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Are Canada’s Electricity Prices at the Whim of War and Climate Change?

electricity towers in a field

We’ve seen the headlines about the rising price of oil and now we’re seeing another commodity, natural gas, that has experienced sudden and significant price inflation. Factors like storms and overseas supply crunch are driving the price of natural gas to exorbitant levels. The price of oil is up about 85% year-over-year while natural gas is up more than 175%. While we more readily notice the increasing price of oil when we go to the pump to fill up our vehicles, natural gas is an energy that millions of Canadians rely on but may not think about as much. Natural gas is used by about two-thirds of Canadians to heat homes and businesses and makes up about 38% of Canada’s energy demand (Canadian Gas Association, 2020). With soaring prices in natural gas, what does this mean for Canada and is this a sign that our energy costs are at the whim of climate change and war?

Source: https://markets.businessinsider.com/commodities/natural-gas-price

Climate change and Canada’s path to net-zero

2021 featured some of the most extreme weather conditions on record in Canada. Windstorms caused multi-million dollars of damage across the West in early January, and floods caused multi-billion dollars of damage in British Columbia at the end of the year. We don’t have to look far in Canada to recognize why policy makers are calling for greater action. 

The reasons for Canada’s net-zero emissions by 2050 policy have become increasingly apparent. The Intergovernmental Panel on Climate Change (IPCC) has concluded that achieving net-zero global greenhouse gas (GHG) emissions by 2050 is necessary to avoid the worst impacts of climate change. Canada has boldly committed to achieving economy-wide net-zero emissions by 2050 through the Canadian Net-Zero Emissions Accountability Act, which became law on June 29, 2021. This means the Canadian economy will either not emit GHGs or will offset its emissions through actions such as tree planting or using carbon capture technology. 

Over 82% of Canada’s GHG emissions are from energy producing and consuming processes (Canada’s Energy Future). Transportation accounts for approximately 25% of Canada’s GHG of which almost half are from cars and light-duty trucks. The Government of Canada has set a mandatory target for all new cars and trucks to be zero-emission by 2035. Electrifying transportation and leveraging improved technology will reduce total energy use in Canada by 23% by 2050; however, electricity generation will need to grow by 50% over the same period to facilitate this change. 

Electrification, the process of replacing technologies that are powered by fossil fuels with those that use electricity, will be key for making any progress toward net-zero emissions. Canadians will need to power their homes and workplaces using both clean electricity and low-carbon fuels (such as hydrogen, advanced biofuels and natural gas) which is the reason the Government of Canada launched the Clean Electricity Standard (CES) to drive progress towards a net-zero electricity grid by 2035. 

As the authority and voice in Canada for wind energy, solar energy and energy storage industries across the country, Canada’s Renewable Energy Association (CanREA) plays a central role in transforming Canada’s energy mix. CanREA very much aligned with the Canadian and global goals for net-zero emissions by issuing the CanREA’s 2050 Vision. In their vision document CanREA outlines that Canada needs to decarbonize and double its electricity production in less than 30 years with an almost ten-fold expansion of Canada’s wind, solar and energy storage capacity. Ambitious? Yes. Impossible? No.

To make these unprecedented goals possible will demand a lot of work from industry. CanREA emphasizes the teamwork required from all industry players — wind, solar and energy storage industry companies, legislators, regulators and other key decision makers. Charge Solar stands behind this teamwork approach and is committed to support these efforts, specifically by leading the behind-the-meter distributed solar and battery storage market in Canada. 

Factoring in global instability

The conflict in Ukraine is undoubtedly one of the most significant events of this decade and has created a ripple effect across the globe. The war has driven up energy prices, an impact felt almost immediately by consumers. The shorter-term impact will be increased greenhouse gas emissions as more coal is burned to reduce dependency on Russian exports of oil and natural gas. 

We believe there is room for hope as those who can, will turn to cleaner sources. To reduce Russia’s leverage over countries’ supply of oil and natural gas, many countries will turn to sustainable electricity sources for longer term solutions, such as wind and solar. As described above, the impetus to reach ambitious net-zero targets is growing stronger and countries, wherever possible, will continue to push for local green sources of electricity. While the efforts to move toward cleaner sources may seem noble, building capacity with solar, for example, is actually faster and a more efficient way to meet the electricity supply needs. It is a win-win, striving to net-zero builds our capacity for cleaner sources, gets us there faster and is good for the planet.

For perspective here in Canada, by 2035, total natural gas usage will go up as we decommission further coal plants, but natural gas will represent a declining percentage of our electricity generating fuel mix.  The percentage of electricity generated by natural gas is expected to drop from 16.3% to 14.1% in 2035, which will help us to further reduce Canada’s dependence on fuel sources that can be affected by global conflicts. This is based on a significant growth of wind and solar generating capacity.  No government can stop the sun shining on our solar panels once they are installed! 

Where does net-zero and global instability leave us?

We recognize that it’s unrealistic to expect all sources of electricity to be completely natural by 2035 or even 2050. We accept that natural gas will continue to play an important role on Canada’s path to net-zero as we eliminate all remaining coal plants over time but are confident that we will become less dependent on natural gas over time, building further energy sovereignty. 

When we look at the 175% increase in the price of natural gas over the last year, there are various reasons that drove up the price, including the global conflict, supply issues and climate change. However, if we continue to push towards net-zero emissions by 2035 through electrification, our efforts will improve Canada’s sovereignty – reducing our exposure to global instability while protecting our environment. In effect, the soaring prices of natural gas will matter less and less for Canada if we achieve our ambitious goals through clean energy technologies. Charge Solar is committed to accelerate Canada’s energy transition. We continue to work with industry associations, lobby for changes to the electrical code, and partner with utilities to establish sustainable policy frameworks. We are making long-term investments to support the growth of the solar industry in Canada to achieve our vision of affordable sustainable energy for all. 

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