A BETTER WAY

 

Canadians can accomplish great things when we work together on nation building projects - our democracy depends on this spirit of cooperation. It is time that we work together to turn the impossible into possible. Currently across Europe and Asia, new transportation and energy pathways are being created and new infrastructure is being built. This platform is setting the stage for their future economic and social opportunities. To remain competitive, Canada must do the same. We must find a better way to remove domestic barriers and bottlenecks to trade and encourage innovative Canadian products to reach domestic and export markets.

Canada is a nation of enormous resources. We have vast low cost developed and undeveloped hydro, wind and solar. Our hydrocarbon fields form the third largest reserves in the world. Yet today, Canada seems to lack the common and cohesive resolve to use our strengths and abilities to our greatest advantage. We must make the transition to a low-carbon economy, but we cannot ignore the vital economic role our existing resource trade plays in our flexibility to make the needed changes for tomorrow. If we work together to recognize the issues and develop competitive solutions, we can capture many future low-carbon opportunities. To use a truly Canadian analogy, we need to skate to where the puck is going to be, not where it has been. Domestic and international consumers are demonstrating with their pocketbooks and votes that they want lower-carbon products. This is not a debate about climate science or political leanings - this is about the evolution of the world economy, consumer demand, and how Canada will continue to participate.

Electricity is quickly becoming the cheapest and most efficient form of energy and several technological revolutions have meant that the cost of supply is dropping and demand increasing. The cost of wind-generated electricity is now the lowest of any source. More efficient end-use technologies, such as electric vehicles, are nearly cost competitive with internal combustion models at the point-of-sale, not to mention lower in operating costs. These developments are transforming the value proposition and accelerating the world’s transformation to cleaner sources and uses of energy.

Consequently, McKinsey, BP, Goldman Sachs, and Shell are all predicting peak oil demand by the mid 2030s to early 2040s. This means that although oil will remain a prominent feature of Canadian’s lives for decades, demand will decline. Consequently, to remain competitive and grow, successful producers need to create new value by producing a superior decarbonized product, rather than expanding production. Canadian petroleum companies are already responding to this challenge; emissions from new oil sands projects are lower than the North American average and will continue to get lower. Our abundant natural gas is helping to displace coal in the US and LNG will help continue this trend in several international markets. Canada leads the world in carbon sequestration technology - the ability to put carbon back into the ground and keep it out of the atmosphere.

However, for lower-carbon products to reach markets we must have transportation flexibility. In the current scenario, jurisdictional barriers, regulatory risks, and cost burdens impede or stop this type of interprovincial trade. This doesn’t just apply to oil and gas, but electricity too. Manitoba and Quebec, two provinces with enormous hydro batteries, sit adjacent to Ontario, which wasted more than $1 billion worth of clean energy in 2016 (Ontario Society of Engineers, 2017) (Ontario Society of Professional Engineers, 2016, p. 5). It’s not unusual in Ontario for wind and solar energy to be curtailed and nuclear facilities to dump excess heat into the Great Lakes to avoid paying the United States to take off-peak electricity away (Office of the Auditor General of Ontario, 2016, pp. 225-226). Finding ways to exchange the regionally specific energy we generate in the most efficient fashion is essential to keeping prices and emissions low nation-wide.

Canada must invest in infrastructure that delivers greater efficiency, allows for downstream value capture, and creates the opportunity to sell higher value products. We cannot ignore the fact that recent efforts to build single infrastructure projects have failed dramatically. Billions of dollars have been lost by proponents and the public within the current regulatory process. The current process is so adversarial that it extinguishes opportunities for national discourse on where and why these projects should be developed. Proponents are now unwilling to propose new infrastructure, regardless of its benefits, simply because their management and boards have lost faith in whether any linear infrastructure can be built in our country. 

The solution? Economic vitality pathways for future value-creating products, planned, agreed to, and created by all Canadians, for all Canadians. Towards this end, we are establishing an industry agnostic, non-partisan, non-government organization to create a zone for current and future generations to develop trade infrastructure critical for tomorrow’s products and transportation needs. We call this project the Canadian Vitality Pathway (CVP) and we seek to join with Indigenous Nations and all Canadians in dialogue about what this infrastructure should accomplish and where it should exist. This more collaborative process will establish opportunities for wider prosperity for First Nations, suppliers and customers while reducing the negative impacts on Indigenous rights, the environment, and communities. With economic pathways, Canada can revolutionize the currently adversarial regulatory process to better meet the needs of all parties and develop these critical infrastructure pathways.

This approach would position Canada to act on the biggest opportunities for decarbonization, electrification and/or hydrogen replacement of transport fuels and building heat. Vitality pathways would provide the opportunity to develop a pan-Canadian electrical backbone that connects high-value, low-cost renewable resources to domestic and export markets. This would significantly reduce the needless cost, waste and inefficiency from curtailing clean resources. Hydro resources in Newfoundland and Labrador, Quebec, Manitoba, and BC would have the opportunity to capture higher value for domestic and export demand for firm clean power. Hydrocarbon suppliers would have the critical infrastructure opportunities necessary to deliver low-carbon high-grade fuels and hydrogen to displace higher-cost, higher-carbon imports in mid and Eastern-Canada. In short, pan-Canadian vitality pathways can assist in the decarbonization of the entire North American energy system to Canada’s financial benefit.

There is trepidation among young Canadians about the future. Increasingly, economic growth through resource development is seen as incompatible with responsible environmental and social policies. But it doesn’t have to be this way. Pan-Canadian interconnection can create new value from resources we already have, create additional trade opportunities, and meet future needs with new zero-emissions resources. When Canadian’s have worked together, we’ve led the world in innovation, peace, and prosperity. Let’s work together to establish vitality pathways to enable all Canadians to participate in the next 200 years of prosperity.

 

 

Office of the Auditor General of Ontario. (2016). 2015 Annual Report of the Office of the Auditor General of Ontario. Toronto: Office of the Auditor General of Ontario. http://www.auditor.on.ca/en/content/annualreports/arreports/en15/2015AR_en_final.pdf

 

Ontario Society of Engineers. (2017, June 29). Ontario Wasted More Than $1 Billion Worth of Clean Energy in 2016. Retrieved from Ontario Society of Engineers: https://blog.ospe.on.ca/featured/ontario-wasted-more-than-1-billion-worth-of-clean-energy-in-2016-enough-to-power-760000-homes/

 

Ontario Society of Professional Engineers. (2016). Power to Lead: The Ontario Society of Professional Engineers' Submission for Ontario's 2017 Long-Term Energy Plan. Toronto: Ontario Society of Professional Engineers. https://www.ospe.on.ca/public/documents/advocacy/submissions/OSPE_2017_LTEP_Submission.pdf