Canada to Invest $797 Million in Race to Carbon Neutrality

The Canadian government announced a sizeable investment to green up its energy sector after recently announcing plans to become carbon neutral within a few decades — but is it enough?

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(CN) — Canada is making a big push to achieve its commitment of becoming carbon neutral by 2050, beginning with a new $797 million clean energy investment over the next four years. Though not everyone is convinced the government is committing the resources necessary to meet its own lofty goals.

The latest investment is part of the country’s Smart Renewables and Electrification Pathways Program (SREP) designed to clamp down on carbon emissions and phase out coal-fired power plants, without threatening energy stability in the often-frigid country.

“The government of Canada is investing $964 million [CAD] over four years in the new Smart Renewables and Electrification Pathways Program (SREPs) to advance the rollout of non-emitting, energy projects like wind, solar, hydro and geothermal,” a Natural Resources Canada spokesperson in an email. “SREPs also supports enabling technologies, such as storage and smart grids. The government is investing such a large sum of money into this program to encourage the replacement of fossil-fuel generated electricity with renewables.”

Canada set a high bar with its 2030 environmental targets and its ultimate aim of achieving net-zero carbon emissions by 2050. As such, the government is working to replace fossil-fuel generated electricity with power derived from clean sources such as solar, wind, hydro and geothermal, among others — but do they really have a plan, or are officials merely splashing cash in the hopes that someone out there does?

“I think this is a good start but $960 million over four years is fairly small compared to the scale of investment needed,” said Dr. M.V. Ramana, professor of global and human security at the University of British Columbia, in an email. “That said, I note that the program funds three different kinds of projects: established renewables like wind and solar, emerging technologies such as energy storage, and grid modernization. Established renewables are already competitive in many parts of the world and may not need that much financial support as the other two kinds of projects. In the latter two categories, I hope that the amounts of funding offered will increase in the coming years.”

All projects applying under the established and emerging tech categories must be capable of providing grid services that are currently handled by traditional power plants running on hydropower, natural gas, coal or nuclear in the jurisdiction where the project is located. Once integrated into the existing grid, officials say these new projects will help utilities and their operators familiarize themselves with newer, greener technologies.

“This investment is a step in the right direction. Particularly, the project intends to support emerging technologies. That is where the most support is needed to get projects off the ground and learn how to work with them,” said Dr. Zareipour, professor of electrical and software engineering at the University of Calgary, in an email. “Those projects may not yet be economical to come to the market on their own. Power system operators have been working with a unidirectional central grid for many decades. We need to start to integrate small but typical nonconventional projects into the grid so the operators can experiment and learn how to work with them and expand from there.”

Zareipour said Canada’s current grid was designed mainly as a one-way power deliver system, meaning electricity is generated in a central location and shipped out to customers. He said incorporating modern distributed energy systems into the grid will need to be a key aspect of any plan to achieve net-zero emissions by 2050.

“From an economic perspective, we need less help with established renewable energy systems (wind, solar) and more help with technologies that are still at an early development or demonstration stage,” said Dr. Werner Antweiler, professor at the Sauder School of Business at the University of British Columbia, in an email. “This part of the program is focused on innovation. One of the largest untapped potentials in Canada is geothermal, a technology which has matured in the last two decades and is no longer the exclusive domain of ‘flash steam’ locations such as Iceland. Modern binary geothermal systems can also provide waste heat for district heating or agricultural facilities. My hope is that geothermal projects will be funded through the SREP program.”

Program managers are also keenly focused on project security — an especially pertinent concern after last month’s Colonial Pipeline hack in the United States hamstrung fuel supplies for millions across several southeastern states. Applicants must “demonstrate how their organization will make use of cyber security-related controls, standards and tools for their project and prioritize actions and investments to maintain or enhance its cyber security posture.” In other words, applicants need to show what measures they’ve put in place to thwart the next ransomware attack.

Programs submitted under all three pathways are eligible for up to $41 million each. Established renewables projects must produce a minimum net capacity of 4 megawatts (or 500 kilowatts for Indigenous-owned projects), and must have already been successfully deployed at the utility scale. Emerging technologies projects only need to prove their technology has been successfully demonstrated in Canada.

“Funding alone will definitely not be enough and there has to be a much more wide-ranging approach, including changing policy incentives and disincentives,” Ramana said. “The government also has to update its planning process. For example, the Canadian Energy Regulator (previously the National Energy Board) foresees wind and solar energy supplying only 13.7% of all electricity in its business-as-usual scenario by 2050, despite the rapid increases in these technologies over the last decade. In the ‘evolving scenario’ it sees wind and solar contributing around 24%, which is still very small compared to what would be needed.”

The government recently announced a number of other climate investments in its 2021 budget plan, including $12 billion to meet its 2030 greenhouse gas reduction targets, another $12 billion for public transit projects and $14 billion to create well-paying jobs in the clean energy sector. Still, much more will need to be done if Canada is to meet its climate targets in the coming decades.

“My criticism of SREP is that it lacks focus — it is fishing for solutions rather than articulating a clear vision about what is necessary,” Antweiler said. “Politically, it is a vehicle to fund a variety of programs across the country. Arguably, it might be better to identify the most pressing deficit in our electricity system and directing the funds into fixing this deficit. Keep in mind that building a major high-voltage DC powerline is easily in the billions of dollars, so even a $964 million fund doesn’t go all that far.”

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