Mr. Chair and members of the committee, thank you for the invitation to be here today to talk about Canada's electricity grid and network.
My name is Jason Dion. I'm the senior research director for the Canadian Climate Institute.
Our research indicates that, while there is a range of pathways Canada can take to achieve our climate target of net-zero emissions by 2050, one thing is certain: All roads to meeting Canada's climate goals will be accompanied by significant changes in the electricity sector. Canadian electricity systems must become bigger, cleaner and smarter, and these transformations must all happen simultaneously.
Let's start with bigger.
We are already seeing early signs of growing demand for electricity coming from industry, electric vehicles and the installation of heat pumps. We anticipate that even more demand will come as Canada continues to electrify. To meet this growing demand, we find that electricity generation will need to grow 1.6 to 2.1 times by 2050.
At the same time as electricity systems will be getting bigger, they must also be getting cleaner. This means reducing our dependence on fossil fuels for electricity generation and building up sources of clean power. Nuclear and hydro will need to maintain their important roles in providing non-emitting baseload power, but wind and solar will need to grow significantly. Our estimates show they should form 60% to 95% of new capacity added by 2030.
When it comes to clean generation, the phase-out of coal power in Canada is already doing a lot of heavy lifting. Electricity sector emissions have fallen by almost two-thirds since 2005. The forthcoming federal clean electricity regulations alongside the clean electricity investment tax credits and industrial carbon pricing will play a pivotal role in continuing this progress. Our research indicates that aligning electricity systems with the clean electricity regulations is achievable, and, in some cases, will only represent an acceleration of provincial utilities' existing development plans.
Of course, electricity needs to remain affordable and reliable. We have been pleased to see flexibilities included in the clean electricity regulations that will allow for continued use of gas-fired power when it is most needed, especially as its alternatives are in their early stages of development.
This brings us to the third part of bigger, cleaner, smarter. Investing in emerging solutions that make grids smarter or more flexible will help us reduce our reliance on gas as well as the size of the necessary build-out. These solutions include things like geothermal power, battery storage, demand-side flexibility and greater interconnection; however, as it stands, short-sighted planning risks delaying build-out of some of the bigger, cleaner, smarter electricity systems Canada needs. While some jurisdictions have long-term climate goals, none have policy architecture that sufficiently maps out its goals' implications for the electricity system. This puts utilities and regulators in a difficult position since they can lack a defensible basis for proceeding with a system build-out at the pace and scale that will ultimately be needed.
An important emerging tool called net-zero energy road maps can help address this risk. These road maps articulate a provincial or territorial government's independent vision for the evolution of its energy systems to meet climate goals by 2050. In this way, energy road maps provide signposts for the provincial utilities and regulators that will lead and oversee the build-out and a clear and defensible basis for their decision-making. Numerous provinces now have road maps developed or in the works.
For its part, the federal government can support provinces' efforts by offering sustained, predictable support for clean electricity projects. A notable example is the forthcoming investment tax credits that will allow for the capital cost of clean electricity projects to be refunded 15% to 30%. The federal government can also repurpose existing programs to enhance the build-out of smarter electricity systems by, for example, restructuring its smart renewables and electrification pathways program to focus exclusively on the deployment of demand-side flexibility, as recommended by the Canada electricity advisory council.
To be clear, provinces and territories will be in the driver's seat in this effort. Along with producing energy road maps, they are responsible for implementing electricity sector policies, establishing mandates for utility regulators, Crown utilities and system operators, and overseeing decision-making processes.
For Canada to truly act effectively on each of the moving parts of the electricity system, we need federal, provincial and territorial governments to use their policy tools in an integrated, coordinated and rapid way.
Transforming Canada's electricity systems is necessary if we are to reach our climate goals. While it is possible, it is a very large task. Acting early and wisely through smart policy that can work in the Canadian federation not only reduces the risk of falling short of our climate targets but will also reduce the cost of the needed system transformation.
Thank you again for your invitation. I'll welcome any questions you might have.