Energy Transformation: Focus on energy use as much as energy sources
Interview with Michael Cleland, Member of the QUEST Board of Directors
Mr. Cleland is a private consultant with extensive experience in energy and environment policy.
He is formerly President and CEO of the Canadian Gas Association. Prior to joining CGA, he was Senior Vice President Government Affairs for the Canadian Electricity Association (CEA). Before joining CEA, he was Assistant Deputy Minister (ADM), Energy Sector in the Department of Natural Resources Canada (NRCan), formerly Energy, Mines and Resources (EMR) and before that, Director General of the Energy Policy Branch. From 1987 to January 1990, he was Assistant Director, Resource Policy Division in the Department of Finance.
We need to shift our focus towards energy demand and usage, since consumer behaviour will be a crucial aspect of Canada’s energy transformation. The energy industry is increasingly becoming a customer-facing business.
Heavy-handed regulation will not be able to lead the entire energy change process and policy that is technologically deterministic will fail. Government policies must set a direction, provide the signals (such as real prices), and provide the institutional support, but not a final destination.
A convergence of energy technologies, information technology and artificial intelligence will be a massive disruptive force in the energy industry.
Federal and provincial governments must increasingly engage and learn from local communities before forming energy policies or implementing energy projects, to ensure that they are the direct beneficiaries of any proposed projects and that they become sources of business opportunity – we need to build a new energy social contract in Canada.
In a talk titled “Demand Better”, you argued that Canada’s biggest green energy opportunities lie in cutting consumption and waste, instead of changing production sources. How will Canada become a zero-emission economy without phasing out fossil fuel production?
If we really want to reach a zero emission economy, we will most likely need to largely phase out fossil fuels. The big question mark though, is what can be done with CO2 capture and disposal technology. I do not think we should rule out the possibility that some of those technologies will become practical and cost effective, and others will emerge. Whether we like it or not, fossil fuels do have a lot of advantages in terms of the sheer energy power that they contain in a very small space as well as their high reliability.
“Changing our energy use is a necessary compliment to thinking about changing the sources of energy, not a substitute.”
We need to put policies in place that drive change in the right direction but we should not make too many assumptions about what it is finally going to look like. The debate with respect to pricing carbon is strangely illiterate in some respects, especially from the conservative side because the alternative is for the most part government actions, which are either intrusive or inefficient. We are experiencing a lot of technological innovation that we cannot possibly predict. If we try to coerce the entire energy process through regulation, we will get it wrong and make it a lot more expensive than we need to. Alternatively, if we factor the costs associated with greenhouse gas emissions into energy prices, investment and consumption decision-makers will adapt.
How can the “hydro” and “hydrocarbon” provinces learn from each other and cooperate to push forward a valuable conversation on the future of Canada’s energy industry?
“There is no such thing as cheap energy. Energy involves big impacts on the environment and local communities, one way or the other.”
What is the balance between national, provincial and local-level energy decision making given Canada’s size and regional differences? How should this evolve?
“All energy projects, renewable or otherwise, will require much more involvement of local communities and local authorities, notably Indigenous authorities, in the decision process.”
What local communities do under their own authority – in other words, with their own energy resources – is the other part of that equation that gets a better balance between top-down and bottom-up decision-making.
Do you see incumbent energy players fully embracing technology and the potential of the energy transformation even at the risk of disrupting their own business?
“We need to think about what customers need and what they will insist on before building our new energy systems.”
The energy transition – more realistically, “transformation” – is very unlikely to be smooth. It is going to cause all sorts of upsets, whether that is in the form of cost surprises, stranded assets or systems that may not deliver. Energy is becoming a customer-facing business and if you focus entirely on upstream production, you are going to miss that point. So if we are worried about the future of Canada’s oil and gas industry, for example, we should not be looking at Fort McMurray, we should be looking at Shanghai.
How will our energy systems look in the future, especially around smart cities and communities?
“The energy transformation is very unlikely to be smooth. It’s going to cause all sorts of upsets, whether in the form of cost surprises, stranded assets or systems that may not deliver.”
The urban transportation system is probably going to be very different. Although electric vehicles will be important, autonomous vehicles and, in effect, distributed transit through Uber and others, will be game changers. Moreover, it would not surprise me in the least if millennials were less likely to own personal vehicles. I suspect that the urban transportation systems of 2050 will not bear any resemblance to today’s systems. Moreover, much of the built environment – buildings and supportive infrastructure – required for 2050 is already built, so change will be incremental and nowhere near as fast as some might like it to be. On the other hand, if it is the development of new neighborhoods or the redevelopment of old neighborhoods, the technological potential for net-zero buildings exists. It is just a matter of pushing the economics and bit-by-bit, you are going to see a pretty fundamental transformation.
QUEST Canada Incorporates Equity, Diversity, and Inclusion Principles into its Capacity Building Initiatives
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