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Renewable Energy Growth in Canada

On a worldwide scale, Canada is a significant energy producer. The country produces about 60% minerals and metals, including a diverse spectrum of essential minerals. It is a top ten producer of oil and natural gas, hydropower, uranium, nuclear energy, biofuels, and wind energy.

On a worldwide scale, Canada is a significant energy producer. The country produces about 60% minerals and metals, including a diverse spectrum of essential minerals. It is a top ten producer of oil and natural gas, hydropower, uranium, nuclear energy, biofuels, and wind energy. In July 2021, Canada submitted a revised nationally determined contribution (NDC) to the Paris Agreement, stating its intention to reduce overall greenhouse gas (GHG) emissions by 40–45% below 2005 levels by 2030, with a goal of reaching net zero emissions by 2050. According to the International Energy Agency’s (IEA) policy study, Canada has begun an ambitious reform of its energy system, and strong policy signals will be required to stimulate energy sector investment in clean and sustainable energy sources. Canada’s government have developed a number of policy measures in recent years to support those climate and energy targets, including an ambitious carbon pricing system, a clean fuels standard, a commitment to phase out unabated coal-fired electricity by 2030, nuclear plant expansions, methane regulations in the oil and gas sector, energy efficiency programs, and measures to decarbonize the transportation sector.

Since 2019, every province and territory in Canada has implemented a carbon tax. Canada’s approach is adaptable as each province or territory has the option of developing its own pricing system customized to local circumstances or adopting the federal pricing system. The federal government establishes minimal national stringency requirements (referred to as the federal “benchmark”) that all systems must satisfy in order to be comparable and effective at decreasing greenhouse gas emissions. If a province or territory opts out of pricing pollution or proposes a system that falls short of these standards, the federal system is implemented. This ensures uniformity and justice for all Canadians. The federal pricing system is divided into two components: a regulatory charge on fossil fuels like gasoline and natural gas, dubbed the fuel tax; and an industry-based performance-based pricing system, dubbed the Output-Based Pricing System. 

With Canada’s large energy production, consumption, and exports, the country has a number of challenges as well as opportunities in fulfilling its enhanced targets. Energy accounts for 10% of GDP and is a substantial source of capital investment, export revenue, and employment. Additionally, given Canada’s highly fragmented political system, a successful energy transition will require substantial cooperation between the federal, provincial, and territorial governments. and provincial and territory governments. In 2020, renewable energy generated 435 terawatt hours (TWh), accounting for 68% of total generation. Hydropower is Canada’s primary source of electricity, accounting for 60% of total electricity generation in 2020. The last decade has seen a significant increase in wind and solar energy generation although growth has slowed down in more recent years. Between 2010 and 2020, wind energy generation expanded fourfold to 36 TWh, or 5.6% of total electricity generation, while solar photovoltaic (PV) generation increased fourfold to 4.3 TWh, or 0.7% of total generation. Between 2010 and 2020, electricity generated by bioenergy (mostly solid biomass) rose by 11% and accounted for 1.6% of total electricity generation.

According to the International Hydropower Association (IHA), Canada is gifted with a natural resource advantage in hydropower, making it the world’s fourth largest generator by capacity. Notably, Canada’s hydroelectric potential which spreads across all areas, is more than quadruple of its existing capacity. Several new large-scale hydroelectric projects have been commissioned in recent years and are scheduled to come into use by 2024, examples are: the Site C project in British Columbia (1100 MW); the Muskrat Falls project in Labrador (824 MW); the Keeyask project in Manitoba (695 MW); and the La Romaine 4 project in Quebec (245 MW). Additionally, some modest hydro projects are moving forward. Though there are a number of potential technically viable locations for new hydro projects, their development remains uncertain given the high costs connected with current developments. Rather than that, recent investments have shifted toward variable renewables and energy storage.

The government of Canada also specified a number of investments in renewable energy and electrification as part of the Strengthened Climate Plan published in December 2020 and Budget 2021, including:

  1. CAD 964 million to develop projects related to smart renewable energy and grid modernisation.
  2. CAD 300 million for rural, isolated, and indigenous areas.
  3. CAD 8 billion over seven years to accelerate decarbonisation efforts, foster industrial change, and advance clean technology development.
  4. Over the next seven years, CAD 8 billion will be spent to speed up decarbonization efforts, encourage industrial change, and advance clean technology development.
  5. People in Canada will spend CAD 1.5 billion over the next few years setting up a Clean Fuels Fund to help with the growth of clean fuel production capacity and the development of sustainable biomass supply chains.
  6. To run the Low-Carbon Fuel Procurement Program, the Greening Government Fund will spend CAD 227.9 million over the next eight years to run the program.
  7. About CAD 35 million will be used to help set up British Columbia’s Center for Innovation and Clean Energy, which will focus on clean fuels and carbon capture, use, and storage.
  8. CAD 287 million over three years to support the existing Incentives for Zero-Emission Vehicles Program (launched with CAD 300 million in funding) for both personal and commercial vehicles; and CAD 150 million over three years to support the existing Zero-Emission Vehicle Infrastructure Program (launched with CAD 130 million in funding through Budget 2019) to support the deployment of charging and refueling stations across Canada.
  9. CAD 5 billion in public transit investments, including CAD 1.5 billion to accelerate the adoption of zero-emission buses and to buy 5,000 zero-emission public transit and school buses by 2025.
  10. Numerous expenditures to bolster energy efficiency measures in buildings, which may include on-site renewable energy generation, include CAD 2.6 billion over seven years, beginning between 2020-2021, to assist homeowners in increasing their home’s energy efficiency, and CAD 1.5 billion over three years for retrofits of green and inclusive community buildings.
  11. To assist farmers in adopting commercially existing clean technology and to support the agriculture industry in creating transformational clean technologies, CAD 166 million over seven years is available to assist farmers.

While the intensity of emissions from Canada’s oil and gas production has declined in recent years, the sector remains a substantial source of greenhouse gases, accounting for almost a quarter of the country’s total GHG emissions. Accelerating energy technology innovation, along with strong measures to reduce methane emissions, will be important for reaching the required level of decarbonisation in oil and gas production, as well as in transportation and industry. Canada, is investing extensively in research and development in a number of critical fields, including carbon capture, storage, and usage; clean hydrogen; and small modular nuclear reactors, in order to position itself as a global supplier of energy and climate solutions. According to the International Energy Agency (IEA), increasing public investment in research, development, and demonstration would expedite progress toward these goals. The report done by the IEA highlights Canada’s strong initiatives and historic investments to provide the groundwork for achieving net-zero emissions by 2050 and ensure a transition consistent with our shared objective of limiting global warming to 1.5 degrees Celsius. Apart from developing technology, goods, and know-how that can be sold and applied globally, these pathways make the most economic, social, and political sense for the people and country.

The IEA also recommends that Canada adopts a comprehensive energy efficiency policy in collaboration with its provinces and territories. This strategy should establish explicit energy efficiency targets for the construction, manufacturing, and transportation sectors. According to the IEA, Canada’s electrical system is among the cleanest in the world, with more than 80% of the country’s electricity generated by non-emitting sources, owing to hydroelectricity’s supremacy and nuclear power’s major role. The research recommends strengthening ties between provinces and territories in order to ensure that decarbonisation development occurs in a balanced manner across the country. This will contribute to the growth of sustainable energy and electrification.

The International Energy Agency (IEA) applauds Canada’s efforts to advance a people-centered approach to its clean energy transition, including initiatives to increase diversity and inclusion in the clean energy sector, programs to expand access to clean energy in northern, remote, and Indigenous communities, and actions to facilitate just transitions for coal workers and their communities. Canada has laid out a comprehensive set of legislative steps and investments across sectors to achieve its climate aspirations, including a major clean energy component to its COVID-19 economic recovery programs, said Natural Resources and Forestry Minister Dr. Birol. 

Feel free to contact the Energy Transition Centre today with questions. 

·  Julius Moerder, Head of Energy Transition Centre

·  Oneyka Ojogbo, Head of Energy Transition Centre, Nigeria & West Africa

·  Leon van Der Merwe, Head of Energy Transition Centre, South Africa