Getting Canada’s energy future right

Lisa Raitt: Welcome back to the Raitt Stuff. Today I have with me a repeat guest, the Chair of Energy for a Secure Future, Shannon Joseph. Shannon is a sustainable development and public affairs professional. She’s got 15 years of experience, which includes environmental engineering, municipal sustainability, program management,the upstream oil and gas industry and Indigenous relations. She is motivated by the strong conviction that energy is about people and that abundant, affordable, low emission energy is a precondition for growing the middle class. Shewas the vice president, government relations and Indigenous affairs for the Canadian Association of Petroleum Producers. She’s also a member of the Order of Engineers and has a Bachelor of Engineering degree from McGill University and a Master of Applied Sciences in Civil Engineering from the University of Toronto. So she knows what she’s talking about. That’s what I’m going to start off by saying today, Shannon. Thanks so much foragreeing to be on the Raitt Stuff again. 

Shannon Joseph: Thank you so much for having me.

Lisa Raitt: It’s a great pleasure. You have published a new paper at the Energy for a Secure Future. I have taken a quick read through it. It’s lengthy, but it’s insightful and it’s got some great statistics and perspectives.I really wanted you to come on so we could talk a little bit about it, because I think it’s something that people who listen to the right stuff would find interesting from a pragmatic point of view. Can you tell us a little bit about this new paper that you published in the past spring?

Shannon Joseph: So the paper is called Getting Canada’s Energy Future Right, A Consumer Lens on Energy in Canada. We really wanted to examine the energy question from the consumer perspective. So the paper does three things. One, it presents a framework for us to think about how we transform our energy systems. It looks at how things have changed between 2005 and 2022, looking at statscan data. Then we look at the Canadian energy regulators net zero outlook. And we say, given everything we’ve learned, what can this tell us about the outlook and what we can expect as Canada really tries to dramatically reduce emissions? So we hope it could be a big contribution to the conversation in Canada.

Lisa Raitt: You will hear various governments always kind of frame out when they’re talking about the energy transition in this way. They’ll say that energy transition energy has to be affordable. It has to be reliable. And then it’s either sustainable or clean depending upon which government you’re talking to. We have this thing called the energy trilemma, but you talk about a different definition of the energy trilemma. Can you give us more on what you mean by that?

Shannon Joseph: Absolutely. Well, the paper’s author, Mike Glenn, who also does a lot of great work with Positive Energy, which is out at the University of Ottawa, he had kind of coined a trilemma that was energy fundamentals, acceptability kind of in society and the environment. What are energy fundamentals? It’s affordability, reliability, safety, security, resilience. Things that if you don’t get it right, you don’t have a policy.If energy gets too expensive, people are upset. If it’s not secure, it’s not acceptable. The acceptability piece is about the fact that some people are used to some things and some others maybe not. In Ontario, we have a long history with the use of nuclear energy. People are really comfortable with that. In British Columbia, I think nuclear energy is kind of banned and that’s been the case since the 90s. So that’s kind of an option off the table until you build back that comfort in society. So that’s going be constrained on how we’re able to build things we want to build. And then the last piece of course is these ambitious environmental goals we have. And the government’s set some very ambitious goals, including the net zero goal. I think the key takeaway is it’s not just affordability. It’s a suite of things that are fundamental, the way it fits in society and people’s readiness, and then the environment.

Lisa Raitt: I like the fact that you talk about acceptability as well, because it is something that we can take for granted. And I suppose why you are able to talk about it in this term is that because you really did take that consumer lens, which I don’t think is out there in any other work that’s being done, quite frankly.

Shannon Joseph: Thank you. No, I don’t think we’ve seen it out there. And so much of the energy conversation in Canada is about producing energy and who’s producing the energy and are they doing a good job? And it’s like, stop, stop, stop. The reason we produce this energy is because people need it and they need it to deliver certain things for them so that, their homes can be comfortable so that they can start a business and know that the lights won’t go out while they’re running their process. This is kind of the basic stuff. And it’s all about the consumer.

Lisa Raitt: You mentioned usage and I wanted to drill down on that a little bit. An important part of your report is talking about how energy is used today in Canada by the various sectors. Can you give us an overview of the big picture? What is it that people need to understand about energy use in Canada?

Shannon Joseph: Well, I think the first thing they need to understand is the breakdown of energy use. And so everyone’s talking about electrification and as the big solution. And today, electricity, and this has been true since 2005, represents 22 % of our end -use energy. The 78 % is refined petroleum products, it’s natural gas, and other. But the big heavy lifts in our economy are refined petroleum products. That’s like 93 % of transport energy. And the other big lift, which has grown as petroleum products have gone down, and I think that’s partly to achieve some emissions goal is natural gas. And so that’s the first thing people need to know, how big of a change we’re trying to move. If you want to just change the transport,

Shannon Joseph: The equivalent amount of energy is, I think, 140 site C dams we cite in our report. That’s not an easy thing to build when we look at the experience of building one site C dam in BC. The other important thing is that 67 % of end -use energy in Canada is industrial. We’re a country with a small population, but we have a big economy. We’re in the G7 because we use a lot of energy. If we’re going to take a crack at the emissions piece, we need to look at How do we still deliver the energy need for our industry? That is what preserves our quality of life. And that conversation needs to be part and parcel of the transformation of our system conversation.

Lisa Raitt: You also mentioned institutional use as well as resident and commercial use. Are they big players in it?

Shannon Joseph: They’re big players, but they’re not as big as industry. They share that one third with the residential use. They’re still important. Those are universities, those are the downtown commercial spaces, but it’s really industrial. And I include in their agriculture is driving the energy demand in Canada.

Lisa Raitt: Very interesting to me that one of the co -presenters of your report is the head of the Canadian Federation of Agriculture.

Shannon Joseph: Yes, yes, that’s right. And that’s because the agriculture sector in Canada is an important one. And it’s a sector where Canada, just like in energy, has a real role, a potential global role in food security and even in delivery of fertilizer. But agriculture has certain energy requirements that there aren’t a lot of good substitutes for. And Keith Curry, in the webinar we did, talked about how carbon pricing, let’s say, on the fuels that are used in agriculture can go up. But he said, there’s nothing for us to switch to. There’s no battery -powered combine to harvest in rural Canada. And if there were, the electrical system in rural Canada was not adequate to charge equipment like that. And so, what can he do? and farmers are price takers and we lose our competitive advantage in agriculture, the more our costs go up domestically. This is something we need to think about if we’re going to change energy costs as an incentive to switch technologies. We have to know whether those technologies are there and we have to decide what’s the trade off, how important it is to us to play that agricultural role, how important is it for us to have the manufacturing in Canada because these are decisions.

Lisa Raitt: And affordability slots in under this this new umbrella you call energy fundamentals. So has energy policy in Canada taken into account those energy fundamentals like reliability, security, affordability, resilience? How are we doing there? Are we making sure that our fundamentals are being kept in place?

Shannon Joseph: Well, I’d say that there are industries in Canada that feel squeezed. Certainly households have felt squeezed. Ontario had the experience of really building in a lot of renewable powers and that helped them achieve a lot of goals. But there was also a big price impact with household energy costs in different parts of the province. There have been corrections since then, and the correction in Ontario,has been that the government subsidizes electricity prices significantly in the budget for the province. So we do have to think about how technology choices affects consumer prices because the consumer has a limited ability to pay, industry has a limited ability to pay before they’re not competitive with their global competitors and then end up moving out of the country. And of course, governments also have a limited ability to pay. And so as we change these systems, and we have to build lots of things very quickly to really do some of the changes that are proposed, we need to think about who pays and how fast can they pay. And we haven’t really had a robust conversation on that, and we need to.

Lisa Raitt: Yeah, and that’s what taxpayers are going to ask and ratepayers, it’s going to be who is paying and it’s their tax dollars in the government too. So it’s one entity that’s us, we’re the ones paying for it. You mentioned energy poverty and you mentioned the subsidization, but we’re in a completely different world when we talk about remote Indigenous communities. And you have, I would say, an incredibly diverse group of Indigenous leaders and nations that working with you on energy for a secure future. Tell me a little bit about the Indigenous inclusion that you have and whether or not Canada is dealing with these policies that are going to be needed for these particular cases.

Shannon Joseph: Well, one of the issues we’re working on a lot now with one of our kind of partners, which is the First Nations Power Authority, is the issue of affordability of energy on reserve. In rural Canada, you don’t always have a lot of options, but, some of these reserves aren’t even that rural. Maybe they’re an hour away from big cities like Saskatoon, and they rely, in some cases on electricity to heat their homes and other cases on propane. And both cases, they’re more expensive than natural gas. And, your tank could run out in the winter, the power can fail in an ice storm with electricity. Some households that we’ve gotten data from you can be paying close to $2 ,000 a month in heat. And this isn’t great for social mobility and reconciliation in those communities.And so we’ve been working a lot with communities who want to extend their access to natural gas as a way to address their high heating costs. And this is something that different utilities in different provinces have been looking at to try and meet those needs. And that question runs into, , are we just going to move away from this source of energy? And it goes back to what are your alternatives? Because right now there’s a human need to access lower cost heat in these areas of Canada. And so how are we going to respond to that? We look at that lightly in this report, but we’re actually working on a broader report on this issue so that we can really explore some of these questions.

Lisa Raitt: I think that’d be fantastic. And I look forward to that one and you’ll probably come back on the podcast to discuss that one too. Last question, and I just want to put it out very carefully that I’m not by any means saying that we’re critiquing the Canadian energy regulator, but you did go back and take a look at their net zero outlook because it has a pretty important reference for federal policy development, which is fair because they are Canada’s energy regulator. What is one of the conclusions that you reached when you took a look at what CER was saying with respect to energy consumption?

Shannon Joseph:  First I want to say that, the CER’s mandate was to develop something that said, if Canada were to get to net zero, what could this look like in terms of an energy mix, energy demand? It was not meant to say this is totally feasible the way we’ve broken this down and this is a policy prescription, but, there’s lots of reference to it. So people kind of use it in that way and that’s not the way they had intended it to be used. But just as one example of an assumption they had to make to make the numbers work, they assumed that there would be a reduction in end use energy, so total end use energy of 15%. And now, Canada has a pretty robust immigration and population growth. And so if you think about adding a million and a half to 2 million people a year between now and 2050, you’re getting close to 30 something million more Canadians. And the idea that we get to 2050 and a net zerofuture, that we could have such a population increase but reduce our total energy consumption, not our energy intensity, it’s not quite reasonable. And I don’t know how the CER dealt with population. But I think the point is, that’s something we need to look at. If we were to do things exactly the way this model proposes, what does this mean for energy fundamentals? What does this mean for acceptability? One of the assumptions they make about nuclear power is that it increases by about almost 200%. I think it’s 148%. Forgive me on the numbers. And that’s great. We want to do that in 26 years. But when we look between 2005 and 2022, our nuclear system grew by 1%. And so if we’re talking about doing something so massive, that’s a thing that needs to be focused on and done if we want to do it. But it doesn’t mean we can do that at the same time that we want to displace all our transportation fuels or at the same time that we decide to change all home heating in Canada. Because again, all these things have to be built. Somebody has to be employed and paid. The materials have to be bought. And so you can see that question of who pays coming up again. And on the energy fundamentals side, is this going to be disruptive? Are we changing too many things at the same time? to ensure that things are affordable, reliable, safe, resilient to shock. The final point I’d make is when we look at Europe, they made a lot of assumptions about how they could switch their energy system.They relied a lot on natural gas from Russia in their build out of renewables. But then suddenly that base load was gone. And a lot of countries and Germany is an example has had to go back to burning coal. They’ve also bought a lot of gas. Which took a lot of gas away from Asia and they started burning more coal too. We can assume that things will go a certain way, but we need to know that things need resilience. We need backup systems and we need backup supply until the new thing is working. And I think that’s really important in how we approach any conversation about transforming energy systems.

Lisa Raitt: It’s great talking to you again. Thank you so much, Shannon, for joining me today.

Shannon Joseph: Thank you.

Lisa Raitt: Thanks so much for tuning in. Now, if you have any questions or comments or even requests on topics to discuss, drop me a line at [email protected]. Your interactions actually will make this better. I’m your host, Lisa Raitt, and this has been The Raitt Stuff.

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