Canadian Energy Research Institute Greenhouse Gas Emissions Reductions in Canada through Electrification of Energy Services Allan Fogwill November 2016 Relevant • Independent • Objective www.ceri.ca

Canadian Energy Research Institute Overview Founded in 1975, the Canadian Energy Research Institute (CERI) is an independent, non-profit research Institute specializing in the analysis of energy economics and related environmental policy issues in the energy production, transportation, and consumption sectors. Our mission is to provide relevant, independent, and objective economic research of energy and environmental issues to benefit business, government, academia and the public.

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Introduction Electrification of end use energy services is seen as a “technology path” to economy wide GHG emissions resections Manage emissions in hundreds of point sources – not several thousands of distributed emitters (buildings, vehicles, etc.) Proven technology exists to decarbonize power generation Such an economy wide energy transition requires: changing the existing infrastructure across all sectors of the economy (infrastructure inertia) much larger electricity generation and transmission infrastructure than today

Why Electrify ? A "Technology Path" for decarbonization Deeper emissions reductions require major transformations in way we source final energy services RCP 3PD/2.6 represents emissions trajectory that aligns with 1.5 degree global temperature stabilization. In order to follow that emissions path, carbon intensity of energy as well as energy intensity of the economy need to go down significantly by end of the century We are looking at an energy system that is very different that today. Figure source: Van Vuuren, P., et al. “The Representative Concentration Pathways: An Overview.” Climatic Change 109 http://link.springer.com/article/10.1007/s10584-011-0148-z

Why Electrify ? Technology push Evolution of the global electric car stock, 2010-15 Source: IEA Global EV Outlook, 2016 Source: CERI

Objectives To assess economic and environmental impacts of electrifying energy end use services in Canada: 10 provinces 3 sectors: residential, commercial, passenger transportation We focus on energy end use services that can be electrified by utilizing commercially ready technologies or ones that can be commercialized within a decade or less

Main Research Questions Is it technically feasible? With proven technologies What major transitions in the energy systems are required? How deeper the emissions reductions that can be achieved through electrification of energy services? What would it cost? This presentation is based on Alberta, Ontario, and Atlantic provinces

Methods A stock-rollover model that simulates physical infrastructure Annual time steps with equipment lifetimes: 2020-2050 Simulate energy consumption at an aggregated level (housing stock, vehicle stock, etc. ) Takes into account infrastructure inertia Build scenarios to explore emissions reduction options We mainly use a stock-rollover methodology that simulate physical infrastructure Simulate energy consumption at an aggregated level (housing stock, vehicle stock, etc. ) Build scenarios to explore emissions reduction options

Methods: Scenarios

Residential Sector Stock Rollover Model Track (by type and vintage) and simulate the infrastructure rollover & energy demand in four housing types and 4 energy end use services

Transportation Sector Due to data limitations, passenger road transportation sector energy consumption is tracked by vehicle miles travelled by mode of transportation and by fuel

Illustrative Stock Rollover Example Energy service demand x Energy service demand

Mitigation measures: Electrification Residential sector: Full stock rollover model, electrification implemented Commercial sector: Partial stock rollover model (by service sector & energy demand), electrification implemented Passenger transportation: Partial stock rollover model (by mode of transportation), electrification implemented Freight transportation: No electrification Industrial: No electrification

Results

Residential Sector: Fuel demand

Road Passenger Transportation: Fuel demand

Commercial Sector: Fuel demand

Electricity Demand: Electrified Sectors x 2 times x 1.5 times x 2.5 times

Emissions & Cost

GHG Emissions: Electrified Demand Sectors

GHG Emissions: All Demand Sectors Majority of demand side emissions are from non electrified sectors (ie. industrial, freight transportation)

Mitigated and Remaining Emissions Emissions reductions achievable by electrifying following sectors: Remaining emissions are from industrial, freight transportation, electricity, and not electrified stock of residential, commercial, and passenger transportation sectors

What Would it Cost (in Alberta)? By 2050, Under electrification scenario, electricity generation infrastructure is 2 times that of BAU scenario Scenario Demand side Electricity supply Cumulative cost of electricity1 (billion 2014 CAD) Cumulative GHG emissions2 (million tCO2eq) Cost of avoided GHG emissions3 (CAD/tCO2eq) Increase in average cost of electricity in 2050 (% of S0) S0 Not electrify BAU 108 7551   S1 Electrify High renewables 244 (126% higher than S0) 6992 (7% lower than S0) 198 33% S2 High renewables + GAS CCS 234 (118% higher than S0) 7008 186 28% 0.4%/ year 0.9%/ year 1 Cumulative cost of adding new capacity and operating electricity infrastructure in the period of 2020-2050 2 In the period of 2020-2050 3 Calculated by taking into account capital cost of demand side mitigation measures and fuel cost savings.

What Would it Cost (in Ontario)? By 2050, Under electrification scenario, electricity generation infrastructure is 2.4 times that of BAU scenario Scenario Demand side Electricity supply Cumulative cost of electricity1 (billion 2014 CAD) Cumulative GHG emissions2 (million tCO2eq) Cost of avoided GHG emissions3 (CAD/tCO2eq) Increase in average cost of electricity in 2050 (% of S0) S0 Not electrify BAU 100 5022   S1 Electrify High renewables 271 (170% higher than S0) 3898 (22% lower than S0) 50 47% S2 High renewables + GAS CCS No improvement 0.4%/ year 0.9%/ year 1 Cumulative cost of adding new capacity and operating electricity infrastructure in the period of 2020-2050 2 In the period of 2020-2050 3 Calculated by taking into account capital cost of demand side mitigation measures and fuel cost savings.

What Would it Cost (in Atlantic Canada)? By 2050, Under electrification scenario, electricity generation infrastructure is 1.5 times that of BAU scenario Scenario Demand side Electricity supply Cumulative cost of electricity1 (billion 2014 CAD) Cumulative GHG emissions2 (million tCO2eq) Cost of avoided GHG emissions3 (CAD/tCO2eq) Increase in average cost of electricity in 2050 (% of S0) S0 Not electrify BAU 29 902   S1 Electrify High renewables 54 (86% higher than S0) 764 (15% lower than S0) 14 48% S2 High renewables + GAS CCS No improvement 0.4%/ year 0.9%/ year 1 Cumulative cost of adding new capacity and operating electricity infrastructure in the period of 2020-2050 2 In the period of 2020-2050 3 Calculated by taking into account capital cost of demand side mitigation measures and fuel cost savings.

Concluding Remarks Electrification provides a viable option to decarbonize residential, commercial, and passenger transportation sectors with current technologies Industrial sector remains the most significant contributor – we did not assess mitigation measures Electrification will profoundly transform the physical energy system Level of end-use energy services remains relatively unchanged

Concluding Remarks Cumulative emissions (2020-2050) reductions are: AB: 7%, ON: 22%, Atlantic Canada: 15% Viability of electrification as an emissions reduction measure depends largely on decarbonizing the power sector Coal to standard gas transition is not sufficient Availability Gas CCS lowered the abatement cost and total cost in Alberta Deeper reductions require mitigation measures in the industrial sector, freight transportation and further decarburization of the electricity sector

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