Tuesday, 26 July 2016

If You Want To Fight Climate Change, Don't Fight Pipelines

Blair King - Environmental Scientist
Published: The Blog - Huffpost British Columbia
On July 27 I will be attending the Trans Mountain Expansion Project (TMX) Ministerial Panel Public Open House in Langley. If I get a chance this is what I intend to say:
I am here today not to speak directly in support of the TMX but rather to clear up some misconceptions and talking points you have heard, and will hear, at this open house.
Let's start with the elephant in the room: climate change. Let's be frank, climate change is real, it is dangerous and we, as a country, have to do more to fight climate change. That being said climate change is a red herring in this discussion. Why? Because up to 80 per cent of the emissions associated with fossil fuels are generated in their combustion. Pipelines represent a negligible part of that equation and the upstream numbers for Canadian producers are entirely comparable to our American counterparts.
Carbon emissions are the result of the demand side of the ledger, the burning of fossil fuels, not their generation/transportation. The world is awash in oil. If it is not supplied from Alberta, it will be supplied by Algeria or Nigeria. If you want to fight climate change, don't fight pipelines -- fight for market-based mechanisms like carbon pricing. History has shown that the only way to reduce fossil fuel use (and resultant carbon emissions) is to address the demand side of the ledger.
So, where is the demand coming from? Well almost all (95 per cent) of the world's transportation energy comes from petroleum-based fuels. Transportation use represents about 33 per cent of energy use in British Columbia.
Only by making fossil fuels more expensive will we have the incentive to develop the technologies necessary to get our transportation systems off fossil fuels.
Alternatives to fossil fuels do not exist for our planes, trains, ferries and transport trucks and electrical vehicles for personal transportation are just becoming practical. Even with a herculean effort we are not going to eliminate fossil fuels from our transportation system for decades. Only by making fossil fuels more expensive will we have the incentive to develop the technologies necessary to get our transportation systems off fossil fuels.
Moreover, even if we were to somehow convert our transportation systems to electric power, we would not come close to having the electrical generating capacity needed to meet the demand. In British Columbia transportation uses the equivalent of nine to 15 Site C Dams worth of energy per year. We do not have that kind of electricity oversupply just lying around.
Renewables will certainly help but ramping up our renewable energy capacity represents another multi-decade long struggle and our existing electrical grid is not compatible with large-scale renewable energy. Going to renewables will mean completely re-designing our electrical grid which will also take time and money.
What this means is that we are going to have a continuing demand for fossil fuels for decades. The question we have to ask ourselves is how are we going to get access to that fuel?
In most of B.C. we get our liquid fuels from Alberta (by truck, rail and pipeline) and the Puget Sound (by barge and tanker). That supply network is stretched extremely thin and as the folks in the interior know, a short shut-down in Edmonton can mean empty gas stations in Kamloops and Kelowna.
I want to leave my kids a world where fossil fuels are not used for transportation or energy, but we are not there yet.
The Puget Sound has historically received the majority of its crude oil from Alaska via tanker. You know that West Coast Tanker ban? Well, Americans have been shipping up to 600,000 barrel/day of crude from Alaska to the Puget Sound through the Salish Sea for the last 20 years. That Alaskan oil is drying up, and besides Canadian oil (via the existing Trans Mountain) the Puget Sound is going to be getting its future oil by rail.
How will they do that? Well the infrastructure is almost in place to supply up to725,000 barrels/day to the U.S. West Coast by rail. Much of that oil will travel along the headwaters of the Kootenay River and alongside the Columbia River to the Puget Sound.
So today's discussion is not about climate change nor is it about renewable energy, it is about how we are going to get liquid hydrocarbons to market in the decades it takes to wean ourselves off fossil fuels. The only debate, today, is how do we transport that oil as safely as possible?
Well, the answer to that question is definitive: pipelines. Pipelines have 4.5 times fewer accidents/spills than oil-by-rail and while every oil spills represents a catastrophe; spills from pipelines do not hold a candle to the apocalyptic aftermath of rail accidents. People like me can clean up the Kalamazoo River, but we can't do anything to restore all those lives lost in Lac Megantic.
I am a pragmatist. I want to leave my kids a world where fossil fuels are not used for transportation or energy, but we are not there yet. Until we reach that point, we will need to move fossil fuels, and the safest and most environmentally sensitive way to move those fuels over land is via pipeline and not oil-by-rail. Because let's be honest, here: the alternative to TMX is not some fossil fuel-free Shangri-La, it is oil-by-rail.

Monday, 25 July 2016

North American Leaders Summit Los Tres Amigos - Other Descriptives We Could Use

Publisher: Scott Jeffrey
Energy Processing Canada

It has become more or less a tradition, if you can characterize anything going back to 2005 in such a way.

The North American Leader's Summit, or the Tree Amigos, started when Vicente Fax, George W. Bush, and Paul Martin (remember Paul?) decided to get together. Back then, they called it the Security and Prosperity Partnership of North America, but the press soon shortened it to the moniker we all use today. It has been held ever since, with the exception of a 2015 cancellation by Stephen Harper because of Barack Obama's stubbornness over the Keystone Pipeline. Of course, our snub didn't do any good, as Obama failed to endorse KXL regardless of our "powerful" message.

There have been other sore points, with Mexican outrage over our imposition of visa requirements, and the restriction of Canadian beef imports to Mexico. For the most part though, the meeting has been a series of photo ops in often luxurious and historic venues. Of substance there has been little, and that tradition continued with the latest summit, hosted by Justin Trudeau in Ottawa June 29 of this year. The other invited guests were Enrique Pena Nieto of Mexico, and of course Barack Obama from the U.S.

What has led to my suggestions for a proposed name change though, is the joint announcement that all three nations would increase their clean energy consumption to 50 per cent by 2025. This would represent an increase of 13 per cent over previous announcements.

Quite apart from the obvious impossibility of reaching such targets, it is an undeniable fact that none of the current triad will be around in nine years. Even if the parties in power are the same, politicians are notorious for not living up to their predecessor's commitments. With a name change they have immediate deniability, something all politicians crave. Even assuming that their remaining time in office would be spent working solely on this goal, economic realities would come into play for even the most delusional of the three administrations. All three nations are heavily dependent on oil and gas revenues, and the kind of significant shit it would take to achieve their stated targets is not financially or even physically doable.

There is even growing debate on what constitutes "clean" energy. Many environmentalists now dispute the nature of hydropower, because of the large footprint left by the construction of dams and the formation of man-made bodies of water. Wind farms mar the landscape as well, and all manner of birds are put at risk. Even the generation of solar power requires huge areas to set up solar panels.

It is at best insulting that over the years, a succession of North American political leaders would continue to make such meaningless statements, and set such unrealistic targets, and then blithely assume that the voting public would just accept them without question. If they're going to spend taxpayers' money, why can't they stick to the achievable, instead of the "pie in the sky" rhetoric that dominates so much of today's political scene? We've had three Prime Ministers, three Mexican Presidents, and two U.S. Presidents involved, and they all spew the same meaningless drivel.

For many of us, it brings to mind unfavourable comparisons to the 1986 movie, "Three Amigos".  IN the film, there is at least a Canadian Amigo, but no Mexican Amigo is in evidence. The movie is famous for making statements that could apply directly to politicians of all stripes. A memorable quote by one of the Amigos was "We're just going to have to use our brains - Damn it!" Another came from two lovelies south of the U.S. border One said, "Which one do you like?" The other replied, "The one who's not too smart." The rejoinder was "Which one is that?" The movie is at least recognized as farce, but incredibly, successive leaders of over half a billion people take themselves seriously.

And so, in an attempt to salvage some kind of truth from the Amigos summits, I am suggesting a change in nickname. I'm going to leave it up to the reader to pick, and I invite you to call and register your preference. I promise I'll report back.

Here they are:
  • Los Tres IIusionistas
  • Los Tres Narradores
  • Los Tres Mentirosos
If you have spent some time in Mexico, you may know the words, but if not, look them up, and pick the title that seems most apt.

It used to be that if you were one voice, you were "crying in the wilderness." Now it is the majority that is consigned to that wilderness. Re-naming this leader's meeting will not change anything, but at least we can say they are labelling themselves correctly.

Thursday, 21 July 2016

The Value Adding Role of Geophysics In The Oil Industry

Contributed by the Chief Geophysicists Forum
Published: Daily Oil Bulletin

The role of geophysics in the industry is a robustly debated subject these days. As our industry continues to evolve in order to meet challenges brought on by unconventional resources, changing supply and demand factors, environmental drivers, and legislative and tax regime changes — just to name a few — all aspects of our industry are under scrutiny. Nobody wants to spend money or do anything that cannot be immediately assessed for the value it adds. It is under this scrutiny that geophysicists could perhaps be forgiven for periodic existential anxiety.
Geophysicists are an important part of the group of professionals who work together on the value adding process of looking for and producing hydrocarbon reserves. Understanding and communication of our respective roles and contributions in that process is urgently required.
At its essence, geophysics has developed as the most cost effective method of sampling the subsurface. All of the key geophysical methods allow us to acquire the immense information about the subsurface for a low unit cost. Initial methods were focused on basin wide prospect assessment. Two dimensional seismic was acquired to illuminate large structures along very long regional lines. This proved quite successful, and the theme of cost effectively being able to learn relatively large amounts about the subsurface without direct measurement was proven out. Continued innovation in the geophysical science has held this premise to be true. Every time we advance the science, it allows us to learn more about the subsurface in the most cost effective manner possible. The nature of what we learn has continued to be more specific, accurate, detailed and now encompasses attributes of the subsurface that we never dreamed of previously, but nevertheless it all holds the same essential quality, that it could not have been learned in a more cost effective way.
Geophysicists currently contribute to asset teams and service companies in a wide range of ways. This is mirrored by the many uses that seismic has:
  • Traditional 2D and 3D seismic is key for exploration and development workflows. Modern acquisition and processing techniques have enabled high quality illumination of subsurface for conventional and unconventional reservoirs at much lower costs than in the past;
  • Prestack workflows, such as AVO and anisotropic velocity analysis are used to predict fluid properties and localized stress and fracture orientation
  • Seismic attributes and quantitative geophysics can be used to predict localized stress regimes, fault distribution, and cap rock integrity, and can further be used to highlight statistical relationships with pay and reservoir quality through cross correlation;
  • 3 component seismic is used to predict fluid distribution, rock properties and changes in lithology;
  • 4D seismic is routinely used to measure the effectiveness of enhanced recovery programs;
  • Seismic acquisition can be used to offset rental payments on oil sand leases;
  • Microseismic imaging of hydraulic fracturing for improving fracture designs and well completions and optimizing the spacing and sequencing between offset wells;
  •  Induced seismicity monitoring for regulatory compliance and mitigation of seismic risk associated with anomalous ground motion.
  • In an industry where producing companies are adopting decision tree and value of information analysis in an effort to objectify decision making, cost effective and highly accurate methods for reducing risk are very important. Lee Hunt (Hunt, 2013) highlights the measurable impact that geophysical methods have on reducing risk in an economical way, even in situations where risk is fairly low.
Geophysical data and analysis is good for all the things that companies are trying to achieve these days. It is cost effective, for the amount of data it supplies, it is environmentally friendly, it reduces risk, increases insight into the subsurface, and the insight that it provides has broad application across geology, reservoir engineering, well planning, and completions. So in the face of this, why is geophysics even perceived to be under threat?
The truth is, there is much room for improvement, and the geophysicists may share some of the blame themselves.
The Chief Geophysicist Forum (CGF) is a subcommittee of the CSEG, and meets quarterly. Among its current priorities is an effort to understand and discuss the factors that are contributing to a reduced focus on geophysics in the industry. Its 65+ members comprise a cross section of the industry and include leading geophysicists from large and small producing companies, service providers, consultants and academics.
As it relates to improving the utilization of geophysics and increasing the benefits to oil companies, the group identified two themes: the need to better integrate asset team communication and workflows, and the need for higher levels of business acumen from the geophysicists themselves.
Geophysical data and analysis has broad application across producing and service companies. The utility of the data and analysis is dependent on integrating that data properly in the context of the entire asset team. Integrated communications are needed in order to ensure this happens properly both within our companies and also between all producers/service companies/regulators and universities. Communication between all members of an asset team needs to be constant and consistent, and not depend upon the discipline of the team member. Regular discussions must take place between the geophysicist, geologist, reservoir engineer, drilling operations team, and land person. This is necessary in order to properly utilize geophysically derived data – especially where that data is easily confused because of similar or identical terminology that is borrowed from other disciplines (Fox and Reine, 2014). Although intuitively obvious, the observations of the CGF indicate that this does not happen enough.
Integration is further facilitated by an approach to technology that enables easy sharing of team members’ output. This encourages constant engagement as opposed to a more traditional linear approach to tasks. Asset teams that are highly integrated are able to utilize geophysical data across the lifecycle of the asset. This enables important subsurface understanding at the point of planning wells and surface facilities, integrates geology and engineering data while planning completions (seismic derived pore pressure prediction for example), and allows for real-time well steering. The key point here is not the emphasis on geophysical data but rather the presence of all disciplines’ data and interpretation at all points in the asset lifecycle. Again, while the benefits of this are intuitively obvious, it is also clear that it is not widely adopted.
The requirement for business acumen is higher now because of reduced netbacks across all our industry. It is no longer sufficient simply to be highly technically proficient. All geoscientists need to put their work, analysis, interpretation, requested additional work, and suggestions in terms of the business value it creates for the asset. This is the language that should be used. Companies have adopted the previously mentioned decision tree and value of information (VOI) analysis as a method of establishing this type of protocol within an industry that has been guilty at times of pursuing ‘data for data’s sake.’ This is both important infrastructure, and a strong message to employees, that investment of any form needs to be articulated in terms of return on that investment. The cost of deploying geophysics can often be assessed in terms of projected well outcomes. Geophysics, properly used, maximizes the extraction of  resources and appreciably reduces finding and development costs. Placing horizontal wells too close together can appreciably affect a drilling budget. Placing wells in sub-optimal orientations and positions can severely affect P10, P50 and P90 outcomes, resultant deliverability and ultimately reserves. While geophysics seldom provides a concrete answer, it does mitigate drill risk and heighten the chances of success.
Geophysical technology also needs to evolve and keep current with the latest industry business needs. A prime example is microseismic, which has evolved into a key geophysical tool to optimize unconventional reservoir exploitation. Similarly, recent concerns around induced seismicity and questions about the associated seismic risk have led to imposition of regulatory required seismic monitoring for certain hydraulic fracturing and waste water disposal wells. During economic challenging times, finding cost effective technical solutions requires a thorough understanding of the geophysical technology against a backdrop of the industry’s social license to operate.
The challenges that our industry is facing are indeed difficult. Consensus is growing that we will adapt to these challenges — as we have always done — but look and act differently when all is said and done. A fundamentally different industry isn’t necessarily a bad thing, if it means that we continue to become smarter and more efficient (by all definitions of that word) as a result. As it relates to geophysics, integrated, well communicated, and properly articulated geophysics can be a great enabler in the future — and will clearly increase value.

Friday, 15 July 2016

Tax Burden For the Average Alberta Family Set to Grow

By: Steve Lafleur, Ben Eisen and Charles Lammam, The Fraser Institue
Published: The Roughneck Buy & Sell

Alberta is typically thought of as a low-tax jurisdiction in Canada. That's largely true. However, Alberta's tax advantage will likely shrink in the future with a recent onslaught of tax increases - some already implemented, some soon to come.

But even today, the tax burden isn't all that light. In 2016, the average Alberta family will pay $47,752 in total taxes. That's 37.4 percent of its annual income ($127,822) going to provincial, federal and local taxes.

One way to put the size of this tax bill into context is to consider a hypothetical scenario where, this year, the average Alberta family paid its total annual tax bill upfront. Under these circumstances, it would give government every dollar it earned up to May 16. In other words, May 17 was Tax Freedom Day in Alberta. It's only after four and a half months of the year that Alberta families finally work for themselves, and not government.

While this year Albertans celebrated Tax Freedom Day significantly earlier than other Canadians across the country, that could soon change once the full suite of tax increases announced by the Notley government over the past year (including the recently passed carbon tax) come into effect. Indeed, the tax hikes already implemented (including increases to the personal income tax and corporate income tax) would have pushed this year's Tax Freedom Day later if not for the sharp economic downturn in the province, which increased unemployment and pushed many Albertans into lower income tax brackets.

Yet this level of taxation (again, 37.4 percent of the average Alberta family's income) is still not enough to satisfy the excessive spending habits of governments.

This year, the provincial government plans to spend $10.4 billion more than what revenues would allow while the federal government plans to spend $29.4 billion more. Government debt is simply deferred taxation, so these budget deficits ultimately must be paid for with taxes in the future.

Put another way, governments now spend more than they collect from Albertans each year, leaving the problem of paying for it to young Albertans.

Let's assume the provincial and federal governments increased taxes further to balance their budgets this year instead of financing the extra expenditures with deficits. If that were the case, Tax Freedom Day in Alberta would arrive 25 days later. That means Albertans would start working for themselves nearly a month later - on June 11, instead of May 17. In this scenario, Tax Freedom Day in Alberta would come later than in neighbouring Saskatchewan. So much for the Alberta Advantage.

Albertans currently work 137 days of the year to fund government before pocketing a single dollar for themselves. Unfortunately, in the future, Albertans may end up working later into the year unless governments stop raising tax rates, begin living within their means and rein in spending.

Changing Industry Dynamics, Public Policy Shifts Are Here To Stay

By: Pierre Alvarez
Published: Daily Oil Bulletin

Over recent weeks the Daily Oil Bulletin has talked to five high-profile, experienced and well-known oil and gas sector leaders about the current downturn. Is it different than others in recent memory? What will the outcome be? What is the best path, as an industry in Western Canada, going forward? An article on Peter Tertzakian appeared on Monday, one on Roger Soucy appeared on Tuesday and one on Charlie Fischer appeared on Wednesday.
Today: Pierre Alvarez.
With over three decades of senior management experience in the Canadian oil, natural gas, pipeline and electricity sectors, nothing much surprises Pierre Alvarez when it comes to the inherent ebbs and flows of Canada’s energy industry.
In fact it’s safe to say Alvarez, whose resume includes nine years as president of the Canadian Association of Petroleum Producers (CAPP) from June 1999 to September 2008, has pretty much seen it all. Yet he views the current and prolonged downturn as being a precursor of sorts to a forever changed business and operational reality for the Canadian oilpatch.
While he’s loathe to speculate on the future of the western Canadian oil and gas sector once the current downturn is in the rearview mirror—“predictions are not productive”—Alvarez notes the industry will be forever changed, with junior oil and gas entities perhaps being the most impacted.
“I think the changes are going to be significant, especially in Western Canada where I think the junior sector is going to have a much more difficult time bouncing back this time. I think lack of capital, cost of entry in terms of liabilities that are out there, the cost of the regulatory process and all that, makes it really difficult on them,” he says.
“The one thing I do know is I don’t think we’ll see the junior sector the way we have historically.”
Although Canada’s oil and gas industry still has legs and future opportunities beckon, the landscape, both currently and going forward, looks a whole lot different than what the industry was facing coming out of past slumps. And perhaps the most obvious and pronounced difference, according to Alvarez, is the metamorphosis of the United States from being Canada’s largest and most reliable customer to becoming a significant competitor.
“We’re seeing huge amounts of shale gas and tight oil being brought into the marketplace. You see U.S. gas take over a significant portion of the eastern Canadian market for natural gas and moving into the western part of the continent, as well,” he says.
“So you’re seeing a fundamental shift in market dynamics. Gone are the days where Canadian producers could still sell everything they wanted—they just had to produce it. And now, that’s not the case.”
Secondly, Alvarez points to the climate change-fueled push to increase the proportion of renewables in the energy mix as another development that is quickly becoming another fast-paced step-change facing the oil and gas sector. Whether it’s the inevitable ramp-up of electric vehicles, or increased emphasis on developing larger solar or wind power options, market share for petroleum-based energy sources will undoubtedly become more challenged in coming years and decades.
“Now we’re starting to see for the first time where renewables have gone from being next year or next decade to a whole lot sooner in their application and, in a lot of instances, it’s immediate,” Alvarez says.
“So I think that’s a huge change in what’s coming. You’ve now got to consider that in future plans for any number of reasons, not the least of which is you want to be able to offer a portfolio of energy services. I think the renewable piece, you have to look at.”

Public policy shifts have growing implications

Alvarez, who is currently vice chair of Global Public Affairs, a Canadian firm with global reach and that provides integrated government relations, strategic communications and issues management consulting services, says there’s been an “enormous” shift in public policy. And that has, and will continue, to change the business and operational environment under which oil and gas companies operate under.
“There used to be a [public policy] view of natural resources, and not just energy but forestry and mining, that natural resources were really seen as the engines of growth for the country. Where natural resources were seen as an obvious and significant part of the economy, now I think that’s much more in question as to whether that really remains,” Alvarez says.
“And that’s partly because of environmental perspectives. It’s also partly because of the shift in demographics where rural and remote Canada is de-populating in many ways. Hence, the immediate relevance of those areas to government is declining, whereas the big urban centres, where it is a service economy, IT, banking and those types of things, are increasingly seen as being the growth areas,” he adds.
“So government focus on policy is far more on those sectors than it is on the traditional and resources economies. Now, we’re seeing a lot less public support for those natural resource industries.”
While the dwindling rural importance as it pertains to shaping public policy and the resulting effect on natural resource industries may at first seem like a stretch, Alvarez says it shouldn’t.
“If you look at the demographic shifts where you’ve got larger and larger urban centres, where you’ve got more young people who didn’t grow up with summer jobs on the farm or those kinds of things and who would often work on the rigs during off times and who were familiar or used to the industry and as a result were big supporters of the industry, that’s a lot less now,” he says.
“I think a big part of it is because there is no connection back to those land-based activities that we had for a long time. That leads not only to governments being less interested, but it also leads to the rise of opposition to projects because I don’t think people are familiar with, or generally appreciate, the significance of the natural resource sectors.”
And that will not only affect the future of the oil and gas sector in Western Canada, but many small and remote communities, as well.
“It used to be the farm boys would work on the farm in the summer and then work on the rigs after. It helped allow those communities to be vibrant and self-sustaining. But it’s increasingly more and more difficult. There’s an obvious impact on government revenues because of this downturn, but I think of it more from a pure community point of view where what’s going to keep those communities going and vibrant?"

How can industry address the challenges?

Like most industry experts and observers, Alvarez stresses the need to continue to hammer down the cost structure as being paramount to the future health of the Canadian oilpatch.
“You can’t do anything about price but you can do something about costs. So clearly that’s got to be a part of it,” he says.
“The oil market is returning to some kind of equilibrium. So when you get there a significant change in supply could change the market relatively quickly. But I think the focus has got to be, to be able to do it cheaper, better and with less impact. Those are the things we can control, and things we have to control.”
Another obvious need is the ability of western Canadian producers to be able to access alternative markets in this day and age of prolific U.S. output capability.
“We do need to look at where the growth markets are, and they’re not going to be in the U.S., at least not for awhile. So pipeline access [to] various markets is hugely important, whether it’s for LNG or for oil going off the West Coast, which is obviously critical,” Alvarez says.
While the co-ordinated, vocal and well-funded efforts of the social media-savvy anti-oil faction poses a significant challenge to the industry, Alvarez is of the belief that most Canadians support the responsible and sustainable development of oil and gas, as well as the proposed  infrastructure projects required to open up new markets.
But with a vocal minority often grabbing the spotlight and headlines, it remains an uphill battle to sway the discussion in industry’s favour. And to do that, the sector will have to continue to pick up its game.
“I would argue that the minority are against these developments. There’s no question it’s a bigger proportion of the population these days, but I think a lot of the polls show a majority are in favour of these developments. They have to be properly done and properly reviewed and all those kinds of things, but I think there still is an appreciation for them,” Alvarez says.
“But there is no question the ‘off-oil’ movement is very sophisticated, very well funded and has the advantage of they don’t have to report to shareholders, they don’t have to report to a securities commission; you can make whichever claims you want. And with social media, it’s out there in the blink of an eye. It’s quick, it’s easy and there are no rules. You can say anything you want. That makes it difficult for the industry,” he adds.
“I think both industry and regulators have been slow in recognizing the degree of the challenge and the nature of the response that was required in terms of emergency response, public engagement, energy efficiency, proper planning, and First Nations’ involvement. I think we’re now seeing huge strides being made, but you’re having to play catch up."

Thursday, 7 July 2016

The dirty little secret behind electric cars

By: Gwyn Morgan
Published in : JWN

Don't be fooled by the claims of the pro-electric car camp – our best bet for low-emissions vehicles is still natural gas

Does the car of the future really need to be electric to be environmentally responsible? 
On a recent trip to Hawaii, the car service sent a beautiful Tesla to pick us up at the airport.
The driver told us how proud he was to be driving a “zero-emissions” vehicle.

This prompted me to ask him what powers the car? When he replied “electricity,” I asked how that electricity was generated. Looking at the windmills on the ridges above us, he said, “Those windmills I guess.”
I informed him that Hawaii’s hundred-plus windmills generate only five per cent of the state’s power. The other 95 per cent comes from carbon emissions-intensive diesel-fueled power plants. Then I explained that each time an energy source is changed to another form, an efficiency loss occurs. The largest loss comes when the diesel is burned in the power plant and the electricity is sent to the Tesla’s charging station. The next loss occurs when the car’s battery charger converts the AC electricity to chemical energy stored in the battery. The final loss occurs when that chemical energy is converted to DC power and delivered to the electric motors driving the wheels.
Combined, these efficiency losses consume some 75 per cent of the energy originally contained in the diesel fuel, leaving just 25 per cent to power the Tesla.
But what if that diesel fuel was burned in an internal combustion engine? The latest turbo-diesel engines approach 50 per cent thermal efficiency, so the car would use only half as much diesel and emit half the emissions.
This anecdote conveys two realities. First, electric cars are only as “green” as the fuel used to generate the electricity they consume. Second, sometimes it’s environmentally better to burn the fuel in the car than the power plant.
How does that first reality apply to electric cars in Canada? B.C., Manitoba, Quebec and Newfoundland generate the vast majority of their electricity from hydro, so it’s thumbs up for electric cars. Coal supplies most of the electricity in Alberta, Saskatchewan, Nova Scotia and P.E.I. New Brunswick’s electricity is fueled by a roughly equal mix of hydro, coal, fuel oil and natural gas. So electric cars are not green in those five provinces.
That leaves Ontario, the province that just announced a $7-billion Climate Action Plan featuring generous subsidies to promote “an electric car in every driveway.”
On the surface, the fact that some 80 per cent of Ontario’s electricity is generated by hydro and nuclear makes electric cars look green. But it’s not that simple. Those millions of new electric cars will require a massive expansion of Ontario’s power systems.
So what’s really important isn’t the current fuel mix but rather what would fuel all that new electricity. The plan makes bold assertions about expansion of wind and solar but the governing Liberals’ last grand green plan was absolutely disastrous, enriching wind and solar companies with huge subsidies while driving Ontario from one of North America’s lowest power-rate jurisdictions to one of the highest. And since the wind is unpredictable, and since Ontario’s winter daylight hours are short and summer days often cloudy, essentially all wind and solar must be backed up by reliable facilities. Billions have already been spent on back-up natural-gas-fueled power plants and many more billions would be required to power all those new electric cars.
That’s where the second reality from my Tesla anecdote applies, not just in Ontario but across the country. Even in provinces where electric cars are actually green, not everyone wants to put up with the “range anxiety” of plug-in cars.
Given that the CO2 emissions intensity of natural gas is 25 per cent lower than gasoline or diesel fuel, the emissions reduction from switching a large portion of the country’s vehicle fleet to natural gas would be dramatic. Moreover, toxic particulate and nitrogen oxide emissions are eliminated with clean-burning natural gas.
What a huge leap forward for meeting Canada’s atmospheric emissions reduction targets!
The Canadian Natural Gas Vehicle Alliance is working to accomplish this vital objective. The International Association for Natural Gas vehicles estimates that there are more than 20 million natural gas-powered vehicles already on the road.
Rather than profoundly flawed and enormously costly transportation schemes like Ontario’s plan, low-carbon-intensity, clean-burning natural gas offers Canadians the biggest single opportunity to reduce atmospheric emissions.

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