Net-Zero by 2050: Canada’s To-Do List

Canada’s goal of reducing emissions to net-zero by 2050 makes the coming years an exciting time to work in renewable energy and energy storage. Electricity is already an enabler of our overall economy, but it is poised to become a much more dominant player. 

“Getting to net-zero requires electricity to account for almost 50% of energy consumption in 2050.”

According to the International Energy Agency (IEA), getting to net-zero requires electricity to account for almost 50% of energy consumption in 2050. This means that electricity is absolutely critical for the decarbonization of transportation, heavy industry and buildings.

Canada has made commitments to a net-zero electricity grid by 2035, 100% zero-emission light-duty vehicle sales by 2035 and net-zero greenhouse gas (GHG) emissions across the economy by 2050. This means we have only 28 years to both decarbonize and double the size of our electricity system.

Wind and Solar: The Key to Getting to Net-Zero by 2050

In October 2021, CanREA released its 2050 Vision: Powering Canada’s Journey to Net-Zero. CanREA’s Vision submits that wind and solar energy, supported by energy storage, will be the primary source of the new electricity generation required to decarbonize and expand our electricity system. 

Here’s why:

• Canada has abundant wind and solar resources.
• The scalability and rapid ability to deploy for such projects.
• Wind and solar are the lowest-cost sources of new electricity in Canada today.

CanREA’s Vision concludes that getting to net-zero will require Canada to install more than 5,000 MW of new wind and solar annually between now and 2050. It has been over a year now since CanREA’s Vision was released, and we can now look back and assess what progress was made in line with our Vision.

Canada’s Progress: The Road to Net-Zero by 2050

The high-level conclusions in CanREA’s Vision have now been broadly accepted: Earlier this year, the Canadian Climate Institute concluded that wind and solar energy would need to grow from 6% of Canada’s electricity production today to somewhere between 31% and 75% of Canada’s electricity production in 2050 – in an electricity system that produces 1.6 to 2.1 times more power. 

In 2020, Canada installed 236 MW of new wind and solar capacity. This increased to 965 MW in 2021 and is projected to exceed 2,000 MW in 2022. This trend is expected to continue going forward. 

The past year has seen contracts signed and procurement plans announced that would, if fully implemented, take us more than one-third of the way to the minimum level (30 GW of new wind, solar and energy storage capacity) required by 2030 to put us on a pathway to net-zero. 

However, this still leaves us far short of the 5,000 MW of annual installations required to get to net-zero. 

Canada’s To-Do List to Reach Net-Zero by 2050

CanREA’s 2050 Vision identified a “To Do List” of five tasks for governments, utilities and electricity system operators across Canada that must be implemented to attract investment at the scale and speed required to enable us to reach net-zero by the deadline. By reviewing the progress made against these five tasks, we can identify the opportunities and challenges we expect to face:

• Task 1: Decarbonize Canada’s electricity production by 2035
• Task 2: Modernize Canada’s electricity markets and regulatory frameworks 
• Task 3: Build new wind, solar and energy storage in Canada 
• Task 4: Rethink Canada’s electricity infrastructure 
• Task 5: Use decarbonized electricity to reduce GHG emissions in Canada’s transportation, buildings and industry sectors.

Decarbonize Canada’s Electricity Production by 2035

Task 1 calls on Canada to put in place foundational measures that would enable the decarbonization of electricity production in Canada by 2035. There has been important progress in this area. 

The Federal Government has announced its intention to move forward with a Clean Electricity Regulation that would result in a net-zero electricity grid by 2035. This commitment has fundamentally changed the conversation and jurisdictions across the country have now initiated studies to identify pathways to a net-zero grid by 2035. 

“There is a need for a Canadian response to the Inflation Reduction Act passed in the United States.”

In addition, in the Fall Economic Statement, the Federal Government stated its commitment to refundable investment tax credits for wind, solar and energy-storage technologies, as well as green hydrogen investments that will bolster the competitiveness of Canada’s renewable-energy industry. There is a need for a Canadian response to the Inflation Reduction Act passed in the United States, and with this new Federal commitment, we are set up for success. 

Modernize Canada’s Electricity Markets and Regulatory Frameworks 

Task 2 calls for the modernization of Canada’s electricity market and regulatory frameworks to enable and accelerate the deployment of disruptive energy storage, smart grids and distributed energy technologies, and to compensate them for the provision of the increasingly valuable flexibility and reliability services needed in a rapidly changing electricity grid. 

While we have not yet seen a comprehensive approach to electricity market and regulatory reform to prepare for net-zero, there have been positive steps taken in the past year. They include targeted energy storage procurements and tariff reforms to encourage the deployment of energy storage, residential and commercial solar generation and provide for early steps to explore broader regulatory reform. 

Build New Wind, Solar and Energy Storage in Canada

Task 3 calls for long-term certainty around innovative and competitive procurement processes for our technologies. Canada needs transparent and stable procurement schedules for renewables and energy storage. Our industries can deliver affordable electricity to ratepayers—if they know what is required, they can manage their supply chains and better plan for upcoming project proposals. 

“Consumers deserve the ability to purchase clean, renewable electricity in the jurisdiction in which they operate.”

Moreover, several jurisdictions across the country are actively looking at Corporate Power Purchase Agreements (PPAs). Alberta has been the poster child for Corporate PPA success to date, with over 2 GW of deals announced. However, other provinces can and should embark on plans to enable Corporate PPAs. The entire electricity system is planned, built and operated for consumers. We must be attuned to the needs of the electricity ratepayers who pay our bills at the end of the day. Consumers deserve the ability to purchase clean, renewable electricity in the jurisdiction in which they operate. 

We have also seen some jurisdictions, particularly Nova Scotia and Saskatchewan, take initial steps to enable procurement that responds to the strong corporate demand for renewable energy that has already been clearly demonstrated in Alberta. Provinces with no plans are looking at a missed opportunity.

Rethink Canada’s Electricity Infrastructure 

Task 4 is around improving the efficiency with which we use existing transmission infrastructure and planning for and building the new transmission required to support a doubling of the electricity grid. Progress has been much more limited here. While some jurisdictions are starting to explore changes that would enable more consideration of non-wired alternatives, we have not seen many new agreements to increase the interties between Canada’s provincial electricity grids. 

Use Decarbonized Electricity to Reduce GHG Emissions in Canada’s Transportation, Buildings and Industry Sectors

Task 5 calls for the development of comprehensive electrification strategies. 

There are positive signs in increased sales of electric vehicles and investments in charging infrastructure, as well as new investments to electrify industrial processes in industries like steel and aluminum, but comprehensive strategies remain rare. 

“The sooner the electricity sector understands the demand and energy needs of electrification, the better the planning process will be.”

The renewables and energy storage industries are working hard to meet the growing electrification demand and are trying to bring energy to consumers as efficiently as possible. The sooner the electricity sector understands the demand and energy needs of electrification, the better the planning process will be.

Across Canada, electricity system operators and utilities are developing forecasts and scenario planning for how to achieve a net-zero grid. For example, in my home province, the Alberta Electric System Operator (AESO) has developed a Net Zero Emissions Pathways Report, reviewing potential supply and demand combinations that may enable Alberta to reach a net-zero electricity system by 2035. 

According to the AESO: “New technologies, carbon policy, broad electrification and a societal desire for cleaner forms of energy are creating substantial and rapid change across the electricity value chain, from production to consumption.”

In Québec, the energy transition is also putting in a strong appearance in Hydro-Québec’s 2023-2032 Electricity Supply Plan, where they are anticipating an increase of 25 TWh (or 14%) in Québec’s electricity demand. This increase is due to several factors that relate to the energy transition, including building/industrial process conversion, green hydrogen production battery components for electric vehicles and transportation electrification.

Acting Now is Key to Attaining Net-Zero by 2050

At this point, it is important to celebrate the success we have had to date and plan carefully for the future. Canada only has 28 years to decarbonize and double the size of our electricity system, better integrate it with energy systems across the economy and maintain affordability and reliability.

In October, CanREA wrote an open letter calling on Canada’s Prime Minister and Provincial and Territorial Premiers to make the decarbonization and expansion of Canada’s electricity grid a much higher priority.
 

Twenty-five organizations signed the letter, including electricity producers, environmental and Indigenous organizations, and major energy consumers as represented by the Canadian Chamber of Commerce, the Canadian Steel Producers Association, the Chemical Industry Association of Canada, the Forest Products Association of Canada, the Global Automakers of Canada and the Mining Association of Canada. 

“We need significantly increased collaboration and coordination among Federal, Provincial and Territorial Governments to develop comprehensive and integrated strategies to decarbonize.”

These organizations agree that we need significantly increased collaboration and coordination among Federal, Provincial and Territorial Governments to develop comprehensive and integrated strategies to decarbonize and expand our electricity system. This emerging consensus among a broad range of stakeholders across the electricity system on the urgent need for action is a clear sign of progress. CanREA’s 2050 Vision’s “To-Do” list remains relevant and necessary going forward. Getting to net-zero by 2050 will require investment in wind, solar and energy storage, and the electricity sector in general, at an unprecedented scale and speed. It is a monumental, nation-building undertaking. We need to act now and we need to act together.