Thank you, Mr. Chairman. It's a pleasure to be here.
We have provided committee members with a deck called “Electricity Supply and Consumption in Canada”. We thought it might be helpful to the committee to provide a bit of context for the electricity sector in Canada: responsibilities of the provincial and federal governments; some of the challenges facing the electricity sector in Canada; and some federal government support programs for meeting one of those challenges, which is ensuring a more sustainable, environmentally benign electricity supply.
Carol Buckley will be able to give the last half of the presentation, which will drill down further into electricity consumption patterns and some of the potential for energy efficiency in Canada and some of the NRCan programs directed at bringing that about, if that would be helpful.
I'll speak then to the first half of the deck. In terms of electricity supply, Canada is fortunate in that our electricity supply is among the most diverse in the world. We also have a very high percentage of energy that is produced by virtually emission-free sources. You can see in slide 3 that 59% of our electricity comes from hydro and an additional 15% from nuclear. It's quite a bit different in the United States, for example, where 72% of their electricity comes from fossil fuel generation. We rank a surprising seventh in the world in terms of total electricity generation. For a relatively small country like Canada, that's fairly significant. I think it speaks to our electricity needs, but also the potential we have in this country for generating electricity economically.
Provincial governments, of course, determine their generation sources, and the mix across Canada differs significantly and very much reflects the resource endowments of the respective provinces. You can see on slide 5 that four of our provinces--British Columbia, Manitoba, Quebec, and Newfoundland--are really dominant hydro producers. Saskatchewan and Alberta generate most of their electricity from fossil fuel sources, as well as Nova Scotia. Ontario and New Brunswick have a more mixed supply, with nuclear, coal, and hydro contributing to the mix.
The trade patterns of electricity are quite interesting and are shown on slide 6. The bulk of trade and electricity is north-south as opposed to east-west. British Columbia, Manitoba, Ontario, and Quebec are major exporters and on occasion importers of electricity. The flows of electricity north and south tend to be very much higher than the flows of electricity east-west, reflecting in part the long distances between provinces in Canada and the population being essentially strung out along the border. An exception with respect to interprovincial trade--and I know you're going up to Churchill Falls--is that about 60% of the total electricity traded from one province to another is accounted for by electricity sales from Newfoundland to Quebec from Churchill Falls.
Here are a quick couple of slides on responsibilities. Of course, provinces are really responsible for the development, pricing, generation, transmission, and distribution systems. The federal government really plays a more complementary role. We're responsible for international and designated interprovincial power lines. The National Energy Board regulates electricity exports. The Canadian Nuclear Safety Commission regulates nuclear safety. A number of federal agencies undertake research and development, including NRCan, AECL, and the National Research Council. The environmental impacts of electricity generation are very much an agenda item of Environment Canada and Natural Resources Canada.
Four big challenges facing the Canadian electricity sector are: ensuring an adequate supply; ensuring a reliable supply that operates 24 hours a day; ensuring electricity prices that are acceptable to consumers and allow for economic growth; and ensuring the environmental sustainability of electricity generation.
In terms of adequate supply, the Canadian electricity sector is increasingly facing challenges, as shown in chart 10. For the last 15 years or so, we have seen a steady increase in peak demand for electricity while generation has not really kept pace. As a result, the reserve margin, the surplus of generating capacity over peak demand, has declined on a national basis to about 15%, which is getting pretty tight.
In terms of reliable supply, of course, the seminal event was the 2003 blackout. Since then, there's been quite a restructuring of the system for managing reliability in North America. Canada and the U.S. have established an international electric reliability organization, and the system has moved from one where electricity standards were voluntary to one where they're mandatory. This has been a fairly major occupation within my branch. We've been working with the provinces through the Council of Energy Ministers to ensure that, on the Canadian side, we have the capacity to have mandatory reliability standards here. And we're pleased to see that all of the provinces have committed to taking the steps necessary to do that.
Canada is fortunate. Because of our resource endowment, we have relatively low electricity prices relative to the rest of the world. You can see that in slide 12. Canada and Norway, because of our vast hydroelectric potential, are well-positioned, particularly vis-à-vis countries in Europe, or Japan, where the electricity prices facing consumers are considerably higher.
The prices, however, vary quite a bit across the country, depending on resource endowment. As you can see on chart 13, the provinces that are the major hydro producers generally have the lowest electricity rates in Canada. You can see Vancouver, Winnipeg, Quebec. Generally, electricity prices are considerably lower than in those provinces that rely more on fossil fuel generation. But you can see, vis-à-vis the United States--that's our principal trading partner--that even the higher-cost jurisdictions in Canada are still relatively competitive with the United States, and many of them are quite a bit lower.
There are, however, a number of factors putting upward pressure on prices. Of course, high and rising fossil fuel prices are a big factor. As we move up the supply curve for hydro, resources become more and more expensive. Some jurisdictions have faced very significant electricity price increases as a result of these pressures.
The fourth challenge is really environmental sustainability. Although 75% of our power is generated from zero or low emissions sources, it's responsible for more than 15% of Canada's greenhouse gas emissions, 27% of sulfur dioxide, and 37% of mercury. Coal-fired generation is the largest contributor to these emissions.
On the final slide, before I turn it over to Carol, of course, the federal government has recently put in force an array of initiatives to support the cleaner sources of power. The eco-energy for renewable power program provides a one-cent-per-kilowatt-hour subsidy for the low-impact renewable energy sources, wind, small hydro, biomass, etc.; an eco-energy technology initiative, which provides support for research development and demonstration; the eco-trust for clean air and climate change, which provides a fund divided among the provinces; and most recently we have announced, with Alberta, a CO2 capture and storage task force, mandated to provide recommendations on a large implementation plan for large-scale CO2 capture and storage in Canada.
I hope that gives you a bit of a sense of the tree tops, I guess, of electricity consumption in Canada.
With your permission, I'll turn it over to Carol to get a little bit more detail on consumption.