We have many advantages, including enormous hydropower, wind, nuclear and solar resources. But Canadian power systems are decentralized, inconsistent and poorly connected. Photo: Shutterstock
Never waste a good crisis.
The pandemic has revealed much that was fragile and dangerous in the old “normal” most took for granted only a few short weeks ago. The silver lining, if there is one, is laying bare so much we need to do, and why prompt action is critical.
For the accelerating climate crisis, COVID-19 offers so many lessons it is hard to digest them all. One is the financial shock to oil-industry lenders and investors, who kept thinking growth would follow growth. Now that the energy sector’s share of the S&P 500 index has collapsed 80 per cent in a decade, the oil industry has gone from the mainstream to the fringes of investors’ portfolios with remarkable speed.
With renewed attention to public health, we should see less tolerance for the air pollution that comes from fossil fuels. It is clearer than ever a secure-energy future, clean air and stable climate are based on energy conservation and low-carbon electricity. For an increasing number of people, low-carbon electricity is also the cheapest electricity. For example, Berkshire Hathaway reports generating almost all the power demand of their Iowa customers from wind allows them to charge electricity rates 70 per cent less than the competing, fossil-based utility.
Canada could be a powerhouse in this future, and could offer energy investors large opportunities for low-carbon capital deployment. We have many advantages, including enormous hydropower, wind, nuclear and solar resources. But Canadian power systems are decentralized, inconsistent and poorly connected, just when they most require co-ordination.
No major Canadian product has more widely varying prices than electricity: from 7.3 cents per kilowatt-hour in Quebec to 16.5 cents in Saskatchewan. Generation, transmission and storage are planned, built and financed separately. Each province has its own electricity institutions, market, regulation and pricing. Weak transmission connections and uneven price signals prevent cost-effective deployment of renewable resources, storage options and demand-response strategies. Instead, provinces silo themselves in outdated practices and miss the best opportunities. And some, like Ontario, have actively turned away from both conservation and clean renewable power, repealing laws, breaking contracts, repudiating investors and physically destroying completed turbines.
All provinces would have a more successful transition to a green economy with a common framework for electricity investment, trade and pricing, linked together with an open and shared transmission network. This would allow all provinces to attract more capital, green their supply and lower their decarbonization cost.
Before COVID-19, this kind of countrywide co-ordination seemed impossibly ambitious. Now, we know that when the stakes are high enough, even bitter political rivals can work together for the public good. When urgent, shared risks are clearly explained and governments take their responsibility, people understand, make difficult changes to their behaviour and look for opportunities to do their share.
Canada has good precedent for countrywide co-operation on matters within provincial jurisdiction. For example, each province is responsible for health, but the Canada Health Act guarantees a minimum level of services to all Canadians, which the federal government helps to fund. The road toward the Canada Health Act was neither easy nor obvious, but the necessary public spirit and compromises made Canada much stronger.
Similarly, Canada will be cleaner and stronger with a co-ordinated, national approach to electricity. We don’t have to both pay so much for electricity and waste so much. With common rules, joint planning, better connections and facilitated trade, B.C., Manitoba, Quebec and Labrador could use their huge hydropower dams to store electricity from the outstanding solar and wind resources in Alberta and Saskatchewan, as well as from solar panels on your roof. That would make low-carbon electricity available all year when we need it, for all our energy needs, including transportation.
The climate crisis is not moving as quickly as the pandemic, but it is just as urgent because the consequences of today’s actions will last so long and have such enormous effects on us all. Canada can respond to the collapse of oil prices by opening another door to a better future, pivoting Canada’s energy sector to shared, low-carbon electrification.