Natural Gas Generation in Ontario

December 6, 2023

Democracy is a noisy, messy and nerve-racking process.  As Winston Churchill is quoted as saying “democracy is the worst form of government – except for all the others that have been tried.”  This is extremely evident in the climate change debates.  You have an issue that could be fundamental to the future well-being of the human race, which will involve trillions of dollars, which has an uncertain outcome, has no clear path and which will affect the livelihoods of millions of people.  Combine this with political leadership that understandably believes it must balance climate change initiatives with the economic well being of its citizens and you get the noise and confusion we see today.

I start with the comments on democracy because there are many that might look at the situation today (the turf wars between Alberta and Ottawa, the recent dire prognosis from the United Nations Environment Program , the slowdown in the growth of EV sales, battery projects being rejected in some communities) and feel that we are doomed.  Instead, I remain a climate change optimist. 

I try to look through the noise and see the underlying trends.  These are generally positive though there is still a long way to go.  A few examples:

  • Since 2005, Canada’s emissions are down over 6%.  We are still off the 30% target but at least going in the right direction.  The biggest reductions have been in electricity while the biggest increases have been in oil & gas and buildings.
  • The US is out-performing Canada in emission reductions and are down over 15% from 2005.  This performance has been driven at the State level with even Republican states like Texas reducing emissions.
  • Sales of EVs, solar panels and heat pumps continue to increase.  This is the consumer driven side of the story and is absolutely vital to the success of decarbonization.  While the fossil fuel equivalents (internal combustion engine cars, gas generators and furnaces) continue to outsell their electrical alternatives, the growth and momentum is with the electrical products.

A couple of recent experiences have helped confirm this optimism.  I recently read How to be a Climate Optimist by Chris Turner, an Alberta based journalist.  He provides many more examples of the points above.  I also recently attended a National Energy Roundtable Conference with speakers from across Canada including many from Alberta.  While there was much debate about the details, all the speakers were clear about the direction of decarbonization.  There were also many presentations on new technologies (energy storage, DERs, hydrogen, carbon capture) that were actually being commercially implemented.

This, finally, brings me back to Ontario and the point of this blog.  The Ontario Government is very proud that 90% of its electricity is carbon free, likes to brag about it and sees it as a competitive advantage.  This is justified as this was an effort that all three parties supported.  However, there are many who now want the electrical system in Ontario to become 100% carbon free.  An example of this is the resolutions passed by a number of municipal councils.

I do not agree with this viewpoint.  In fact, I believe going to a 100% carbon free electricity system in Ontario would be detrimental to decarbonization efforts.

Only around one quarter of the energy used in Ontario is electricity.  The rest is almost all fossil fuels used for transportation, heating and industrial use.  To decarbonize, these uses of energy must convert from fossil fuels to electricity.  This means electric vehicles, heat pumps, green hydrogen and all the other arising technologies.  Even hydrogen, which is also looking like a potential alternative, will be created using electricity.  However, to get these conversions, households and organizations must want to switch.  This switching will only occur if the new technologies offer either superior performance or are lower cost (or preferably both).

Going from 90% to 100% carbon free electricity will be incredibly expensive.  There is no clear path.  When Ontario phased out coal it replaced the generation with nuclear power and natural gas.  This was possible as coal was largely a base load source of energy and so is nuclear power.  Natural gas is largely used for supplying power during peak periods and at times when power from other sources is not available.  There is no natural replacement.  Nuclear power cannot be used intermittently and solar and wind are not available on an as-needed basis.  Energy storage is potentially a future solution but its cost is still prohibitive.  Importing the power, while ensuring the imported power is also not carbon based, is also a challenge as other jurisdictions have the same peaks as Ontario.

I am all for reducing the use of natural gas when it can be done economically.  The recent electricity agreement with the Province of Quebec is an example of this.  I also believe the economic use of solar can and will expand and community solar would be a great way to promote this.  But mandating the complete replacement of natural gas will mean uneconomic trade-offs that will substantially increase the cost of electricity.  Ontario is having to subsidize the cost of electricity by around $3 billion just to offset the costs of the Green Energy Act.  This would require much more electricity so would be even more expensive; all for around 2-3% of the energy usage in Ontario.

A better strategy is to keep the cost of electricity low so that consumers voluntarily switch to the non-carbon alternatives in transportation and heating.  As these represent around 70% of the energy usage in Ontario the potential climate change impact is hugely more significant. 

Leave a Reply

Your email address will not be published. Required fields are marked *