Forced transition to wind and solar will impose real costs on Canadians
A key aspect of the federal government’s pledge to reduce greenhouse gas emissions and achieve net-zero emissions by 2050 is the nationwide phaseout of coal-fired power by 2030. As with any decision, there are costs and benefits, but unfortunately advocates continue to tell Canadians that these decisions are costless when they will in reality impose costs, potentially significant costs.
Ottawa’s plan is to completely eliminate coal-fired power and replace it with renewable energy, principally wind and solar. However, wind and solar are intermittent sources of power, meaning that they’re not always available. Simply put, we need another source of power when the sun doesn’t shine and the wind doesn’t blow. That means maintaining sufficient energy capacity in a parallel system usually run on natural gas.
This requirement—of building and maintaining a parallel source of energy, namely natural gas—causes overall energy costs to increase when jurisdictions transition from reliable fossil fuels to more renewables.
A new study published by the Fraser Institute used the experiences of Alberta and Ontario to estimate the overall cost implications for Canada moving away from coal to renewables backed up by natural gas. The annual estimate is between $16.8 billion and $37.7 billion, which represents between roughly 1 per cent and 2 per cent of the entire economy. In other words, Canadians will spend the equivalent of 1 to 2 per cent of the economy every year in the form of higher energy costs. And these estimates are relatively conservative since they don’t include the costs of building more transmission lines, land rentals, environmental costs related to bird and bat kills and end-of-life disposal of wind turbines and solar panel wastes.
Of course, the transition to renewables and natural gas is not without benefits. The same study calculated that the transition would reduce national emissions by 7.4 per cent (although that’s less than one-fifth of emission reductions required to meet Ottawa’s 2030 target of reducing emissions by 40 to 45 per cent from 2005 levels).
The shortfall in meeting the emissions reduction is important since it implies much more will be needed with additional costs. For instance, it’s likely Canada will need to rely more on nuclear energy to meet its goal. If the entirety of the new goal were met with nuclear, it would mean building 30 new nuclear power plants before 2030 at substantial costs.
Critically, though, previous research on Ontario’s experience in phasing-out coal-fired plants found only small improvements in air quality, and that comparable improvements could have been achieved at a much lower cost had new pollution control systems been used instead of shuttering plants.
The study’s conclusions are supported by real world experiences in Texas and several European countries, which made similar decisions as Canada—governments impose a transition away from reliable, comparatively inexpensive energy sources such as coal to renewables backed by natural gas. In every case, the result has been a more expensive and less-reliable electrical system.
In light of the experiences of Alberta and Ontario (and parts of the United States and Europe), Canadians should understand that at the very least the forced transition to renewables will impose real costs in the form of higher energy bills. Simply put, there’s no free lunch when it comes to forced energy transitions.