Collaboration needed to reach net-zero goals in the electricity sector

The decarbonization of electricity grids across Canada was a focal point of discussion in 2022 following the federal government’s announcement in March of its 2035 net-zero goal for the electricity sector. That conversation will continue in 2023 as provinces establish their own net-zero targets and develop plans to meet those targets. The Pathways to Decarbonization report released last month by the Independent Electricity System Operator (IESO) examines what a net-zero electricity system would look like in Ontario and established a model for a potential decarbonized supply mix for 2050. The report highlighted a number of key points. Decarbonization carries a significant investment cost of approximately $400-billion to develop the new non-emitting resources and conservation measures needed to meet expected electricity demands that would be three times what they are today. The IESO also prioritized the development of non-emitting resources based in Ontario to meet net zero goals over imports. The 2050 model included more than 3,000 megawatts (MW) of new capacity from imports. But the bulk of the expected 74,000 MW of new capacity comes from sources within the province itself, new nuclear, conservation, renewables, storage and low carbon generation such as hydrogen and renewable natural gas. Canada’s electricity sector is more than 80 per cent non-emitting and it’s understandable to think that sharing hydroelectric, nuclear, or other non-emitting sources between provinces can play a big part in meeting the federal government’s net-zero goals for the electricity sector. Terry Young is a senior counsel with Sussex Strategy Group and a former president and CEO of the Independent Electricity System Operator. Photograph courtesy of Terry Young But energy is under provincial jurisdiction and provinces are not going to be offering discounts for their non-emitting power to help other provinces meet their net-zero goals. Nor are provinces going to be paying a premium for non-emitting sources of electricity without first looking within their own jurisdictions. Some in Ontario have advocated for the province to rely on Quebec for long-term supply commitments for reliability and net-zero needs, but these arrangements may not always ensure that Ontario comes first when electricity is urgently needed in both jurisdictions. Alternatively, the price Ontarians would need to pay for that guarantee may be much higher than they can afford. Ontario has established physical interconnections and financial arrangements with neighbouring jurisdictions including Quebec to import electricity on an as needed basis. These interconnections not only allow Ontario to import power when it’s needed, but also to sell it when there is a surplus. The IESO study also points to the importance of natural gas on a decarbonization path, albeit in a more limited role. While the IESO concluded that a moratorium on new natural gas generation was feasible beginning in 2027, it noted that natural gas generation would be needed past 2035 to continue to provide flexibility and reliability to the broader system. Eliminating coal from the province’s electricity supply mix took more than a decade and that was with natural gas available as a viable alternative. No single alternative, including imported hydroelectric power, exists today to replace natural gas. However, the IESO says installed natural gas capacity would be cut by one-third in 2035, and emissions would be reduced by 60 per cent from previous forecasts. Ontario has made significant investment in natural gas infrastructure. Rather than stranding that investment, the existing pipelines should be used on the decarbonization pathway to deliver renewable natural gas, hydrogen or natural gas with carbon capture. Investing in emerging technologies like low carbon fuels should be a priority. Ironically, the IESO’s Pathways to Decarbonization report is more of an end state than a pathway. How Ontario goes down that pathway is still in question and timing is just as important as the decarbonization measures to be implemented. As Enbridge Gas president Michele Harradence told the National Energy Roundtable in November, we need to get the pace of energy transition right. Too slow of a pace means we won’t meet our decarbonization goals, but moving too quickly could have significant impacts on our standard of living and on the most vulnerable people in our society. As the IESO report demonstrated, meeting net-zero goals is a daunting task. No provincial or federal government can do it singlehandedly. A federal and provincial collaborative effort that recognizes both the provinces’ jurisdiction over energy and the need for support from all levels of government should be part of our conversations in 2023. Terry Young is a senior counsel with Sussex Strategy Group and a former president and CEO of the Independent Electricity System Operator. The Hill Times

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Collaboration needed to reach net-zero goals in the electricity sector

Meeting net-zero goals is a daunting task that no provincial or federal government can do singlehandedly.

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