JOCK FINLAYSON
By Jock Finlayson, ICBA Chief Economist
BRITISH COLUMBIA – While some B.C. politicians and environmental activists trumpet the “energy transition” and present alluring visions of a low-carbon future that supposedly lies around the corner, the facts around energy use tell a different story.
A review of the latest data on energy consumption casts doubt on the idea of a quick march toward a fundamentally different B.C. energy system, one that includes a greatly diminished role for the fossil fuels that have long supplied the vast majority of the energy consumed in the province.
The federal government’s Energy Fact Book provides a wealth of information on energy production, consumption trends, investment, and the environmental impact of energy production and use. Separately, Natural Resources Canada publishes periodic “energy profiles” for the individual provinces and territories which highlight production and use in B.C. and other regions of the country.
Starting with energy production (and considering all sources of energy except uranium), fossil fuels – mainly crude oil, refined petroleum products, and natural gas – still account for more than four-fifths of the energy produced in British Columbia. Smaller shares come from hydroelectricity, “other” renewables, and a smattering of very minor energy sources. The statistics on energy output confirm that fossil fuels dominate energy production in B.C. (as they do for Canada as a whole).
Turning to energy consumption – the main focus of this blog post – a glance at the most recent data points to the central place of fossil fuels in meeting the energy needs of B.C. households and businesses.
Based on Natural Resources Canada data, industry, collectively, is responsible for about 47 per cent of final end-use energy demand in British Columbia; this category includes manufacturing, natural resource extraction and processing, and construction. Transportation is the second largest consumer of energy (31 per cent of final demand), followed by the residential (12 per cent) and commercial sectors (10 per cent).
Figure 1
What types of energy do British Columbians rely on? Refined petroleum products (including gasoline and diesel) rank first, providing almost two-fifths of the energy consumed in the province. Natural gas is second (29 per cent). Electricity makes up just 16 per cent of the energy used in B.C., while bio-fuels chip in a similar share. Thus, carbon-based fossil fuels still deliver about 70 per cent of the energy British Columbians consume in a typical year.
Some may be surprised that electricity supplies less than a fifth of the energy used in B.C. This reflects the fact that electricity does not currently provide large shares of the energy consumed in sectors like transportation, buildings, agriculture, and industrial manufacturing.
Figure 2
The B.C. government, in common with counterparts in other regions of the country, is seeking to reduce greenhouse gas emissions by, inter alia, redirecting overall energy demand to electricity and away from carbon-based energy sources. That makes sense, particularly since B.C.’s electricity grid is almost entirely carbon-free. But a “big switch”[1] to electricity won’t be easy to achieve across the energy system or the wider economy.
Today, electricity has only a modest role in meeting the demand for energy for transportation, the heating and cooling of buildings, primary agriculture, and in the industrial sector. Policymakers have pledged to boost electricity’s share of total energy consumption, and to that end the provincial government has mandated a substantial increase in B.C. Hydro’s capital budget over the next ten years.
However, making progress will necessitate an enormous expansion of the electricity sector, involving hundreds of billions of dollars of capital spending in the coming decades. This larger capital outlay will be aimed at adding more generation capacity but also at siting and constructing additional transmission networks to deliver electric energy to end-users. In line with the “net zero” goals espoused by the B.C. government, virtually all of the extra power presumably will have to come from carbon-free sources. It is far from clear that the objectives set by the province in its “clean energy strategy” are attainable, particularly given the many obstacles to undertaking large-scale construction projects in B.C., the fact that B.C. has recently become a net importer of power, and the continued reliance on fossil fuel energy sources — especially abundant, reliable and comparatively affordable natural gas.
The transition away from fossil fuels as the predominant source of energy used in B.C. will be a lengthy and arduous journey, one that depends more on investments and advances in technology than on government pronouncements or the political grandstanding that has become ubiquitous in the area of climate change. B.C. policymakers should acknowledge that the pace of change in energy consumption patterns cannot be determined by politically-manufactured targets and timelines. Concerns over energy reliability and affordability must be a prominent part of government strategies and policies affecting energy production and use.
Source: ICBA
