Navigating Canada’s Energy Transition: Challenges and Opportunities

The energy transition is a big topic on thinkenergy. But what exactly is it? What does it mean globally, in Canada, and to you as an energy user? In this bite-sized episode, host Trevor Freeman unpacks the what, where, when, and how of the energy transition. From energy production and storage to how electrification is implemented in different communities. Listen in to learn about the nuances shaping the energy landscape, including the economic, political, and technological shifts driving change.

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Transcript:

Trevor Freeman  00:00  Welcome to think energy, a podcast that dives into the fast, changing world of energy through conversations with industry leaders, innovators and people on the front lines of the energy transition. Join me, Trevor Freeman, as I explore the traditional, unconventional and up and coming facets of the energy industry. If you have any thoughts, feedback or ideas for topics we should cover, please reach out to us at thinkenergy@hydrottawa.com

Hi everyone and welcome back. Okay, so today is going to be a little bit different than normal. I mentioned in our first episode following the summer break that we'd be trying out a few new things, and this is one of them, we're going to periodically mix up the format and deliver kind of a shorter, bite sized episode. Every once in a while, the goal of these episodes will be to provide a little bit of an explainer or context setting information on a topic that either we reference and refer to often, but maybe haven't explicitly explained, or to maybe demystify some aspect of energy in the utility sector that can be overlooked or generally goes unseen from the outside. So for example, you know, what does that line item on my bill actually mean, or something like that? How we fill that shorter time slot may vary, but one of the formats will be just kind of me waxing on, hopefully poetically, hopefully not too mundane about the issue. I promise to keep it as short and succinct as I can think today is going to be probably on the longer side of that short and succinct window, but I will do my best. So what's on Trevor's mind for today? It shouldn't surprise you that it's the energy transition. Obviously, listeners of previous episodes will have heard me use that term probably in almost every episode since I took over the helm here at think energy. I think it's likely that if you're listening to this podcast, you've got a pretty good idea of what we mean by that, or a general sense, at least, but there is some nuance to it that I think is worth picking apart for a few minutes, and I always want to make sure that we are also welcoming to new people into the conversation who maybe don't know what that is, and so this would be kind of a good explainer for that.

So with that rather verbose intro, let us dive in. When we think about the energy transition, we probably mostly think of this ongoing shift to cleaner emissions free energy. So EVs over gas cars, heat pumps over gas furnaces, etcetera. That is definitely part of it. In fact, that's a major part of it. But like most things in life, it's never just as simple as that. The Energy Transition is a truly fundamental shift in our global relationship with energy, which includes not just what makes our cars go, but everything from how, where and when we generate energy, how, where and when we store and use energy, how we pay for the energy we use, how we finance and pay for energy projects and the systems that we need to do all the things I just mentioned, it will include a shift in what policies and regulatory guidelines and barriers we put in place to protect the public, but that also encourage change that we want to see happen to allow for innovation and advancement. It isn't completely throwing out everything we have and starting from scratch, although some things will disappear, like coal fired electricity generation, for example, but in a lot of areas, it is building on what we've already got at a pace that we haven't seen before, at least in a very long time. And I think that's a key point here. One of the things that makes the energy transition a change worth noting is the pace of change that we will see. Things have never really been static in the world of energy, from that time when our earliest ancestors first sparked that fire, this is the poetic part that I mentioned earlier, our relationship to energy has never really stood still. But other than a few significant events, the upward trend in sophistication and growth and scope has been fairly linear, gradual, one step after the other, etcetera. It's those exceptions, though, those things that are different from that gradual, linear growth that probably most closely resemble this period of change that has started that we're calling the energy transition. Take the Industrial Revolution, for example. For decades and centuries prior, there had been gradual improvements in how we got around or how we worked the fields. Let's say, you know, first by hand, then with tools, maybe a better plow came along, and we started using a horse or an oxen to pull that plow, et cetera. Then along comes the steam engine, and all of a sudden, things take off like never before. It wasn't just a matter of swapping out a horse for an engine. It may have started there, but entire economies and aspects of society changed or sprang up where they didn't exist before one change rolls into another and another in quick succession, and before too long, things that couldn't be imagined only decades before are suddenly a reality. To a degree, that's what we're looking at today with the energy transition. How far that change goes remains to be seen, but it's pretty clear that we have begun one of those disruptive periods of change that will be looked back on as a major turning point. So yes, the energy transition is about shifting away from greenhouse gas emitting fossil fuels, coal, oil, natural gas, etcetera, to renewable, non-emitting energy sources, solar, wind, hydro, nuclear, etcetera. But it's also so much more. The World Energy Council Secretary General and CEO Angela Wilkinson put it best when she said, we're actually looking not at one energy transition, but multiple transitions plural, because there are many diverse pathways to a sustainable energy future. So, there is the aforementioned shift away from fossil fuels for space, water, heating and transportation. A very large portion of that fuel switch will be to electricity, which means we also need to decarbonize how we produce electricity. Phase out coal, nearly all-natural gas, the remaining diesel generation in favor of non-emitting energy sources that I just mentioned. We will also see more distributed energy resources, so things like small scale solar and battery storage and more programs like demand response to manage when we use energy. And there are also other items that I highlighted at the beginning, our financial mechanisms, our regulatory and policy framework, all the interconnected pieces that go along with this. Now, if you'll permit me just a couple more minutes, I do want to touch on a few more aspects of this. The first is, why? Why is this transition happening? One major, overwhelming driver, of course, is the climate crisis. This isn't the episode to fully pick that apart and define it, but suffice to say, climate change is and will continue to be, a signature global crisis of this century, and it is driven primarily by fossil fuel usage, the energy transition and all its various aspects and parts, is a big part of the strategy to slow and stop Climate change and to limit its impacts to what is already baked in. But other things are driving this too. As we continue to digitize our lives, another major disruptive change that probably is worth its own conversation, and as tools like AI evolve, our need for energy is growing faster than ever. We can't meet those needs with the business-as-usual approach. The energy transition helps us deal with this rising demand, regardless of the reason, whether it's for electrification or large, dense data centers that are needed to run things like AI. There are also considerations like energy security and the benefits of decentralizing at least some of our energy sources. And finally, air quality considerations are a major push to reduce harmful emissions and replace that energy with clean, non emitting sources. Listeners in Ontario who are say around my tenure as kind of that oldest millennial age group will remember smog days in Ontario, which no longer exists, mostly because we moved away from coal fired generation, a bit over a decade ago. There are other parts of the world that still see really poor air quality, and shifting away from fossil fuel combustion will go a long, long way to addressing that. Now, the energy transition is not all sunshine and grassy meadows. It is a hard journey with challenges and obstacles to overcome. To start with, time is tight, and that is an understatement. We lost our chance, which could have started as early as 50 years ago, for this to be a slow and easy process, we need to move fast. Our climate is changing rapidly around us, and we are not on track to reduce emissions at the pace we need to. We haven't been keeping up with past targets and goals for reductions, and so we really need to pick up the pace. And like I mentioned earlier, even without climate change, our need for energy is growing at an exponential pace. In Canada, we're fortunate in that we have a strong foundation with a relatively decarbonized grid already, so about 80% carbon free nationally, and a diverse mix of hydro, nuclear and renewables like wind and solar. But it's still going to take quite a lot of effort to decarbonize that remaining 20% at a time when, as I keep mentioning, demand is increasing rapidly. In Ontario, our electricity system operator, the IESO, just updated their future demand projections to show that provincial demand will be 75% more or less higher by 2050 than it is today. This means we also need to invest in our grid infrastructure to ensure it can handle the increased load, as well as utilizing things like decentralized generation and storage to ensure we don't over build not to mention making sure we can handle more extreme weather. Just to give you a sense of what all that means, I'll remind you of an episode we did a few months ago with Jenna Gillis, Hydro, Ottawa's manager of distribution system integration, about our grid modernization roadmap, which is a 10-year plan to modernize our grid to make sure it can support. Support the kinds of things we're talking about here today. And I encourage you to go back and have a listen to that if you haven't already. To zoom out a bit, the energy transition is also very political as any major disrupter in society would be. There are differing viewpoints on the tools and tactics, the carrots and sticks, if you will, with which to enable change, differing viewpoints about the pace of change that we should be aiming for, and differing viewpoints even about where we ultimately end up when it comes to energy, and that is true within each jurisdiction, so within Ontario and within Canada and between jurisdictions at a more geopolitical level. So, to find alignment to make progress in these areas, these are not easy tasks. Have a listen to my earlier episode with Nicholas Rivers from the University of Ottawa for more thoughts on that and on the role that governments and policy makers can and should be playing. Now, as urgent as the need for change is, as exciting as the benefits might be, and as appealing as the vision for a smart, clean, connected energy future can appear, we can't just plow ahead without also considering the consequences and impacts of our choices. The energy transition will be disruptive, and there are a lot of good things about that, but let's not forget the root of that word, disruption, disturbance, things we know today, systems we have today will be upended, will need to change and adapt and quickly, and there are people who rely on those systems. In Canada, we have an entire industry, a substantial portion of our economy, that is associated with fossil fuel extraction and processing, and that's just one example for the transition to work and to actually move forward, it has to be fair and equitable and just for everyone. People and communities whose livelihoods are going to be upended need to be supported. The energy transition is also not free. Another massive understatement. All this change that I've been talking about here costs a lot of money. For Canada to reach net zero by 2050 it could require an estimated $2 trillion in investment. Now there are a lot of benefits to that, absolutely. I'm not saying that's not a worthwhile investment, but it's worth thinking about. So, we already have affordability challenges for many of our neighbors. We have institutions like healthcare, education and housing struggling to hold up under the pressure of the pandemic that we just experienced, inflation, supply chain issues, underfunding, all these different things. This transition has to happen in a way that, again, allows everyone to benefit and participate in it, regardless of their income levels, in a way that doesn't cause those other institutions to crack and crumble.

You'll notice I'm not talking any specific solutions to this, and I guess that's the benefit of sitting in the host chair. I get to bring other smart people on to talk about that. But I do want to highlight that in this little talk here. Going back to the World Energy Council that I mentioned earlier, they also note the concept of the energy quadrilemma. So as in more than a dilemma, a quadrilemma. What they mean by that is that the transition needs to be just, so ensure fairness for everyone through the process needs to be orderly, so making sure that we approach things in a structured and efficient manner. It needs to be inclusive, so ensuring that everyone has an equal voice in the decision-making process, and it needs to be equitable, making sure that everyone has access to affordable, reliable and clean energy. It's worth noting here that our current system doesn't yet provide this. In my previous episode with Gemma Pinchin from Quest Canada, we talked about the number of rural and remote Canadians relying on diesel generators, for example, for their energy needs, because they're not connected to a grid and they don't enjoy all the benefits that come with that not everyone has the same access to energy across the country today, and that is its own challenge that needs to be solved as we go through this energy transition.

So, as we get close to wrapping this up, let's talk about the how, what will enable us to realize this transition that we've been talking about. To start with, we need to scale up. We have heat pumps, EVs, renewable generation and battery storage today, those are major pieces in the energy transition, but we need more can we need it faster, and most of all, we need it cheaper. We've seen this drop in costs for things like solar already. If you look at the cost of solar from, you know, let's say 15, 10, five years ago to now, it's dropped precipitously. But we need that across all aspects of the transition. And this happens naturally in some cases, but we also need to speed it along with both policy and market forces. So the more demand for heat pumps, the more get made, the cheaper it is to make them. We need public awareness. We need to collectively recognize the importance and urgency for action so that we can make decisions whether that's what vehicle that. Or what project to tackle in our homes, or what we demand of our political representation that will drive us in the right direction. On that note, we need clear and consistent policy from all levels of government that will support and encourage the energy transition, and we need the appropriate levels of investment from our various levels of government to make this transition possible, Again, listen to my conversation with Nicholas rivers for more thoughts on what that might look like. And we need leadership, leadership from our governments, but we also need to look at ourselves as how can we show leadership Canada and Canadians can punch above our weight class, so to speak, by setting an example for others to follow, and by developing policies, programs and technologies, even to serve and guide others. So, to wrap it up, as I come to a close here, the energy transition is a little bit bigger than just fuel switching. It definitely is that, but it's more. It's a long, tough road, but we're on it no matter what it started, and it will continue, and it's also full of exciting possibilities and opportunities.

Now, I hope this summary wasn't too vague. That was, it was meant to be high level, and again, I'm going to play the host card here and point to past and future episodes to dive deeper into specific aspects of this. But what I will say is that I'd love to hear from you. If you have thoughts about what we cover on the show, what we're not covering that you think we should be reach out to us. Thinkenergy@hydroottawa.com, I'd love to hear from you. Love to get your thoughts on this. Feel free to let us know what you think about this kind of format. If this works for you and you want to see kind of more of these explainers. Great. That's awesome. If you want to reach out to us and say, I think that was maybe just a little bit too much, Trevor, I get it. That's okay. I won't be offended or too offended. Now, I normally wrap up my episodes with a series of questions for my guests. Since I don't have a guest today, I won't make you listen to me sharing all of my answers, but I will leave you with a book recommendation. And I have to be honest here, I'm taking a rather dangerous step of recommending a book that I haven't actually read yet, but it is next on my list when I finish what I'm reading now, and it came highly recommended to me, and I'm really excited to read it. It's a book called, What if we get it right by Ayanna Elizabeth Johnson. It's a collection of essays and poetry and conversations that really gives some optimism about what could be when it comes to climate change and the energy transition, it is an exercise in not letting the sometimes-disheartening aspects of the climate crisis keep us from dreaming about the possible and to have hope and faith in the future that we can solve these challenges, we can realize the benefits of this energy transition that we talk about and that we know are possible. So, I'm really excited to read it soon, hopefully it lives up to my recommendation and the recommendation that was given to me for it when I wanted to let you know about it as well.

So thank you, as always, for joining. Thank you for letting me and the team here try out this different format. Definitely let us know what you think about it, and keep checking back in for more great conversations with great leaders in the energy world. I promise I will be bringing guests back onto the show. It won't just be me talking. There will be some great ones coming up. So, thanks very much, and check back next time.

Thanks for tuning in to another episode of The Think Energy podcast. Don't forget to subscribe wherever you listen to podcasts, and it would be great if you could leave us a review. It really helps to spread the word. As always, we would love to hear from you, whether it's feedback comments or an idea for a show or a guest. You can always reach us at thinkenergy@HydroOttawa.com