By Jock Finlayson
and Denise Mullen
Business Council of B.C.
There’s no getting around it: the world is consuming more energy than ever, notwithstanding a temporary dip in demand associated with the COVID-19 pandemic.
This reflects the simple fact that all human activity ultimately is derived from the use of energy. We depend on vast quantities of it – whether it’s embedded in food, building materials or refined oil products, or used to construct buildings, provide electricity, manufacture things, or transport goods and people.
We in the advanced economies owe our standard of living to the ability to harness energy resources. And the emerging and developing economies, where the bulk of the world’s population lives, are mostly following a similar path.
As the global population climbs, so too will the demand for energy. The question is what types of energy will be produced and for what purposes, in a world where fossil fuels still supply four-fifths of all energy.
For many analysts and policy-makers, finding a pathway to full electrification of the economy is the most promising way to tackle climate change, provided the additional electricity produced comes from sources that don’t emit greenhouse gases (GHGs).
The demand for electricity has been growing most quickly in emerging economies, at an average annual pace of six per cent over the past three decades. By 2100, eight out 10 of the Earth’s inhabitants will call these regions home. That means emerging economies will determine the trajectory of global energy demand in the coming decades.
Contrast this with the advanced economies. There, electricity consumption has inched ahead by 1.6 per cent annually for the last three decades. This figure is likely to decline in a post-pandemic world, as commuting for work and travel becomes less common, and governments step up efforts to reduce GHG emissions.
But what happens in the advanced economies is less relevant to understanding the direction of the global energy system. Instead, developments in the emerging economies will dictate where things are headed.
In 2019, electricity made up just under one-fifth of all energy consumed in the world, with three-quarters of this supplied by fossil fuels. Electricity is also the energy sub-sector where countries have made the most progress in lowering GHG emissions, by substituting natural gas for coal and adding renewable sources to the overall generation mix.
This is true for Germany and the United Kingdom, often cited as positive role models, and also for the United States and Canada, where the GHG footprint of the electricity sector has declined appreciably since 2000.
Natural gas has a big role to play in getting to a lower carbon future. It’s also a sector where Canada, with extensive reserves of natural gas, can contribute to global efforts to tamp down GHG emissions.
The natural-gas-for-coal switch in the electricity sector is also important when viewed through the lens of energy capacity versus usable energy. The former is the maximum output an electricity generator can physically produce. Energy flow is the actual energy produced. Only the flow is available to support the kinds of work we need energy to do.
Many, including the International Energy Agency, refer to the need for massive investments to expand renewable power capacity. And countries around the world have indeed been investing huge sums to that end.
However, the amount of usable energy that flows from these new facility investments is often significantly less than the headlines would suggest, particularly in the case of wind, solar and some other forms of renewable electricity. And the spatial requirements for expanding small and medium-scale distributed renewables are often large.
Increasing the quantum of renewable electrons to help move the global electricity sector to a lower-carbon pathway makes sense but will require the development of new generation resources.
Natural gas is a logical fuel to use in both the electricity and transportation sectors, while we explore, wait, and eventually transition to technologies like fusion and fuels such as hydrogen.
The future of electricity production and consumption is not an ‘or’ but rather an ‘and.’
Endowed with ample energy resources, Canada has an opportunity to contribute and benefit from the gifts of geology and geography, and in the process help to dig ourselves out of today’s deep pandemic-induced economic hole.
Jock Finlayson is executive vice-president of the Business Council of British Columbia. Denise Mullen is director of environment and sustainability at the Business Council of B.C.