A Path Less Traveled: Exploring a Net-Zero Future
Our current political and economic systems have been tested. We’ve been shown that a lack of foresight and preparedness for black swan events, such as the COVID-19 pandemic, results in grave consequences. While these events are highly unlikely and often difficult to anticipate and thus prepare for, events such as climate change and the effects of carbon-intensive fossil fuels are much more predictable.
As climate change intensifies, it’s becoming increasingly clear that future global energy demand will need to rely on low-carbon and renewable alternatives.
Canada’s commitment to net-zero carbon emissions
On November 19th, 2020, the federal government tabled legislation (Bill C-12) that would set binding targets to achieve net-zero carbon emissions by 2050.
While critics have expressed concerns about Bill C-12, such as failing to provide a legislative backstop to achieve our 2030 goal or setting binding legislation without complimentary punishment mechanisms, it nonetheless sets a stage for energy development in Canada for the next 30 years.
Alberta’s energy development
Alberta’s consideration of developing alternative energy shows a need for diversification into low carbon energy sources.
Newer alternative energy technologies could create new resource sectors which would enable Alberta to maintain its resource and energy mantra while capitalizing on a low carbon energy future.
But Alberta’s venture into emerging low carbon alternatives is a question of selection. Wind and solar photovoltaic are established technologies with robust networks of support, while hydrogen, geothermal, and SMR’s are still gaining traction as steady alternatives.
Alberta and solar PV
The World Bank’s study on global photovoltaic (PV) potential, suggested that Southern Alberta has the best potential for solar PV development across Canada.
However, solar PV currently accounts for less than 0.1% of Alberta’s electricity generation.
A report by the Alberta Electric System’s Operator (AESO) states that: if Alberta were to develop solar PV to its full potential, peak production would amount to 7,732GW, more than enough to meet total household electricity demand.
Using AESO 2019 long-term outlook scenarios, solar PV could create additional 29,700 jobs through direct employment by 2030.
Though solar is promising, there are some notable drawbacks.
Energy storage, or other forms of electricity, are required during non-peak solar generation hours. There are also issues surrounding scalability; PV efficiency is lost during transmission to an electricity grid.
Cost is also a barrier to entry. With flat-rate pricing, the cost exceeds the current market price for electricity in Alberta by 50%. That being said, the price of solar has decreased by 50% over the last five years and there is a low-cost scenario where solar PV energy would be 17% cheaper than current methods of electricity generation.
Wind Energy Generation in Alberta
Unlike solar, wind energy has a more significant footprint in Alberta, contributing to 6% of electricity production. Again, the potential contribution of this energy source is much greater.
The 2019 AESO long-term outlook envisions a scenario in which wind and solar combine to account for 30% of Alberta’s electricity by 2030 without requiring any additional backup storage.
The price of wind energy is also decreasing year-over-year.
The auction price for wind energy in Alberta declined as low as $37/MWh, the lowest price ever paid for wind-generated electricity in Canada. A 2020 Lazard report shows that these prices could decline further, where the Levelized cost of energy for wind generation varies between $26-$54/MWh.
If Alberta were to capitalize on developing its solar PV and wind energy sectors, there is potential for significant economic benefit.
Based on the AESO scenario, a fully scaled wind energy sector by 2030 would result in upwards of $8.3 billion of investment in Alberta.
This scenario would add 28,100 jobs through direct, indirect, and induced employment, $25.5 million in additional property taxes, and $13.5 million in lease payments to Albertan landowners.
Other Emerging Energy Sources in Alberta
Both solar and wind energy have tremendous potential in Alberta when it comes to creating jobs and creating a more carbon-neutral economy.
Given the limited availability of resources, both political and physical, it is worth investigating why the province is exploring less established sources of renewable energy.
The government of Alberta has signed a memorandum of understanding to support the development of small modular reactors (SMR’s), introduced the Geothermal Resource Development Act, and proposed large-scale hydrogen production across the province by 2030.
Small Modular Reactors
First, what are Small Modular Reactors (SMRs)? Small Modular Reactors (SMRs) are a potentially game-changing technology when it comes to combating climate change and achieving net-zero emissions targets.
Using nuclear fission to produce energy, SMR’s have multiple use applications to produce electricity, heating, and energy for hybrid energy systems, while remaining portable, scalable, and carbon neutral. Canada is in a unique position to capitalize on this emerging technology in domestic and international markets. Natural Resources Canada (NRCAN) estimates the Canadian market value at $5.3 billion between 2025 and 2040.
The largest concern regarding SMR’s is the deployment of these technologies.
NRCAN estimates that the most available SMR’s could be adopted within the next 7 to 15 years, while some technologies such as Molten Salt Reactors or Fast Spectrum Reactors, which close off the fuel cycle, require many more years of research and investment.
Alberta is well-positioned to develop a scaled hydrogen industry due to its considerable expertise in producing low-cost hydrogen.
While there is no Alberta specific data on the economic benefit of hydrogen, a recent report by Transition Accelerator estimates that an export market equal to the size of our domestic market would create a $100 billion market potential for hydrogen per year.
Our robust infrastructure and resource reserves would uniquely position Canada as a world leader in what the Hydrogen Council projects to be a $2.5 trillion per year industry by 2050.
Like SMR’s, hydrogen is a technology that would drastically benefit a net-zero carbon goal by 2050 but it remains underutilized and underdeveloped.
Expanding hydrogen production and consumption would require extensive work to align strategies, develop legislation, construct demonstration projects and support infrastructure, and ensure funding support moving forward.
Geothermal resources represent another avenue for Alberta to transition towards net-zero carbon emissions.
Unlike solar and wind technologies, geothermal has more suitable conditions in Northern Alberta, due to suitable temperatures and necessary geological factors required for power generation.
A Terrapin report identified twelve areas that would provide suitable conditions for geothermal electricity generation, a few of which have begun to see pilot projects developed.
If Alberta were to maximize its potential geothermal resources, there is as much as 5,558GW of potential electricity waiting to be tapped.
Alberta could have a significant advantage in this sector due to the workforce and experience in the energy sector.
Moreover, some abandoned well site areas could be transformed into functioning geothermal plants, offsetting the previous environmental damage into net-zero electricity generation.
Significant pilot projects, such as Terrapin’s AB no.1 well in Grand Prairie and Eavor’s closed-loop system in Rocky Mountain House, are well underway across Alberta, receiving support from Alberta Innovates and NRCAN’s emerging renewable power program.
However, like SMR’s and hydrogen, geothermal technologies are still in a stage of relative infancy and will require more development to achieve scalability to provide electricity, jobs, and opportunity in Alberta.
A Path to a Green Future
As the severity of climate change intensifies, Canada and Alberta must explore all potential avenues in renewable energy technologies.
Ultimately, economic feasibility will play a significant aspect in the decision-making.
However, as we experienced with the black swan of COVID-19, a lack of preparation results in cataclysmic consequences. We cannot afford to be unprepared in the face of overwhelming evidence.
Diversifying our energy future has the potential to create a significant number of jobs alongside economic opportunities across multiple sectors.
In Alberta’s case, an established resource sector and geographical advantages, make the ability to transition towards a renewable or low carbon energy future easier.
While there may be a high upfront cost to some of these technologies, the long-term benefit in job creation, economic diversity, and climate action have the potential to far exceed the upfront cost.