Federal and Provincial Policies to Advance Industrial Energy Efficiency in Canada EFEX Workshop ACEEE Summer Study on Energy Efficiency in Industry August, 2019 Jess Burgess, Econoler

Econoler Core Expertise Energy efficiency firm based in Quebec 35 years experience 4,000 projects in Canada and Internationally Core Expertise Planning & Strategy Financing Evaluation Présenter Econoler. Faire référence à notre ouvrage

Policy context 0 – 0.02 kg CO2e/kWh 0.02 – 0.2 kg CO2e/kWh A third factor of paramount importance when analyzing the energy efficiency sector in Canada, and one that is often forgotten, is that Canada is the world's sixth largest energy exporter and one of the few net energy exporters in the world. More specifically, in 2015, Canada was the fifth largest petroleum producers and the second largest producer of hydro-electric power. Whereas the petroleum production is mainly concentrated in one province (Alberta), most of hydroelectricity producing is concentrated in three provinces approximately 1,000 kilometers apart (British-Columbia, Manitoba and Quebec). This fundamental difference in the energy source available in each of the province and territory is evidently reflected in the carbon footprint of electricity generation, which varies by a factor of 40 from the lowest to the highest emitting provinces. Given that for the past recent years many of the demand-side management (DSM) initiatives have been driven by the climate change agenda, the electricity carbon footprint has had an impact on the DSM programs put forward by the governments. For instance in Quebec, where the electricity is almost entirely produced by hydropower damns and wind turbines, most incentive programs are GHG-focused instead of electricity-focused. Transition énergétique Québec (TÉQ), the independent governmental energy efficiency agency, signs agreements with energy consumers who are ready to commit to a GHG emissions reduction target. In return, TÉQ pays them $ 40 / ton each year they can demonstrate by a rigorous measurement and verification process that they have complied with their GHG emissions reduction target. This GHG-focused approach to DSM in Quebec favors the decrease in natural gas and oil consumption while favoring the electrification of the building heating systems, the industrial processes and the transportation sector. Contrasting with this approach, Alberta has a much stronger electricity component in its DSM approach. The electricity production in Alberta has the highest carbon footprint in the country and many of the DSM programs offered by Efficiency Alberta, the newly created governmental energy efficiency agency, offers instant discounts, online rebates and other financial incentives targeted at reducing the electricity consumption in homes as well as in the commercial and industrial buildings. These two examples show how the highly diversified energy context in Canada induces energy efficiency initiatives that are highly inconsistent from a pan-Canadian perspective. Source: Energy Policies of IEA Countries. Canada 2015 Review. International Energy Agency

Pricing mechanism by province Price on carbon British Columbia Prince Edward Island Northwest Territories Newfoundland and Labrador (in discussion) Cap-and-Trade Nova Scotia Quebec Federal Backstop Alberta (partial, 2020) Manitoba New Brunswick (in discussion) Ontario Saskatchewan Source: Government of Canada, Pollution Pricing Technical Briefing

Federal carbon pricing system Implemented April 1, 2019 2019 price: $20/ton Increases $10/year to $50/ton in 2022 Carbon levy on fuels Output based pricing system Applies to industrial emitters 50k tons/year 10k tons/year optional participation

Federal IEE Activities and programs Legacy Programs Network: CIPEC Leaders Tools & Information Energy audit Energy benchmarking Employee engagement Funding Support EMIS ISO 50001 New Federal Energy Manager Program Launched July, 2019 Co-funding for energy manager salary or energy management projects Only available in provinces relying on federal backstop Alberta Manitoba New Brunswick Ontario Saskatchewan

Alberta: Energy intensive trade exposed industries Federal Allocations Output based Sector specific Intensity metric Begin at 80% of sector intensity benchmark Decline over time High-risk sectors – cement, iron & steel, lime and nitrogen – receive 90% Phases 1 and 2 of ECCC’s assessment were complete as of July 2018. Phase 3 of the assessment is ongoing and will be based on a “competitiveness analysis.” Factors that ECCC has identified for assessment in this stage include: “evidence of significant facility level impacts, domestic or international market considerations, [and] consideration of indirect costs on sectors associated with carbon pricing” (Environment and Climate Change Canada 2018e). If significant impacts are found then, similar to the Phase 1 and 2 assessments, a sector will be eligible to receive a higher level of carbon pricing support. Source: Dobson and Winter, 2018, Assessing Policy Support for Energy Intensive and Trade Exposed Industries, https://doi.org/10.11575/sppp.v11i0.43673

Québec: Cap-and-trade Cap-and-Trade proceeds fund Québec 2013-2020 Climate Change Action Plan Source: Whitmore and Pineau, 2018, The State of the Energy Sector in Québec, http://energie.hec.ca/eeq/

British columbia: Industrial Energy management funding BC applies a tax on GHG emissions Industrial facilities may access funds to cover 75% of total costs up to $80,000* for energy management projects and equipment Stackable with some federal funding opportunities

Opportunities and…

Thank you Jess Burgess Econoler jburgess@econoler.com

Source: Whitmore and Pineau, 2018, The State of the Energy Sector in Québec, http://energie.hec.ca/eeq/