Stack of cut logs by a lake

The power behind transition: A national energy system strategy

By: Roger Francis

This op-ed was originally published in The Hill Times on December 7, 2020.

Canada is an energy bank. We need to treat it like one. We require an energy system strategy that would allow Canada to lead (not follow) market opportunities and leverage our capital to transition to a low carbon future. An energy system strategy will allow us to better monitor and achieve our transition.

Energy is more than developing energy products like oil, natural gas, hydro, nuclear, wind, solar, tidal, biofuel, hydrogen, wood, coal, and geothermal. Energy is also about users. Transportation, housing, businesses, affordability, urban and rural centres, and financial markets all contribute to consumption. Combined, producers and consumers make up Canada’s energy system, and it is undergoing a dramatic evolution, often in a discordant way.

The Canadian Energy Strategy of 2015 is not up to date with the times and is in need of a reset.

Banks do not like discordant environments. This is why we need an energy system strategy that reflects and balances the needs of the different stakeholders. A national energy system strategy must support Canada’s diverse energy resource base, provincial energy interests, and support every Canadian’s need for accessible, secure, and affordable energy to fuel daily life.

The Canadian Energy Strategy of 2015, which was built from the collaboration of the provinces and territories through the Council of the Federation, was a start. However, given the many changes in the energy system over the past five years it needs a reset.

The Centre for a Clean Energy Growth Economy (CEGE) at the Conference Board of Canada has created an interactive dashboard monitoring the energy system’s progress towards achieving a clean energy growth economy. By aggregating findings from 14 indicators we define how far the energy system has progressed across three themes of economy, environment, and society. Each theme and indicator can be filtered between producers and consumers, and by reference period.

The good news is Canada is moving in the right direction. We have experienced an average 18 per cent improvement across the indicators since 2010. Pricing carbon emissions, adopting tough regulation and investing in innovative technology have all helped drive sustainable outcomes. Weak economic performance for energy producers, while slowing their overall transition, has not stopped their contribution to improvement.

Indicators tracking value add, investments in capacity, global reach, operating environment, and growth prospects comprise our economic performance theme. Since 2010, in aggregate, this theme has seen an improvement of 31 per cent despite challenges in the energy sector. GHG emissions and economic value add are decoupling rather than marching in tandem. As technology and environmental practices improve, firms are increasing output and decreasing associated emissions and impacts. Sustaining this trend is essential to achieving balanced, inclusive growth.

The environment theme monitors greenhouse gas emissions, air pollution, deforestation, energy use, and water use. Since 2010, this theme has improved by only four per cent. Deforestation rates are falling, and air quality is improving as coal fades from the energy mix, but significant work remains to be done. Energy producers are on a positive course as GHG emissions and energy intensity are both down, and the energy mix is increasingly renewable. The biggest challenge remains consumption. Environmental performance for energy consumers stopped improving in 2015 and has since deteriorated. Water consumption has increased and the volume of GHGs emitted by energy consumers remains concerning.

Energy is transformative. A current national energy system strategy should fuel that transformation. … But we need a plan.

And finally, our society theme includes indicators for opportunity, compensation, contribution to society, and affordability. Since 2010, this theme has improved by 21 per cent. Energy affordability has improved over the past decade. However, not all Canadians enjoy easy access to low-cost or clean energy. Aging diesel generators in remote communities, for example, negatively impact community health, the environment, and economic prospects. Placing consumers at the centre of the transition to a clean energy economy should be a key priority of a national energy system strategy.

Energy is transformative. A current national energy system strategy should fuel that transformation. Just like our personal financial health, our energy system impacts all aspects of life in Canada. Energy production and consumption are at the epicentre of the disruptive changes occurring in our economy, environment and society. Our indicators illustrate a system undergoing transformation.

But we need a plan—a national energy strategy reboot that leads to collaborative government, business, and consumer decision-making. Strategy is an important part of transitioning to a clean-energy growth economy and a sustainable future. A national strategy mechanism needs to track the impact of these decisions, so that ultimately our “energy bank” thrives.