Electrification and Climate I: Scale of the Challenge

Many elements have to come together if Canada is to significantly reduce its greenhouse gas (“GHG”) emissions. There is now a technical consensus that “electrification” – the replacement of fossil fuels with electricity as an energy source – is a necessary condition for decarbonization, and that electrification will require that zero/low-emission electricity generation double or triple by 2050. In this first of a series of electricity-oriented climate-related posts, I summarize the electrification modelling evidence and analyse it in historical context.

In the doom and gloom of current climate news, electrification is a relatively good news story. From the supply side, it shows that deep decarbonization (reductions of 80% or more in GHG) is feasible at current GDP and population growth rates. Because of its energy-efficiency and other conservation measures, electrification would result in reduced energy use while providing us with the same level of “energy services”. However, while there is an appreciation of electrification among many decision-makers and analysts, it has not yet led to significant action (like so many other aspects of climate policy). Some of the reasons are the same political economy challenges to any climate action. But other reasons relate to disagreements among stakeholders on how decarbonization should occur. I discuss these aspects after I summarize the models.

Energy Models and a Hypothetical Example

Climate models have been instrumental in driving the policy discussion about the need for decarbonization. The models I review here are not climate models. Rather, they are economy-wide models that forecast energy demand across sectors (residential, transportation and industrial) and then “construct” electricity and carbon infrastructure to estimate GHGs. Such models can either be calibrated to achieve a determined level of GHGs or can simulate the impact of specific policies.

I present the following hypothetical electrification example to assist lay readers in understanding these models. According to the 2019 National Inventory Report, Canada’s 24 million “light-duty” internal combustion engine (“ICE”) cars/SUVs/trucks account for 83 Mt of GHGs (11.6% of the total of 716 Mt) and use 1,080 Peta Joules (PJ)/year of energy (gasoline and diesel). On average, each vehicle is driven about 16,000 km/year, which equals about 384 billion vehicle-kilometres travelled (“VKT”)/year. What would be the electricity, emissions and energy impact of electrifying overnight the “energy services” provided by those 384 billion VKTs? There are a couple of ways of calculating the electricity impact. One is to multiply the average energy use of an EV (about 0.19 Wh/km) times 384 billion VKTs, which equals about 73 TWh of electricity. Another is to multiply the annual average electricity use of an EV (3.06 MWh) times 24 million vehicles, which also equals about 73 TWh. This amount of electricity would be an increase of 11.2% from Canada’s 2017 generation of 650 TWh. The emissions impact would be an elimination of 83 Mt, assuming the additional electricity is zero-emission. Electric motors are more energy efficient than ICEs, which is why we see EVs would use only one-quarter (263 PJ = 73 TWh) of the energy used by ICE vehicles (1,080 PJ), and would result in a 9.9% reduction in Canada’s final energy use.

This simple example shows the promise and challenges of electrification. To decrease GHGs by 11.6%, while maintaining the same level of “energy services”, we would need to add 11.2% of electricity, which would result in 9.9% economy-wide energy savings. One could see how aggregating this process across the economy would lead to decarbonization.

Summary of Decarbonization Models for Canada

These types of decarbonization models reached their policy apex in Canada via the Federal Government’s November 2016 “Mid-Century Long-Term Low-GHG Strategy” that noted that based on the results of a handful of such models (see below), achieving 80% GHG reductions by 2050 was technically possible via electrification. The Mid-Century Strategy was not a blueprint for action, but rather one of many inputs into Government’s “Pan-Canadian Framework” issued later that year.

Table 1 provides a summary of selected deep decarbonization models. It includes the three Canada-specific models included in the Mid-Century Strategy, and two later models. For context, it also includes three global models. Table 1 includes the 2050 electricity generation and the technology mix.

The first global model is in fact a series of models from last year’s IPCC “Global Warming of 1.5C” special report (“SR15”) that noted “the electrification of energy end use” was a common element of the 85 model scenarios (pathways) that were most most likely to keep global warming at or below 1.5C. Chapter 2 of the SR15 shows that the median increase in electricity generation of these 85 pathways is 125%. Note also that the IPCC’s median technology mix includes a “balanced” portfolio of non-emitting hydro, non-hydro renewables (wind, solar and others) and nuclear, as well as some residual fossil fuels.

This is where we get to introduce one of the main policy discussions among energy and environmental stakeholders. In the real-world where there is no perfect zero-emission technology, there are sharp differences between proponents of traditional “baseload” hydro and nuclear technologies and “intermittent” wind and solar and other newer technologies. Such disagreements are highlighted by the second and third models in Table 1 by Mark Jacobson et al (2017) and Sven Teske et al (2019), two prominent “100% Renewables” (“100%R”) modellers. Both models exclude nuclear generation as a matter of principle and use some existing hydro dams for “load balancing”. The differences are stark between Balanced and 100%R models. Under the median IPCC pathways hydro and nuclear account for 56% of global generation while non-hydro renewables for 28%. The ratios for Jacobson and Teske are reversed, averaging 7% and 93%, respectively. While this is an important discussion, it deserves its own separate treatment, which I will address in a subsequent post.

But the main message remains – regardless of whether they are “Balanced” or 100%R – global models show that electrification is a necessary condition for decarbonization, and that electrification will require electricity generation to double or triple (or more) by 2050.

The same conclusions apply for the USA and Canada. Focussing on Canada, Table 1 shows five models, the first three of which were included in the Mid-Century Strategy and two newer models, the Trottier Institute’s 2018 model and Jacobson’s Canada-specific results. Taken together, these five models indicate that decarbonization will require an increase in electricity generation to between 1,500 and 2,100 TWh in 2050; in effect, more than double or triple the 2017 generation of 650 TWh.

Canada’s current technology mix is already comparatively low-emission, with hydro and nuclear accounting for 76%, non-hydro renewables 7% and fossil fuels the remaining 17%. Looking forward, however, the policy differences embedded in the models are clear. For the four Balanced models, hydro and nuclear average 72% and non-hydro renewables 26%, in effect maintaining the current hydro and nuclear ratio while replacing all fossil fuels with non-hydro renewables. These figures are reversed under the Jacobson modelling, at with hydro at 15% and non-hydro renewables at 81%.

The Electrification-80%GHG Mitigation Pathway

For ease of presenting what the electrification process may look like and putting it in historical context, I use the mean of the five Canada models in Table 1 (1,760 TWh) to construct a representative “Electrification-80GHG” scenario. A further research contribution in this segment is my compilation and presentation of historical data from 1945 (data from Statistics Canada, other than earlier energy data from Richard Unger’s “Energy Consumption in Canada in the 19th and 20th Centuries“) to provide a more fulsome historical perspective.

Figure 1 presents historical electricity generation for Canada and the Electrification-80%GHG scenario to 2050. For comparative purposes I include the “Business as Usual” (“BAU”) projections based on the “Reference” scenario in the National Energy Board’s “Canada’s Energy Future”. The BAU scenario has a very modest increase of 0.5%/year, equal to an increase of 105 TWh by 2050. In contrast, the Electrification-80% scenario increases generation by 3.3%/year and adds 1,100 TWh by 2050. For simplicity, I focus on the 2050 end-point and “straight-line” growth from 2020 to 2050.

Figure 1 shows that while the 3.3%/year growth of the Electrification-80%GHG scenario constitutes a significant change from the modest 1.0%/year growth of the last three decades, it would be relatively modest compared to the 5.9%/year increase achieved in the four decades after 1945.

This kind of utility-scale growth has been achieved in the past and is technically feasible now, but as noted above, there is no policy consensus that would facilitate the broader societal consensus needed to move forward. Long-standing “in principle” opposition by some environmental stakeholders to all hydro and nuclear projects would block a consensus on the expansion of the zero-emission technologies that account for 66% of Canada’s current generation and 56% of IPCC’s global generation by 2050. Conversely, there is opposition among some energy analysts to the expansion of wind and solar, because of its intermittent nature and other attributes. Further, with respect to siting, there is already strong opposition among affected rural residents to many of the 300 wind farms that include Canada’s current 6,600 wind turbines. Both Jacobson and Trottier (2018) indicate that between 45% to 50% of electricity generation in 2050 could be wind-generated, which Jacobson estimates would require about 60,000 5MW turbines (proportionately larger compared to the current 2MW average). That is a nine-fold increase, compared to an increase of two or three times for hydro or nuclear under a Balanced growth scenario.

Interwoven into technology preferences are preferences over how the electricity should be delivered. There is a continuing tension between the household or community-controlled ideal of “distributed” energy self-sufficiency and the economies of scale associated with distant utility-scale provision that is delivered to urban areas over transmission wires. Electrification will provide policy space for both types of systems. By way of example, the most common form of distributed generation is rooftop solar. Current maximum residential potential (solar panels on every rooftop) in Canada is currently about 100 TWh (Jacobson (2017) estimates 125 TWh for 2050). Under the BAU scenario where additional generation to 2050 would be 105 TWh, there could be a legitimate policy discussion as to what proportion the distributed and utility systems would contribute. But we cannot achieve decarbonization under BAU. The Electrification-80%GHG scenario calls for an increase of 1,100 TWh. Even with solar panels covering every residential rooftop in Canada, that would account for only 10% of our incremental electricity needs. The vast majority of the new zero-emissions electricity will hence have to be provided at scale, whether at distant solar or wind “farms”, hydro dams or nuclear stations.

Another implication of the modelling is that we cannot “conserve” our way to decarbonization. All models already include aggressive efficiency and conservation measures, which become evident when we take a broader view of efficiency to include energy as a whole. For example, the upper portion of Figure 2 shows historical and projected final energy use. The BAU estimates are from the NEB and the Electrification-80%GHG is a constructed average of Trottier (2018) and Jacobson. Figure 2 shows that under BAU total energy use would continue to increase but would decrease by -0.3%/year under the Electrification-80%GHG scenario, resulting in significant energy savings (about 2,000 PJ by 2050). The lower portion of Figure 2 shows electricity’s relative share of final energy and shows that it has increased from about 10% after WWII and plateaued in the mid-1980’s at around 28%, a level that would be continued under the BAU scenario. In contrast, electricity would reach about 80% by 2050 in my constructed scenario. The bottom line is that in terms of energy, electricity would increase by less than fossil fuels would decrease, resulting in lower energy use.

Figures 3 and 4 shows electricity and energy intensity and per capita use. Intensity is measured with respect to GDP (real 2012 – based on the NEB’s long-term GDP increase of 1.8%/year), and per capita use with respect to population (from the NEB’s long-term increase of 0.8%/year).

Figure 3 shows that electricity intensity increased after 1945 by 1.5%/year, until about 1979, after which it declined by -1.3%/year. The BAU scenario sees electricity intensity continue to decrease by -1.3%/year, while the Electrification-80%GHG scenario sees an increase of 1.5%/year. Electricity use per person would also increase under Electrification-80%GHG, averaging 2.5%/year to 2050.

Figure 4 shows that, relative to historical trends, energy intensity would decline further under the Electrification-80%GHG scenario (-2.0%/year) than the BAU, and would have decreased by about 46% from 2020 to 2050. That would indeed be a “de-linking” of the economy-energy nexus. Per person energy use would also decline from 2020 to 2050, by about 28% under the Electrification-80%GHG scenario, resulting in usage levels not seen since the early 1960’s.

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Closing Thoughts

The promise of electrification is that decarbonization is technically feasible. A new societal consensus would have to emerge to facilitate the expansion of utility-scale electricity generation infrastructure that would displace most carbon infrastructure. However, there is no consensus among stakeholders that favour deep decarbonization about how it should proceed. The last decades of slow or stable electricity growth has resulted in a type of “zero-sum” game where proponents are not satisfied in advocating for their preferred technology but also attempt to block competing zero-emissions options. If we are to take decarbonization seriously, electrification would require an “all hands on deck” approach. In this respect, for instance, I am somewhat encouraged by the very recent Suzuki Foundation report that qualitatively reviewed some of the same models as this post. While the report advocates for a certain type of electricity (distributed 100%R), it does not shy away from reporting the broader modelling consensus that Canada’s low-carbon economy of 2050 would require 2.5 to 3 times more electricity.

In addition to the technology issue, in subsequent posts I also aim to deal with policy and regulatory matters, including the challenge of matching supply and demand over time. In a nutshell, an increase in generating capacity is the necessary supply side response to meet increased demand induced by policy and regulation. To date, policy has focussed on demand-side measures, including the carbon tax. But these measures have been tardy and modest and have not been applied consistently. The resulting lack of demand certainty is problematic for the electricity sector because it requires long lead-times to build supply. No Government or private investor wants to finance generation assets that will operate under-capacity because electrification-related demand was delayed or never materialized. In effect, national and provincial electricity regulators have taken a conservative approach; while they have modelled electrification, they generally have not included it in their long-term resource planning forecasts. So we fall further behind on the supply side. One could advocate for improved policy and regulatory commitments on the demand side, but such indirect measures may not be sufficient; a more direct policy approach on the supply-side may be appropriate and necessary. Stay tuned.