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Bruce Lourie, C.M., is president of the Ivey Foundation and a professor of practice at the Trottier Institute for Sustainability in Engineering and Design, McGill University.

What if our pursuit of a perfectly clean electricity grid undermines the broader electrification revolution we need? The answer lies in understanding the economics of that final push toward 100-per-cent renewable electricity, and nowhere is this tension more visible than in Canada.

That’s because Canada’s electricity system stands as one of the cleanest in the industrialized world, already 84-per-cent decarbonized. This is an impressive achievement, built largely on the foundation of hydroelectric power in Newfoundland and Labrador, Quebec, Manitoba and British Columbia, complemented by nuclear generation in Ontario.

For most of the past two decades, Canadian policymakers have celebrated this advantage, viewing it as a springboard for climate action. But the calculus becomes more challenging with a push toward 100-per-cent decarbonization.

Sometimes called “the last mile problem,” the challenge is straightforward but profound. The first 84-per-cent of decarbonization in Canada came relatively easily. Natural geography and historical public investments provided reliable and affordable electricity. The final stretch is different.

The Energy Transitions Commission and the Rocky Mountain Institute (global think tanks) have documented this challenge across multiple jurisdictions. Their research shows that the cost curve for grid decarbonization is not linear. Going from 50-per-cent to 80-per-cent decarbonized electricity is cost-effective. Above 80 per cent, the costs increase, and that final push from 90 per cent to 100 per cent can cost exponentially more still. Pushing beyond 95 per cent requires infrastructure investments that can double or triple the marginal cost of that final clean energy.

Opinion: A decade after the Paris Agreement, the clean economy is winning

In Canada’s case, this could mean electricity rate increases of 20 to 40 per cent in the non-hydro provinces. This isn’t a failure of renewable technology. It’s simply the reality that the last few percentage points of demand require massive investments in energy storage, transmission infrastructure, carbon capture technology or significant overbuilding of renewable capacity to ensure reliability during peak periods.

Alberta has achieved 60-per-cent decarbonization with natural gas replacing coal. And while wind and solar capacity have grown dramatically over the past decade, there is room for much more to further decarbonize the system and bring down the province’s sky-high electricity rates. This will only happen once the electricity market is freed from political intervention that prevents renewable power development. Over 90-per-cent decarbonization of the system is doable while maintaining a few natural gas peaking plants for reliability during January cold snaps, when electricity demand surges and evening solar production plummets.

British Columbia is a different story. It already has 98-per-cent clean electricity through hydroelectric power. BC Hydro has projected that achieving 100-per-cent clean energy and shutting the natural gas peaking plants would add massive cost. Similar dynamics play out in Nova Scotia, Quebec and Manitoba.

The situation is urgent, and long-term energy storage solutions are expensive. This doesn’t mean gas “peakers” forever; only until alternative technologies are proven at the scale and cost needed to get us through a January cold snap.

Analysis: Carney’s climate vision is to deprioritize emissions targets, focus on economic advantages

Modelling done by the Transition Accelerator (a Canadian think tank) shows that for Canada to achieve 2050 climate targets, roughly 60 per cent of current end-use energy needs to be electrified requiring a doubling of electricity supply. The entire climate strategy for Canada, and indeed most industrialized countries, depends on rapid electrification of transportation and heating.

This is where the paradox becomes dangerous and introduces the counterintuitive idea that total decarbonization of the electricity grid could stall economywide electrification and delay the achievement of climate change targets.

Here’s the problem: Consumers make decisions based on affordability. A family considering an electric vehicle or heat pump compares the lifetime operating costs against conventional alternatives. If electricity rates increase 30 per cent while natural gas prices remain stable, the case for electrification weakens considerably. That heat pump is less appealing if it means higher heating costs.

Now more than ever, we need a thoughtful approach to electricity planning. Maintaining a small percentage of natural gas generation for peak demand provides low-cost reliability while still achieving 95-per-cent decarbonization in the power sector. The mathematics are compelling. The emissions from gas peaker plants running a couple of hundred hours per year pale in comparison with the emissions avoided by accelerating electrification of transportation and heating.

Regulations are important to drive decarbonization, but flexibility is foremost if we are to double down on the main issue: rapidly accelerating the electrification of the economy.

Open this photo in gallery:

Bruce Lourie, C.M., is president of the Ivey Foundation and a professor of practice at the Trottier Institute for Sustainability in Engineering and Design, McGill University.

What if our pursuit of a perfectly clean electricity grid undermines the broader electrification revolution we need? The answer lies in understanding the economics of that final push toward 100-per-cent renewable electricity, and nowhere is this tension more visible than in Canada.

That’s because Canada’s electricity system stands as one of the cleanest in the industrialized world, already 84-per-cent decarbonized. This is an impressive achievement, built largely on the foundation of hydroelectric power in Newfoundland and Labrador, Quebec, Manitoba and British Columbia, complemented by nuclear generation in Ontario.

For most of the past two decades, Canadian policymakers have celebrated this advantage, viewing it as a springboard for climate action. But the calculus becomes more challenging with a push toward 100-per-cent decarbonization.

Sometimes called “the last mile problem,” the challenge is straightforward but profound. The first 84-per-cent of decarbonization in Canada came relatively easily. Natural geography and historical public investments provided reliable and affordable electricity. The final stretch is different.

The Energy Transitions Commission and the Rocky Mountain Institute (global think tanks) have documented this challenge across multiple jurisdictions. Their research shows that the cost curve for grid decarbonization is not linear. Going from 50-per-cent to 80-per-cent decarbonized electricity is cost-effective. Above 80 per cent, the costs increase, and that final push from 90 per cent to 100 per cent can cost exponentially more still. Pushing beyond 95 per cent requires infrastructure investments that can double or triple the marginal cost of that final clean energy.

Opinion: A decade after the Paris Agreement, the clean economy is winning

In Canada’s case, this could mean electricity rate increases of 20 to 40 per cent in the non-hydro provinces. This isn’t a failure of renewable technology. It’s simply the reality that the last few percentage points of demand require massive investments in energy storage, transmission infrastructure, carbon capture technology or significant overbuilding of renewable capacity to ensure reliability during peak periods.

Alberta has achieved 60-per-cent decarbonization with natural gas replacing coal. And while wind and solar capacity have grown dramatically over the past decade, there is room for much more to further decarbonize the system and bring down the province’s sky-high electricity rates. This will only happen once the electricity market is freed from political intervention that prevents renewable power development. Over 90-per-cent decarbonization of the system is doable while maintaining a few natural gas peaking plants for reliability during January cold snaps, when electricity demand surges and evening solar production plummets.

British Columbia is a different story. It already has 98-per-cent clean electricity through hydroelectric power. BC Hydro has projected that achieving 100-per-cent clean energy and shutting the natural gas peaking plants would add massive cost. Similar dynamics play out in Nova Scotia, Quebec and Manitoba.

The situation is urgent, and long-term energy storage solutions are expensive. This doesn’t mean gas “peakers” forever; only until alternative technologies are proven at the scale and cost needed to get us through a January cold snap.

Analysis: Carney’s climate vision is to deprioritize emissions targets, focus on economic advantages

Modelling done by the Transition Accelerator (a Canadian think tank) shows that for Canada to achieve 2050 climate targets, roughly 60 per cent of current end-use energy needs to be electrified requiring a doubling of electricity supply. The entire climate strategy for Canada, and indeed most industrialized countries, depends on rapid electrification of transportation and heating.

This is where the paradox becomes dangerous and introduces the counterintuitive idea that total decarbonization of the electricity grid could stall economywide electrification and delay the achievement of climate change targets.

Here’s the problem: Consumers make decisions based on affordability. A family considering an electric vehicle or heat pump compares the lifetime operating costs against conventional alternatives. If electricity rates increase 30 per cent while natural gas prices remain stable, the case for electrification weakens considerably. That heat pump is less appealing if it means higher heating costs.

Now more than ever, we need a thoughtful approach to electricity planning. Maintaining a small percentage of natural gas generation for peak demand provides low-cost reliability while still achieving 95-per-cent decarbonization in the power sector. The mathematics are compelling. The emissions from gas peaker plants running a couple of hundred hours per year pale in comparison with the emissions avoided by accelerating electrification of transportation and heating.

Regulations are important to drive decarbonization, but flexibility is foremost if we are to double down on the main issue: rapidly accelerating the electrification of the economy.