Decarbonizing Canadian economy by 2050 a foolish academic exercise

Re-Energizing Canada: Pathways to a Low-Carbon Future proposes aggressive govt intervention to support decarbonization

Did your mother ever remind you that “the Devil is in the details”? Someone’s mother should recall that aphorism for the 80-plus Canadian academics who recently released a new study calling for complete decarbonization of the national economy by 2050. The reason decarbonization is impossible by then is, literally, in the details.

The study was commissioned by Natural Resources Canada in the fall of 2016. Re-Energizing Canada: Pathways to a Low-Carbon Future bridges decision-making and academic thought around energy and climate change, offering suggestions on how Canadian governments, companies and citizens can advance de-carbonization in a manner coherent with the Paris Agreement,” is how the study’s website describes the project.

“…we are convinced more than ever that Canada has an opportunity to drive innovation and deliver benefits now and into the future by tapping our vast renewable energy potential and know-how to make the transition away from fossil-fuel-based energy systems.”

Detailed objections can wait for a future column. For today, let’s unpack a few of the rosy assumptions behind the the statements above.

These sorts of academic efforts fail on at least two fronts.

One, they assume governments can “drive” decarbonization. At best, governments can guide the process, goosing it a bit in the right place and the right time, but governments are handcuffed by public opinion and financial resources.

Don’t misunderstand me, public policy will be a significant driver of the Energy Transition, according to the experts I’ve interviewed.

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For instance, Chris Robinson of Lux Research, thinks that ever more stringent automobile fuel economy standards will force automakers to include more hybrid and plug-in electric vehicles in order to raise their fleet gas mileage numbers. But there are limits to the effectiveness of subsidies and other inducements to buy if EVs are twice the purchase price of equivalent cars and only have a range of 300 kilometres.

And UBC engineering professor William Dunford says that policy-driven energy efficiency strategies – lauded in the NRC study – often lead to contrary results for adopters, who install commercial lighting control systems or low-flow toilets only to discover that in the real world, some design or adaptation glitch actually makes those products less efficient than what they replaced.

Electro-chemistry analyst Tim Gratjik cautions that power grids are the largest synchronized machines ever created by humankind and that they are made up of thousands of technologies that must evolve in lock-step to avoid catastrophic failure. Too bad Ontario never consulted with Gratjik before their ill-fated tampering with the provincial electricity system.

These are just three examples. I could provide dozens more.

If governments, urged on by well-meaning academics, start pounding on the technology square peg with a policy sledge hammer, something’s going to break. And that something might be mission critical infrastructure – like power grids – that are very expensive to fix.

No surprise, the report is full of calls for joint task forces, independent commissions, “a multi-level structure to promote decarbonization and facilitate exchanges among all government levels,” and lots and lots of money from public treasuries to fuel this great policy edifice.

The study is heavy on academic modelling and light on real world issues like immature technologies, markets, consumers, and capital – problems which presumably can be solved with government policy and money.

Politicians and taxpayers beware.

Two, the academics in this study are classic “hype cyclers,” great believers in hockey stick-type growth in clean energy technology.

They make a common mistake of hype cycle analysts and pundits, focusing on technology adoption “accelerators” and ignoring “constraints. Or, if they pay lip service to constraints, they assume “political will” and aggressive public policy is all that is required to overcome the constraints.

For instance, Bloomberg New Energy Finance and Stanford economist Tony Seba are two well-known examples of electric vehicle hype cyclers.

Both do the math on EV adoption – BNEF on the “replacement model” and Seba on the Transportation as a Service model – and conclude that electrification will in a few years revolutionize transportation and, as collateral damage, destroy the global oil industry.

And if all one did was consider declining cost curves for EV batteries and the imminent arrival of autonomous driving technology, the math makes sense. Aggressive sense, mind, but still plausible.

But the forecasts make no sense if you dig into the details, as I have done in many columns, and discover, for instance, that lithium-ion technology is fast approaching its theoretical maximums and that costs and energy density are not likely to continue to rapidly fall and rise respectively.

This information comes from interviews with leading American EV battery electro-chemists like professors Yi Cui and Mike Toney at Stanford, Haleh Ardebelli at the University of Houston, and analysts like Dr. Fred Beach of the Energy Institute and Robinson and Gratjik from Lux Research.

The constraints to technology adoption are in the details, which cannot be quickly overcome by aggressive government policy, according to my experts.

In fact, if the recommendations of the Canadian academics is followed, policy might introduce rigidities to the capital and consumer markets that could impede the diffusion of innovative new technologies.

One of the consequences of the hype cycle mindset is that the offending parties minimize the risk and cost to stakeholders.

Or, in this case, it appears that the academics’ fixation with meeting Canada’s Paris climate accord targets – and the global warming risk that entails – over-rides serious consideration of the higher risk and cost that invariably accompanies speeding up new technology diffusion.

Natural Resources Minister Jim Carr should throw this study on his shelf and leave it to moulder, while Canada gets on with the task of decarbonization out in the real world.