Thank you, Mr. Chair, and thank you to the committee for inviting us to participate today.
I'm pleased to be with you this afternoon on behalf of Clean Energy Canada, a climate and energy think tank based at the Centre for Dialogue at Simon Fraser University. Our focus is on accelerating our nation’s transition to clean and renewable energy systems by studying and documenting the global shift to clean and low-carbon energy sources, by hosting multi-sector dialogues and by inspiring and informing policy leadership.
The transition to a cleaner energy system in Canada is a national challenge that requires federal leadership. While many decisions about energy production and transmission are within the domain of the provinces, the federal government has both areas of oversight and the ability to catalyze and support provincial and interprovincial decisions that shape our energy system.
The Canadian Electricity Association has made it clear that our electricity system is in need of massive infrastructure renewal. The Conference Board of Canada has estimated that by 2030 close to $350 billion in new investment is needed just to maintain the reliability of the system we have today. This renewal will require capital investments in the range of $15 billion a year each year for the foreseeable future. While those investments are already beginning to reduce the electricity sector’s carbon emissions, targeted federal clean energy infrastructure initiatives and investments can accelerate the process significantly.
I'd like to just briefly recap some past federal initiatives. In 2007, the government established the $1.5-billion Canada eco-trust for clean air and climate change program, which was intended to “provide support to those provinces and territories that identify major projects that will result in real reductions in greenhouse gas emissions and air pollutants.” Eligible projects for that funding included electricity transmission initiatives.
The federal government’s green infrastructure fund, which existed between 2009 and 2014, provided support for a range of projects, including green energy generation and transmission. In 2012, the federal government agreed to a loan guarantee for the Muskrat Falls hydroelectric generating facility and associated transmission lines.
Looking ahead, much more is required. Canada has abundant renewable energy resources from coast to coast to coast. Tapping into these resources can provide us with the electricity we need to increasingly electrify our economy, a key pillar in addressing climate change. Ultimately, tackling climate change is going to require shifting away from fossil fuels to clean energy as a power source for many of our everyday activities, from driving our cars to powering our industries to heating our homes.
To prosper in a low-carbon world, Canada will need to update its electricity infrastructure across the country. We need the transmission capacity to move clean power to where it’s needed, and a modern smart grid that allows for solar rooftops, smart meters, and leading-edge energy efficiency approaches. In addition, some provinces are exploring opportunities for clean energy exports to neighbouring provinces or to the United States, but realizing these opportunities often requires significant investment in new transmission capacity.
We will also need to think more regionally, with a focus on optimizing our electricity system on a national or even North American scale. Grid and transmission investments could allow Canada’s jurisdictions to integrate more variable renewable power, such as wind and solar, into their electricity mix. Today, some of Canada’s provinces continue to rely on higher emission coal or gas-fired electricity, while others have built significant hydro or renewable power infrastructure. Greater regional integration of our electricity system can help deliver clean, renewable power to markets currently reliant upon fossil fuels.
Similarly, many states in the U.S. are heavily dependent upon coal-fired power, and will be seeking out low-carbon sources of power to comply with President Obama’s clean power plan, creating new export opportunities for Canada.
One example of that is a recent agreement between Minnesota Power and Manitoba Hydro. It's a renewable optimization agreement under which electricity from excess wind power produced in North Dakota can be stored in Manitoba’s hydro reservoirs. The 15-year deal is worth $4 billion and is the single most lucrative export deal that Manitoba Hydro’s has ever struck. The 500-kilovolt cross-border great northern transmission line will allow the utilities to balance variable power from North Dakota wind farms with dispatchable power from Manitoba hydro facilities. These investments are part of Minnesota Power’s plan to achieve a one-third renewable, one-third natural gas, and one-third coal-generated electricity portfolio.
That stands in stark contrast with their grid today, which gets 80% of its electricity from coal. Canada is doing a lot to help them achieve that goal.
Finding additional ways to move clean electricity to coal-powered grids would have significant benefits, but it will require regional coordination and cooperation at the state and provincial levels, and also at the federal level.
Last summer the Canadian Academy of Engineering published an important study entitled “Canada: Becoming a Sustainable Energy Powerhouse”. The study noted that Canada has a low-carbon electricity advantage that positions us incredibly well to deliver on the goals of energy security and reduction of greenhouse gases in both Canada and the United States. The academy suggests that opportunities to significantly increase electricity trade to the United States could in fact be the necessary impetus to drive more regional integration within Canada as well, between provinces. Ultimately, this integration would offer the benefits of lower energy costs, reduced price volatility, improved reliability, and lower greenhouse gas emissions.
This study emphasizes that electricity generation is a high-value manufactured good that has the promise and potential to deliver large economic benefits through inter-regional trade. Ultimately, the academy concluded that to realize our clean electricity advantage and reap these benefits, we must expand our power grid and make upgrades to the existing interconnections and transmission systems.
There's a clear role for the federal government to enable this infrastructure investment. Increased federal support for clean energy infrastructure across Canada would contribute to numerous federal policy objectives. It would encourage economic development by supporting greater Canadian participation in the fast-growing clean energy sector, including the potential for greater exports of clean electricity and clean energy technology and services.
Given the government's recent commitment to a 30% reduction in greenhouse gas emissions by 2030, supporting clean energy infrastructure would help deliver these emissions reductions as well as support the government's goal of an electricity system that is 90% non-emitting by 2020.
What's needed? First, we need additional and targeted commitment and support for clean energy infrastructure. Second, we need a commitment to collaborate with the provinces to optimize and better integrate our domestic electricity system. Third, we need continued engagement with the U.S. government to identify new electricity infrastructure needs and to enhance the efficiency of the permitting process for international power line projects.
In closing, we can't lose sight of the fact that turnover on our electricity system happens slowly. We're now at a point in history where the Canadian electricity system needs updating, upgrading, and renewal. The choices we make in the coming years will build the system our children and grandchildren will rely upon. Policy-makers like you must choose wisely.
Thank you, and I look forward to addressing any questions you may have.