Beware of Political Promises About Climate Change
Posted July 23, 2021
Nova Scotian electricity consumers have seen their bills go up and up. The reasons for that are well hidden.
It is certainly not the price of fuel. In recent years there has been downward pressure on the price of coal across North America as it is replaced by cheaper and more climate-friendly natural gas, and by a growing number of installations for renewable resources.
In Nova Scotia, large-scale wind farms have been an efficient addition to our generation fleet. They are not especially attractive.
The problems start when politicians provide leadership on climate change that is ill-informed, or more interested in appearances than substance.
A decade ago, the NDP government decided that we should have small-scale projects dotted around the province, perhaps so that citizens everywhere could be proud that their community was fighting against climate change.
Scale matters. To be viable, the price was much higher than what was paid to the commercial-scale producers. This resulted in price increases for consumers. Not long after taking power, the McNeil government saw the nonsense and put an end to any future mini projects.
Then the NDP negotiated a terrible contract for electricity from Muskrat Falls. It required Nova Scotia to build the Maritime Link, at a cost of $1.6 billion, by the end of 2017.
That was done and ratepayers have been paying NSP the cost of interest and maintenance ever since. Three and a half years later, the promised power is still not being delivered. The McNeil government had the chance to remedy that problem before signing the final contract but missed it.
Fast forward to today.
On July 8th the federal, provincial, and municipal governments announced a $22.4 million expenditure on “solar gardens” in Antigonish, Berwick, and Mahone Bay. This is a good deal for the towns. They will pay less than 30% of the cost and get all the benefits.
Last year, NSP completed its Integrated Resource Plan (IRP) for the next 25 years. It concluded that utility-scale solar generation will not be cost-competitive over the planning horizon. At the small scale of the solar gardens, the electricity will be that much more expensive.
Neither government had any efficiency criteria for the projects. This is cost-ineffective virtue showing by the federal and provincial governments.
The IRP has a base case assumption that coal plants would be gradually retired concluding in 2040. Ratepayers will still be paying off the cost of those plants whether or not they are used.
That did not discourage Premier Rankin from announcing in March’s throne speech that all the coal plants will be closed by 2030. He did not reveal the substantial extra cost for ratepayers—electricity prices 5%-10% higher between 2030 and 2040.
Perhaps Nova Scotians would support the decision despite the hit on their power bills. It would be nice if they were able to have an informed opinion.
On July 10, Rankin announced competition for low-cost and innovative solutions to supply 10 percent of the province’s electricity from renewables, such as wind and solar.
The Premier also announced an aggressive, new renewable electricity standard, requiring 80 percent of Nova Scotia’s electricity to come from renewable resources by 2030.
Again, there is no indication of what maximum cost per kilowatt-hour he is willing to accept or what the estimated cost to ratepayers will be to achieve the stated goal.
Meanwhile, the federal Liberals have a credibility problem. In 2015 they promised to exceed Canada’s 2030 emissions goal and achieve net-zero emissions by 2050. The emissions did not go down at all during their first mandate. The slight reduction seen since then is attributable to the COVID pandemic’s impact on transportation.
In 2020, they announced that the carbon tax would grow from $30 to $170 between 2020 and 2030, with the big steps starting in 2023. Perhaps they will back off again as they did with their first tax proposal.
On June 29th, they announced that by 2035, all new cars and light-duty trucks sold in the country must be zero-emission vehicles. It made for a good headline.
As pointed out by the Globe and Mail, there are enormous obstacles. Electric cars cost today twice as much as ones that burn gasoline. The cost of copper and lithium in batteries has doubled and will continue to rise. Huge new mines will be needed if new resources can be found.
A cross-country supply chain of charging stations and parts suppliers has to be built virtually from scratch. A lot of additional electricity generation needs to be built. The lowest cost alternatives will already have been built.
Transport Minister Omar Alghabra earnestly acknowledged that “the target is ambitious, undoubtedly, but it is a must. We believe that it’s doable. It needs determination, it needs focus, it needs effort.”
He could have added, “We don’t have a clue what this is going to cost you.”
Beware of politicians promising great progress in reducing greenhouse gas emissions. It is a worthy goal. But Canadians deserve an honest assessment of the cost so they can decide if the plan is well thought through and the faster pace is reasonable.
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