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'Project of the century': Electrifying Canada could cost $1.7 trillion

Public Policy Forum lays out a blueprint for Canada's green power transition

The Public Policy Forum's latest report on national electrification anticipates it to be the challenge of the century. (Courtesy Public Policy Forum) 

Canada must urgently accelerate efforts to create clean electricity to meet its climate goals, and faces a bill of up to $1.7 trillion to accomplish the feat according to a Public Policy Forum blueprint for the transition.

The Ottawa-based think tank published Project of the Century: A Blueprint for Growing Canada’s Clean Electricity Supply – and Fast.

The scope of transitioning Canada into net-zero and meeting the projected doubling of demand for electricity by 2050 surpasses even iconic Canadian infrastructure projects of the 19th and 20th centuries (including the trans-Canada railway and the St. Lawrence Seaway), the report states.

“It’s two goals in one," Edward Greenspon, the president and CEO of the Public Policy Forum, told SustainableBiz. "It’s a clean system and it’s a more than doubling of the system. It’s huge. We’re not accustomed to moving at that scale, that speed . . .

"The two-minute warning has sounded. We are behind in the game; we need to play the game differently.”

The move will be costly, Public Policy Forum predicts, and must be done while keeping electricity supplies affordable and reliable.

Government at all levels, the private sector and Indigenous Canadians have crucial roles in this effort, the report states.

The trillion-dollar question for electrification

The report expects electrifying and greening Canada to come at a high cost.

This covers not just infrastructure, but finding, training and retaining clean-energy economy workers, building electric vehicle charging stations and transmission lines, establishing supply chains, sourcing clean fuels and taking in critical minerals.

It cites the March 2023 budget pegging a net-zero economy to a cost of $125 billion to $140 billion every year until 2050. Other estimates put the price tag at the high hundreds of billions to as much as $1.7 trillion.

Transmission lines to carry the clean electricity and batteries to store the power are a key part of this plan to charge facilities that are part of the green economy, but current policies are limiting electrification.

Despite Canada’s energy abundance and reliability, the energy transition will likely disrupt this status quo, the report said. Without a credible plan, policy coherence could go awry due to provincial divisions and conflicting decisions at different levels of government.

Uniting Canada’s policies

Canada’s decentralized electricity grids create “differing generation mixes but also bespoke market structures, debt loads, governance and pricing mechanisms,” across the provinces, according to the report.

The incoming Clean Energy Regulation will set a framework for net-zero provincial grids by 2035, but has already faced resistance or expectations of pushed deadlines from provincial governments.

Policymakers can address these problems, Greenspon said, with what the forum calls the “hurry-up offense.” The report outlines ways this can be achieved.

This will mean engaging with Indigenous Canadians on “economic reconciliation,” such as involvement in decision making and having Indigenous figures on leadership boards.

Many projects, such as the 250-megawatt Oneida Energy storage project, will inevitably cross into Indigenous land, Greenspon said, and Indigenous Canadians increasingly want a stake in clean energy projects.

A major hurdle is getting competitive capital into Indigenous ownership pieces, but this is something that is “not beyond the grasp of reasonable people and systems of government to get their act together (on),” he added.

Building these projects will require haste matching the urgency. But an EY survey found Canadian megaprojects on average run 39 per cent over budget and 12 months behind schedule. A 2018 study found approvals alone for federal projects typically take 49 months for new generation and 38 months for transmission.

Addressing this problem means speeding up permitting and learning from jurisdictions like California that streamlined its regulations, Greenspon added.

Ensuring a smooth transition

Looking through the example of Europe’s bumpy move out of natural gas in 2022 – sparked by necessity due to the Russia-Ukraine war – the forum said Canada can avoid a similar scenario as it moves from fossil fuels to non-emitting sources of power. Reliability and affordability are going to be key factors.

“If you push cleanliness without the same emphasis on affordability and reliability, you lose the room. If you lose the room, then it becomes a lot harder to push forward on something that’s necessary,” Greenspon said.

Natural gas will likely play a pivotal role in Canada’s transition to cleaner energy, and the Clean Energy Regulation may answer the country’s natural gas policies, such as its role in public emergency situations, or how biomass will be treated as it moves from emitter to a source of negative emissions.

The report says the energy transition can be done with actions like sequenced building of infrastructure (staggering their build-out over time) and retaining energy sources like nuclear power in Ontario.

Taxpayers will have to foot the bill of this transition, which will require decisions over taxation policy and looking through the lens of clean energy saving money in the long term.

Greenspon is optimistic Canada can overcome this challenge, provided it moves rapidly and develops coherent policies in conjunction with the government, private sector and Indigenous Canadians.

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