Clean Growth is More Than a Goal—It’s a Re­al­ity

Just as so­cial me­dia up­ended com­mu­ni­ca­tions, the tran­si­tion to clean en­ergy is rapidly un­do­ing cen­tury-old ex­pec­ta­tions around elec­tric­ity, trans­porta­tion and oil—and it’s hap­pen­ing faster than most Cana­di­ans re­al­ize.

Policy - - Contents - Dan Woynil­low­icz and Mer­ran Smith

Protests. Pol­i­tics. Po­lar­iza­tion.

Whether you’re read­ing a news­pa­per, tun­ing into the news, or scrolling through Twit­ter, you’ll no­tice a com­mon theme: cov­er­age of en­ergy and cli­mate change is dom­i­nated by pipe­lines.

Are pipe­lines a se­ri­ous mat­ter? Cer­tainly. And yet the time and at­ten­tion they con­sume risks dis­tract­ing Canada’s busi­ness and po­lit­i­cal lead­ers from the much broader and deeper shifts oc­cur­ring in the world’s en­ergy sys­tem.

The costs of re­new­able elec­tric­ity— such as wind and so­lar power—are fall­ing year af­ter year, while more and more projects are see­ing mas­sive in­vest­ments. But elec­tric­ity isn’t the only chap­ter in this tran­si­tion’s story. The tale un­fold­ing in trans­porta­tion prom­ises to be just as dis­rup­tive.

Con­sider this: A record-set­ting 1.1 mil­lion elec­tric cars were sold in 2017, and roughly half of those were sold in China, which saw a 73 per cent in­crease in EV sales over 2016. There are now more than three mil­lion elec­tric cars cruis­ing roads around the world, and over a mil­lion of those are in a sin­gle coun­try.

China is now also the world’s big­gest man­u­fac­turer of elec­tric cars and is home to an in­cred­i­ble 487 EV mak­ers. So, why is China all-in on EVs?

As Amy My­ers Jaffe of the Coun­cil on For­eign Re­la­tions wrote re­cently, “China is bank­ing on clean en­ergy tech­nolo­gies as ma­jor in­dus­trial ex­ports that will com­pete with U.S. and Rus­sian oil and gas and make China the re­new­able en­ergy and elec­tric ve­hi­cle su­per­power of a fu­ture en­ergy world.”

An­thony Milewski of Pala In­vest­ments put it even more sim­ply: “China, un­abashedly, wants to be the Detroit of elec­tric ve­hi­cles.”

And this push to elec­trify isn’t lim­ited to pas­sen­ger ve­hi­cles. There are a grow­ing num­ber of elec­tric buses, bi­cy­cles, garbage and trans­port trucks, even fer­ries.

Last year, China put 90,000 fully elec­tric buses on its roads, and in De­cem­ber the city of Shen­zhen an­nounced that all 16,359 ve­hi­cles in its fleet were elec­tric. To put that in per­spec­tive, New York City has one-third as many buses, pe­riod.

And by no means is this tran­si­tion con­fined to China. Bri­tain, France, Ger­many, Nor­way, the Nether­lands, Scot­land— and yes, China—have all an­nounced they will even­tu­ally pro­hibit the sale of gas- and diesel-fu­elled ve­hi­cles.

The trans­porta­tion tran­si­tion is hap­pen­ing here in Canada, too, al­beit more slowly. While we’re trail­ing lead­ing ju­ris­dic­tions, Canada saw a 68 per cent in­crease in elec­tric car sales in 2017 over the pre­vi­ous year. The Toronto Tran­sit Com­mis­sion, mean­while, re­cently placed an or­der for ten elec­tric buses from New Flyer’s Cana­dian sub­sidiary in Win­nipeg, with an op­tion for an­other 30. This was fol­lowed by an or­der for 40 more from

BYD, China’s lead­ing EV maker. (BYD will also sup­ply Seat­tle with elec­tric garbage trucks early next year.)

As mo­men­tum builds, so too do pro­jec­tions for the rapid up­take of EVs around the world. In its most re­cent out­look, the International En­ergy Agency pro­jected there could be as many as 228 mil­lion EVs on the road by 2030, in­clud­ing pas­sen­ger ve­hi­cles, com­mer­cial ve­hi­cles, buses and trucks. Count­ing elec­tric two- and three-wheel­ers—which are in­cred­i­bly pop­u­lar in de­vel­op­ing coun­tries— that would add an­other 585 mil­lion ve­hi­cles. The sum to­tal? Clos­ing in on a tril­lion EVs on the road in a lit­tle over a decade.

It’s lit­tle won­der these pro­jec­tions are send­ing shock­waves through the auto and oil sec­tors—driv­ing an ac­cel­er­at­ing evo­lu­tion of their busi­ness mod­els and prod­uct of­fer­ings.

By Bloomberg New En­ergy Fi­nance’s count, at the end of 2017 there were 156 elec­tric car mod­els to choose from, up from just 97 at the start of 2016. By 2020, the num­ber of avail­able mod­els will grow to 217. And that num­ber will keep tick­ing up as more and more ve­hi­cle com­pa­nies set new tar­gets for model of­fer­ings and elec­tric car sales.

Evo­lu­tion is also un­der­way among the world’s largest pub­licly traded oil and gas com­pa­nies. To­tal, a top player in so­lar and bat­tery power, aims for low-car­bon busi­ness to ac­count for 20 per cent of its port­fo­lio by 2035. Sta­toil has made big in­vest­ments in off­shore wind power, draw­ing on its ex­pe­ri­ence with off­shore oil drilling; the com­pany plans to in­vest roughly C$16 bil­lion in re­new­ables by 2030. And BP is once again in­vest­ing heav­ily in so­lar, wind and bio­fu­els.

Per­haps most sig­nif­i­cant are the moves by Shell, whose CEO, Ben van Beur­den, put it bluntly last year: “So­ci­etal ac­cep­tance of the en­ergy sys­tem as we have it is just dis­ap­pear­ing.” His next car, he said, will be elec­tric, but that’s just the tip of the melt­ing ice­berg. Shell an­nounced last year that it will be in­vest­ing up to $2 bil­lion an­nu­ally in clean en­ergy by 2020—while also di­vest­ing all of its Cana­dian oil­sands as­sets. These in­vest­ments and ac­qui­si­tions span EV charg­ing net­works in the U.K., hy­dro­gen refuelling sta­tions—in­clud­ing here in Canada—and wind, so­lar and other re­new­able en­ergy tech­nolo­gies around the world. It’s a smart move, ac­cord­ing to a re­cent re­port from Wood Macken­zie, which says oil and gas com­pa­nies that adopt re­new­ables early will be at a com­pet­i­tive ad­van­tage, while slow adopters could find them­selves at a struc­tural dis­ad­van­tage. Their an­a­lysts—among the fi­nan­cial com­mu­nity’s most re­spected—have pro­jected that oil de­mand could peak by 2036, the re­sult of a “tec­tonic” shift in trans­porta­tion to­ward elec­tric and au­tonomous ve­hi­cles.

While Canada’s oil and gas sec­tor re­mains fo­cused on do­ing what they’ve al­ways done, other busi­nesses are mov­ing ag­gres­sively to seize part of the grow­ing global mar­ket for low-car­bon goods and ser­vices—now worth $5.8 tril­lion and grow­ing by 3 per cent a year.

Toronto-based Hy­dro­gen­ics and Van­cou­ver-based Bal­lard Power, for ex­am­ple, pro­duce fuel cells that con­vert hy­dro­gen into clean elec­tric­ity. Grow­ing Chi­nese and Euro­pean de­mand have been a boon for them, in ap­pli­ca­tions rang­ing from fork­lifts to trains and buses.

Also based in Van­cou­ver, all-elec­tric bus com­pany GreenPower has joined tra­di­tional Cana­dian bus com­pa­nies in­clud­ing Lion and New Flyer in of­fer­ing elec­tric buses to the grow­ing num­ber of tran­sit agen­cies around the world that are look­ing to clean up their fleets.

And Canada’s two largest auto parts mak­ers—Magna and Li­na­mar—have both di­ver­si­fied into EVs. Just this past June, Magna signed a deal with China’s BAIC Group—the par­ent com­pany of Bei­jing Elec­tric Ve­hi­cle Co.—to build elec­tric cars in China.

While this ac­cel­er­at­ing tran­si­tion poses chal­lenges to oil com­pa­nies, it of­fers new op­por­tu­ni­ties for the min­ing in­dus­try due to grow­ing de­mand for a range of met­als needed for EVs and their bat­ter­ies. As the CEO of the Min­ing As­so­ci­a­tion of Canada re­cently noted, “For the min­ing sec­tor, a shift to a low-car­bon econ­omy has a lot of po­ten­tial up­sides be­cause the kinds of ma­te­ri­als that are go­ing to

be needed will grow ex­po­nen­tially.”

Cana­di­ans un­der­stand the need to tran­si­tion. When asked about the best way for­ward for Canada’s econ­omy in an Aba­cus Data pub­lic opin­ion sur­vey last year, just one third sug­gested Canada should prioritize pro­mot­ing the use of Canada’s oil and gas. Twothirds said Canada should prioritize other ways of grow­ing our econ­omy.

In a fol­low-up sur­vey, 74 per cent agreed that the pace of in­no­va­tion in new forms of en­ergy is quick, and Canada must be part of this new en­ergy revo­lu­tion—and not fall be­hind be­cause of a re­liance on oil. What does all this boil down to for Canada?

The very real risk of fall­ing be­hind. Not fully seiz­ing a world-shift­ing op­por­tu­nity.

Clean growth is more than an goal— it’s a re­al­ity. As the world com­bats cli­mate change, growth is shift­ing away from cen­tury-old fu­els and tech­nolo­gies to­ward clean en­ergy so­lu­tions. We would be wise to prioritize present trends over past ones—with an eye to the fu­ture.

Whether or not more pipe­lines should be pur­sued, the global en­ergy tran­si­tion is hap­pen­ing with or with­out us. And Cana­di­ans don’t want to be left be­hind.

Dan Woynil­low­icz is the pol­icy di­rec­tor of Clean En­ergy Canada at Si­mon Fraser Univer­sity. dan@clean­er­gy­

Mer­ran Smith is the ex­ec­u­tive di­rec­tor of Clean En­ergy Canada and serves on the board of the Cana­dian Cli­mate Fo­rum. mer­ran@cleanen­er­gy­

Source: International En­ergy Agency, Global Elec­tric Ve­hi­cle Out­look 2018

Volk­swa­gen has pledged 20 elec­tric mod­els by 2020 and 300 by 2030.

As of 2019, all new Volvo cars will be fully elec­tric or hy­brids.

Gen­eral Mo­tors will in­tro­duce 20 new EVs over the next six years.

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