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Switch to electrified economy could be costly, Canadian Gas Association finds

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Switch to electrified economy could be costly, Canadian Gas Association finds

A government-mandated switch to renewable energy that eliminates the use of natural gas for home heating and power generation would cost between C$580 billion and C$1.4 trillion over the next three decades, a report commissioned by the Canadian Gas Association found.

The study, prepared by consultant ICF, said boosting Canada's generation capacity to the needed 252 GW of renewable power from its 141 GW of existing capability would cost as much as C$851 billion, while the cost of additional energy and transmission infrastructure could surge to as much as C$291 billion between 2020 and 2050. Canada's federal government, along with some provinces, are considering all-renewables policies that would be implemented over the coming decades. The Canadian Gas Association represents the nation's local distribution companies, transmission pipeline operators, equipment manufacturers and other related services

"The goal of this study is to examine the impacts of a policy choice to replace natural gas and other fossil fuel use in Canada with electricity," said the study, released Oct. 16. "In all cases these assumptions were deliberately 'cost-conservative' meaning they were designed to not overstate the possible cost implications of such a policy choice."

Natural gas industry associations across North America are concerned that anti-fossil-fuel activism could cripple local distribution companies and the companies that support them. A push in the U.S. Senate to block any infrastructure that would facilitate the export of gas is being spearheaded by Massachusetts Democratic Sens. Edward Markey, a leading climate activist, and Elizabeth Warren, a top contender for the party's 2020 presidential nomination. Some cities are also seeking bans on the use of natural gas for energy in new buildings. Canada's federal government has already ordered the shutdown of all coal-fired generating plants by 2030.

Only 20% of Canada's energy need is met by electricity, the study said. Switching the nation's cars, homes and industry to electricity from natural gas or other refined fuels would greatly increase the need for transmission infrastructure, particularly during peak load times, and the result "could be an electrical system challenged to provide reliable service during the peak design condition at reasonable cost."

The report also found that an electricity-only energy market would carry higher costs to reduce greenhouse gas emissions. Focusing on electricity while eliminating natural gas would cost C$289/tonne of carbon dioxide equivalent, while an integrated system with both sources of energy would cost about C$129/tonne. The report suggested that natural gas could still be used for large peak loads, such as extremely cold days and in power generation to support high demand when renewable sources are not available.

The report is titled Implications of Policy-Driven Electrification in Canada. Enbridge Inc. is Canada's biggest natural gas utility owner with its Ontario-based franchises, which it formed by merging its Union Gas Ltd. and Enbridge Gas Distribution Inc. subsidiaries.