The Future of Canada’s Energy Markets Workshop

Report

Calgary – July 19, 2017

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Executive Summary

On July 19, Natural Resources Canada joined the Canadian Energy Research Institute (CERI) and the Government of Alberta in welcoming roughly 30 participants from associations, energy companies, and other government organizations to a workshop on the future of Canada’s energy markets for Generation Energy. The workshop was facilitated by Adam Goehner, Director at The Delphi Group.

WORKSHOP OVERVIEW

The workshop included a presentation on Canada’s energy markets in transition and a number of exercises that addressed a series of questions:

• What will Canada’s energy markets look like in 2050? (i.e., oil, gas, electricity)

• What are the values that will help guide the way?

• What are the pathways and guideposts to help get us to the vision?

KEY INSIGHTS

1. Canada needs to leverage its core strengths and use fossil fuels to fund the transition to a low-carbon economy. Canada could expand from being a commodity exporter to a technology expertise exporter. Canada also needs a new lens on hydrocarbon innovation and technology - getting rid of carbon is not the same thing as eliminating oil and gas.

2. In order for Canada’s economy to be globally competitive, it is critical that we manage the future costs of our energy – these are intrinsically linked. Canada’s future energy costs need to be set at a reasonable rate that is comparable to our competitors; otherwise, we would be forced out of competition.

3. Future policies and regulations need to be more proactive and adaptive. A shift towards collaboration (working together to accomplish a single shared goal) instead of cooperation (each person as responsible for only a portion of the problem) is needed within the energy sector. This is the concept of policy as an energy system as opposed to for individual sectors/industry.

4. It is important to communicate to Canadians that although current actions are not always felt, they will directly impact the next generation. Canada needs a national program for energy literacy that provides a full understanding of the pros and cons of the traditional energy choices.

Natural Resources Canada, CERI, Government of Alberta and the facilitator synthesized these challenges into a number of themes. Participants identified which themes they would like to work on and broke into small groups for discussion.

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POINTS TO REGISTER

Theme 1: Technological Change and End-Use

• National goals: There is a need to develop long-term sustainability goals that should vary for different regions across Canada. The federal government needs to act as an “energy champion” for Canadian interests. For example, challenge jurisdictional issues, establish a clearer national direction, and act as a broker for export deals.

• Technology advancements: new technological advancements are needed to separate the idea of eliminating ‘carbon’ from eliminating ‘oil and gas’, and to create end-use fossil fuel products with low carbon intensity. Future policies need to facilitate, not impede these technological innovations.

o Concerns were also brought up over the speed of phasing out coal power plants. Participants agreed that new technologies such as carbon capture and storage are a viable solution to keep using the coal plants, which is an affordable source of power, while moving towards our climate objectives.

o Participants mentioned that it is important to recognize that not all energy jobs generate the same amount of economic impact (e.g., working in the oil fields vs. on a wind farm)

• Unbiased information: there is a greater need for knowledge sharing and access to reliable information, which could mean the establishment of a national energy information organization that is unbiased of the oil and gas industry.

• National pride: there was emphasis on a “national energy concept,” which stresses that energy production, refining, and products should be made in Canada for Canadians. Participants noted that Canada needs to continue its strength in natural resources and focus on sharing its resource wealth, extraction technology and knowledge as a way to further motivate Canadians and establish a Canadian energy brand.

Theme 2: The Cost of Energy (affordability vs. clean vs. competitiveness)

• Affordability: this was brought up numerous times as an expected major change, however there was disagreement as to whether energy would actually become more or less affordable by 2050.

o Energy cost was discussed in the context of markets, with an emphasis on how the potential increase in energy costs will make Canadian markets unattractive.

o Participants voiced their concerns that polices and regulations recently have failed the sector. Future policies should incentivize businesses to invest in Canadian resources, especially in provinces like Alberta where the economy is heavily dependent on investments from other countries. Currently, our policies are no longer aligned, and in fact are moving away from those of our main competitors. This forces Canada out of the competition.

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o Participants questioned whether affordable energy means no sector is left behind. If so, how would this be managed and who would manage it?

• Looking outward at our competitors: participants stressed that both provincial and federal governments need to be mindful of our competitors’ future movements. Concerns were raised that Canada is moving too fast on clean energy development, which raises the cost of energy production and electricity. We need to pay more attention to our competitors’ markets if we want to stay a certain distance ahead.

• Managing energy costs: If we continue to quickly increase Canada’s energy costs (due to new requirements needed for clean power and reducing GHG), when our competitors are not doing the same, it will put us at an unfair disadvantage. If Canada is to remain globally competitive, then the rate of change in our energy costs needs to be carefully managed. FPT government and stakeholders need to all be on the same page regarding this. Participants did question and were uncertain of how this can be accomplished.

Theme 3: Policy and Regulation Change

• Policy and regulation development: Currently, Canada has become a very risk adverse society. By 2050, we need to fundamentally shift to a calculated risk society.

o Future federal policies also need to be developed based on creditable data, and take into consideration environmental, economic and societal factors. Policy development needs to be proactive rather than reactive, and adaptable at the national, provincial and municipal level.

• Engaging Indigenous Peoples: Engaging Indigenous communities needs to become socially and culturally embedded in the policy development and regulation process, instead of being an add-on.

• Human Rights: There was a discussion on whether access to clean energy will become a human right in the future (i.e., like access to clean water). There was also a question of whether it is clean or affordable energy that everyone deserves access to.

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Theme 4: Social Change

It is important to communicate to Canadians that although current actions are not always felt, they will directly impact the next generation. Canada needs a national program for energy literacy that provides a full understanding of the pros and cons of traditional energy choices.

• National program for energy literacy: Canada requires more publically available and credible energy information. Almost all of the participants mentioned that the information currently available is biased and flawed. Energy literacy needs to be embedded in our education systems, starting as early as primary education. Informed citizens are needed to inform policy.

• Human behaviour: citizens need to become more aware and accountable for their actions with respect to energy. New methods are needed to enable and reward good behaviour, and disable and penalize bad behaviour. Examples of possible ways to do this include, publically releasing energy use levels for communities and ‘reducing your energy use’ competitions among households.

• Cumulative effects: participants reiterated and emphasized the benefits of cumulative effects – “every little bit helps.” Making change is attainable by everyone (even if it is just switching lightbulbs to more efficient versions) – this is the concept of empowering the individual.