Tackle ‘fossilflation’ with local clean energy
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With the price of gas, groceries, utilities, mortgages and rent all up, Manitobans are feeling the squeeze of inflation. The Manitoba government’s response has focused on tax cuts and flat direct payments. This approach is neither efficient, nor long-term, nor effective. We at Climate Action Team Manitoba would like to propose a way to eliminate a root cause of inflation and keep energy costs down permanently: get off fossil fuels.
According to Statistics Canada, oil and gas prices were the largest factor in inflation last year, rising 22.5 per cent. And as oil and gas rise, other key goods and services follow, from services and manufacturing to food and transportation.
Last June, Christine Lagarde, the president of the European Central Bank, used the term “fossilflation” to describe the outsized influence fossil fuel prices have on the health of our economy.
Currently, Manitobans have no control over the cost of energy as our main energy sources — fossil fuels — are global commodities. The cost of a tank of gas in Manitoba can be driven up not only by global events, such as the Russian invasion of Ukraine, but also arbitrary price-raising on the part of OPEC or multinational oil and gas corporations.
Research from David Macdonald at the Canadian Centre for Policy Alternatives shows that of the extra $18 billion flowing to the oil, gas and mining sectors because of inflation, most of it ended up as pure profit.
Renewable energy, on the other hand, is also locally generated energy, not exposed to corporate profit-taking or market swings. Canadians are starting to recognize this — a poll commissioned by Clean Energy Canada shows that a majority believe renewable energy is more affordable, reliable and less influenced by global markets. This is backed up by research from the Roosevelt Institute that shows transitioning to electrified renewable energy could significantly increase price stability across the economy, and a 2022 Canadian Climate Institute study showing renewable energy leads to a decrease in energy costs as a portion of household income.
Take Manitoba Hydro prices. The primary rate for natural gas, which we import from Alberta, has tripled from 7.62 to 19.77 over the last four years. In the same period, prices for electricity — produced here in our own province by a Crown corporation — have remained largely stable and affordable (8.08 in June 2018 to 9.20 in January 2022).
What if we were able to meet all of our energy needs locally, through energy we produced ourselves using hydro, sun, wind and geothermal? Climate Action Team has calculated how Manitoba could reach this goal. To start, we switch all vehicles from volatile gas to local electricity — this is already happening, with electric vehicle registrations in the province tripling since 2021. Electric vehicles have the added advantage of doubling as batteries that can store power and provide it back to the grid when it is needed.
Second, buildings can be converted from imported natural gas to geothermal heat drawn straight from the ground (which Manitoba Hydro shows is the cheapest way to heat your home), as well as retrofitted to use much less energy.
Third, we can turn buildings and homes into producers of solar power and build wind farms outside the city. Finally, we can return the excess hydroelectricity we currently export and use it in-province.
Because locally generated electricity is generally cheaper than fossil fuels, many of these changes could be implemented without costing households and businesses very much.
We recommend the province offer low-interest loan programs to provide households, businesses and public-sector institutions the capital they need to purchase EVs or retrofit their homes, businesses, schools, and more. The loans help cover the upfront costs and can be paid back through small payments over a long period of time through the energy savings that will follow. It is cheap on both ends, for the government as well as for people.
Climate Action Team has submitted these recommendations in much more detail to the public consultations for the upcoming 2023 provincial budget. With affordability among the top concerns of Manitobans going into this year’s budget, the province should be thinking bigger than one-time payments of a few hundred dollars, and start offering long-term solutions.
The sooner we switch from imported and expensive fossil fuels to local, reliable and renewable energy, the sooner we can get ourselves off the inflation see-saw for good.
Hannah Muhajarine is a policy researcher with Climate Action Team (CAT), a coalition of Manitoba environmental and policy organizations, researchers and sector experts working towards climate resilience. Manitoba’s Road to Resilience: Our Pathway to a Fossil Fuel Free Future is available at climateactionmb.ca.