Proceedings of the Standing Senate Committee on
Energy, the Environment and Natural Resources
Issue No. 6 - Evidence - April 19, 2016
OTTAWA, Tuesday, April 19, 2016
The Standing Senate Committee on Energy, the Environment and Natural Resources met this day at 5 p.m. to study the effects of transitioning to a low-carbon economy.
Senator Grant Mitchell (Deputy Chair) in the chair.
[English]
The Deputy Chair: Welcome to this meeting of the Standing Senate Committee on Energy, the Environment and Natural Resources.
[Translation]
My name is Grant Mitchell. I represent the province of Alberta in the Senate and I am deputy chair of this committee. Senator Richard Neufeld, the chair, regrets that he was unable to attend today's meeting.
[English]
I would like to welcome honourable senators, any members of the public with us in the room and viewers all across the country watching on television. As a reminder to those watching, these committee hearings are wonderful to watch, of course, and are open to the public and also available via webcast on the sen.parl.gc.ca website. You may find more information on the schedule of witnesses on the website under "Senate Committees.''
I will now ask senators around the table to introduce themselves.
Senator Mockler: Percy Mockler, senator for New Brunswick.
Senator Johnson: Janis Johnson, a Manitoba senator.
Senator Massicotte: Paul Massicotte from Quebec.
The Deputy Chair: I would like to introduce our staff beginning with the clerk, Lynn Gordon and our two Library of Parliament analysts, Sam Bank and Mark Leblanc. Today marks our fourth meeting for our study on the effects of transitioning to a low-carbon economy, as required to meet the Government of Canada's announced targets for greenhouse gas emission reductions.
I am pleased to welcome Jacob Irving, President, Canadian Hydropower Association, to speak to us on behalf of the Canadian Council on Renewable Energy. Mr. Irving, thank you for being with us today. Please proceed with your opening remarks, after which, as we always do, we will go to questions and answers.
Jacob Irving, President, Canadian Hydropower Association, Canadian Council on Renewable Electricity: Thank you very much, Senator Mitchell, and thank you all for inviting me to speak to you today about the opportunities associated with transitioning to a low-carbon economy. My name is Jacob Irving. I'm the President of the Canadian Hydropower Association.
Founded in 1998, the Canadian Hydropower Association, CHA, is the national trade association dedicated to representing the interests of the hydro power industry. Its members span the breadth of industry, and with nearly 50 members total includes hydro power producers, manufacturers, developers, engineering firms, organizations and individuals interested in the field of hydro power. CHA members represent more than 95 per cent of the hydro power capacity in Canada.
Today I'm here on behalf of the Canadian Council on Renewable Electricity, of which CHA is a founding member. Established last year in 2015, the Canadian Council on Renewable Electricity is a nonpartisan organization that allows Canada's leading national renewable electricity industry associations to collaborate, educate, pursue common electricity solutions and provide answers to the critical challenge of decarbonizing the North American energy system while bolstering economic growth.
[Translation]
The council is involved in research, cooperation and communication initiatives designed to encourage dialogue and build support among Canadians for greater use of Canada's abundant renewable electricity resources, in order to reduce the greenhouse gas emissions from electricity production in North America. The council also seeks to facilitate the greater use of clean electricity in other sectors, including transportation, construction and heavy industry, in order to capitalize on Canada's reputation and its technical expertise in the green economy, in North America and around the world.
[English]
Today I would like to share with you findings of the council's first report released last November entitled Powering Climate Prosperity: Canada's Renewable Electricity Advantage. The report explored two key questions: How can Canada achieve GHG pollution reductions in line with Copenhagen and G7 commitments? What is the role for renewable electricity?
Our research included data and modeling from the Deep Decarbonization Pathways Project for Canada. This work was undertaken by a Canadian team of researchers as part of a global partnership and energy research. The teams modeled 16 country-specific policy scenarios to decarbonize the economy while ensuring the average global temperature increase does not exceed 2 degrees Celsius.
Our research is also included in a literature review including analysis by the International Energy Agency, the World Bank, the International Renewable Energy Agency, Canada's National Round Table on the Environment and the Economy, and the Council of Canadian Academies. What did we find?
As a starting point, it's worth noting that Canada has the cleanest, most renewable electricity generation system in the G7 and fourth largest renewable electricity generating capacity in the world. More than 65 per cent of our electricity comes from renewable energy; but we're just scratching the surface. Recent assessments suggest that biomass, wind, hydro, solar thermal and solar photovoltaic alone could be sufficient to provide 1.5 times the total energy in Canada based on 2010 numbers.
Some have pointed to Canada's overall relatively high proportion of renewable electricity to argue that further efforts and other policy support are unwarranted. In fact, the opposite is true, especially when one considers the energy system as a whole.
If you turn to slide 3, if you have them in your package, you'll see that in 2010 fossil fuels delivered 70 per cent of the primary energy used in Canada. We clearly have a long way to go to reduce our carbon emissions, which brings us to the Deep Decarbonization Pathways Project for Canada.
On slide 4, the pathways you see aren't forecasts but illustrative scenarios based on a set of global and domestic assumptions about key emissions drivers, technology availability and economic activity. The Canadian Pathways project team found that if our country were to pursue deep decarbonization, we could achieve a greater than 80 per cent reduction in greenhouse gas emissions below 2010 levels by the year 2050. This is consistent with our Copenhagen Accord commitments and puts us on the trajectory to the recent G7 commitments to decarbonize by 2100. These strategies underlie the scenario to overhaul Canada's energy system and achieve reductions of this scale. For this discussion, we'll refer to them as the three pillars: one, boost energy efficiency; two, decarbonize electricity systems; and three, electrify everything.
Turning to slide 5, the first pillar we mentioned is boosting energy efficiency. Any credible effort to decarbonize Canada's economy must begin with optimizing how we use energy in the first place. Measured by how much energy we consume to grow our economy, the Deep Decarbonization Pathways scenarios sees Canada's energy intensity drop by more than half, or 57 per cent, between 2010 and 2050.
In other words, the economy would produce the same amount of economic growth that it does today using half the energy. That's good news, but it gets better. This near-doubling of efficiency is consistent with the trajectory already established by existing and forthcoming energy regulations.
Slide 6 talks about the second pillar, decarbonizing our electricity system. As the author of Canada's Deep Decarbonization Pathways noted, fuel switching to decarbonized electricity is the single most significant pathway toward achieving deep emissions reductions globally. It allows demand sectors to reduce their end-use emissions by switching from refined petroleum products, such as natural gas and other fossil fuels, to clean electricity. This abatement is made possible only through both decarbonization of existing electricity generation and a large expansion of new zero-emissions electricity sources.
As noted earlier with respect to both existing generation and untapped potential, Canada enjoys an enviable renewable electricity advantage. Renewable resources, predominantly hydro power, dominate grids in Quebec, Manitoba, British Columbia and Newfoundland. Other provinces, such as Ontario and Nova Scotia, have been working significantly to clean up their systems. But many opportunities remain to clean up our existing grids. Utilities in Alberta, Saskatchewan and Nova Scotia still burn coal to keep the lights on. Other provinces, including Ontario, still rely heavily on natural gas. Still other regions burn fuel oil or diesel to generate electricity, an expensive and highly polluting process.
On the Deep Decarbonization Pathway for Canada, these plants gradually go dark over the coming decades or adopt carbon capture and storage, and renewable electricity generation grows significantly. The result is that the average carbon intensity of Canadian electricity production falls from 170 grams of carbon dioxide per kilowatt hour, as it was in 2010, to a mere 4.3 grams in 2050. In the modelled scenario illustrated in figure 5, renewable sources of electricity overwhelmingly provide the replacement power to drive down this curve. In 2050, renewable sources of electricity would account for fully three-quarters of Canada's electricity supply, with nearly three times more power generated by renewables relative to 2010.
A diversity of renewable electricity sources would furnish this new supply atop a hydro power foundation. As the International Energy Agency has highlighted, nations with high proportions of firm hydro power, such as Canada, can more easily integrate large amounts of variable output renewable power into their electrical grids with fewer significant operational challenges. These findings are echoed by the Council of Canadian Academies, whose recent report Technology and Policy Options for a Low-Emission Energy System in Canada, noted that low-emission electricity is the foundation for economy-wide emission reductions in transportation, buildings and industry. While Canada already benefits from relatively low-emission power generation, remaining high-emission generation facilities will need to be replaced. All provinces will need to expand low-emission electricity generation capacity to meet growing demand and enable further reductions.
This brings us to the third pillar, which is particularly important for Canada because it's where we can truly capitalize on our abundance of renewable power resources. This third pillar focuses on electrifying as much of our economy as possible.
Slide 7 focuses on buildings, which are an obvious place to start. They heat both living and working spaces and hot water, typically with natural gas. Established cost effective and readily available technologies can do the same job with clean electricity. The Deep Decarbonization team identified this as a significant source of emissions reductions potential.
As illustrated, electricity grows from meeting 36 per cent of the buildings sector to nearly 100 per cent. By regulating building energy and greenhouse gas intensity, Canada could have net zero energy residential buildings by 2025 and commercial buildings after 2035.
On slide 8, you can see how energy use for transportation would evolve. This is where we talk about light passenger vehicles. Light passenger vehicles, light and medium freight transportation and rail are all excellent candidates for electrification, as you can see in figure 7. Indeed, the team found that by 2050, electric vehicles account for nearly all light-duty passenger vehicles on the nation's roads.
Turning to slide 9, we see that it will take considerably more effort and next-generation technologies to decarbonize Canada's industrial sector; however the effort is essential. As the pathways report notes, heavy industry is currently a key weakness in Canada's decarbonization portfolio but could be an advantage because of our plentiful renewables capacity for both electrified industry and carbon-storage geology.
Multiple engineering pathways exist to virtually decarbonize heavy industry; but to date they haven't attracted significant innovation. That has to change. This area is crying out for new and transformative technologies. With respect to light industry and oil and gas production, electric boilers and heat pumps can meet many process heat requirements. Process changes, such as electric arc steel production and oxygen production for direct contact steam generation and oil sands production, can fulfil other requirements. By more than doubling the use of the electricity for the industrial activity, in figure 9, the carbon intensity of the sector can drop by 85 per cent between 2010 and 2050, even as output continues to grow apace.
To recap, our key points are captured in slide 10. Canada boasts a generous endowment of renewable resources that are distributed across the country. Despite our global leadership, these resources are also largely untapped. We conclude that if Canada is to do its part to prevent average global temperatures from rising above 2 degrees Celsius by the middle of the century, it must intensify efforts to cut energy wastes across the economy, more than double the renewable electricity generation capacity and increase its use of electricity as the clean fuel of choice to power the economy. Ensuring our electricity grid is powered by clean, renewable energy offers a key climate-change solution.
But this isn't just about continuing to clean up our power grid: it's about fuel-shifting from natural gas, gasoline and diesel to electricity. Renewable electricity must meet a growing proportion of our primary energy needs in the decades ahead if we are to achieve our climate targets. The more we electrify our economy, from buildings to industry to transportation, with renewable resources, the faster and deeper we can cut greenhouse gas pollution and ensure Canada stands out as a climate-change leader.
To do so will require doubling our generation and use of electricity, and few countries are as well positioned as Canada to do so using clean, renewable sources of power. This is Canada's renewable electricity advantage.
Thank you again for taking the time to hear from me today. I look forward to your questions.
The Deputy Chair: Thank you, Mr. Irving. That was a compelling presentation. We will begin with questions.
Senator Massicotte: Thank you for being with us, Mr. Irving. I read the materials and I heard your speech, but I guess I'm not intelligent enough. Let's do it again in a simple way. The information I have — and I'm sure you have the same thing — is that the current projections with what is in place by all governments today will show GHGs going up every year by approximately 0.71 per cent based on the programs in place, and that decision is already made. If you go forward 15 years from now, relative to our commitment in Paris, let's say, we have to decrease the GHGs from the current projection by 60 per cent.
You're saying electricity is a solution. We all acknowledge that we are very lucky in the world: We are one of the few countries that has the potential for a lot of hydroelectricity. We have good winds and have, potentially, nuclear.
Your plan would get us there to reduce GHGs by 60 per cent within 15 years. If that is the case, what is it you would do, specifically? What form of electrical energy are you suggesting, and at what price?
Mr. Irving: There is no question there is a challenge to meet our commitments and to try to keep to a 2-degree- Celsius world — even a 1.5-degree-Celsius world, as was recently discussed in Paris.
The three pillars are, first and foremost, we have to enact more aggressive policy and more aggressive incentives to ensure that we use energy more wisely, so that there is greater energy conservation and efficiency.
Senator Massicotte: By increasing the price of energy, effectively.
Mr. Irving: Through means such as incentivizing some of the new, higher efficiency light bulbs that are out there and those types of things — that kind of transition — trying to make sure that we can serve more electricity and that we don't have to build as much; that we use what we have more wisely.
There are a lot of gains that can be made there.
Senator Massicotte: How much? You give us specifics here. The 60 per cent reduction we have to do, if we do that what does that represent?
Mr. Irving: That, I don't have. What we're presenting here is illustrative of what can be achieved but it doesn't have detailed prescriptions.
Senator Massicotte: But you're convinced that if we did that we would achieve a 60 per cent reduction?
Mr. Irving: Yes, in combination with the other elements here.
Senator Massicotte: You're suggesting, basically, making the transportation sector greener. How much? If we did nothing — if we shut off all cars and so on — I think 18 per cent of energy use is for transportation. We're obviously not going to prohibit everybody from driving.
So if you electrify, what are we talking about? Don't forget that, for a good part of our country, electricity comes from maybe coal or other fossil fuels so it's not a total savings.
What percentage do you save from doing what you're proposing? What are we talking about?
Mr. Irving: Projections that I've seen about transportation indicate, depending on how you look at it, that transportation is the country's largest source of greenhouse gas emissions — single largest source. Then there is everything else. Actually, in Canada, that makes us fairly remarkable. For most countries around the world, their number one source of greenhouse gas emissions comes from the generation of electricity.
Senator Massicotte: Producing electricity, exactly.
Mr. Irving: That's a big difference for us. We're actually remarkable on the world scale that transportation is bigger than electricity generation.
Senator Massicotte: If it's currently 18 per cent and we green it, it will come down to 12 or 15 per cent?
Mr. Irving: In this particular projection, it's a pretty ambitious goal, but we're talking changing out the entire light- duty vehicle fleet to electric by 2050.
Senator Massicotte: But the electricity comes from someplace. You aren't going to be able to reduce it from 18 to 0, but maybe 18 to 12.
I'm trying to the 60 per cent. What are you suggesting? Hydro has limited capacity, right? Quebec has some; B.C. has some. We'd probably use wind? Solar? What are you proposing exactly? Are you proposing more nuclear?
Mr. Irving: You would be able to use all the renewables. One of the illustrated scenarios here is the dramatic use of all renewables, including hydro, wind, solar and marine renewables.
Senator Massicotte: No matter what the price is?
Mr. Irving: The price will depend, too, on whether carbon pricing is introduced. That's one of the big effects. Clearly, if there is no carbon price placed on generation types such as coal or natural gas, then they often have a short- term, price-competitive advantage over the renewables. That's fairly clear.
Senator Massicotte: That's a major problem if that is the case, right? We're not going to the right place at all. What you're saying is we have to price carbon, otherwise it's not full price; it's the aggregate price. Is that what you're saying?
Mr. Irving: Yes, carbon price is very important however it's priced, whether provincially or federally, through cap and trade or through a carbon tax.
Senator Massicotte: What should that level be in your mind, per tonne?
Mr. Irving: We don't have that figured out as an overall cost.
Also, it's something that is being discussed and determined through federal-provincial discussions now. That's one of the things that we have to see the political leadership of the country determine.
What we're here to say is that, when and if that kind of pricing incentive comes into play, we are there with the raw materials and the clean, renewable electricity to fill in the gap.
Senator Massicotte: But what you're doing here is illustrative. It doesn't say "if we do that, we'll achieve our 60 per cent reduction within 15 years.'' It doesn't say that.
Mr. Irving: It doesn't get that granular, unfortunately.
Senator Massicotte: You just hope we're going to get there.
Mr. Irving: It shows what we can do if we use what we have.
The big point is that this is a fairly high-level study. I would agree that more detail could be added to get to some more specific percentages, like you're asking for.
What this does at a very high level is demonstrate that, if we do pursue the right policy objectives, it is within reach. It is within our grasp.
You mentioned the renewables earlier. The undeveloped potential for Canadian renewables is extraordinary. In hydro power alone we are the third largest generator in the world, which is significant when you consider that the number one generator is China with 1.3 billion people. Number two is Brazil with 230 million people. We're number three with 35 million people.
What is even more extraordinary is that, as big as we are as the third largest generator, we could still more than double our current installed capacity. That undeveloped potential is spread across the country; it's everywhere. Provinces like Quebec have an even larger share, a greater endowment, but every province has it. Every province has the ability to turn to it if the right policies are in place.
Senator Massicotte: From an energy sense — not electricity — what is the total amount of energy we consume a year as a country? What percentage is hydro? Because you are saying you would double it. Give me a sense what that means for the energy picture if you double it.
Mr. Irving: I don't know offhand what it is in terms of units of joules, et cetera. But slide 3 may partially answer the question. This represents a total primary energy in Canada. This is the energy that we consume. By percentage, you can see that the largest percentage is still nonrenewable fossil fuel.
Senator Massicotte: If renewable and your biomass is 21 per cent, I suspect your hydro is probably 15 per cent. It's a pretty high percentage.
Mr. Irving: Yes, hydro power would be the majority of that 21 per cent.
Senator Massicotte: So 15 probably becomes 30 per cent. You could increase that number by 15 per cent, so you could probably save if you eliminate the coal and a percentage of your petroleum products.
Mr. Irving: Yes. The idea here is to eliminate what's left of the coal and then, in areas that are consuming a lot of natural gas and oil, reduce that consumption by electrifying instead. That's where you can see that 21 per cent grow significantly. There are many opportunities there and some of the ones we illustrate are, again, buildings and vehicles, as you mentioned.
Senator Johnson: Thank you. I'm from the province of Manitoba and of course, as you know, it's a major generator of clean hydro power. We export roughly $500 million worth of electricity per year to jurisdictions in the U.S. and Canada. While this is a major source of clean energy in our country, there are still issues surrounding water level regulation. I live on Lake Winnipeg, so I obviously have issues with what's happening there. Water quality issues and shoreline erosion are huge around Lake Winnipeg right now.
As Canada continues to expand its hydro power capacity with projects like the Site C Dam in northeastern B.C., what kind of environmental mitigation measures is the industry taking to protect critical and highly sensitive ecosystems?
Mr. Irving: The hydro power industry, with about a 130-year history, in many ways, has grown up alongside regulations, both provincial and federal, and provincial and federal regulations have grown up alongside hydro power.
The primary approach to any of the projects that are being conducted across the country today is to, first, avoid; second, mitigate; and third, compensate for any environmental effects of the projects. I think that hydro power projects have gotten better at knowing where to site their projects strategically, but also at mitigation. Our projects are involved in much more detailed and intense public outreach. Long before projects are considered, we're consulting with Aboriginal and First Nations people in particular, and then also with all other affected stakeholders.
Design of facilities can do a great deal, as well as right-sizing facilities. We've had instances where our developers have proposed a certain size of facility to the local community and then, through consultation and regulatory hearings, they have actually changed the size of the facility to accommodate the desires of the people in the community. That's part of the avoidance and mitigation measures. Some of it just comes right through in the way we design.
Also in terms of avoidance, our members are very much engaged in fish passage and new approaches of that nature, also in terms of rehabilitating and restoring habitat and wetlands associated with the projects. There are a number of things that we do to mitigate, in addition to avoiding, any of our impacts.
Senator Johnson: Are you pleased with the way the hydro power industry that you represent conducts itself?
Mr. Irving: I'm pleased with the fact that the hydro power industry has demonstrated that it is more consultative than it has ever been and that it takes a much more open approach in consulting with stakeholders and communities of all types. What I've seen from our members is that everyone is committed to a constant improvement approach to developing their projects, and over time you can definitely see changes and improvements that have happened along the way. Many of them come not just from the developers themselves, but changes in developments that have come from listening and engaging with other communities and stakeholders.
Senator Johnson: So, you're optimistic? I don't feel optimistic living on Lake Winnipeg. I'm not a big fan of all the things that hydro does to lake levels and shoreline erosion. It has caused huge problems in our communities along the entire lake, and I don't see them responding. It's upsetting to all of us who live there.
Mr. Irving: In that instance for sure you probably want to talk to the proponents, to those who operate and regulate that particular facility and lake.
I know that our members are consistently engaged in consultations with government regulators, communities and the people they serve, and they're committed to constant improvement and in trying to meet the many different demands that are also put on hydro power development.
Senator Johnson: It's huge, yes.
Mr. Irving: Yes. Much of the water regulation and control has to do with the production of electricity for sure, which of course is usually seen as a primary social value. People are very dependent on electricity obviously, but there are also other demands that are called upon, such as water management and erosion control, as you mentioned, but also flood management, irrigation and many of the other things that hydro power has to manage on its way to making electricity.
Senator Johnson: Mr. Irving, policy options such as great energy efficiency and regulating building energy consumption may fall within provincial or territorial jurisdiction. What measures is your organization taking at the provincial and territorial level to advance the increased use of renewable electricity?
Mr. Irving: Our organization, the Canadian Council on Renewable Electricity, is primarily an education group. We're not a lobbying group; we do not lobby provincial or federal governments. We're mostly trying to illustrate the possibilities that are there, and then allow others to grab hold of them.
I think that our primary desire is to let people know that there are different ways of doing things, compared to the way we've done them in the past. We are able to increasingly use electricity in our energy system, and that electricity can be clean and renewable because we have that capacity.
Senator Johnson: As energy demand increases, what is the current state of Canada's electricity infrastructure and what investments are necessary to facilitate the transition to a low-carbon future?
Mr. Irving: The need for investment in Canada's overall electricity system is quite significant. We have an aging infrastructure and we also have growing demand. I know that the Canadian Electricity Association, for example, is quite expert on some of the investment requirements for the greater grid: We've heard figures in the order of $300 billion over the next 50 years.
In addition to changing the way we generate electricity and making sure that we move more and more toward renewable sources, as other sources are retired or possibly even replaced, we will have to make sure that our transmission and distribution systems are ready for ever-changing needs.
Senator Johnson: Thank you. I'm glad to have had a chance to ask those questions.
Senator Mockler: Thank you. I see that you have quite a few partners. There's more than one question I'd like to bring forward. The first, however, is a comment.
The federal budget tabled in March 2016 contained several measures aimed at reducing emissions, including the establishment of the "Low Carbon Economy Fund'' and funding for clean technology investment, research, development and demonstration projects. I see some of your partners here.
Did your organization, or member organizations, participate in the pre-budget consultation? If so, in which part of the country?
Mr. Irving: I can only speak on behalf of the Canadian Hydropower Association: We didn't participate in the pre- budget consultations. As far as the other partners, I think you'd probably have to ask them, unfortunately. I'm not sure I can speak on their behalf.
It has been important for all of us, through different channels and means, to make sure that the federal government is aware of the opportunities that lie before it in terms of clean and renewable electricity. In our review of the budget, it does appear that many of those opportunities have been seized upon and that the government is proceeding in a robust direction.
Senator Mockler: Therefore, you were not consulted. Why were you not consulted? Do you have an idea? Is it because you chose not to participate?
Mr. Irving: Yes. Our association didn't proactively reach out to make a consultation on the budget. I have to say, too, that the Canadian Hydropower Association hasn't been in the habit of making budget submissions. This is partially due to the fact that our industry, at a national level, hasn't required funding from the federal government, perhaps, like some others.
Hydro power is really built and exists, for the large part, at the provincial level within Canada.
Senator Mockler: I was listening carefully, Mr. Irving, to your presentation and looking at your different graphs. Are you satisfied with the funding that's being provided? What additional measures, if any, are necessary to achieve Canada's emission reduction targets, especially in view of the comments you gave to Senator Massicotte?
Mr. Irving: Probably like any funding announcement, we will need to see some passage of time and need to see results before determining whether or not amounts are sufficient. It's important to note that there is greater funding in many of the areas that could use it in order to promote clean, renewable electricity.
I think all of the members of the Canadian Council on Renewable Electricity are encouraged by what we've seen.
As time goes forward, one of the things that I know we were particularly interested in were some of the funds that were put toward simply studying the potential for greater partnerships on clean electricity throughout the country, seeing what could be done to connect different parts of the country that currently are not connected or not strongly connected enough to help synergize their clean renewables. That alone is of great interest to us because, armed with that information, it can give us an idea of what more we can do specifically going forward.
Senator Mockler: On that matter, there was a question I wanted to ask. As you look from east to west and south to north, what regions of Canada are leading the way in your vision, the way you would like to see Canada move forward?
Mr. Irving: We have a very interesting electricity grid in Canada and North America in particular. The grid, by and large, runs more north-south than it does east-west. That's true in Canada, and it's true in the United States as well. That is also the case from Canada to the United States.
We see some very strong interconnections in Manitoba, as mentioned earlier; Quebec; British Columbia; Ontario; in the future, Newfoundland through Nova Scotia. There's a great deal of clean, renewable electricity generated in Canada that's currently going to the United States.
We are a net exporter of electricity to the United States and the electricity we send them is clean and renewable, by and large. Of the electricity that we send to the United States — much of it from Manitoba, Quebec, British Columbia, even Ontario — 80 per cent is hydro power. The effect that that has, when you look at the United States, which has an even more fossil intense generation system, mostly coal and natural gas, every terawatt hour of hydro power that we can send to the United States will displace between half a million and a million tonnes of carbon. It can also help enable renewable generation in the United States.
Manitoba has a very strong example of that. Manitoba water was essentially going to enable North Dakota wind and then service Wisconsin and Minnesota.
That's a pretty incredible example of, I often say, two countries, three states and two provinces all coming together to have their clean, renewable technologies enable each other. It's a very leading process.
North-south, there's some really interesting stuff going on already, and I can imagine more. There's a real opportunity for Canada to export more clean, renewable electricity to the United States.
East-west, there are opportunities as well. For example, two provinces that rely mostly on fossil fuels for electricity — Alberta and Saskatchewan — are surrounded by other provinces that have strengths in hydro power: Manitoba and British Columbia. To the north even, in the Northwest Territories, there's great undeveloped potential.
What is also interesting, and what most people don't know, is there is great undeveloped potential in both Saskatchewan and Alberta. Alberta has the fourth largest undeveloped hydro power potential in Canada. It has greater undeveloped technical potential than Manitoba has. These are things that have not been noticed throughout the passage of time because of reliance on other forms of generation.
Senator Johnson: Where is it in Alberta?
Mr. Irving: A goodly amount of potential is in the North. For hydro power, essentially you need water and elevation change. Alberta has that. It has both.
The story of Alberta, the reason why hydro power has not been strongly developed is because it has been leaning on other sources for so long. Just because it's not developed doesn't mean it doesn't exist. That potential is there.
The provinces that surround it also have huge undeveloped potential as well. Saskatchewan has undeveloped potential in the north as well.
Senator Mockler: There are some people who will say that somebody has to pay. If our chair, Senator Neufeld, was here, he would say, "Who is going to pay? Fred and Martha are going to pay.''
If that's the case, and in order to meet the emission reduction targets that we have, should these measures be publicly funded, in your experience?
Mr. Irving: In the case of hydro power, we've proven over time that we are able to build projects successfully and have them be supported by the rate base over longer term horizons.
What I mean by that is that hydro power, often in the short term, can be quite capital intensive. It will take eight to fourteen years to build a hydro facility. That time alone is quite an investment. Once it's built, you will be entering into a price world that is only so forecastable.
Senator Massicotte: In your scenario, you're not asking for any government help whatsoever. Am I correct in saying that?
Mr. Irving: On the hydro side, no. The projects, by and large, self-fund and pay themselves off over time.
Senator Massicotte: And the other stuff?
Mr. Irving: It's a longer term horizon for many. I often like to use the example of the Chaudière Falls hydro power facility right here on the Ottawa River. You can see it from the Peace Tower. If you look down, you can see the old ring dam that's there from 1910. It has an operating water wheel from 1891 that's still making electricity today.
The original capital cost for that facility was paid back a long time ago and has been producing electricity ever since. That is the long-term advantage of hydro power. It's one of those things that can be very difficult to finance with short- term or short-cycle thinking, but with long-term commitment and understanding it becomes one of the best life-cycle cost advantages of making electricity.
Senator Mockler: Canada has some of the lowest residential and commercial electricity rates in the world; I saw that in New Brunswick and Atlantic Canada. As the industry spokesperson, do you believe that we should, in order to meet our emission targets, design programs to relieve low-income families and those on low, fixed incomes of higher energy prices?
Mr. Irving: That is an interesting question. I would say that that sounds to me like a decision that is probably best left to political leaders.
As much as I find those questions personally compelling and interesting, any personal opinions I might have on them aren't particularly helpful and I have to remember that. Once social questions like that are answered, and once environmental and economic questions as to how we will produce our energy are put forward to it, our job is to perform. Our job is to respond.
I guess probably the biggest message I want to try to deliver through this slide deck and this overall presentation is that if we want to move toward clean, renewable electricity and go through the changes we have to make to make it happen, the good news is that we have the capacity in abundance to do it. How we do it, the prices that are involved in it, the social considerations and potential trade-offs are very complicated. I leave that to bodies such as the Senate, the House of Commons and others. What I want to make sure you know is that we have this potential. It is actually in our long-term interests to turn toward it.
Senator Massicotte: To fully answer this question, you answered hydro, no subsidy and no government help. How about the other ones? What are you proposing? What are you asking the government to do?
Mr. Irving: On that one, unfortunately, I come to you imperfectly as the Canadian Council on Renewable Electricity. You could ask them directly. I know they have very sophisticated ideas.
Senator Massicotte: You are here and represent them. What is the answer of your association?
Mr. Irving: Unfortunately, I don't think I can represent them on that question. That is something where they are more expert and where they make their case individually.
Senator Massicotte: All the other forms are, in your sense, economical. There is no need for subsidies or government help. Is that correct?
Mr. Irving: You might want to talk to them individually about how they make their case and where they see it. From what I understand, deployment of these resources can be very different from region to region and province to province, based on the strength of the resource and on the design of the grid. There are all kinds of factors.
Senator Massicotte: In your scenario, where does nuclear sit?
Mr. Irving: It's about 14 per cent of overall generation.
Senator Massicotte: Relative to your solution, do you see more nuclear, or are you capping that at 14 per cent?
Mr. Irving: For us, as proponents of clean, renewable electricity, we see that as a strength that Canada has.
Senator Massicotte: Is it fundamental to our plan to get GHGs down by 60 per cent? Is it part of your solution?
Mr. Irving: In our estimation, growth in nuclear isn't necessary. You see that there is a significant growth in renewables on page 6. It includes nuclear operating at its current level, I think.
Senator Massicotte: I have a technical question, and I want you to share your opinion. Earlier when you referred to "relative to export of energy,'' it made me think of the way we measure GHGs. It is based upon the amount of GHGs we produce as a country. If I were a country of one, but I was so smart and properly organized that I had a bunch of hydro dams across my country and I exported all of it because I could get along with very little, I would probably be deemed, relative to the way we calculate, as the most polluting country in the world, because we often do it per capita or per GDP. Yet all of it would be clean hydro for export. In other words, are we doing the right calculation when we say we produce so many GHGs without considering how much of that is actually used to export or service our product to other countries?
Mr. Irving: Yes, I think I understand the question. The idea is that if you have a whole bunch of clean, renewable generation and use that only for export, but then at home you were using a different form of energy.
Senator Massicotte: It doesn't matter. All energy has some GHGs, including hydro, but it's minimal.
Alberta is a good example. We produce a lot of GHGs to produce energy, but we export nearly 4 million barrels a day. Obviously somebody else benefits from that gasoline, yet we get tagged with producing GHGs without considering how much of it is exported. Is that fair to us, or is the calculation lacking sophistication to properly calculate our responsibility and our contribution to clean energy elsewhere?
Mr. Irving: I think full life-cycle assessments or full life-cycle calculations are the best way to go, and I think in many cases they benefit Canada greatly and help to reveal the true nature of our energy system.
As we were mentioning, we have one of the cleanest and most renewable
electricity systems in the world, owing largely to hydro power and the other
renewables that are coming on greater and greater.
One thing I do know and can say on behalf of wind, for example, is that Canada
is the seventh largest wind power producer in the world. That's impressive,
considering where we started from.
We do have a clean electricity system in particular. It's doing a whole lot already. When people talk about how difficult the challenges are for to us meet some of our commitments, I always like to point out that the good news is we have a real head start on this.
Senator Massicotte: I agree.
Mr. Irving: Imagine where we would be if we had not turned to hydro power in our past, and we decided instead that we were going to build coal-fired facilities and import coal from Virginia to make our electricity. If we sort of married ourselves to that and developed an electricity system based on that, where would we be in terms of emissions and how much work would we have to do?
Senator Massicotte: The problem is everybody fools around with numbers. If you start off with coal, as the Americans largely were, and people were measuring everything compared to a certain year and reduction, they can get that reduction pretty quickly by just eliminating coal. We can't because we weren't using it to a significant degree, so the numbers look a little less attractive. Anyways, that's my point.
The Deputy Chair: Every house in the country, give or take, has electricity, but not every house has gas, fuel oil or coal. Why is that? Is that pure price — if I can use gas or fuel oil or coal, I will because it's cheaper than the electricity that is turning my lights on?
Mr. Irving: I think for some of it, yes. We get into intricate questions of supply and demand behind the question. Much of it, too, is about different areas and regions relying on their different strengths and working backward from them.
For example, in Quebec, as you can imagine, a great proportion of heating is done through electricity. Electric baseboard heaters are common throughout the province and are quite economical because of the cost of hydro power. In Quebec, you have some of the lowest electricity rates in North America. This is based on the fact that Quebec chose hydro power early in its history, and then stuck with it throughout. A lot of those big, upfront capital cost investments that were made have been amortized and allow for the new projects that come on that might have those kinds of cost structures. What it ends up producing is quite affordable, reasonably priced electricity. In many places people will have a choice: Do I want natural gas in my home, or do I want electricity? A lot of them will choose based on price.
In other regions, electricity prices are higher and natural gas may be comparatively lower.
The Deputy Chair: First, with respect to electric cars, for example, how close are we to a breakthrough on electric car range — a breakthrough being 400-600 kilometres? Could you give us some idea of that? Second, how close are we to batteries that hold a lot of power and can be charged quickly? Could you answer those two questions?
Mr. Irving: I'm not an expert on electric vehicles, but I know that Electric Mobility Canada is fairly expert in that direction and are very interesting to talk to on this. They track a lot of this very fast-moving change in the innovation and development of electric vehicles. I understand that the Chevrolet Volt will be coming out soon, which will have extended range for a charge. I don't know it off the top of my head, but I could find out for you. With the advent of some of the new battery technology, and you have seen the Tesla wall battery being developed, there has been some incremental improvement in that respect.
I tend to take a step back and look at it. For vehicles at the turn of the century, it's my understanding that horseless carriages, as vehicles were called, were powered both electrically and by this new stuff called "rock oil'' that they were finding in Pennsylvania. Both were being driven at the time but no one really knew how they were going to be powered. Everybody knew they liked the idea of a horseless carriage but they didn't know how best to power them.
As history wore on, the finds in oil and gas grew exponentially. The energy storage was so strong and powerful there that it led everyone down the track of horseless carriages powered by rock oil. That was during the last 100 years, and the infrastructure and behaviour have grown up around it. Everything is moulded to it.
Now we're turning our attention to the other piece that was originally electric vehicles. As we start putting more time, thought and attention into that, the opportunity for innovation and change is enormous. That's partially because over the last 100 years it has been somewhat ignored because attention was directed almost solely to this other area. Unfortunately, I don't have the crystal ball on some of these great innovations, but I have high optimism for what we can find and the various ways we can make these vehicles real.
Senator Martin: Thank you very much. I was in the chamber, which is why I'm late. I apologize. I looked through what you presented.
I'm assuming that the CCRE brings all of these companies and associations together because Canada is so diverse and complex. Are you having success in aligning or bringing the different regions up to a certain standard because of the Council? What challenges have you faced? This may be a redundant question.
Mr. Irving: I appreciate it. The Council has only been around since 2015.
Senator Martin: It's quite new.
Mr. Irving: We are getting our legs underneath us. We realize that we have these great strengths in renewable electricity with hydro, wind, solar, marine and developing tidal ocean energy. If you could fit them all together properly, they could really enable one another. We were talking earlier about an example of water power backing up wind power. One of the biggest issues with some of the newer renewables is the nature of their variability. All renewables are variable, but the specific nature of wind and solar is some of the daily hour variability that they have. When the sun isn't shining or if the wind stops blowing, the electricity needs to keep flowing so you need to back it up. This is where Canada's hydro power advantage becomes very apparent.
The one thing about hydro power that you can't take from us is that we are the most "dispatchable.'' You can turn us on and off faster than any other form. We realize that if we stitch ourselves together properly, we can provide an answer that's bigger than any one of us. That's what the Council is here to do.
Senator Martin: I love that answer.
The Deputy Chair: Thank you, Mr. Irving, for your presentation. We appreciate it greatly.
(The committee adjourned.)