Implications of Climate Change Initiatives on the Electricity Sector. May 8, 2017 Devin McCarthy VP Public Affairs & U.S. Policy

Transcription

1 Implications of Climate Change Initiatives on the Electricity Sector May 8, 2017 Devin McCarthy VP Public Affairs & U.S. Policy

2 Page 2 CEA s Corporate Utility Members

3 CEA Corporate Partners Program Membership Page 3

4 CEA Corporate Partners Program Membership Page 4

5 CEA Corporate Partners Program Membership Page 5

6 Context Setting Clean energy is the future and electricity is Canada s clean energy solution Electricity mix already over 80% non-emitting Second largest producer of hydroelectricity in the world Tremendous clean resource potential found across the country The sector has reduced emissions by over 30% since 2005 Canada must achieve GHG emission reductions while maintaining industrial competitiveness and affordability for families Electrification represents significant opportunity for the electricity sector; not without its challenges Page 6

7 Canada s GHG Emission Trajectory Page 7

8 Emission Projections by Sector Page Oil & Gas Electricity Transportation Emissions Intensive and Trade Exposed Industries Buildings Agriculture Waste & Others Total Emission Target 523 Difference (219) Table prepared by the Library of Parliament using data obtained from Environment and Climate Change Canada, Canada s 2016 Greenhouse Gas Emissions Reference Case. Note: Includes new federal, provincial and territorial government measures that have legislative or funding certainty as of 1 November, 2016.

9 Pan-Canadian Climate Framework GHG Emission Reduction Plan Page 9

10 Electricity Sector Initiatives Phase out of conventional coal assets Pricing carbon Electrification Federal funding mechanisms to support infrastructure investment and innovation Page 10

11 Electricity Generation in Canada by Fuel Type, 2015 (Utilities & Industry) Page 11 *Numbers may not sum to 100 percent due to rounding. Source: Statistics Canada, CANSIM Table , , 2015 Retrieved November, 2016

12 Electricity Generation in Canada by Province and Fuel Type, 2015 (Utilities & Industry) Total Electricity Generation in Canada, 2015 = TWh *Point Lepreau nuclear generating station resumed power production on November 23, 2012, nuclear has been re-established as a major source (about 30%) of electricity in New Brunswick. Page 12 Source: Statistics Canada, Electric power generation, by class of electricity producer, annual (CANSIM Table ), 2015 Retrieved October, 2016

13 Implications for Electricity Sector October 2016 report by EDC Associates put a price tag of $4 billion to $8 billion on 2030 coal phase-out in Alberta Many variables still at play: Equivalency agreements in SK, NB, NS Coal-to-gas conversions Provincial flexibility is key to constraining costs Page 13

14 Electricity Prices in Ontario Page 14

15 Carbon Price Impacts (back-of-theenvelope) Electricity sector carbon costs at various pricing and emission levels ($ million) 78 MT (2014) 64 MT (2020) 34 MT (2030) $10 $780 $640 $340 $20 $1,560 $1,280 $680 $30 $2,340 $1,920 $1,020 $40 $3,120 $2,560 $1,360 $50 $3,900 $3,200 $1,700 $75 $5,850 $4,800 $2,550 $100 $7,800 $6,400 $3,400 $150 $11,700 $9,600 $5,100 $200 $15,600 $12,800 $6,800 Page 15

16 Carbon Price Cost Impacts Very difficult to model due to investment and dispatch decision impacts, plus offset market availability Modest costs nationally: $2B in 2020 on 650 TWh is about $0.003 per KWh Regional impacts more significant. Canadian Manufacturers and Exporters report from August 2016 projects a 15% rate increase for NS on carbon price of $30 Page 16

17 Energy Use by Fuel Type, 2013 *Other includes coke, coal, coke oven gas, natural gas liquids and steam and waste. Page 17

18 Deep Decarbonization Report Published by the Low Carbon Pathways Group of CMC Part of a 16-nation decarbonization pathways study led by Jeffrey Sachs, Columbia University Low-emitting electricity captures a much larger share of total energy use across the entire economy and provides a low-cost fuel-switching path for currently fossil fuel-based end uses. Investment per year in the electricity sector increases by $13.5 billion Page 18

19 Electrification Abatement by Sector and Action Page 19 Source: Pathways to Deep Decarbonization in Canada, CMC, 2015

20 Page 20 Federal Support to Help Mitigate Impacts of Transition to Cleaner Energy Systems

21 The Canada Infrastructure Bank (CIB) Description: Will be an arms-length crown corporation responsible for investing in large infrastructure projects that result in economic growth and attract private investment. Funding: Responsible for investing an eventual $35 billion. $20 billion will be available for equity investments and for loans. Has been capitalized immediately with $15 billion, spread evenly over the following buckets: Transport ($5 billion) Green Infrastructure ($5 billion) Trade and Transport ($5 billion) *Funding be released in stages until 2028 *Legislation being reviewed by the Standing Committee on Finance (review will be done by mid-june) Page 21

22 CIB Contd. Funding Mechanisms: Will be granted via a competitive process, and will allow for various forms of support, including: Direct Investment Loans (including low-cost loans) Loan Guarantees Equity Investments Hybrids of all the above Eligibility: TBD; initial conversations indicate that projects must have a private investor and be revenue generating assets. Transmission projects, and specifically green energy transmission and electricity grid interconnections. From left to right: Minister Morneau (Finance), Minister Sohi (Infrastructure), Mr. Boissonnault (MP for Edmonton Centre) Timeline: TBD Page 22

23 Integrated Bilateral Agreements (IBAs) with Provinces and Territories Description: As part of the government s infrastructure build-out ~32.7 billion has been set aside for integrated bilateral agreements (IBAs) with provinces. This funding is being released in a number of phases, with four funding buckets established for the current Phase II. Money will flow until Funding: The four buckets that have received funding are: Public Transit (~$20.1 billion) Rural and Northern Communities ($2 billion) Green Infrastructure (~$9.2 billion) Social Infrastructure (~$1.3 billion) Funding Mechanisms: The Rural and Northern Communities ($2 billion) and Green Infrastructure (~$9.2 billion) are of greatest interest to the electricity industry. Each Province/Territory will receive an allocation of funding. Provinces/Territories are to prioritize projects submitted to them. Page 23

24 IBAs Contd. Funding Mechanisms (Contd.): IBAs can fund up to 30% of projects put forward by municipalities, up to 50% of those by provinces, and up to 75% of those by territories. Eligibility: You must submit your projects to the department in your province/territory responsible for overseeing infrastructure lists. If unsure of department, contact CEA and we can connect (usually infrastructure). Timeline: Submit projects to your provincial/territory ASAP. Money for Phase II will flow as early as Phase 1 Investment Tracker Infrastructure Canada (Provincial/Territorial Lists are Key) Page 24

25 Off-Diesel Initiatives 1) South of the 60 th Parallel Description: Budget 2017 proposes $220 million to reduce the reliance of rural and remote communities south of the 60 th parallel on diesel fuel and to support the use of more sustainable renewable power solutions. Timeline: This funding is set to flow in the fiscal year and end in *Specifics TBD as program design unfolds. CEA will continue to follow. Communities by province/territory not connected to the North American grid (NRCan 2011) Page 25

26 Off-Diesel Initiatives (Contd.) 2) The Arctic Energy Fund (North of the 60 th parallel) Description: Budget 2017 proposes $400 million for the renewal and replacement of energy systems in northern communities, so that remote communities can reduce their reliance on diesel. This $400 million will begin this work by addressing energy security for communities north of the 60 th parallel, including indigenous communities. Eligibility: Investments will be made via bilateral agreements with provinces and territories, and will have flexible terms. Funding & Timeline: $400 million will flow beginning in out to This program will be administered by Natural Resources Canada (NRCan). *Specifics TBD as program design unfolds. CEA will continue to follow. Page 26

27 Off-Diesel Initiatives (Contd.) 3) The Northern Responsible Energy Approach for Community Heat and Electricity Program (REACHE) Description: To support the deployment of renewable energy projects in communities that rely on diesel for electricity and heating, Budget 2017 proposes to provide $21.4 million to Indigenous and Northern Affairs Canada (INAC) to continue REACHE. Funding & Timeline: $21.4 million to be spread over four years, starting in to Applications reviewed on an ongoing basis. Further information, including application contact can be found here. Eligible Entities First Nation & Inuit Communities (including development corps.) Municipalities Indigenous Orgs. Territorial Govts. & Orgs. Regional Govts. Modern Land Claim Orgs. First Nation self- Govts. Eligible Technologies (Must be proven ) Solar Wind Energy Storage Hydro Biomass Heating Residual Heat Recovery LED Lighting Page 27

28 Innovation Funding Mechanisms Superclusters ($950 M) Smart Grid, Storage & Clean Technology ($100 M) Emerging Renewable Energy Technologies ($200 M) Electric Vehicles & Alternative Fuels ($120 M) Sustainable Development Technology Canada ($400 M) Energy Efficient Building Codes ($120 M) NRCan Energy Efficiency Programs ($67.5 M) Disaster Mitigation & Adaptation Fund ($2 B) Canadian Centre for Climate Services ($73.5 M) Impact Canada Fund ($375 M) Financing for Cleantech Firms ($1.4 B) Clean Growth Hub (TBD) Strategic Innovation Fund ($1.26 B) Page 28

29 Page 29 Devin McCarthy VP, Public Affairs & U.S. Policy