Wedge Advisory Note – Section 1
Advice on a Long-term Strategy
on Energy and Climate Change
Section I: Introduction
This study is a first.
While other studies have raised general issues about how climate
change will affect Canada’s economy and environment,
this study is the first to focus on what a low carbon
future might look like for Canada over the next 45 years.
In this analysis, NRTEE members focused on two questions.
How can Canada protect and enhance its national interest
with regard to energy and climate change issues between
now and the mid-21st century? And what do we need to
do right now to achieve this?
Canada can meet multiple goals at the same time
The scenario developed as part of this study examines one
way that Canada can reduce energy-related greenhouse
gas (GHG) emissions by 60 per cent by 2050 (compared
with current levels). This exercise allowed the NRTEE
to explore what would likely be involved if Canada were
to contribute to global stabilization of GHG emissions
by significantly reducing energy-related emissions by
mid-century. This challenge is considerable, given that
Canada has a growing population, an economy that is
growing faster than the population, and an oil and gas
sector that is growing faster than the economy.
The first and perhaps most important finding of the analysis
is that it can be done, at least from a technological
standpoint. In other words, a scenario using existing
and near-term technology only was developed in which
energy-related greenhouse gas emissions are reduced
to less than half their current levels, even with a
future that includes a larger population (45 million),
a larger economy (more than double in real terms) and
growth in oil and gas production that outstrips growth
in domestic demand.
Although reductions of this magnitude provide significant challenges,
the necessary technologies can also bring significant
opportunities for the Canadian economy and its environment.
Along with reducing the threat of catastrophic climate
change and meeting the energy needs of a growing economy,
they will also lead to major improvements in the quality
of Canada’s air. These actions will also provide
opportunities for Canada to develop a more sustainable
economy, to become a world leader in sustainable technology
and to continue its role as a major energy exporter.
With environmental technology representing a global
growth area, a robust domestic market will provide a
solid base for Canada’s exporters.
A dual focus on increasing the efficiency of how we use
energy and on reducing carbon intensity in energy production
An important finding of the scenario is that there can
be a Canadian solution to making significant GHG reductions
by mid-century, but significant reductions can be achieved
only if energy and climate change policy addresses both
energy use and energy production –
in other words increasing energy efficiency and reducing
carbon intensity.
Developing this scenario also helped to focus on some priorities.
While the analysis shows that the contribution of all
existing GHG reduction technologies associated with
energy use and production will be necessary to achieving
a 60 per cent GHG reduction for 2050, there are some
priority areas whose contributions are so large that
they become fundamental to setting Canada on a trajectory
towards sustained and significant GHG emission reductions.
The priority areas (falling in both the energy use and
energy production categories) are:
- Energy use: Increasing energy efficiency is key –
by doing so we could achieve approximately 40 per
cent of our goal of a 60 per cent reduction. The question
is not which technologies to deploy, but how to deploy
nearly all of the potential greenhouse gas (GHG) reduction
technologies. How to effectively deploy many different
technologies in several sectors is an important policy
issue. - Energy production:
i)
Oil and gas sector: Canada’s growing role as
a major energy exporter is compatible with deep GHG
emissions, but only if carbon capture and
sequestration (CCS) is perfected. Resource extraction
in the 21st century needs to take into account GHG
reduction and adaptation to a carbon-constrained world
economy – this benefits Canada both environmentally
ii)
Electricity generation: To reduce GHG emissions by 60
per cent, the electricity sector will need to be transformed
between now and 2050. As with the oil and gas sector,
clean coal technology involving CCS plays an important
role. After CCS, the largest reductions pertaining to
electricity generation are from co-generation and renewables
(particularly wind, but including all other forms of
renewable energy).
As noted above, GHG reduction in these priority areas would
also provide substantial co-benefits. Carbon capture
and storage and “clean coal” technology
virtually eliminate other forms of air pollution, such
as emissions of SO2, NOx, mercury and particulate matter.
Similarly, renewables and other non-emitting electricity sources
have a beneficial effect on air quality. Energy efficient
buildings such as the new Manitoba Hydro headquarters
in Winnipeg provide better indoor air quality and therefore
a healthier work environment that can increase productivity.
Increasing efficiency in transportation also addresses
one of the most enduring problem areas with regard to
improving air quality.
Urgent need for a signal showing that GHG reduction remains a priority over the long-term
The chief difficulty in significantly reducing GHG emissions
is not the lack of relevant technologies – rather
it is the lack of long-term signals indicating that
ongoing GHG reduction will remain a priority.
Such signals are needed to help the private sector make short-term
and long-term investment decisions that take GHG reductions
into consideration. Investment decisions are being made
every day on new equipment, new processes, new facilities
and new buildings, many of which will still be operational
in 2050. These investments will have to be revisited
later at a higher price if they do not take into account
the sustainable options that are currently available.
A clear commitment to long-term GHG reductions will
provide the signal that will allow investment decisions
to be made in the context of sustainable growth and
capital stock turnover, so that reductions can be achieved
with a minimum of disruption.
The NRTEE suggests that the government examine how to convey
an enduring commitment to significant GHG emissions
reductions that will contribute to global stabilization
of atmospheric carbon levels. This overall goal can
be implemented through many different policy signals
that can be adjusted over time (e.g., short-term technology
and GHG reduction targets, regulation, voluntary initiatives).
The overarching commitment, however, must be clearly
stated very soon.
The bottom line that the NRTEE wants to convey through this
report is it that addressing the challenge of climate
change opens up opportunities that can be accomplished
with benefits for Canada’s economy, environment,
and society. The broad deployment of existing and near-
term technologies, taken together, can in fact achieve
long range and significant reductions in energy-related
GHG emissions even in the face of growth in Canada’s
population, economy and oil and gas sector.
© 2013