Energy is important — but subtle

Opinion

Hey there, time traveller!
This article was published 31/10/2023 (709 days ago), so information in it may no longer be current.

Robert Parsons

During the recent provincial election, energy was pushed to the side. Contrasting policy proposals are still worth talking about.

Energy remains important, including environmental, social and financial effects, but many subtleties need to be considered. There are also national implications. Since the election, commentaries relating to energy have appeared in the Free Press, including articles by Marianne Cerilli (Reconsidering cuts to gas tax, Oct. 17), and Zachary Rempel and Jessica Kelly from the International Institute for Sustainable Development (A climate mandate for Manitoba, Oct. 19). Yet, key subtleties are missed, leading to either incorrect or misleading information.

Through the election, both Wab Kinew and Heather Stefanson mutually got one thing correct.

Manitoba should not be eager to build brand-new dams. These are expensive and risky. We know Keeyask costs were excessive, with other provinces burned much worse.

The PCs’ “Energy Roadmap” was surprisingly on-point regarding three aspects. Most important, Manitoba’s electricity constraint moving forward is not electrical energy, i.e., kWh, but rather electrical power, i.e., kW, often termed demand capacity.

Manitoba has lots of electrical energy. We could electrify all light-duty vehicles, convert all homes to ground source heat pumps (GSHP), and have ample room to spare. The same is not true of capacity, with Manitoba Hydro reports showing we are quickly running out.

The same situation applies nationally. Canada is an electricity exporter, with a high proportion already low emission. Clean electricity is just not in locations where needed, suggesting the importance of an East-West grid.

The federal Liberal government long ignored electricity, that is until 2021, when “Mr. Trudeau goes to Washington.” Now, apparently, we need lots, with roughly $35 billion in lucrative federal incentives. But this is oriented to solar, wind, and battery storage; little is going for grid improvements that are needed. These technologies now come largely from the U.S., such that a chunk of cash will migrate south. Prime Minister Justin Trudeau appears oriented to pleasing Joe Biden, not addressing Canada’s electricity needs.

Based on capacity constraints, the PCs tasked Efficiency Manitoba to specifically address peak demand, and very surprisingly raised the possibility of using a bit of natural gas. This is heresy for environmentalists, but actually is positive, in particular compared to solar.

As confirmed by Natural Resources Canada, solar is a poor choice here, except in narrow circumstances. It is costly, only works during the day, contributes no capacity, and is shockingly dirty, the latter in particular considering the emergence of “solar trash.”

Natural gas turbines represent a cost-efficient way to generate electrical capacity, less than one 10th that for dams. Emissions are generated, but only to the extent operated. As long as no more than 10 to 20 per cent, quantitative results show natural gas is cleaner than solar.

One significant problem with the PC’s directions was that we cannot afford to blanket accept every new project coming to town. New projects demanding electricity must show significant benefits.

The NDP proposal for GSHP incentives is a useful start but needs better planning for the longer-term. Incentives support initial one-off installations, but if maintained, could entail costs as high as $7 billion.

A focus on co-ordinated, lower-cost community loops would be more prudent. The NDP also proposed incentives for electric vehicles. A decade ago, this was a good idea the NDP missed, i.e., addressing technology risks of high battery costs, but not today. Battery costs are less than a 10th. New incentives could amount to more than $5 billion, are little more than “rent seeking” by vehicle manufacturers, and most problematically go primarily to the well off. A much better solution, one everyone seems to agree on, is public transit. Making this a priority not only ensures equity and reduces emissions, but is economically cost efficient.

A negative NDP idea is freezing Manitoba Hydro rates. This impacts their financial position, while involving an awkward hypocrisy of overriding the PUB while having criticized the past government for doing similar.

A better choice, also positively proposed by the NDP, is the temporary reduction of fuel taxes. This is targeted, time limited, and directly provides assistance to those who need it most. Fuel prices are already high. An important aspect overlooked by Ms. Cerilli is that while higher-income families may use more energy, lower-income families have to spend more than twice as much of disposable income on energy. This is also part of the reason carbon taxes are unfair, and, no, it is a complete fib that eight of 10 Manitoba families get more back. Indeed, based on actual data, the average family pays more.

A last, but odd move by the NDP is adamant opposition to time-of-use rates on electricity. It is also uncertain where this actually came from. As noted earlier, managing peak electricity demand is increasingly critical, and Mr. Kinew does not want to earn a moniker as “Brown-out Wab.” There is still time, and a variety of positive alternatives available to be able to alter this.

Robert Parsons, PhD, MBA, teaches at the I.H. Asper School of Business, University of Manitoba on topics of sustainability economics, mathematical methods, logistics and supply-chain management.