Thank you very much, Mr. Chair, and members. It's a pleasure to be here, and I appreciate the opportunity to speak to you on this issue of strategic electricity interties.
I'll take one second to tell you a bit about our organization, the Canadian Wind Energy Association. We are the national association for the wind energy industry in Canada. We represent a little over 200 companies who are involved in the industry: turbine manufacturers, component suppliers, wind energy project developers, owners, and operators, as well as a range of service providers to the industry.
Just to put wind in context these days in Canada, there's been more wind generation built in Canada in the last decade than any other form of electricity generation. Canada is now the eighth-largest producer of wind energy in the world, and we produce enough electricity from wind to meet about 6% of Canada's electricity demand today.
We think this issue is very important because of the commitments Canada has made with respect to climate change. Under the Paris accord, when we're looking to limit the increase in temperatures going forward, our long-term commitment really will require Canada to reduce greenhouse gas emissions by about 80% from current levels.
You will not find an analysis anywhere that says you'll be able to do that without a significant increase in the production and use of non-emitting and renewable electricity. In fact, Canada starts from a very positive position, because 79% of our electricity today is non-emitting. That puts us well ahead of most countries. The federal government has established a target of seeing that go up to 90% by 2030. We think that's a sensible target, and ultimately, by 2050, we will have to have a grid that's 100% non-emitting if we're hopeful about meeting our climate change objectives.
Not only will we have to have a non-emitting grid, but we'll have to be using that electricity in a number of other sectors, to substitute for fossil fuels in transportation, industry, and buildings. That will require increased electricity production going forward.
Meeting an objective of that scale is going to require increased collaboration and co-operation across jurisdictions, and indeed increased interconnection across jurisdictions, which is why this discussion is so important. Historically, and indeed constitutionally, electricity is largely an area of provincial responsibility. In Canada that has actually led to challenges, I would argue, in terms of interjurisdictional co-operation.
We do a very good job within the country of optimizing our electricity systems at a provincial level, but the one thing we know is that if we optimize 10 separate electricity systems at the provincial level, the one thing we can be sure of is that nationally and federally we have a suboptimal system, because we haven't explored the opportunities for co-operation, collaboration, and interconnection going forward.
That's changing now. Climate change considerations have led to an increased discussion and examination of opportunities to work together across the country with respect to electricity planning, electricity markets, and electricity infrastructure. This is going to be absolutely critical if we're going to respond successfully to climate change.
We're a strong supporter of electricity interties, both between Canadian provinces and between Canada and the United States, because we believe that well-designed interties can do a number of things that will help us to meet these climate change commitments. It can help us to enable the development of renewable energy resources in resource-rich areas by providing more transmission capacity that allows us to access and move that energy across the country.
It can improve the efficiency of renewable energy use in areas where we currently have transmission constraints and you're forced to curtail or cut back on renewable energy production.
Importantly, it can facilitate the integration of variable renewable energy, like wind and solar energy, because it provides you with an opportunity—if wind or solar energy production is going up or down—to have a broader range of options you can access to balance that. If you have greater interconnection, you have access to more generation, and you can do more to balance and manage that variability.
Interties can also provide increased access to non-greenhouse gas emitting options for jurisdictions where those are not as common, and I'm sure you will have heard—and will continue to hear throughout your hearings—talk about B.C. hydro going to Alberta, or Manitoba hydro going to Saskatchewan, or Quebec hydro going to Ontario. We have a tremendous diversity of renewable energy resources in Canada, but they're not distributed equally in geographical terms. Therefore, there's an opportunity through interties to use those resources more efficiently.
Finally, interties can help us open up new markets for the export of electricity, not only between jurisdictions in Canada but also between the United States and Canada.
Canada has the opportunity to really be the clean energy battery for North America in terms of helping the United States to address its carbon challenge within the electricity sector, a challenge that is much more significant than ours because the U.S. has much more coal and gas to start with than we do.
The pan-Canadian wind integration study was a study released last year and funded by NRCan. It looked at the possibility of moving to a situation where 35% of the electricity in Canada came from wind. That study was undertaken with a steering committee that involved system operators from across the country. It concluded, in the end, that there are no operational barriers to having 35% of our electricity from wind. It does require some strategic investment in interties.
What it found was that, from a system basis, the investment in those interties, their cost, was more than offset by the savings from no longer paying fuel costs for fossil fuels. Essentially, those reduced fuel costs more than offset the cost of building the intertie when it was done strategically in jurisdictions targeted at reducing greenhouse gas emissions.
Having said that, interties are expensive, they're long term, and we need to be thoughtful about how we'll proceed. There are a few considerations that we think need to be looked at when we're looking at intertie investment.
It's absolutely clear that the key objectives of an intertie must be clearly defined and well understood, and, we would argue, they have to be consistent with Canada's climate change commitments.
We think transmission interties have to demonstrate that they're actually a cost-effective means of achieving those objectives. It may be possible to reduce greenhouse gas emissions not through an intertie but by taking action within a jurisdiction. It may be possible to balance variable renewable energy not through an intertie but through building storage. In fact, there are exercises under way in both western and eastern Canada right now through the RECSI initiative to look at those different options to see which are most cost-effective.
It also makes sense to look at how we can use our existing transmission system more effectively. In the United States, we see a growing movement towards something called energy imbalance markets, which allow greater trading of electricity across interties on a more flexible basis, not through long-term contracts but in a way that is much more responsive to situations that allow them to reduce emissions.
Having said that, the scale of the challenge we're talking about and the emission reductions we're looking at mean that interties are going to be a key part of the agenda going forward. Interties have to, obviously, enhance the reliability and the resiliency of the grid. We wouldn't do it otherwise.
I would argue three last things. I think we want to make sure that new transmission interties actually facilitate opportunities for renewable energy development on both sides of the intertie. I mentioned that Canada is resource rich. We have ample solar and wind energy resources, for example, in every province of the country. We want to try to unlock the full potential, but more importantly, we want to ensure that interties provide an opportunity for economic development in both of the jurisdictions connected by the intertie to enable them to build out their capacities.
We want to ensure that there's open access to new transmission interties, that's there's a transparent, fair, and competitive process to gain access to those interties. We want to ensure that people are competing and actually using the most cost-effective power in that regard. We also want to ensure that we have a level playing field for people using interties. There are some challenges in Canada. We have different types of electricity markets, different types of structures, different types of players. Sometimes when crown corporations are competing with independent power producers, it's hard to make it a level playing field. Crown corporations can, for example, take some costs and transfer those onto the rate base. An independent power producer might not be able to do that. It's not an obstacle but it's a challenge, and it's something to be thoughtful about.
Finally, we can also build new transmission through a number of different players. Crown utilities and private sector actors can also build transmission. I think we need to be open to a range of different approaches, but we do need interties.
I would argue that if we're going to make the investment in interties, we want to make sure that we're building them the right size, that we're not building them just to deal with an immediate issue, that we're not looking only five or 10 years ahead. We have to recognize the long lifespan of these structures and the long-term challenge of the climate change issue that we're dealing with. We have to build these interties with a view to being able to expand our usage of them over time. We have to build for the future, as opposed to just building for the current situation.
Thank you. Those are my introductory remarks. I'll be happy to answer any questions.