It’s pretty well known that some 110 countries are committed to net zero emissions by 2050, including the U.S., the EU, the UK, Australia and… Canada.
So it’s a bit puzzling that the Canadian federal government is proposing regulations this year which would require electricity grids across the country to reach net-zero emissions within a dozen years… by 2035.
So why the rush to 2035 for electrification if the emissions commitment is for 2050?
Premier Danielle Smith and her ministers have analyzed the impact of the proposed regulations and concluded that the province has a different renewable resource mix and affordability concerns that mean Alberta needs the longer timeline of 2050. As Federal Environment Minister Steven Guilbeault continues to dismiss the province’s concerns, the discourse has heated up in the press and social media with Guilbeault’s most recent comments:
“There will be no carve-out for a province. How fair would it be for the rest of the federation if we started carving out exceptions for provinces?” It is telling that he followed up this sentence with the reminder… “and we will be, as well, looking at the oil and gas cap regulations that will be coming up by the end of the year…” (as quoted Sept 30th in the Calgary Herald)
The feasibility of cutting emissions to net zero by 2050 was discussed in a Ministerial panel at the World Petroleum Congress 2023 which, in the light of the current pressure from Ottawa, is well worth revisiting.
It was titled “Is the World on Track to Reach Net Zero Emissions on Time?” and featured insights from a Ministerial panel that featured Mohammed Oun, Minister – Ministry of Oil and Gas, Libya and Tutuka Ariadji, Director General of Oil and Gas – Ministry of Energy and Mineral Resources, Indonesia along with Alberta Premier Danielle Smith as the minister representing Canada with moderator Dr. Amrita Sen, Founder and Director of Research – Energy Aspects UK, a global research house that advises over 500 companies globally on energy markets.
Dr. Sen began the discussion with some of her research findings at Energy Aspects. She advised that the energy transition, which is at the heart of the net zero debate, has to be discussed in relation to energy poverty. She sees energy transition and energy poverty as two sides of the same coin – although they seem different, they are actually closely related. She also says that the energy transition is a very privileged concept when Western countries talk about it.
“Sitting in Europe or North America, it’s easy to talk about reducing greenhouse emissions when we don’t necessarily have to face energy poverty. I grew up in India…when I was growing up electricity wasn’t a given and we still have more than 50% of the world’s population today without guaranteed electricity. So there has to be a marriage between all forms of fossil fuel and other forms of energy. We can’t lose sight of the fact that by only focusing on net zero we may not have sustainable, affordable or reliable energy.”
Dr. Sen stated that one of the most challenging subjects of Energy Aspect’s forecasting and discussions of net zero emissions is the subject of coal in Asia, saying “Asia doesn’t burn coal because it likes pollution. Asia burns coal because it is reliable, and it is the most affordable form of energy.”
In terms of achieving an energy transition or achieving a path to net zero, Dr. Sen points out inclusivity is extremely important and the subject has to be approached from a very global point of view.
Asia, Africa and Latin America have to be included in European and North American discussions of approaches because without them, an energy transition path is simply not going to be possible and there will be too many people left behind in energy poverty.
Libyan Minister Mohammed Oun voiced very valuable insights coming from a representative of the fourth-largest country in Africa, with approximately one-third of its population living below the poverty line. He pointed out that half of the African population has no access to electricity. He agreed that their energy transition must take into account energy poverty. Oun stressed that the circumstances of individual countries greatly affect their ability to achieve net zero. Libya holds Africa’s largest (and the world’s ninth largest) proven oil reserves and Africa’s fifth largest gas reserves according to a US State Department report. Hydrocarbons are currently used to produce power with renewable energy sources scarcely playing a role. The country is highly dependent on the hydrocarbons sector which generates about 95% of its revenues. However, they are only very slowly, gradually recovering from the repeated attacks on oil infrastructure during periods of civil unrest. The recent floods are expected to have a substantial economic impact. as well which greatly affects the country’s ability to achieve net zero timelines
“One size fits all will not work from our point of view,” Oun stated in the panel. “We can proceed gradually and can work in parallel by cleaning fossil fuel production- reducing gas flaring and emissions from refineries with CO2 injection and so forth. Investment in renewables in African countries must be ramped up to overcome the difficulties we may face. We want to utilize the vast amount of resources (including newly discovered oil and gas) to reach net zero by 2050. But there is a lot of tech advancement needed to get to net zero. Libya has started projects in hydrogen and solar. Libya has signed an MOU (Memorandum of Understanding) with the Maltese government to run an underwater cable to Europe to supply electricity from solar. Libya committed to net zero emissions, yet we need to emphasize that considering the special circumstances of the country, we have to be pragmatic in such approaches. The other very important point is we still have a lot of resources in oil and gas… to abandon them after all these efforts and technological advancement would be a loss to the world community.”
Tutuka Ariadji, Director General of Oil and Gas – Ministry of Energy and Mineral Resources, Indonesia voiced a different perspective based on the challenges his country faces in Asia.
Ariadji began by saying that he agreed with Premier Smith’s comments in the opening ceremony of the WPC 2023. He noted that Indonesia is a signatory to the Paris Agreement and has pledged to reduce GHG production (by 2060 it seems) but said they must also increase their production of hydrocarbons to meet demand. As Dr. Sen pointed out, Indonesia is a large energy producer but is also a large energy consumer. Ariadji advised Indonesia has a renewable energy program and plans EV implementation and like Libya intends to leverage solar technology, which has a huge potential to decarbonize since they are advantaged with abundant sunshine. However, Indonesia still has a heavy dependence on coal. Currently, about 60% of the country’s electricity comes from coal and Indonesia is building more coal plants to run green tech factories. Reports say Indonesia is an interesting test case of a developing nation that is being incentivized to adopt renewables and is receiving large amounts of money from industrialized countries like the U.S. and Japan. Ariadji acknowledged that Indonesia has to work hard and double their efforts to achieve its net zero targets. The country also has natural gas resources but has some distribution challenges.
When Danielle Smith rose to speak, she re-stated the question “Is Net Zero achievable by 2050?” and answered “Yes for Alberta and Canada and some of the wealthiest jurisdictions on the planet” and “No for those below the energy bar in Europe” and pointed out how 3.5 billion of the over 8 billion people in the world live in energy poverty and consume less than 10% of global energy. Smith said she tries to be optimistic and pragmatic about a net zero emissions target at the same time. Her vision of the energy transition is a transition away from emissions, not a transition away from oil and gas as world demand for affordable energy is forecast to increase. She cautions that we have to be realistic about how much Carbon Capture, Usage and Storage will solve emissions problems in the short term and make improvements in other technologies at the same time. Certainly, Smith expressed optimism that Alberta could reach net zero emissions by 2050.
“I know that my federal counterparts have this view that the entire electrical grid is going to be able to support not only all electricity but also all industrial use, home heating and all transportation – but I have a different view,” Smith said. “ I think that we’re going to have parallel and backup and redundant energy systems and in our province, hydrogen is what makes sense. So our net zero community is going to be built around ‘Can we safely use hydrogen to be able to heat homes?’ I just heard there’s a company that is in the pioneering stage of developing a process to use methane for heating. It manages to produce only 30% of the emissions of the current methane stream of gas. Those are the kind of innovations that I think are going to be game-changing.”
Smith stated that the job of wealthier jurisdictions is to get to net zero – aspirationally by 2050 – so they can export successful technologies to assist energy transformations while other nations deal with the joint problem of carbon neutrality and energy poverty. However, she identified a growing problem that threatens an affordable energy transition.
“We’re in real danger of getting locked into a particular paradigm that has been pushed I think by the most extreme voices in the environmental movement,” Smith said “That the only solution is wind and solar and battery and everything else is not green enough. You can see the danger of what happens when that occurs. In our province, we will sometimes have temperatures that are -30 degrees Celsius and when the wind isn’t blowing and the sun isn’t shining, if you can’t produce energy, people will die. We also have +30 C weather and if we don’t have air conditioning, we do have people who die of heat exhaustion each year. We can’t allow electricity to become so unaffordable and so unattainable that our citizens are going to be suffering those kinds of outcomes.”
As the panel discussion continued, Dr. Sen addressed the challenge of the cost of the transition.
“We are not investing enough in grid stability,” Dr. Sen said. “If we are supposed to rely on renewable power and the wind doesn’t blow then we don’t get power. So you have to have backup – usually gas. That automatically increases the cost. We’ve seen with Russia’s invasion of Ukraine massive increases in electricity costs. So what is the true cost of transition? I think the reality is it’s not going to be cheap so why are we not talking about who is going to pay for it and how we are going to fund it?”
Danielle Smith described the elements of Alberta’s transition from coal to natural gas-fired electricity and the resultant increase in electricity rates, which is cost transferred to ratepayers or end users. The province went through the experience of a very rapid transition away from coal-fired electricity to natural gas. There have been differing estimates of the full cost.
“We had one coal-fired plant that was super critical – so it had the lowest emissions,” Smith said “but because of this decision by previous administrations they had to close it down six months after they were in operation. So you can imagine the cost associated with doing that and then the cost associated with having to compensate those companies that we put in a position where we stranded their assets. We started building out wind and solar but because wind only works about 30% of the time solar only works 12% of the time we have to build our 100% backup with natural gas, plus all of the installations, all of the transmission and distribution to hook them into the grid. So all of that has added to the cost and as a result, we’ve gone from $0.03 a kWh for electricity to $0.32 a kWh which just happened over this past summer and that is causing a lot of harm to our businesses and residential consumers. That was from one decision to shift about 7000 megawatts of coal rapidly to natural gas over a period of time that was not sustainable. That’s why I’m very mindful that all of our companies have now invested in natural gas with top-of-the-line natural gas power systems. And now we’ve got a federal government that wants us to transition them out within 12 years.”
Smith stated that if Alberta had a realistic time frame like 2050, a better greener solution to net zero emissions for the grid would be more affordable for Alberta’s relatively small population of 4.5 million people.
Dr. Sen observed that some organizations are pushing for 2035 timelines, which she commented is inflationary. The discussion then turned to Africa’s challenge. With millions of people who don’t have access to electricity, transitioning from biomass – wood and cow dung – Africa risks doubling or even tripling the cost of energy. She asked: How can countries resolve that energy may get much more expensive for those who have few resources?
Libyan Minister Oun pointed out that because half of the African continent has no access to clean cooking fuel or electricity, countries need to recognize their special circumstances. They shouldn’t be rushed to net zero emissions by 2050.
“If Africans have no electricity today, how can you transition them from fossil fuels to clean energy consumption? We have to tap all our resources to finance development. Probably the international community can’t finance all the clean energy projects all over the world so perhaps the financing has to come from producing our traditional resources. In Libya, we still have not tapped all the resources that we have. Some studies name us as the fourth in the world for shale gas and shale oil. This could be utilized to help us go slowly and pragmatically towards clean energy.”
Oun recommends open dialogues between the advanced and the less advanced countries involving exchanges of information, technology and financing. He advises that Libya and perhaps other countries like it still need energy and have no immediate resource that they can utilize other than oil and gas. He advised that less advanced countries need to be allowed to produce and have income to utilize to reach net zero emissions by 2050.
On the subject of peak oil demand, Oun says it’s obvious that the world is still in need of the “first fuel” and there is no other immediate alternative. He agrees with targets to reduce emissions.
Dr. Sen observed that in some ways, the energy transition has made some governments very myopic and they hold fast to the belief that “Our companies cannot produce oil and gas” without realizing that there is a global picture involved in this issue. The stance is self-defeating as oil demand will just move to other countries that may have lower environmental standards and less commitment to net zero emissions. There is also a lack of awareness that they are creating energy insecurity. More than one speaker at the conference mentioned that when people are energy insecure – when they can’t get electricity for heating from their home, to cook their food or for transportation, that creates societal instability. Panelists agreed that there is a need to broaden the global energy/environment conversation to meet the complex needs of people.
The panel’s conclusion that countries have to broaden global environmental conversations to recognize solutions and maintain peace and stability has direct applications to environmental conversations within Canada. Applying an approach to net zero emissions with tight timelines that suit some provinces but not others is certainly not a solution to achieve either net zero emissions or a stable energy transition and it certainly could threaten stability within the country.
With no direct answer offered by the panel, the question remains – Is the world on track to reach net zero emissions on time?
Maureen McCall is an energy professional who writes on issues affecting the energy industry.