The pursuit of a healthy climate through limited carbon emissions can’t be achieved through the efforts of a singular actor. The current dependence on fossil fuels is ingrained in the infrastructure that’s essential to much of the world’s foundational functions. The complex web that needs to be untangled to undo this dependence requires a coordinated effort across industries and governments.
We see some of this cooperation happening already, through the United Nations’ Climate Change Councils, the Paris Climate Agreement, and various governments’ regulation of emissions-heavy private industries. These initiatives have already made a significant dent in the global increase in temperature and it’s clear that the future of addressing global warming hinges on the ability of governments, private businesses, and technology developers to build lasting partnerships. Such partnerships lend viability to the difficult task of undoing an international energy grid that has been embedded in nearly every segment of society for 200 years.
A promising example of such cooperation can currently be seen in the partnering of Siemens Energy and the Energy Council of Canada. On this episode of the Siemens Energy Podcast, Jacob Irving, President of the Energy Council of Canada, and Arne Wohlschlegel, Managing Director of Siemens Energy Canada, come together to detail their coordinated effort to reach net-zero carbon emissions across the whole of Canada by 2050. The work they’ve done and continue to do could serve as a template for other nations seeking to efficiently reduce their own emissions.
The story of Canada’s energy sector is a cross-section of social change, infrastructure development, and bureaucratic cooperation. It’s a proof-of-concept for the way the world could overcome modern environmental challenges and it’s a story that Jacob and Arne think is worth telling.
The Current Canadian Energy Landscape
Canada is a country that often flies under the radar in the international news cycle. Despite a strong national identity and significant contributions to the world stage, the assumption of stability that is often associated with Canada means it’s seldom the focus of international current events. This, unfortunately, extends to the Canadian energy sector. To the detriment of the world, the trending success in the structure of Canada’s energy industry goes unnoticed.
While many associate the northern Canadian geography with simply cold and snow, there’s an abundance of natural resources available that have allowed Canada to build a robust system of infrastructure and energy. According to a 2019 review, Canada was the fourth-leading producer of oil in the world and the sixth-leading producer of natural gas. This puts Canada’s natural gas production ahead of Saudi Arabia and its oil production ahead of both Iraq and China, two other oil production giants. This is significant as a testament to the access Canada has to natural resources. But there is a quirk in Canada’s current carbon emissions.
In most developed nations, the leading producer of CO2 into the earth’s atmosphere is the electrical grid. To produce the majority of electricity needed to power critical systems, fossil fuels are burned to generate the necessary power. While hydroelectric power, solar power, and wind turbines supplement many electrical grids around the world, the bulk of these grids depends on carbon-heavy combustion engines and turbines to create power.
In Canada, this is not the case. While it’s true that it does still rely on carbon-rich fuels, electricity generation is not the primary producer of carbon emissions. Instead, the production of oil and natural gas is the leading emitter, with transportation coming in at a close second. This affords much more flexibility in pursuing carbon neutrality. As renewable energy becomes more widely adopted, oil production can naturally decrease, thus offering a reduction in carbon emissions as a natural consequence of the global shift towards renewables. In the case of transportation, the carbon is then being produced at a consumer level, not primarily by the infrastructure that the national energy grid depends on. This, too, will naturally fall as consumer renewables become more accessible and affordable.
This means that a significant amount of the work in reaching carbon neutrality will be done by the global market as a natural part of renewable innovation. This is not to say that Canada will not need to continue to innovate ways to reduce its emissions, rather that the barriers to that innovation are comparatively low.
The future, then, of Canadian energy lies in coordination between the government and private industry to develop solutions to those obstacles that do exist.
Transforming the Energy Sector
As oil production can necessarily fall as the transportation industry comes to rely on alternative energy sources, transportation is a chief focus of energy reform. This sector is not immune to the challenges facing other nations and their electrical systems, as the infrastructure that those systems depend on is also present in transportation. Combustion engines are still the primary method of generating energy in cars, trains, planes, and boats. Although electric vehicles are becoming more commonplace, the goal of carbon neutrality by 2050 is not attainable through the slow adoption of electric vehicles alone. Instead, alternative fuels capable of functioning with existing infrastructure are being developed. Haru Oni, for example, is a Siemens Energy initiative aimed at creating e-fuels, a near carbon-neutral alternative to gasoline which many modern combustion engines can use as fuel.
This is, of course, not the only solution that Canada is looking to. Along with being a leading oil and natural gas producer, Canada also ranks among the top ten hydrogen producers in the world. Hydrogen is another option for infrastructure built to work through the burning of fossil fuels. Hydrogen energy works in a similar way, but burns cleaner than coal, for example. Unlike e-fuels, the current combustion energy infrastructure is not necessarily one-to-one compatible with hydrogen, but the transition is much more achievable in the short term than other renewable alternatives. Shifting to a more hydrogen-centric energy industry in the near future is a multifaceted solution for the energy industry. As mentioned, hydrogen is a cleaner-burning fuel. Implementing hydrogen into Canada’s electrical grid can both reduce emissions by this grid and also reduce dependence on oil and natural gas production, thus reducing the need for oil and gas production and refinement. This would limit emissions across two leading carbon producers with just one fuel transition.
A potential hurdle some of these solutions face is the slow-moving bureaucratic machine that is government regulation. The energy sector intersects issues of environmentalism, international commerce, public works, and private industry. Because of this vast reach, there are often stringent regulations regarding the sorts of projects that private energy companies are legally permitted to initiate. These regulations can take the form of hardline requirements such as laws that outline the emissions a company is legally allowed to produce, or soft incentives, such as tax credits for certain environmentally-friendly projects. Regardless of type, changes to these regulations are often slow to take shape and a company may wait years before the government gives it the green light on the necessary permits and licenses.
In the movement toward carbon neutrality, time is of the essence, and overcoming this arduously-slow process is one of the primary motivations behind the informal partnership between Siemens Energy Canada and the Energy Council of Canada. Facilitating clear and concise communication between private businesses and the governments that regulate them goes a long way toward streamlining the permitting and approval process. Understanding the needs and concerns of both interested parties allows each to capitulate to the other's demands. Disagreement is much more quickly resolved when it’s not being mediated through applications and permits.
There is promise that these partnerships are becoming more commonplace. In many private businesses, ESG departments are beginning to take on a more prominent role, alongside R&D, marketing, or IT departments. Companies are regularly sending ESG officers to conferences and conventions and allowing them to provide serious input on the direction of the business. There is, in essence, an advocate for government cooperation within a leadership role in many energy-producing companies, which is helping to clear the way for the kind of communication necessary to streamline the bureaucratic process.
"We have history and ability in this sector. We know what hydrogen is, and we know how to produce it. We are also blessed with a lot of given hydrocarbon infrastructure that can be converted into hydrogen infrastructure."Jacob Irving, President of the Energy Council of Canada
Present Challenge and Future Opportunity
Despite the obstacles standing in the way of carbon neutrality, Canada has done a remarkable job of moving towards a greener economy, especially in relation to its peers in the industry. This success offers a challenge of its own, however. The success of Canada is largely unrecognized on the world stage. It’s not in the nature of Canada to boast about its accomplishments but, in this case, boasting is an asset. Not only would the world do well to see the benefits of the coordination between Canada and Siemens Energy, or the success of providing clean energy tax incentives, but it would help the Canadian quest for clean energy as well. In the modern global economy, no nation is an island. As much as Canada may be making great strides toward carbon neutrality on its own, to achieve its goal requires the cooperation of other nations that Canada depends on for trade, infrastructure, and the like. Investment into electric car charging stations is of little use if the top auto manufacturers in the world, China and the United States, continue to produce only gasoline-powered cars, for example. It is essential, then, that Canada takes initiatives to educate the international community on its efforts and successes so that other nations may begin replicating that success.
To this end, Canada has formed a North American International Outreach Program with the express purpose of telling Canada’s energy story to the world. This initiative is aimed at encouraging the energy industry itself to be the salesperson for Canada’s energy success, rather than the Canadian government. This approach hopes to encourage more energy producers to bring their business to Canada and engage in the sorts of partnerships that Siemens Energy has. It’s an internal project, hoping to build a more robust energy industry from within. This helps, as well, with a bottom-up, rather than a top-down, energy reform approach. Reforms are often far more successful when the market and industry are self-motivated, rather than when the motivation is forced upon them through government regulation. The North American International Outreach Program is one such example of the Canadian government attempting to effect that internal motivation to encourage continued growth both within Canada and around the world.
The bottom-up approach extends not only to the market itself but even further down, to the consumer level. Adoption of renewable technology faces an uphill battle of having to undo the ubiquitousness of fossil fuel infrastructure. This infrastructure became commonplace precisely because consumers demanded it at a time when it was the pinnacle of energy technology. Now that it has become so entrenched in daily use, consumers are not viewing renewable energy in the same way. Its usefulness and importance are not readily apparent and so the consumer is not demanding its implementation in the same way that they did for, say, the lightbulb when it was invented.
This is another arena in which Siemens Energy Canada and the Energy Council of Canada see education as an essential tool. The market demand for renewable energy technology doesn’t exist because the average consumer hasn’t been properly educated on its significance. Clean energy is still seen by many as a novelty, not as the future norm. Bringing the average consumer onboard with energy sector reform can help to create the market demand and thus the economic viability of renewable infrastructure.
Financial incentive is an important part of the carbon-neutral journey because profit can motivate innovation. Compared to its fossil fuel counterparts, renewable energy is a very young technology and huge strides in innovation are necessary to create the market viability necessary to encourage commonplace adoption. Consumer demand and tax incentives will hopefully create the ideal economic environment for private companies like Siemens Energy Canada to continue pushing the envelope of what renewable tech can do. The hope is that there will be a clean energy equivalent of the iPhone revolution, where a leap forward in technological capability changes the market landscape permanently. With a proper education campaign and buy-in from the energy industry itself, the research and development needed to make these kinds of innovations are within reach.
“No one can do this alone and by themselves. We need to do this in a partnership. We need to collaborate. And this is private industry, governments, all stakeholders and investors need to come together to make the transition work.”Arne Wohlschlegel, Managing Director at Siemens Energy Canada
The Canadian Model
Canadian energy sector is moving towards carbon neutrality at an astounding rate. The 2050 goal set by the Paris Climate Agreement once seemed lofty but cooperation between institutions has made it an easily reachable target. There is still work to be done, but the Canadian model sets forth a plan for how that work might be accomplished.
The natural resources plentifully available in Canada allow for energy security and help to prop up the Canadian energy economy until it can become fully reliant on carbon-neutral energy sources. These resources can help supplement other nations’ industries as well, and the trade that produces helps the Canadian government provide the financial incentives to create widespread adoption and innovation of green technology. The implementation of this tech is expedited through a comprehensive public education campaign that creates the market demand for renewable consumer tech, creating further financial incentives and promoting competition and innovation among clean energy producers.
Taken as a whole, the picture painted by Canada’s approach to the renewable energy transition is vibrant with possibility and promise. As a model to follow, Canada is leading the world to a more sustainable energy economy.