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FINDING SUSTAINABLE PATHWAYS

OUR PROCESS

Our process helps Canada achieve sustainable development solutions that integrate environmental and economic considerations to ensure the lasting prosperity and well-being of our nation.

RESEARCH

We rigorously research and conduct high quality analysis on issues of sustainable development. Our thinking is original and thought provoking.

CONVENE

We convene opinion leaders and experts from across Canada around our table to share their knowledge and diverse perspectives. We stimulate debate and integrate polarities. We create a context for possibilities to emerge.

ADVISE

We generate ideas and provide realistic solutions to advise governments, Parliament and Canadians. We proceed with resolve and optimism to bring Canada’s economy and environment closer together.

6.1 Canada ’s LCGS Sectors

Framing the Future: Embracing the Low-Carbon Economy
 

Appendices cover

Canada’s low-carbon opportunities are as significant and diverse as its geography. The distribution of low-carbon energy resources and of LCGS opportunities across Canada varies by region, and even within regions.

The types of low-carbon energy resources available, and the broader nature of the regional economies, can have significant influence over what opportunities are viable, and can influence regional priorities for development. Despite this significant variation in regional economies and natural resource endowments, a number of opportunities were identified consistently across Canada. In addition, a number of opportunities were highlighted as being of national significance. The following LCGS sector-specific overviews are informed by both our research and these discussions and provide a high-level qualitative characterization of the opportunity as a function of Canada’s perceived strengths.a

RENEWABLE ELECTRICITY GENERATIONb

There is significant opportunity in the further exploration and development of renewable electricity sources. These can be used to power Canada’s added-value economy, and the electricity and/or technology (and intellectual property) can be exported in its own right. Renewable electricity sources noted across Canada include biomass, hydropower, solar, onshore and offshore wind, wave and tidal, and geothermal power.

// BIOMASS:c Canada has large biomass resources and the bioenergy industry is well positioned to claim a significant portion of the international bioenergy market. Installed thermal and electrical capacity from biomass was approximately 5,050 MW in 2008.137 The electrical capacity of this biomass was approximately 1,400 MW. This generation includes independent power producers and industry — particularly the pulp and paper sector. British Columbia and Ontario have aggressive plans to increase biomass power generation within their provinces. The Ontario Power Authority currently has 54 MW of bioenergy capacity generated by biomass and landfill waste under contract, with an additional 125 MW of bioenergy under development.138 BC Hydro has a number of initiatives underway to procure bioenergy from projects that use wood fibre and other biomass fuel sources.

As a subset of biomass, biogas was highlighted as an opportunity that has seen significant penetration in Europe, but is currently significantly underdeveloped in Canada. Biogas can, at large scale, be used to generate electricity or can be used for direct heating applications on a smaller scale.

// HYDROPOWER: Hydropower is the leading source of electricity in Canada, providing for approximately 60% of the national electricity generation. Canada is currently the second-largest hydro producer in the world, producing close to 12% of the world’s total hydroelectric output, with a depth of experience going back over 125 years. In addition, 65% of electricity exports from Canada are hydropower. Canada’s total hydroelectric installed capacity exceeded 69,000 MW in 2009. It is estimated that about 2,000 MW of this installed capacity is small hydro facilities.139 Significant potential for future investment in hydropower remains and there are an estimated 23 GW of future hydro developments currently under review by electric utilities.140 Recent estimates suggest that Canada could develop about 29 GW of hydropower over the next 20 years.141

// SOLAR: While starting from a small base, recent expansion in Canada’s total PV power installed capacity has been rapid. In 2009, installed capacity reached 95 MW up from under 33 MW at the end of 2008 and the grid-connected market accounted for 87% of the market as compared to only 33%.142 This significant growth was mostly spurred by Ontario’s feed-in tariff (FIT) program. Forecasted solar PV growth in Ontario is expected to continue to be very rapid with the Ontario Power Authority anticipating over 2,000 MW being installed by 2015143 as a result of the FIT program. Despite this rapid regional growth, the Canadian solar PV industry, sized at 350 companies, is small and has limited R&D and capital investments when compared with the U.S. or on a global scale. The Canadian industry does nonetheless appear to be well positioned to participate in global supply chains for PV components (e.g., PV system controllers, solar collectors, photovoltaic cells, etc.). In a 2010 report, the Conference Board of Canada highlighted Canada’s small revealed comparative advantage in PV system controllers (second largest global low-carbon trade category by value) and noted several other product categories for which Canada did not have a revealed advantage, but nonetheless exports more than $100 million annually.144 Global trade in these product categories was also noted as growing by more than 10% annually.145 Interestingly, while Germany has the highest level of solar PV installations of any market in the world, with current installed capacity of 9.6 GW — roughly 145 times Canada’s current capacity146 — Canada’s solar resources are considerably stronger than those of Germany — an indication of the potential.

// WIND: Despite almost 4,000 MW of installed wind energy capacity at the end of 2010 less than 1% of Canada’s electricity comes from wind. According to the Canadian Wind Energy Association (CanWEA) wind energy could satisfy 20% of domestic electricity demand by 2025. Achieving this vision could generate $80 billion of investment, create 52,000 full-time jobs, add 55,000 MW of generating capacity, and reduce Canada’s annual greenhouse gas emissions by 17 Mt.147 Regional growth would be expected to vary significantly across Canada. As an example, a study in Québec projected that by 2015, the wind energy industry could develop 4,000 MW of generating capacity, resulting in $10 billion in new investment, more than 5,000 jobs, and significant economic benefits for regions hosting wind power facilities. With regard to trade, Canada is a leader in the manufacturing of small turbines, and has four manufacturers in the small 30–100 kW range and seven manufacturers in the <30 kW range. These small-scale wind manufacturers captured 15% of the global market and exports accounted for 86% of their 2009 sales.

// WAVE AND TIDAL: The wave and tidal subsector includes all manner of ocean energy projects that harness the power of ocean waves and tidal flows. Currently there are only a few operational ocean energy systems in the world, but significant development is underway. Canada has substantial wave and tidal energy resources not only because of its extensive coastline, but also because the energy density of waves tends to be the highest between 30 and 60 degrees latitude, and because it has areas with some of the highest tidal stream energy levels in the world. Canada’s only commercially operational ocean energy system is the 18 MW Annapolis Royal Tidal Plant in the Bay of Fundy. The Bay of Fundy between New Brunswick and Nova Scotia is the most promising location in Canada for tidal energy, and could potentially produce as much as 30,000 MW of energy. On a national scale, wave, tidal, and in-stream energy sources could contribute generating capacity of 75 MW by 2016, 250 MW by 2020, and 2,000 MW by 2030.148 There have been no new large-scale installations since the Bay of Fundy project; however, there is renewed activity in Canada, and many active companies. For example, in 2010 a collaboration between Minas Basin Pulp and Power, Nova Scotia Power, Alstom, the Nova Scotia government, OpenHydro, and Marine Current Turbines, made a commitment to install four 20 MW 34.5 kV off-shore cables to pilot tidal array power plants.

// GEOTHERMAL: The Geothermal subsector includes all projects that generate power from the use of superheated water or steam from the earth’s interior. There is currently no domestic geothermal power production in Canada and only a small number of companies are active in Canada. The potential for geothermal energy in Canada has been estimated to be over 5,000 MW of power production from shallow geothermal resources.149 Most of this potential is believed to be in western and northern Canada. Approximately five geothermal power projects in Canada are under some stage of development in British Columbia and Alberta. Geothermal energy was highlighted in NRT’s dialogues where several participants noted that the exploration and drilling expertise in Canada is the best in the world as a result of the oil and gas exploration and production sector, and that this expertise should be brought to bear on this resource.

// OFF-GRID RENEWABLE ELECTRICITY TECHNOLOGIES: As a particular niche within the renewable electricity technology category, off-grid renewable electricity and distributed generation technologies have significant potential in international markets given the number of regions worldwide that are currently bereft of large centralized energy infrastructure. Canada’s remote communities, many of which are aboriginal communities located in Canada’s north, provide an ideal opportunity for exploring the deployment of off-grid renewable electricity technologies (RETs) and the integration of RETs with existing conventional electricity supply. Frequently, costs associated with connection to the centralized grid are prohibitive. Conventional off-grid electricity generation, often using diesel generators, is also expensive to operate and subject to increasing price-risk. These elevated costs create conditions in which the deployment of off-grid RETs has the potential to be cost-competitive. Furthermore, many aboriginal communities have additional concerns such as the environmental footprint of their community and energy security, which make pursuing such opportunities attractive.d Canada’s strength in small-scale wind turbine design and manufacturing is an example of alignment between an existing strength, domestic need, and international opportunity.

// LOW-CARBON ELECTRICITY GENERATION (NON-RENEWABLE): In addition to renewable electricity supplies, Canada is home to significant expertise and resources associated with nuclear energy, a critical low-carbon electricity source, and carbon capture and storage, a technology with the potential to increase lowcarbon electricity generation, particularly in the West. As highlighted most recently in the International Energy Agency’s 2011 World Energy Outlook, these two low-carbon electricity sources are critical to easing the transition to a low-carbon world.

// NUCLEAR ENERGY: Nuclear energy includes the implementation of nuclear power,e as well as refurbishments of nuclear power plants. Canada operates 17 nuclear reactors at five sites in Québec, Ontario, and New Brunswick. These reactors contribute approximately 15% of Canada’s total electricity generation, including 55% in Ontario. All of the commissioned reactors are based on Canada’s CANDU technology that uses Pressurized Heavy Water Reactors. The last domestic CANDU reactor was completed in 1993; however, Atomic Energy of Canada Limited (AECL) sold and built 11 CANDU reactors outside of Canada between 1971 and 2007.

Canada’s nuclear sector is a $6.4 billion per year industry generating $1.4 billion in federal and provincial revenues from taxes, and providing 66,000 direct and indirect jobs. Canada’s nuclear sector represents 150 firms, generates $1.2 billion per year in exports, and provides over 50% of the global supply of medical isotopes that find use in over 50,000 procedures per day.150 In addition, Canada is the world’s second-largest uranium producer and exporter.

Canada’s nuclear industry has seen a decline in recent years; however, there remains significant capacity and Canada has been a world leader in nuclear technology for over 60 years.151 While several nuclear power plants are undergoing upgrades in Canada, no new generation has been approved.f CANDU Energy Inc. (formerly AECL) is currently awaiting a decision with respect to its proposal for constructing an Enhanced CANDU 6 reactor at Ontario’s Darlington facility. Securing this project is seen as pivotal in terms of the potential for winning new international projects. Given the positive international reputation of Canada’s CANDU technology for safety, performance and reliability, and the competitive advantages of CANDU technology over other technologies,g there is significant potential for next generation CANDU reactor technology to be sold on international markets. This would also bring opportunities for Canadian companies to provide ongoing related services.

// CARBON CAPTURE AND STORAGE: The CCS subsector includes all components of carbon sequestration including capture from power plants or industrial sources, transportation to the storage site, enhanced oil or gas recovery sites, and geological storage in deep saline formations, depleted oil and gas fields, or un-minable coal. Carbon capture and storage (CCS) offers a significant opportunity for Canada to exploit its substantial natural fossil fuel endowments in a manner that respects its international commitment to reducing GHG emissions. As the global economy becomes more carbon-constrained, CCS also has the potential to assure the ongoing viability of this commodity as a source of prosperity for Canada. Expertise and intellectual capital developed around CCS is also expected to offer opportunities in global markets. In 2011, Canada was ranked third in the world (behind the U.S. and Europe) in terms of the number of CCS projects and fourth in the world in terms of the volume of CO2 potentially stored. The recent cancellation of the Project Pioneer demonstration project has highlighted the importance of a supportive market-oriented policy context in achieving domestic commercial success.

BIOFUELS 

The biofuels LCGS subsector includes the use of biofuels for transport and to substitute existing fuels such as heating oil for small end-uses.h With abundant biomass resources in Canada, the biofuel industry is well positioned to claim a significant portion of the international bioenergy market, and Canada is currently among the leading nations in the development of bio-fuel technologies, equipment, and services. Canadian firms have gained expertise in the design, construction and operation of large-scale production plants for bioethanol, biodiesel, and biogas products. From an R&D perspective, Canadian firms are leading the way in the development of second-generation biofuels, using distinct feedstock, such as wheat stalks, wood chips (also pine beetle affected wood mass), and municipal waste.

The major driver in Canada of biofuels investment is the renewable fuel standard in Canada that requires 5% renewable content in gasoline by 2010 and 2% renewable content in diesel and home heating oil by 2012. It was estimated that Canada would need to produce a total of 3.1 billion litres of biofuel to meet this regulation. As of the end of 2010, there were more than 28 biofuel plants operating in Canada, producing more than two billion litres of biofuels. The domestic and international potential for biofuels for transportation is significant. While some regions in Canada will look to electrification of their transportation systems, this may make less sense for other regions with more limited access to low-carbon electricity sources. Biofuels offer significant potential as a low-carbon alternative fuel.i

ENERGY EFFICIENCY, DEMAND-SIDE MANAGEMENT (DSM), AND LOW-CARBON FUEL SWITCHING

Energy efficiency, demand-side management (DSM), and low-carbon fuel switching continue to offer significant cost-saving and GHG reduction potential to the Canadian economy. While it was broadly suggested in our consultations that the energy efficiency and DSM potential was spread across a number of activity areas including industry and manufacturing, energy efficiency in existing and new residential and commercial buildings was highlighted as being substantial and easily served by existing technology. It was also noted that there was a particular opportunity for building energy efficiency gains in areas subject to rapid expansion and growth in the building stock (e.g., Saskatchewan, Newfoundland and Labrador).

// LOW-EMITTING AND EFFICIENT INDUSTRIAL AND MANUFACTURING PROCESSES: The industrial processes subsector includes LCGS that are deployed in a vast array of industries and manufacturing. Ultimately these LCGS contribute to emission reductions either through energy efficiency, changing processes to become less emission intensive, or through fuel switching to renewable energy supplies. This LCGS subsector is essential to the continued competitiveness of many of Canada’s resource sectors and requires significant innovation to identify new approaches and technologies that can reduce the carbon intensity of the processing and manufacturing that forms a significant part of the Canadian economy.

// LOW-CARBON BUILDINGS: Right across Canada, the ability to reduce carbon emissions through both new green buildings and green retrofits is a real opportunity that Canada can and must act upon.j This opportunity presents itself both on the commercial as well as the residential sides. Canada’s commercial building sector is a significant energy user and producer of carbon emissions. It accounts for 14% of end-use energy consumption and 11% of the country’s carbon emissions. Energy efficient technologies exist that could reduce costs to businesses and consumers while reducing the environmental impact of this major economic sector. The opportunity in the residential building sector provides a similar opportunity especially for new construction within cities that are planning for significant growth, infill, and urban intensification.

The estimated incremental capital investment in Canada for new green construction in 2009 represents approximately $950 million in total construction costs.152 Total residential and commercial construction costs exceed $110 billion per year.153 Green retrofits to buildings are not counted in this total of new construction. However, between 2007 and 2009, the EcoEnergy Retrofit Program delivered approximately $100 million in grants to 99,863 residential property owners.154 Investment in more efficient buildings is expected to continue beyond these current trends, with investment increasing over seven times between now and 2050. Growth could climb from current levels of about $1.5 billion to over $9.7 billion in 2050.155

// LOW-CARBON TRANSPORTATION: Low-carbon transportation encompasses efficient or low-carbon vehicle technology including both passenger and freight technologies ranging from personal vehicles to natural gas engines for trucks and heavy vehicles, to advanced rail technologies and advanced aviation materials. In addition to the benefits to the Canadian economy derived from the increased resource efficiency, some regions may benefit through their participation in global manufacturing supply chains for transportation equipment. The Canadian automotive industry is a major contributor to the Canadian economy, employing over half a million people. The industry produces light-duty vehicles, heavy-duty vehicles, and a wide range of parts, components, and vehicle systems, a large portion of which is slated for export. The current on-road vehicle market in Canada is significant.156

Our analysis estimates a Canadian market (total spending) for efficient vehicles at approximately $1.6 billion in 2010. Going forward, there appears to be a considerable opportunity specifically in two types of next generation electric vehicles being developed, both of which can offer substantially lower GHG emissions. These are Plug-In Hybrid Electric Vehicles (PHEVs) that are powered by both re-chargeable batteries as well as by a normal internal combustion engine, and a new generation of pure electric vehicles (EVs) that have only an electric motor. Relative to its size in the global economy, Canada currently has a significant share of companies that are involved in manufacturing electric vehicles or components. However, to date, no mass production PHEVs or EVs are being assembled in Canada.

IHS Global Insight forecasted that the global production of pure EVs would be more than 60,000 in 2011, and growing to more than 150,000 in 2015.157 Major automakers have announced over 50 new electric vehicle models will be launched over the next three to five years; most of these will be PHEVs but many automakers are planning to offer pure EVs as well.

Given the rapid turnover rate in vehicle investment as compared to other sectors, vehicles are expected to be one of the highest growth areas in international investment. This will also likely be true for domestic deployment rates of efficient vehicles. Our forecast indicates that investment could increase almost 15 times between now and 2050, from about $1.6 billion currently to over $24.2 billion in 2050.158

// LAND-USE PLANNING: Land-use planning was highlighted in a number of jurisdictions as presenting significant opportunity, particularly in the context of rapid growth and urbanization. Advance planning using a systems perspective and anticipating levels of growth provides the opportunity to develop communities that are less energy and resource intensive, requiring less energy for transportation, water treatment/distribution, etc., and which are ultimately less costly to maintain and inhabit. This opportunity is less achievable in areas with significant existing development and infrastructure.


[a] Some LCGS sectors consider aspects that were not included in the quantitative analysis.

[b] Much of this material references work undertaken by Delphi Group and EnviroEconomics (Delphi Group and EnviroEconomics 2012) as well as Stiebert Consulting (Stiebert 2012) in the quantification of Canada’s low-carbon opportunity.

[c] The biomass subsector has been delineated to include only biomass used for the production or cogeneration of electricity in large utility sized projects. This definition excludes the use of biomass to produce biofuels for transport and to substitute existing fuels such as heating oil for small end uses; such uses are included in the Biofuels subsector described later.

[d] For examples, see (Aboriginal Affairs and Northern Development Canada 2004) or (Weis and Cobb 2008).

[e] Other components of the nuclear sector such as uranium mining and nuclear medicine are excluded.

[f] Specifically within Ontario, units at the Darlington and Bruce sites will be modernized and the province has noted that it will need two new nuclear units at Darlington. Ontario is also investing in refurbishment in the extension of the Pickering B station until 2020. Outside of Ontario, several provinces are currently considering nuclear reactors for electricity generation and for heat/steam generation.

[g] Canada’s CANDU technology has competitive advantages over other technologies resulting from its ability to use thorium as an alternative to uranium as fuel, and its ability to reuse uranium recycled from light water reactor fuel used in other reactors.

[h] The biofuels subsector excludes the use of biomass for large heat and power applications.

[i] This is particularly true as second-generation biofuel feedstocks and technologies become available. Second generation biofuels generally come from inedible sources (e.g., switchgrass, agricultural and forestry residues, etc.) whereas first generation biofuels are often derived from edible sources (e.g., sugarcane, vegetable oil, grains, etc.).

[j] In 2009 the NRT and Sustainable Development Technology Canada (SDTC) jointly investigated the opportunities within commercial building and provided policy advice to help governments make policy choices enabling the commercial building sector to deploy technologies necessary to achieve substantial energy efficiency gains. See: Geared for Change (National Round Table on the Environment and the Economy 2009b).

[137] Canadian Industrial Energy End-use Data and Analysis Centre (CIEEDAC) 2010

[138] Ontario Power Authority 2011

[139] CanmetENERGY 2007

[140] Irving 2010

[141] Desrochers et al. 2011; Analytica Advisors 2010

[142] CanmetENERGY 2010

[143] Ontario Power Authority 2010

[144] Goldfarb 2010

[145] Goldfarb 2010

[146] Canadian Solar Energy Industries Association 2010

[147] Canadian Wind Energy Association 2008

[148] Ocean Renewable Energy Group 2011

[149] Canadian Geothermal Energy Association 2010b

[150] Canadian Nuclear Association 2011

[151] Canadian Nuclear Association 2011

[152] Delphi Group and EnviroEconomics 2012

[153] Statistics Canada 2012a, 2012b

[154] Natural Resources Canada 2010a

[155] Stiebert 2012

[156] Government of Canada 2009b

[157] De Vleesschauwer 2009

[158] Delphi Group and EnviroEconomics 2012