B.C. Business Matters:
Denise Mullen >>
True or Not True: Canada is Falling Behind in Addressing GHG Emissions?
The latest installment of the United Nations Framework Convention on Climate Change – a meeting of the Conference of the Parties — is underway now in Bonn, Germany. There is the usual hand wringing about inadequate progress and finger pointing at countries seen as not doing their part. Admittedly, some of this criticism is warranted. But there are also countries (read: the United States) that have chosen to withdraw from the Paris Accord, while at the same time taking credit for heroic reductions in greenhouse gas emissions. And where does Canada fit in? We are once again chastised by many for being laggards: not doing enough, fast enough.
The starting point for most global comparisons of national GHG emissions is 1990. Electricity generation is an important sector to look at in this regard, as it accounts for a big slice of total emissions in most countries.
It is not true that absolute U.S. emissions from electricity generation have fallen -- if the timeframe being examined is 1990 to 2015. It is true, however, if the starting point is 2005. Of interest, Canada beats the U.S. in lowering electricity-related GHG emissions over the 1990 to 2015 timeframe, with a reduction of 17%. Over the same period, U.S. electricity sector emissions rose by 17%. Canada also fares quite well if the starting point is 2005: we posted a 33% decline in electricity-related emissions in the subsequent decade, compared to a 29% decrease in the United States.
In terms of other sectors, the distribution of aggregate GHG emissions is similar between Canada and the United States for the transportation, agriculture, commercial and residential sectors. It is true that in both countries, total emissions have risen since 1990, but decreased since 2005. And it’s also true that the overall drop in emissions has been larger for the United States since 2005. But the latter result primarily reflects one factor: the U.S. transition from coal to natural gas – and to a lesser extent, renewables – in the electricity sector. The overall decline in U.S. emissions since 2005 is influenced heavily by the replacement of old coal technology with new low risk, more efficient natural gas generation. The result — since 2005, about 70% of the decline in America’s GHG emissions have come from fuel switching in electricity generation, not from tougher regulations or because of developments elsewhere in the economy.
Another truth is that the U.S. electricity system is still dominated by fossil fuel generation — 65% — split almost evenly between natural gas and coal. As such, the U.S. has substantial remaining latitude to further reduce GHG emissions in the electricity sector, as more coal-fired power plants reach the end of their serviceable lives and are replaced with flexible, high energy dense natural gas -- or by renewable energy sources. Replacing coal with natural gas garners an immediate improvement in CO2 emissions per MMBTU (IPCC Emissions Factors), by at least 44%. In addition, measured on an average operating cost per unit basis, natural gas is more competitive by 11% than coal (US EIA.) Therefore, it makes sense, both for cost and environmental reasons, for utilities to replace coal with gas. The market works.
But when it comes to GHG emissions from the electricity sector, Canada does not have the same options available as our neighbours to the south. Our baseline electricity system is already ~80% renewable, and the “last mile” challenges are always significant. Nor should it be overlooked that the average remaining Canadian coal-fired plant is 20% more efficient than the U.S. stock, on an age basis alone. Of course, Canada can and should seek to make further progress in de-carbonizing electricity production over time, while recognizing that most of the low-hanging fruit has already been harvested. But the order of magnitude difference in the size of the opportunity, relative to the U.S., is stark.
Policy-makers in Canada and critics of our performance would be wise to acknowledge these basic and important differences. The data, when assessed properly, does not tell the simple morality tale of Canadian inaction that many seem to believe.
In fact, 38% of the US electricity generating units fueled by hydrocarbons are 30 years or older, with 48% at least 25 years old (U.S. EIA Preliminary Monthly Electric Generator Inventory, August 2017). This means a significant portion of the U.S. fleet is ready for normal capital stock roll over into lower carbon generation based on natural gas or renewables.
Meanwhile, Canada ties itself in regulatory and policy knots over the potential addition of one or two LNG plants and a couple of pipelines across the country. The Americans eat and will continue to feast on Canada’s lunch, as they accelerate work to convert their existing LNG import facilities into export plants in a world increasingly hungry for natural gas, while exporting coal that’s no longer needed to supply power in their own electricity industry. Meanwhile, Canada’s natural gas, produced under some of the best environmental regulation in the world and using clean energy inputs (i.e., upstream production using Canada’s abundance of renewably generated electricity), remains constrained despite the positive GHG differences.
Finally, we would note that the international GHG accounting system does an abysmal job of differentiating between production- and consumption-driven greenhouse gas emissions. The current international approach is biased against energy-exporting jurisdictions, putting Canada at a disadvantage and absolving others around the world from the implications of their consumer choices. All of Canada’s energy and energy-intensive industries are further disadvantaged because we start with a younger and more efficient energy system base year than our U.S. and European competitors.
Elected representatives and environmental critics need to do some homework and look at the data more closely before continuing to heap abuse on Canada. Measuring in absolutes does not do justice to the nuances of our country’s size, economic structure, and population density, all critical elements in understanding how we compare in energy production and use. Nor does it consider the consequences of starting with different base years when calibrating emissions or the age of the existing capital stock in the electricity sector and other parts of the economy.
 https://www.canada.ca/en/environment-climate-change/services/environmental-indicators/greenhouse-gas-emissions/canadian-economic-sector.html; https://www.epa.gov/ghgemissions/inventory-us-greenhouse-gas-emissions-and-sinks-1990-2015.