National Energy Board

www.neb-one.gc.ca

Common menu bar

• Français
• Home
• Contact Us
• Help
• Search
• canada.gc.ca

Breadcrumb

Home > Speeches and Presentations > Speeches and Presentations 2010 > A Canadian Perspective on Clean Energy

A Canadian Perspective on Clean Energy

Presented by
Gaétan Caron
Chair and Chief Executive Officer
National Energy Board

2010 DOE - NARUC
National Electricity Forum
Washington, DC

17 February 2010

Good afternoon.

I was very pleased to receive an invitation from the organizers to be today's luncheon speaker. I think this forum is a wonderful opportunity to learn and share best practices. I'd like to take these next fifteen minutes to provide perspective from a Canadian standpoint on some of the issues and opportunities surrounding the growth and transformation of the grid.

Outline

My presentation will follow the subjects outlined here.

Based on experiences of those in the audience here today, I'm sure the policy issues and evolution of energy regulation surrounding the transformation of the Canadian electric industry will be familiar.

Role of the NEB

I'd like to begin with a brief background about the National Energy Board (NEB). The NEB is an independent federal agency established in 1959 by the Parliament of Canada. That's right, 50 years old last year!

In essence, the NEB has two broad responsibilities that derive from the National Energy Board Act. Our regulatory role includes: oversight of the construction and operation of international and interprovincial pipelines, international power lines and designated interprovincial power lines; authorization of pipeline tolls & tariffs; and authorization of energy exports (oil, natural gas, natural gas liquids and electricity) and imports (of natural gas). In comparison to pipelines across Canada, the NEB regulates a smaller amount of international power lines but nevertheless, they serve important trade purposes.

Markets work best with good information. Our advisory work includes informing the government, industry and the public at large about developments in energy supply and markets through our Energy Information Program. This includes undertaking reports like Canada's Energy Future, other Energy Market Assessments and making energy information available at our website.

We cannot work alone in pursuing these goals. We work with people inside and outside government as we seek to achieve success. All of the NEB's work is fundamentally based on consulting with stakeholders.

Note: The NEB regulates approximately 71 000 kilometres (44 120 miles) of pipeline across Canada and approximately 1 400 kilometres (870 miles) of international power lines.

The Hydrocarbon Reality

North America's overall energy demand is on the rise. The majority of things in our day to day lives use energy. Our businesses, cars, homes, the list goes on. As the world continues to grow and develop, we will use more of these things and the energy that comes with them. The International Energy Agency's (IEA) 450 Scenario shown here assumes strong action to cut CO₂ emissions and gains in energy efficiency. Under that "green" scenario, primary energy demand is expected to grow by 20 per cent from 2007 to 2030. Hydrocarbons will be with us for some time. In 2030, fossil fuels will still dominate, accounting for two-thirds of the world's primary sources of energy demand. Going forward, it's a matter of how strategies and policies can mitigate the impact of consuming hydrocarbons. How to best manage and reduce the effects of our inevitable hydrocarbon consumption is challenging.

Note:  The International Energy Agency's (IEA) 450 Scenario refers to the Scenario where governments are assumed to take strong action to cut CO₂ emissions.  These changes in policy would result in limiting the concentration of GHGs in the atmosphere to 450 parts/million of CO₂ equivalent and global temperature increases to 2°C. Demand for fossil fuels peaks by 2020, and zero-carbon fuels make up one-third of the world's primary sources of energy demand by 2030.  Actions, however, are required to be in place by 2020.

Sustainability

An important aspect of this management is sustainability. Picture a 3-legged stool, with the environment, economy and society representing the 3-legs. How do we integrate environmental goals with economic and social goals?

In the NEB's strategic plan, we define the public interest as inclusive of all Canadians, having regard to economic, environmental and social interests that change as society's values and preferences evolve over time. As a regulator, the Board considers in one gesture, all of the relevant impacts on these interests when making its decisions. This is a key aspect of pursuing a sustainable energy future. Canada, like the U.S., is looking for a diversified supply mix that will be sustainable over time. As the IEA 450 Scenario clearly indicates, this will include hydrocarbons, and a growing supply of hydro, wind, solar, tidal, biomass and technological advances on the supply and demand side, combined with constant efforts to conserve.

Trends in Electric Generation

This chart shows the North American electric system gradually transitioning to lower emission intensity. The recent Energy Information Agency (EIA) 2010 reference update goes to 2035 but for comparison purposes we have used 2020. There is still a large hydrocarbon presence beyond 2020 (66 per cent in U.S. by 2035), and the share of unconventional emerging technologies is expected to remain small (less than 15 per cent by 2020 in Canada). At the same time, large changes are projected in the magnitude of these generation technologies.

While policies that focus on fuel substitution and efficiency initiatives will drive incremental change, there is no silver bullet. Similar to the U.S., our energy analyses show that the transformation in Canada will consist of cleaner coal through sequestration and super critical boiler technology, natural gas, nuclear and renewables such as wind, biomass and solar. Several Canadian jurisdictions are yielding significant results. For example, the expected phase-out of coal-fired generation by 2014 in Ontario, the launch of tidal generation in Nova Scotia (demonstration and commercial projects using new in-stream technology), new installed wind capacity in New Brunswick (which at the end of 2009 is the leader in Atlantic Canada with 195 MW) and Quebec continues to focus on renewable developments like hydro and wind (1 000 MW of hydro will be added from 2008-2013 and 2 000 MW of wind through purchase power agreements from 2011-2015). Increases in financial incentives and improved access to the grid for renewables are also behind this growth. [(Other examples are: Feed in Tariff Program (Ontario), Embedded Generation Program and Feed in Tariff (New Brunswick), the Alberta CCS Fund, the ecoEnergy for Renewable Power Fund, the Clean Energy Fund, the Green Infrastructure Fund (all Government of Canada) and Renewable Portfolio Standards in Canada and the U.S.)]

Note: The NEB's Reference Case Scenario, July 2009, estimates that 80 per cent of Canada's electricity will come from zero-emitting sources by 2020. Canada's wind capacity is projected to form 10 per cent of total Canadian installed capacity by 2020.

Role of the Consumer

Another key element for the pursuit of a sustainable energy future is the central role of the consumer. As the Olympics are currently underway in Vancouver, I'm reminded of the 2010 Olympic logo pictured here, an Inuit Inukshuk. An Inukshuk has various meanings, however, one of its traditional meanings is "You are on the right path."

I think this thought puts emphasis on the importance of the consumer in contributing to a cleaner, sustainable electric industry. The transformation on the demand side will depend on how strong a behavioural change the consumer is committed to make and the incentives and technological solutions that can best manage and sustain this change. It will be important for regulators to continue encouraging market forces and be goal oriented rather than using a prescriptive approach.

Challenges

Integrating environmental, economic and social goals will be challenging and take time. Like Rubik's Cube, while the outcomes may be seemingly clear, achieving transformation is complex. Renewables need infrastructure and their integration will require maximizing the flexibility within each and every resource. For example, developments are underway in Canadian jurisdictions to manage the intermittent nature of wind and alleviate integration difficulties. Synergies are being explored in provinces with large hydro and wind resources to allow for energy banking and enabling the opportunity to integrate more wind energy into the system. This is one more reason why we regard hydro in Canada as an essential element of renewable energy.

Many existing Canadian systems need to be replaced and supported with new efficient technology to accommodate a differently configured supply system. Public engagement and support will be essential for new infrastructure to be assessed in a fair and timely way. In Canada, the Major Projects Management Office (MPMO) was established in 2007 to provide industry with a single, efficient point of entry into federal processes, while ensuring that projects which are approved are built in a safe manner and the environment is protected.

It is currently an overwhelming environment for organizations and governments to make the major investments that are needed. According to the IEA's 2008 World Energy Outlook, $13.6 trillion is needed for the global power sector and $221 billion in Canada by 2030. Nevertheless, the sustainable transformation of the grid will be the outcome of market forces, policy direction and decisions by regulators. If we refer back to Rubik's Cube, arriving at optimal solutions will be challenging.

Transformation and Growth: Demand

Transformation is not all on the supply side; the demand side must shift as well. Some of these challenges can be managed through the continued advancement of the smart grid. The smart grid will enable the consumer to take on a more participatory role. In Canada, the installation of smart meters in the provinces of Ontario, British Columbia and Alberta is an example of the consumer's increased participation. Smart meters create an opportunity for increased price responsiveness. Scheduled to be implemented by 2011, Ontario is introducing smart meters with “time of use rates” for residential and small business customers. There is a trend toward more distributed generation rather than centralized, reducing the amount of supply communities need from the bulk electricity system. Demand side management programs and options for demand response also represent a resource to counterbalance the variability of renewables.

Other important factors contributing to lower energy demand expectations are stricter building code requirements in various provinces, new minimum energy efficiency standards for energy using equipment, new standby limits on common household items and the planned phase-out of inefficient lighting by 2012 through the Regulations under Canada's Energy Efficiency Act.

Note: The Energy Efficiency Regulations establish energy efficiency standards for a wide range of energy-using products, with the objective of eliminating the least energy-efficient products from the Canadian market.

The Role of Trade

Let's not forget the traditional strong trading relationship between our two countries. With respect to electricity, trade takes advantage of the diversity between the Canadian and U.S. generation, and peaking characteristics. This will continue in the future and allows leverage of comparable advantages. The hydro generation in Canada has significant storage capability which allows energy to be stored and shifted seasonally to help meet the mostly summer time demand peaks in the United States. Thus trade is driven largely by the major hydro jurisdictions (British Columbia, Manitoba, Ontario and Quebec). Exports (and total trade) are typically less than 10 per cent of Canadian generation, but proportionally higher impact in the importing jurisdictions.

Looking to the future, trade remains very important to system efficiency and reliability; we don't want restrictions around it. A recent U.S. - Canada initiative is the Montana Alberta Tie Line (MATL). This project is a great example of our collaborative capability to take advantage of broader regional diversity (both north and south of the border), through the development and sharing of hydro and wind resources. The line will provide flexibility, encouraging market development, competitive prices and increased reliability. There are other potential international power lines that could contribute to the increased sharing of renewable resources and these are listed in the NEB's recent infrastructure EMA: Canada's Energy Future - Infrastructure Changes and Challenges to 2020.

The ongoing tri-lateral collaboration which takes place between the U.S. Federal Energy Regulatory Commission (FERC), the Mexico Comisión Reguladora de Energía (CRE) and the NEB will be important going forward. Although each regulator has its own distinct and independent regulatory mandate, nevertheless the sharing of publicly available information on what projects are ongoing and which are coming soon will help to ensure our regulatory processes are mutually informed. On a policy level, collaboration between U.S. and Canadian governments will be central for a sustainable energy future.

Note: 2009 Trade Levels (estimate): Exports 50 TW.h (-10% change from 2008); Imports 18 TW.h (-24% change from 2008); Net Exports 32 TW.h (0.4% change from 2008); Total Trade 68 TW.h (-14% change from 2008).

Key Messages for a Clean Energy Future

To conclude, there are some key messages and lessons learned that I would like to highlight.

Like the U.S., the initiatives are in place for transformation on the supply side and it's happening in Canada, for example, with wind now present in every province and other renewables under development. However, hydrocarbons will be here with us well into the future. The challenge is in effectively reducing the carbon footprint of electricity generation. This can be achieved through a realistic, sustainable approach. At a high level, this leads to fuel substitution and increased efficiency. CCS demonstration projects in Alberta and Saskatchewan are living examples of these principles. The potential for changes on the demand side are widespread but the scale will largely be determined by the behavioural change of the consumer.

Policy makers and regulators have a role to play. Through goal oriented or performance based regulation, regulators can look for opportunities to facilitate outcomes. Policy makers will play an important role in indicating the overall direction.

Policy and regulatory measures support continued Canadian / U.S. trade and partnerships. Such partnerships can extend our traditional electricity trade, based on commercial interests and reliability, to promoting a sustainable energy future.

"It's Getting Better all the Time"

Thank you very much for your valued time, especially during your lunch. I'd like to leave you with a phrase that reflects that the regulatory regime and the electricity industry are not static, but rather very dynamic: it's getting better all the time. As we continue to be at the intersection of the need for infrastructure and desire to promote sustainability, the transformation of the grid will require regulators in Canada and around the world to continually update their tool kits, be creative, be extremely good listeners, be partners, be committed to continual improvement and be passionate about the pursuit of the public interest.

If you are interested in knowing more about the topics I discussed today, I would be happy to answer any questions you may have. A copy of my presentation has been made available electronically through the conference's website. Or, if you prefer:

• try our website: www.neb-one.gc.ca
• call us at 403-292-4800 or toll free at 1-800-899-1265
• drop by our Library in Calgary: National Energy Board, 444 Seventh Avenue SW, Calgary, Alberta
• reference our recent publications (Energy Futures, Infrastructure EMA, Briefing Note on Attitude and Behaviour etc.)
• we are also currently updating our Energy Futures Scenarios - stay tuned!

 

Primary navigation (left column)

Date Modified:

2011-10-28