CGA Releases Report Studying the Impacts of Policy Driven Electrification for Canada
October 16, 2019 (Ottawa, ON) - Today, the Canadian Gas Association released the study Impacts of Policy Driven Electrification in Canada. Prepared by ICF, the study assesses four scenarios that quantify what effects, requirements and costs electrification of roughly 40 to 50 per cent more of Energy use would impose on generation capacity, electricity infrastructure, peak demand supply capability, emission reductions, and energy affordability. The study makes clear that:
Electrification will require a massive build out of new infrastructure.
Currently only 20 per cent of Canada’s energy requirements are met by electricity. Based on ICF analysis, fuel switching to electricity of an additional 40 per cent would require an expansion from 141 gigawatts (GW) of generating capacity today, to between 278 GW and 422 GW of capacity by 2050, depending on the electrification strategy deployed. That represents a tripling of generation capacity to meet peak demand on the energy system.
The infrastructure required will be enormously expensive.
The expansion, along with the associated incremental costs of energy, electric technology adoption, new transmission infrastructure, and renewable natural gas (RNG), could increase national energy costs by between $580 billion and $1.4 trillionover the 30 year period between 2020 and 2050.
The expense for the average Canadian household will be significant.
The cost is equivalent to increasing average Canadian household spending by $1,300 to $3,200 per year. The capacity requirements and associated costs could be significantly higher were it not for the study’s aggressive, cost-conservative assumptions related to the improvement of electric technologies (e.g., heat pumps) and assumed steep reductions in the heating loads of residential and commercial buildings.
Environmental policy goals can be pursued at significantly lower cost through a multi-grid approach that integrates natural gas solutions with the electric system rather than an electric-only option.
GHG reduction policies that entirely favour electricity over multi-grid approaches are significantly more costly (at $289 /tCO2 for electric alone vs $129 /tCO2 for integrated systems). Canada’s existing natural gas and electricity systems and existing infrastructure working together can be optimized for a reliable, affordable, low emissions solution.
The goal of this report is to help better inform the public discourse on options for Canada’s energy future. What is clear from the research is that the cost to electrify additional parts of the Canadian economy will come at tremendous cost. More importantly, pathways that leverage both natural gas and electricity systems can deliver important emission reductions much more affordably. As we move forward, the Canadian natural gas delivery industry is committed to advancing cost effective solutions that will help Canada meet its environmental objectives, while remaining economically competitive. For more details on this study, visit Link
CGA believes studies like this one are necessary if we want to have an informed discussion about energy policy options and their implications for Canadians. It is too easy for decision-makers to make bold statements about what an energy system might look like without ever explaining what is involved, and what that will cost working Canadians.
Timothy M. Egan, President and CEO, Canadian Gas Association
Many of my colleagues around the Board table lead integrated gas and electric companies, and all of us face a big challenge in trying to meet Canadians’ energy needs in a way that is environmentally sound, reliable, and affordable. Studies like this help us to be better informed about those challenges, so that we can better meet those customer needs. We hope this study fuels a more informed energy discussion in our country.
Leigh Ann Shoji-Lee, President, Pacific Northern Gas, Chair, Board of Directors, CGA
Fuel switching and energy transitions are difficult to accomplish. The NGV industry’s experience over the last decade in the transportation sector points to the pivotal role of cost and affordability in supporting these transitions. This report provides a realistic look at cost implications and the real supply chain challenges that need to be addressed if Canada is to meet its emissions reductions targets.
Bruce Winchester – Executive Director CNGVA
The Canadian Gas Association (CGA) is the voice of Canada’s natural gas distribution industry and its members are distribution companies, transmission companies, equipment manufacturers and other service providers. Natural gas has a central place in Canada’s energy mix meeting 35 per cent of the country’s energy needs. Today, in over 7 million homes, apartments, buildings, businesses, hospitals and schools, customers representing two-thirds of Canadians rely on natural gas for heat and power.
Kim Brunhuber’s article is another in a line of comments suggesting the electrification of our energy use would be straightforward. We at the Canadian Gas Association disagree. To put some independent analysis into the discussion we commissioned ICF to examine electrification under various scenarios in Canada. The conclusions of their work make it clear that electrification would be extremely expensive, and of limited benefit for emission reductions versus a more cost-effective approach that would integrate both gas and electric energy delivery systems.
In Canada, electricity currently represents roughly 20 per cent of energy end-use with natural gas delivering 35 per cent and the balance coming from liquid fuels (40 per cent) and biomass/other fuels (5 per cent). The ICF analysis looked at electrifying roughly half of the non-electric portion, so that we would have approximately 60 per cent of end-use energy being met by electricity (to go to 100 per cent electrification was deemed too challenging a prospect at present). At a 60 per cent level electrification presents some daunting numbers:
Electrification will require a massive build out of new infrastructure: Fuel switching to electricity of an additional 40 per cent of our end use would require an expansion from 141 gigawatts (GW) of generating capacity today, to between 278 GW and 422 GW of capacity by 2050, depending on the electrification strategy deployed. That represents as much as a tripling of generation capacity to meet peak demand on the energy system. That is the equivalent of hundreds of nuclear reactors. The infrastructure required will be enormously expensive: The expansion, along with the associated incremental costs of energy, electric technology adoption, new transmission infrastructure, etc, could increase national energy costs by between $580 billion and $1.4 trillion over the 30 year period between 2020 and 2050. That is a conservative assessment – and again, does not represent total electrification.
The expense for the average Canadian household will be very large: The cost is equivalent to increasing average Canadian household spending by $1,300 to $3,200 per year. The study used cost-conservative assumptions related to the improvement of electric technologies (e.g., heat pumps) and assumed steep reductions in the heating loads of residential and commercial buildings: so in fact the capacity requirements and associated costs could be significantly higher.
Environmental policy goals can be pursued at significantly lower cost through a multi-grid approach that integrates natural gas solutions with the electric system rather than an electric-only option: GHG reduction policies that entirely favour electricity over multi-grid approaches are significantly more costly (at $289 /tCO2 for electric alone vs $129 /tCO2 for integrated systems). Canada’s existing natural gas and electricity systems and existing infrastructure working together can be optimized for a reliable, affordable, low emissions solution.
With the study complete, we at the CGA want to broadcast the results and start a conversation about what they mean as we look to our energy future. What we know today is that the Canadian energy market is demonstrating a strong demand for continued and expanded use of natural gas. This isn’t a surprise: heating with it saves homes and businesses a lot of money – as much as $3,000 per year over alternatives for the average family. In addition, natural gas infrastructure is incredibly reliable – it wasn’t gas customers in California or Nova Scotia who lost service in recent outages because of fires and hurricanes – it was electricity customers. And, the emissions from gas use are declining today, in part because of how we focus on energy efficiency (a home today uses 30 per cent less natural gas than one just 15 years ago, with more reductions anticipated), and in part because other innovations in fuel options (renewable natural gas and hydrogen) and other technologies (like CO2 recovery) are a priority.
Add to that the great promise for Canada’s natural gas in other areas: in transportation markets where we are deploying compressed and liquefied natural gas (CNG and LNG) in marine, trucking, rail and off-road applications; in the use of LNG and CNG to deliver reliable, affordable, low-emission energy in northern communities and industries; and of course in global markets, where Canadian natural gas can help bring millions out of poverty and deliver clean air benefits.
There is much talk of crisis around energy and environmental questions in Canada today – talk that is rarely helpful. What Canadians deserve is more talk of practical cost-effective solutions to real challenges. Natural gas delivery offers just such a solution. It is critical today, and will be valuable for the long-term as part of an energy future for Canada where emissions continue to decline, prices stay affordable for families and businesses, and our know-how takes opportunity to the world.
Timothy M. Egan
President and CEO
Canadian Gas Association
The piece “The Next Target in the Climate Change Debate: your Gas Stove” published in the September 9, 2019 Financial Post highlights how the very animated conversation around climate change, so dominant across North America, can quickly lead to actions that are not well thought out, and that could have a very negative impact on citizens.
First, there is a clarification required. The discussion of “system methane leaks” that is a big part of the U.S. debate is much less relevant to Canada where the natural gas delivery industry phased out cast iron pipe almost a decade ago. Widely used in older gas distribution systems, cast iron pipe is the cause of most distribution system leaks in the U.S., and is now being phased out there too. No gas company wants leaks, however small they might be. Methane is, after all, our product, and leaks represent a waste of that product. Not surprisingly then, our industry is working constantly to reduce methane emissions and our success in doing so is notable. According to data from the Canadian Energy Partnership for Environmental Innovation, emissions per kilometre of distribution gas lines have declined by 46 per cent since 2005 despite a doubling of the pipeline system size and a 45 per cent increase in natural gas use in Canada.
The discussion of banning natural gas connections suggests that the only way to reduce emissions is to move from dependence on multiple energy delivery systems (liquid fuel delivery of fuels like gasoline and diesel by truck over roads, gaseous fuel delivery of fuels like natural gas through underground gas lines, and electric delivery systems of electrons over wires) to delivery by one system: the electric system. This is not true. First, it should be noted that an electric system produces emissions. Electricity is still, in many cases, generated by fuels that produce emissions (coal, oil, natural gas) or technologies that depend on the use of those emitting fuels, such as natural gas backup for intermittent wind. Second, other delivery systems can deliver significant emission reductions, and often do so at lower cost. For example, through our gas lines we can deliver renewable natural gas and hydrogen, and we have an increasing array of innovative technologies that reduce emissions. One of these is the CO2 recovery technology from the company Clean02, recently profiled in the Financial Post. Through our Natural Gas Innovation Fund we are working with a wide range of technology companies to support more innovation like this.
It seems as though the language of crisis is taking such hold that decision-makers are inclined to act impulsively, losing sight of the negative implications of such actions.
One big negative implication for consumers is higher energy costs. Natural gas customers save in the order of $2,000 per year by having access to natural gas for heating – a saving that is forecast to continue well into the future - while electricity prices that are already much higher than natural gas prices are expected to grow higher still.
A second big negative implication is the threat posed to the resiliency of our energy system. When big storms hit, the energy system that faces the biggest challenge isn’t the gas system, it is the electric system. We just saw this in Nova Scotia where the hurricane Dorian had virtually no effect on gas customers but affected hundreds of thousands of electric customers. Not surprisingly, more and more gas customers are asking how they can use technology like combined heat and power to meet electric needs using the gas system.
Decision makers should take a deep breath and calmly reflect on what is best for citizens, in the short term, the medium term, and the long term. Undermining affordability and resiliency while delivering costly single energy system environmental benefits hardly seems like good policy.
The Canadian Gas Association represents the gas delivery sector, but many of our companies operate multiple energy delivery pathways – including electricity systems. We believe Canada’s energy system is stronger when there are more delivery routes, not fewer. To decision makers we say: don’t dictate the design of a system by eliminating choices. Instead, create the conditions where all options are on the table, and all system operators are encouraged to constantly improve their performance for the benefit of Canadians.
Clean fuel and electric vehicle use in Canada can reduce GHGs by over 50 million tonnes by 2030
Canada’s national clean fuels associations forecast greenhouse gas (GHG) emissions reductions of over 50 million tonnes (Mt) per year by 2030 through greater production and use of renewable energy in Canada. The associations, Advanced Biofuels Canada (ABFC), Canadian Biogas Association (CBA), Canadian Gas Association (CGA), Electric Mobility Canada (EMC) and Wood Pellet Association of Canada (WPAC), represent a significant part of the spectrum of Canada’s primary clean fuel industries. Together, we share a belief that investments to increase the production and use of clean and renewable fuels and electric vehicles (EVs) to meet Canada’s GHG emissions targets will stimulate clean growth, create jobs, and achieve significant greenhouse gas reductions over the next decade.
Collectively, the associations represent technologies that can, with the right policy measures in place, exceed the proposed federal Clean Fuel Standard’s objective of 30 Mt of annual GHG emission reductions by 2030. Estimates of potential emission reductions are based on modelling work for the joint industry – federal government steering committee looking at the competitiveness of clean fuel investment in Canada.
The results demonstrate significant annual emissions reduction potential by 2030 from adopting clean and renewable liquid, gaseous, and solid fuels, and from switching to electric vehicle use. ABFC estimates that 15 Mt of reductions per year are achievable by 2030 by incorporating modest levels of biofuels and other non-fossil clean fuels into transport fuels. The CBA and CGA estimate that 14 Mt of reductions are attainable by introducing renewable gases into transportation, building heating, and industrial processes. EMC estimates that 16Mt of GHG reductions are achievable through the electrification of light, medium, and heavy-duty vehicles, including buses. WPAC estimates that 5.5 Mt of reductions can be achieved through fuel switching to wood pellets to provide heat in the residential, commercial, and institution sectors, and from replacing coal with pellets for power generation. Across all sectors, there is even greater potential to achieve stronger results. In aggregate, the estimates demonstrate Canada’s potential to economically and efficiently reduce GHG emissions by fueling our economy with clean and renewable fuels made and used in Canada.
The results will not come easily. To attract the capital investments ($ billions) necessary to support this transition, the associations have recommended that the federal government adopt a Clean Fuel Strategy by 2020. The strategy would include setting a clear path to clean and renewable fuel use by 2030:
Establishing clear market signals for clean fuels and electric vehicles
Aligning clean and renewable fuel regulations to meet targeted clean fuel and EV use
Establish clean fuel program funding to support clean and renewable fuel production capacity and infrastructure investments, and support EV adoption
Support research and development programs to maintain Canadian leadership in clean fuel technologies and innovation
Advanced Biofuels Canada is the national voice for producers, distributors, and technology developers of advanced biofuels in Canada. Our members are global leaders in commercial production of advanced biofuels and technology development, with over 14 billion litres of installed annual production capacity worldwide. Advanced biofuels and synthetic low carbon liquid fuels can be made in Canada from sustainable crops, forest and agricultural residues, wastes, and carbon capture technologies. Canada has 22 biofuel production facilities, which produced 2.1 billion litres of clean fuels in 2017.
ABFC’s 2018 capital projects survey identified $6 billion of capital investment potential to 2030, representing over 50 projects with potential new capacity of 3.9 billion litres. The World Agricultural Economic and Environmental Services (WAEES) modelling of the proposed CFS demonstrated that Canada can produce 5.0 – 6.75 billion litres of advanced biofuels by 2030. Advanced biofuel production would create green jobs, improve fuel market competition, and support economic resilience for farm and forestry communities in rural Canada. GHG reductions of 15 Mt per year by 2030 can be affordably and sustainably achieved with biofuel/synthetic fuel blends of 10-15% in gasoline and diesel fuels.
Renewable gases, including renewable natural gas (RNG), biogas and hydrogen, remain an untapped emission reduction opportunity for Canada. The CBA membership includes gaseous fuel producers (farmers, municipalities, and others), technology suppliers, organic residue generators, and utilities that support the entire value chain of the biogas and RNG industry. Biogas is produced from organic waste materials that originate on farms, forests, and municipal waste streams. In order to produce RNG, the gas is cleaned to meet end use specifications for injection into the gas pipeline or compressed and liquified for use as a transportation fuel. Currently, there are over 100 operating biogas facilities in Canada.
CGA is the voice of the natural gas distribution industry. Natural gas meets 35% of Canada’s energy needs through over 550,000 kilometers of infrastructure connecting over two thirds of Canadians. Canada’s natural gas utilities strongly support low-emission energy delivery to Canadians through the advancement of RNG and hydrogen.
With Canada’s wealth of forests, agricultural wastes, and extensive interprovincial and local distribution natural gas pipeline network, Canada is well positioned to be a world leader in RNG production, use and technology export. In addition to RNG, CGA is exploring the role of piped hydrogen as a zero emission energy carrier.
In order to advance renewable gas development in Canada, it is essential to have a policy that reflects the realities of the industry and renewable gas projects. In 2018, CGA, along with representatives from the renewable gas industry, including CBA, developed the Renewable Gas Innovation Program proposal. The vision for this policy is that it will stimulate a market and put Canada on course to realize between 5-10 per cent content of renewable gases in the Canadian energy system by 2030.
EMC is Canada’s national electric mobility association. Our 180+ members represent the entire value chain of electric mobility in Canada, including automakers, utilities, industry, researchers, NGOs and governments. A recent report released by EMC, showed that electric vehicles represented 3.3% of all passenger vehicles sales in Canada in Q2 2019. The number of EVs has grown exponentially in the past few years.
Electricity will play a critical role in supporting clean fuel use in Canada. Powered by clean, renewable electricity, electric vehicles could reduce GHG emissions by 16 Mt per year by 2030. This forecast is based on electric vehicle penetration rates of 10% of light-duty passenger vehicles (car and pickup trucks), 30% of buses (municipal transit fleets), and 3% of medium and heavy-duty vehicles (delivery and long-haul trucks) by 2030. Together with other initiatives promoting electrification of transport in Canada, we believe electric mobility can support expanding the targeted reductions under the CFS.
WPAC represents the pellet producers, equipment manufacturers, research and development and engineering companies. Today, our members produce around 3 million tonnes of pellets per year, contributing to Canada’s economy and roll-out of renewable, on-demand electricity.
There is huge potential for greater reductions of GHGs through domestic use of wood pellets in Canada. Solid biomass fuels, including wood pellets, could readily meet the full 30 Mt CFS reduction goal, and further GHG reductions could be achieved via end-use fuel switching in gaseous and liquid (stationary) class fuels. Given the maturity of the thermal generation and heat distribution technology, Canada’s abundant sustainable solid biomass resources, and Canada’s leadership position in certified sustainably-managed forests, solid biomass fuels can be a key pillar Canada’s Clean Fuel Strategy.
Canadian Gas Association open response to TVO Piece by John Michael McGrath “Infrastructure Outlives Us All”
On July 30, 2019, TVO published an opinion piece by John Michael McGrath titled Why the government will have to come for your gas stove someday. The article, supporting Berkeley, California's decision to restrict natural gas connection to new commercial and residential buildings, misses some key points about the value proposition of gas and gas infrastructure for Canadians.
The following is CGA's response to this article. Click here to read our response.