As other jurisdictions work to reduce their reliance on fossil fuels, Ontario is going in the other direction.
This week, Doug Ford’s government announced a plan to spend $234-million on the latest stage of its Natural Gas Expansion Program, to provide new gas connections offering heat to 43 rural, remote and Indigenous communities.
The province is also planning to significantly increase the role of natural gas in electricity generation, as nuclear reactors come offline for refurbishment this decade.
Taken on their own, there is some rationale for both plans. The new connections will improve affordability and fairness for far-flung areas that have long had higher energy bills than elsewhere in the province; existing generation capacity makes natural gas the readiest available replacement for the lost nuclear power.
But combined with Mr. Ford’s apparent allergy to renewable electricity or most other forms of green-energy investment, it adds up to actively skating in the opposite direction from where the puck is going. In the long run, it threatens both to impede national emissions-reductions goals, and to lock in fuel sources that will eventually make much less sense financially.
When it comes to the latest announcement, the financial case actually seems fairly tenuous even at the outset.
Per the government’s math, the new gas hook-ups will allow for approximately 8,750 homes and businesses to switch to gas furnaces (which they will have to pay for themselves) from baseboard electrical heating or other current sources. That’s an average, based on the total price, of nearly $27,000 for each one.
With projected annual savings of between $250 and $1,500 per household, it would take somewhere between 18 and 107 years to earn back the investment.
It’s improbable that the cost-benefit equation will get any more favourable with time, since the savings could be compromised by rising domestic carbon prices and the increasing cheapness of other energy options amid a global shift toward a cleaner economy. It’s debatable for how long natural gas will even remain a viable option, as the International Energy Agency calls for an end to gas-furnace sales by 2025 and an almost complete elimination of the fuel source by mid-century to achieve net-zero emissions.
The instinct to provide help to remote communities, with their heating costs, is the right one. A majority of Ontarians already use gas to heat their homes, and have benefited from its relative cheapness to date. It helps with the fairness argument that existing users are to pay for the new connections, through their gas bills, rather than it coming out of the tax base.
But for the price, the province could instead be subsidizing top-of-the-line heat pumps that increasingly enable cheap, low-emissions electrical heating even in very cold weather, plus renovations to improve buildings’ energy efficiency.
That’s a direction many current users of natural gas are likely to go in the years ahead, aided by federal retrofit subsidies. Remote communities in urgent need of cheaper energy could be at the forefront of that shift; instead the province may be locking them into gas in a way that ultimately leaves them behind again.
As for the plan to increase natural gas’s share of the provincial electricity mix, it’s probably an unavoidable way of dealing with the loss of some nuclear power (by far the biggest part of Ontario’s supply mix) starting around the middle of this decade. While gas currently accounts for less than 10 per cent of generation, it has about 30 per cent of the province’s installed capacity, meaning it can be ramped up far more easily than anything else.
What’s disconcerting, though, is that Mr. Ford’s government seems to consider it the only way of dealing with the coming shortfall. It has been actively hostile toward wind and solar power, cancelling contracts it inherited and eschewing new investments despite renewables now being relatively cheap. Likewise emergent energy storage technology that could make those sources more efficient. It has done little to encourage the building of smart grids that could better manage demand, and shown minimal interest in conservation programs. It seemingly wants no part of discussions with Quebec about taking advantage of that province’s hydro and storage capacity through greater interprovincial transmission.
That’s worrying not just because, between now and the 2030s, the increased gas reliance will negate some of the emissions reductions from getting off coal power earlier this century – likely making Ontario the only province going in the wrong direction on grid pollution.
It also points toward the province leaning on gas to deal with electricity demand that is projected to at least double by mid-century, as vehicles and buildings and industry are electrified. The provincial utility Ontario Power Generation’s $2.8-billion purchase from TC Energy of three existing gas plants, during Mr. Ford’s time in office, adds to that impression. That raises the prospect of the environmental benefits of electrification being somewhat diminished, and Ontario’s industry having a harder time competing as companies and investors prioritize access to clean power.
It’s easy to guess why Mr. Ford’s Progressive Conservatives have been so gas-friendly. They came to office three years ago amid frustration with high energy bills, caused partly by the previous Liberal government’s ill-fated decision to pay exorbitant prices for renewables. And like many governments, when it comes to energy policy, they appear more concerned with short-term cost containment than long-term planning.
But there is a risk for a government facing re-election next year to be indifferent to energy emissions.
Ontario is not about to abruptly abandon natural gas, whoever is in power. That doesn’t mean treating it like the fuel of the future, while the rest of the world aims to move on.
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