Exploring visions for Alberta’s low-carbon economy

Posted on Mon, 11/26/2018 - 05:03

By Mark Lowey, for CESAR

The Canadian Energy Systems Analysis Research (CESAR) Initiative and the Fuse Collective student group at the University of Calgary presented a free public event, “Alberta in 2050: Visions for a Low-carbon Economy,” on September 25, 2018. The panel presentation, moderated by CESAR director David Layzell, was held on UCalgary campus and attracted more than 200 people.

The four panelists were:

  • Shannon Phillips, Minister of Alberta Environment and Parks and Minister Responsible for the Climate Change Office;
  • energy economist and author, Peter Tertzakian, executive director of ARC Energy Research Institute, chief economist and managing director at ARC Financial Corporation and an adjunct professor at UCalgary;
  • Anouk Kendall, president of Decentralised Energy Canada; and
  • UCalgary mechanical engineering student Ben Huang, president of Fuse Collective.


The main points made by the panel moderator and panelists included:

  • Incremental change in society’s systems is insufficient for Canada to meet its international greenhouse gas emissions (GHG)-reduction commitments and targets in 2030 and 2050. Transformative, and in some cases disruptive, change is required.
  • We need more compelling reasons – and such reasons exist – to steer transformative change in a low-carbon direction.
  • It is unlikely that Canada and many other countries will meet their 2030 and 2050 GHG-reduction targets.
  • Alberta has seen a “flattening” in GHG emissions in the past four years, due to phasing out coal-fired power, growing use of wind and solar power, innovations in the oilsands industry, a provincial energy efficiency program, and a methane emissions-reduction program.
  • It is unlikely that Alberta’s oilsands industry will hit its 100-megatonne GHG emissions cap by 2030, mainly due to improvements in energy efficiency and innovative technologies.
  • Alberta’s energy industry, including the oil and gas sector, can become an international leader and “tech hub” in the use and export of novel technologies that reduce GHG emissions.
  • Shifting from coal-fired to natural gas-fired electricity generation is the quickest, most cost-effective and technologically proven way to reduce GHGs in the near term.
  • Current energy systems and other societal systems are extremely inefficient and result in a lot of waste.
  • Society needs a massive behavioural change in how it uses energy and other resources to dramatically reduce GHGs.
  • All Canadians need to set aside their regional differences and come together to find solutions to climate change.
  • Carbon pricing will continue to play an important role in reducing GHGs.
  • Alberta will not discuss an escalating price on carbon, as planned in the federal government’s PanCanadian Framework on Clean Growth and Climate Change, until there’s a final approval of the Trans Mountain pipeline to transport oilsands bitumen to the West Coast for international export.

Transformative change required

Panel moderator David Layzell started the session by reminding everyone that it has been more than 20 years since Canada and other nations came together to recognize the problem of climate change caused by human-produced greenhouse gas emissions. He pointed out that Canada didn’t succeed in meeting its international GHG-reduction commitments in either the 1997 Kyoto Protocol, or in the 2009 Copenhagen Accord.

L to R: David Layzell, Ben Huang, Shannon Phillips, Peter Tertzakian, Anouk Kendall

In the 2015 Paris Agreement, Canada committed to do its part to keep the increase in the average global temperature below 2 degrees Celsius. This commitment, given Canada’s expected population growth, would require per capita GHG emissions in the country to decline from about 20 tonnes of CO2e per person per year to about three or four tonnes per person in 2050, Layzell noted. “Clearly these targets can’t be met with incremental change,” he said. “Transformative – and in some cases disruptive – changes will be needed in the systems we use to meet societal needs,” (e.g. in mobility, goods movement, food system, how we live).

“The problem is that over the past 20 years, no one has been able to convince the majority of Canadians – or Americans for that matter – that fighting climate change is a good enough reason to undertake major societal change,” Layzell said. In Canada, he added, one government introduces policies that promise to advance the climate change agenda (such as carbon taxes, regulations or clean energy incentives), and then a new government gets elected and they reverse most, if not all of the policies.

The need for more compelling reasons to transform society

“So in a democratic society, how are we going to achieve this transition to a low-carbon economy?” Layzell asked. He said that CESAR, through its research, is asking whether there might be other, more compelling reasons to fundamentally change the way society does things such as, for example, how we move around. “Clearly, there are,” he added, citing traffic congestion, accidents, air pollution, high cost of vehicle ownership, parking and urban sprawl.

“What if those systems were already on the verge of disruptive change, giving us an historic opportunity to steer their evolution in a way that is better for people – and is also better for the climate?” Layzell said. “Think about autonomous vehicles, car sharing and electric vehicles” when it comes to transportation.

Such disruptive change gives society the leverage to connect people’s desire for more convenience, lower costs, greater comfort, improved health and higher quality of life “with the opportunity to steer transformative change in a low-carbon direction,” Layzell said.

Can Canada meet its Paris Agreement target for 2030?

Turning to the four panelists, Layzell asked whether Canada can possibly meet its Paris Agreement target to reduce GHG emissions in 2030 by 30 per cent from levels in 2005.

Phillips, who was at the international climate meeting in Paris on behalf of the Alberta government, said: “The Paris targets are ambitious, and will require a much more concerted federal effort in this space.” Transportation and buildings account for a large proportion of Canada’s emissions, yet “we have yet to see a comprehensive policy approach from the federal government on buildings and houses and transportation,” she said.

“Alberta has taken the position that we have done what we can in this space,” Phillips said. “We have seen a reduction in greenhouse gas emissions and we will see it going forward to 2030.” Alberta is positioning itself, such as with its policy on reducing methane emissions, to be able to export GHG-reduction technology to other oil- and natural gas-producing jurisdictions, Phillips said. Alberta’s responsibility, she added, “is to demonstrate we can do this in a way that minimizes our carbon input costs, and ensures we remain competitive and also put people to work in this industry here and around the world.”

Tertzakian said he’d be surprised if Canada reaches half its 2030 GHG-reduction target, by reducing emissions from the low-700 megatonnes of CO2e to the low-500 megatonnes. “That’s not an indictment against Canada. I think there are going to be many, many countries that are going to miss it (the 2030 target),” he said. Instead of a collaborative international effort to reduce emissions, he added, “There’s this polarization around the world now, which is just pitting [energy] system against system, which precludes optimization of the systems.”

What if oilsands industry hits GHG emissions cap?

A University of Calgary student asked the panel what would happen to Alberta’s economy if the oilsands industry reaches the 100-megatonne GHG cap, implemented by the provincial government, by 2030.

Phillips replied that it was the major oilsands producers that proposed that cap to the government, because of the unlikelihood that it would be reached. “With investments and innovation that we’re already seeing, and the push of pricing and the pull of investing funds into oilsands innovation, it’s quite unlikely that we will hit that cap.” The government has developed regulations, in consultation with industry, on what will happen within the regulatory process when the industry reaches certain GHG thresholds, she said. These regulations are to be released this fall.

Why not transition directly to near-zero-carbon power generation?

A member of the audience asked why Alberta is shutting down coal-fired power plants before the end of their useful operational life, and converting these plants to natural gas when they might also need to be mothballed “because of the pressure of climate change.” Why not “leapfrog” over such hydrocarbons-based technologies and go directly to more advanced electricity-producing technologies, such as oxy-fuel combustion or thorium molten salt nuclear reactors? she asked.

Tertzakian replied that due to compounding wealth creation around the world, there really is no mitigation on using oil, natural gas or “I would even argue coal usage in the world.” So, proven solutions that quickly achieve large-scale reductions in GHG emissions are needed. “The only system right now that can meaningfully reduce emissions in the near term is natural gas pushing out coal. That’s large scale and it’s happening, even in the absence of legislation . . . because the natural gas is becoming so cheap to extract and is pushing it (coal) out,” he said. “I think that natural gas has to be part of the solution.”

Phillips pointed out that 12 of 18 of Alberta’s coal-fired power plants were scheduled for decommissioning under regulations brought in by the former Progressive Conservative federal government. Alberta’s NDP government negotiated an earlier phase-out of the remaining six coal plants. The cost per tonne of reducing GHGs by phasing out the coal plants “is considerably less than any other way of getting [carbon] out of the atmosphere,” she said. Coal plants that will convert to natural gas will reduce their compliancy payment of $30 per tonne of GHG emissions under the government’s new regulation, she added. The companies that own the plants will make their investments “according to the carbon pricing framework, which has established the benchmark as good-as-best gas [technology]. So that will be a further push for natural gas investors in new natural gas generation to ensure that those (plants) are the highest level of efficiency that they can be.”

As for other technologies, within the context of carbon pricing, the market will look for the lowest-cost compliance option and lowest-cost electricity generation over time, Phillips said. “There may be big mega-solutions out there, but they are not economic. What is economic right now is a mixture of renewables, new natural gas generation (and) potentially there might be some interest in smaller-scale hydro projects.”

What behavioural shifts are needed?

Anouk Kendall talks with audience members.

A graduate student in UCalgary’s Haskayne School of Business asked what kind of behavioural changes are needed in Alberta and the rest of Canada to actually meet GHG-reduction targets in 2030, 2050 and beyond.

Kendall replied that we as a society are “extremely disconnected on cause and effect” when it comes to energy usage and GHG emissions. “I don’t think the majority of the population understands the waste we create, the inefficiencies of our systems,” she said, noting that current energy systems average only 23-per-cent efficiency. Alberta’s steam-assisted gravity drainage oilsands plants, for example, produce 408 petajoules of discarded heat energy per year. Kendall said she hopes that people will be “forced to pay more attention” and be led to change as society’s systems – whether it’s energy, waste management, banking or other systems – become more transparent, autonomous, digitalized and shared. “I think that transparency is what we need for people to see the impacts that we have.”

Huang said he believes the needed behavioural shift will be driven by the lower costs of new, more efficient and better quality technologies and systems. He pointed to Uber and electric vehicles as examples in the personal transportation sector. “I think for a lot of people it becomes a part of the experience, it becomes part of the quality they’re being offered, as well as the cost at which they’re being offered the product,” he said. “When those things match up and they make sense, people will naturally obviously choose lower-cost, higher-quality product.”

Tertzakian said that changing society’s behaviour “is the ultimate question. We tend to focus a lot on technology (and) what can it do for me, and point fingers at the scientists and engineers and say, ‘Solve it for me.’ Ultimately, this is a behavioural issue because fossil fuels do not emit anything: people who burn fossil fuels emit. And what you use to burn those fossil fuels emit.” He pointed out that the dynamic range between buying a small vehicle versus a large SUV is four-to-one in terms of CO2 emissions per kilometre. “You can cut CO2 emissions from transportation by 75 per cent if people just choose a different vehicle.”

What policy changes are needed?

A Master’s student in public policy at UCalgary, and whose home is in British Columbia, asked what policy changes are needed to get B.C. and Alberta on the same page when it comes to energy systems and pipelines.

Phillips said many Albertans, including those who support the NDP government, “like to see a middle path in terms of energy and environment, and that is equally true in British Columbia by and large. So I think there’s a lot of space there to have that conversation with ordinary working people who want to hear that (energy) transition is not a transition to EI [employment insurance], that it’s . . . about broadening and deepening the economy.” As well as Albertans, many British Columbians are employed directly or indirectly by the energy economy, she said. Phillips said she met with clean tech entrepreneurs in Vancouver at the recent Global Sustainable Investment Forum, “who were so pleased to hear about the $1.4 billion that was going into innovation and clean tech in Alberta, as a recycling of the carbon competitiveness regulation incentives. They see really business opportunity there as well . . ..”

Minister Shannon Phillips networks with the audience.

Albertans, British Columbians are all Canadians “are all in this together and there are problems that we need to solve together,” Phillips said. “It distresses me that we can’t reach across and have those productive conversations with also a New Democrat government that is governing the second-fastest growing economy in the country. (Alberta has the fastest-growing economy). “I think as this (energy transition) moves along, those opportunities will present themselves.”

What role will carbon pricing play going forward?

An audience member asked what role carbon pricing will play going forward, given that governments in Ontario, Saskatchewan and Manitoba are now pushing back against the federal government’s carbon pricing plan.

Tertzakian said he thinks the carbon levy “is very productive from the perspective of taking the proceeds and if you reinvest that back into lower-carbon alternatives or more efficient alternatives.” However, he questions whether the carbon tax needed to change behaviour has to be much higher than it is now ($30 per tonne in Alberta), which would be “politically unpalatable.” For example, a few years ago when the price of a barrel of crude oil hit $140, the price of gasoline in the U.S. reached nearly $5 per gallon. That equates to a carbon tax of $200 to $250 per tonne, he noted. “All that served to do was actually momentarily stall oil consumption growth. It really didn’t bend it.”

Peter Tertzakian talks with audience members.

Another challenge is that any carbon tax is typically offset by new, more efficient technologies, Tertzakian said. Moreover, the bulk of energy use and GHG emissions typically comes from upper-income earners, he added. “Somebody who makes $100,000 a year produces way more than five times as much emissions as somebody who makes $20,000 a year. It’s an exponential function.” So for someone who generates a lot of GHGs, even a carbon tax of $70 per tonne “is like a couple of bottles of wine every month. It’s just not consequential.” Carbon taxes by themselves are insufficient and other solutions are required, Tertzakian added. “You need to have a wholesale cultural change in terms of attitudes about consumption if you really want to make a dent in this problem.”

Phillips said the most efficient way to reduce GHGs throughout the economy is by pricing CO2. The bulk of Alberta’s GHG emissions come from large final emitters, she noted. The government’s carbon competitiveness regulation with its carbon levy can respond to changes elsewhere, such as policy ‘tweaks’ or carbon constraints among industries and products that compete with Alberta’s. Phillips said that when the federal government proposed a PanCanadian climate change plan with an escalating carbon price starting in 2021-22, the Alberta government’s analysis at the time showed the province’s economy – even without a pipeline to the West Coast to export oilsands bitumen to offshore markets – could, with reinvestments in innovation and diversification initiatives, withstand a carbon price of $30 per tonne. But without that market access for bitumen, she added, a $40- or $50-per-tonne carbon price “becomes problematic for the Alberta economy.” Phillips said that is why, in response to a Federal Court of Appeal decision that quashed the federal approval of the Trans Mountain pipeline expansion, Premier Rachel Notley said “once we have a pipeline approval back in place, ten we can have this conversation around $40 or $50. But not until that time.”

Since the NDP government was elected in May 2015, Alberta has seen “a flattening of our (GHG) emissions profile,” Phillips said. “We did it, and we are doing it, through things like the electricity policies, some of the innovations coming out of the oilsands, (expanding use of) natural gas, the methane reduction . . . and in energy efficiency that’s also saving people money.” The first six months of the province’s energy efficiency programs have saved $300 million in avoided costs for Alberta businesses, individuals, farms and communities, she said. “In three years, we’ve grown our installed solar capacity by eight times,” Phillips added. “So it’s working and there has been good progress. The only way that we can move it further is through partnerships with municipalities and with the federal government to do more.”

A graduate student from the University of Alberta who was visiting Calgary asked how current provincial policies on climate change might be affected if the government changes in the election next year.

“Massive changes could be wrought through the reversal of any of those (policies),” Phillips replied. “It would have a tremendously destabilizing effect.” The imposition of the federal PanCanadian climate plan, if Alberta’s climate plan is scrapped or significantly curtailed, “is also fraught with many unknowns.”

Mark Lowey is a communications advisor to CESAR and the managing editor of EnviroLine.


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