absolutely critical that we do so.
Health Care Update: Province will deliver health services regionally in seven “health corridors”
The Most Devastating Report So Far
What Will Be the Future of the Keystone XL Pipeline Under President Trump?
Another Mass Grave?
-
Business2 days agoCBC’s business model is trapped in a very dark place
-
Censorship Industrial Complex2 days agoCongressional investigation into authors of ‘Disinformation Dozen’ intensifies
-
Alberta2 days agoAlberta government announces review of Trudeau’s euthanasia regime
-
Alberta1 day agoAlberta fiscal update: second quarter is outstanding, challenges ahead
-
Business1 day agoTrump’s government efficiency department plans to cut $500 Billion in unauthorized expenditures, including funding for Planned Parenthood
-
Crime1 day agoMexican cartels are a direct threat to Canada’s public safety, and the future of North American trade
-
Brownstone Institute16 hours agoFirst Amendment Blues
-
Bruce Dowbiggin2 days agoThe Pathetic, Predictable Demise of Echo Journalism