Thank you very much for the invitation. It's really a pleasure to be here.
I'm Pierre-Olivier Pineau. I'm the chair of energy sector management at HEC Montréal. I have published a report on the state of energy in Quebec every year for the last 12 years. For the last 30 years, I've been looking at, and have specialized in, energy and electricity policy.
It was with great pleasure that I heard the Canadian government recently mention its national electricity strategy with the key element of interprovincial trade and interconnections, as Blake mentioned. This is also a key aspect of the personal research I've been working on. I was extremely pleased to see that priority come in at the highest level—the federal level. I really think more interprovincial collaboration is key for the future of our country.
In 2013, I published a chapter called “Fragmented Markets: Canadian Electricity Sectors' Underperformance” to explain that we were underperforming in Canada because we were not better integrated due to our 10 different electricity markets. I strongly believe in integration.
In 2016, I published a paper that looked at Ontario and Quebec, one that exactly described what Blake was mentioning: the benefits of integrating a thermal jurisdiction with a hydro jurisdiction, by which you could reduce greenhouse gas emissions while creating welfare. In such cases, it pays to reduce greenhouse gases because you can substitute hydroelectricity and thermal generation to increase welfare, especially if you use marginal cost pricing in both jurisdictions. This is not the case in hydro jurisdictions, such as British Columbia, Manitoba and Quebec. We are using average cost pricing, which brings some inefficiencies to the market.
Interties are very important. I am a strong advocate of increasing interconnections among provinces. It's not only a matter of transmission lines but also a matter of how you design markets and how trade is settled. You really need to move pricing to a different level if you want to optimize our markets. That's an important point that I think the government needs to hear.
In the strategy presented by the federal government, doubling electricity production was emphasized. This is something we need to be extremely concerned about, because there is one aspect we don't pay enough attention to: Canada is suffering from energy obesity. We are using so much energy in Canada that it places us eighth in the world in terms of per capita energy consumption, between Oman and Saudi Arabia. Not only are we using a lot of energy in general, but we are using it extremely poorly. We are among the least-productive countries when it comes to energy productivity. We are in the same group as Kazakhstan and North Korea when it comes to energy productivity.
What is energy productivity? It's the amount of wealth or GDP we generate with one gigajoule, or unit, of energy. In Canada, we basically produce $146 for every gigajoule we consume. In the U.S., they produce $223. In Australia—a country we can compare with Canada because it has a strong natural resources basis to its economy—they produce $217 of GDP per gigajoule. We are not extracting as much wealth from every gigajoule we're using. That's for a good reason: We're blessed with an abundance of energy. We've never really paid attention to how much energy we're using to generate wealth. That has to change.
Both Blake and Normand, my esteemed colleagues, mentioned the low level of electricity in our final consumption in Canada—around 24%—but they omitted to mention that, on average, per capita, Canada uses 13,000 kilowatt hours per year, compared with China's 6,000 kilowatt hours per year. It is the same amount in Germany and France, or about the same.
We're already using twice the amount of electricity per capita as China, Germany or France is using. The goal is not to double electricity generation just for the sake of using even more electricity than what we're using now to generate very little wealth. The real goal to make Canada stronger and more productive is to use energy and electricity more efficiently and more wisely.
Our session's title is “Canada's Electrification, Energy Self-Sufficiency and Domestic Energy Security”. The energy security part has to be important. You don't become more secure by having bigger infrastructure. If you want to become more secure, you make sure that you're less vulnerable and less exposed, and you make sure that you use less energy while providing the same services so as not to overexpose yourself to the many different risks—geopolitics, climate risks and cybersecurity threats—that will come in the future.
I believe my time is over. I will stop here.