05/2011Jaccard-Simon Fraser University1 Mark Jaccard Simon Fraser University Vancouver May, 2011 Solar Energy in Canada: Making It Happen

05/2011Jaccard-Simon Fraser University2 My activities and experiences in sustainable energy Professor of sustainable energy at Simon Fraser University since (Chair and CEO of BC Utilities Commission – 92-97) Intergovernmental Panel on Climate Change (recently- special report on renewables) China Council on Environment and Development (recently – sustainable use of coal) Canada’s National Roundtable on Environment and Economy (recently – achieving 2050 national climate targets) Global Energy Assessment – head of sustainable energy policy (recently – prep for Rio+20 in 2012) Books on climate policy and sustainable energy (recently – developing book on energy sustainability delusions)

05/2011Jaccard-Simon Fraser University3 Good news for solar industry I. Humanity is going to need a lot of energy Exajoules400 EJ1200 EJ? II. Our energy system must dramatically reduce GHG emissions over the next few decades. III. Renewables in general and solar in particular are rapidly getting cheaper.

05/2011Jaccard-Simon Fraser University4 Bad news for solar industry - I Universal tendency for self-interest-related delusions – “solar will be fully competitive by 2000” 2010 – “by 2025 solar energy will have achieved market competitiveness and will no longer need government incentives.”

05/2011Jaccard-Simon Fraser University5 Ignoring fossil fuel future supplies and market dynamics Source: MIT Natural Gas Report

05/2011Jaccard-Simon Fraser University6 Ignoring the challenges to long payback investments We often see renewables advocates using simple financial analysis with low discount rates when estimating economic returns. Leading researchers label this “naïve financial analysis” because it ignores the extra risk of long payback investments, or what Pindyck (MIT) calls the extra “option value” of short payback investments. With extra risk, long payback investments have higher “expected cost” than naïve financial analysis suggests. Thus, it can be economically “rational” to avoid if possible long payback investments – like solar-electric and solar-thermal - relative to short payback investments – like a more efficient gas furnace. Consumers and firms intuitively know this, or they learn it from painful experiences.

05/2011Jaccard-Simon Fraser University7 Confusing coincident with dispatchable energy production Good news about solar is that its daily and seasonal peak electric or thermal output is coincident with hot season loads in electric and thermal demand. But this is not the same as dispatchable technologies that are virtually certain to be available to meet peak demands (for electric or thermal), so extra costs are required for back-up or storage. See Joskow (MIT) “Comparing the cost of intermittent and dispatchable electricity generation technologies.”

05/2011Jaccard-Simon Fraser University8 Bad news for solar industry - II Governments and the rest of us are good at deluding ourselves about climate targets and the effectiveness of climate policies. In 1997, Jean Chretien promised dramatic reductions in GHG emissions by 2010 and implemented policies that independent experts claimed would be ineffective. He was re-elected anyway. In 2007, Stephen Harper promised dramatic reductions in GHG emissions by 2020 and implemented policies that independent experts claimed would be ineffective. He was re-elected anyway. In 2017, expect new promises – along with more climate-related extreme events like floods, droughts, tornadoes, heat-waves, hurricanes, region-wide fires, and pest infestations.

05/2011Jaccard-Simon Fraser University9 Fossil fuel expansion belies climate promises It is quite simple to determine if governments are serious about promises to reduce GHG emissions significantly by 2050 – by 65% in the case of Canada’s government. Climate policy modelers simulate the global energy-environment system and calculate the time required to drive emissions down by significant levels and what must happen when. Models consistently show that expansion of oil sands is inconsistent with Canada’s 2050 target. In fact, oil sands must be gradually phased out – starting now! (Again, an MIT study provides a good recent example.)

05/2011Jaccard-Simon Fraser University10 Good news – bad news synthesis You have a critical role to play in preventing climate-change. But this role is not just to provide technology and business know- how. Equally important is to lobby for “effective” climate policy. For this, you cannot delude yourself about the competition from fossil fuels. You must not settle for continued modest subsidies. You must lobby strongly for the essential emissions pricing (tax or cap and trade) and regulations on equipment and buildings. This includes pressuring politicians directly as well as educating the public about the need for such policies (information, advertising, newspaper op-eds, videos, etc). It also means defending and promoting politicians who do the right thing.

05/2011Jaccard-Simon Fraser University11 A strategy for making solar happen Abandon delusion that solar can soon compete with fossil fuels for more than niche markets. This flawed strategy supports politicians who lack the courage or honesty to price GHG emissions. Lobby loudly for immediate emissions pricing across Canada. Lobby loudly for regulations requiring solar applications in new buildings that would be economic if emissions were priced today at $100 per tonne CO2 (under risk-honest “expected” cost analysis). Lobby loudly for regulations requiring solar retrofit applications in existing buildings at the time of renovation or ownership transfer. Lobby loudly for comparable regulations for industry, utilities, etc.

05/2011Jaccard-Simon Fraser University12 Conclusion Being the solar industry, you have every right to feel good about yourselves. You have combined your commercial interests with your society’s interests. This is a great place to be. But don’t allow this heady self-satisfaction to foster delusions that hinder you from playing the critical role that is needed. Remember that: 1.Fossil fuels are plentiful and thus likely to remain quite cheap. 2.Rational investment behavior avoids long paybacks. 3.To reduce GHG emissions, we need substantial emissions pricing and serious regulations now. 4.Politicians will not do this without pressure from you and others. Much better to feel good about yourselves in a winning cause than in a catastrophe you could have done much more to help avert.