Jamie Stephen, PhD 2024-10-18 06:24:32
The likely impending doom of the carbon tax opens the door for better policy, BECCS
It’s clear the majority of Canadians have soured on Canada’s consumer-based fuel charge, more commonly known as the carbon tax.
Conservative leader Pierre Poilievre is calling for a “carbon tax election” — assured his aim to abolish the controversial policy will secure him as the country’s next prime minister.
The tax was promoted by the federal Liberals and many economists as a mechanism to shift markets, eliciting a behavioral change in Canadians and commercial and small-emitter businesses.
But with the Conservatives far ahead in the polls, and provincial governments across the country lining up against consumer carbon pricing, it looks like the days of the carbon tax — a significant driver for switching from fossil fuels to bioenergy, in particular, from “natural” fossil gas, propane, and heating oil to solid biomass for building heating — are numbered.
Does the end of the carbon tax mean efforts to decarbonize buildings and transportation, the primary consumer and commercial sources of greenhouse gas emissions (GHG), are also done? Not so fast.
ENERGY INFRASTRUCTURE HAS ITS OWN MARKET
Carbon pricing is favoured by many economists as the most economically efficient means of reducing emissions.
If that’s the case, why are so many Canadians enthusiastically calling for the end of the carbon tax?
What many economists haven’t recognized is that a lot of energy infrastructure, particularly for building heating in most areas of Canada, is not a part of a competitive, free market. There is competition in energy products, but not necessarily in energy infrastructure.
Canadians are served by monopoly energy companies providing one of two products: fossil gas and electricity. The principles of the free market generally don’t apply to linear infrastructure because it’s a “natural monopoly.”
Running two competing fossil gas lines down the same street makes no economic sense, so there really isn’t a choice on the actual infrastructure.
If the answer to the carbon tax is that everyone should switch from fossil gas to heat pumps, supplied by the other linear infrastructure monopoly, electricity, think again.
Many buildings are not good candidates for heat pumps due to heat distribution temperature requirements. Think homes with radiators and multi-storey buildings with heat distribution temperatures over 85 C.
Economists evangelizing the carbon tax don’t seem to understand that for many small emitters, there is no available alternative to fossil fuels, regardless of price.
Where are all the zero carbon combine harvesters? Or timber harvesters and feller bunchers? Or long-distance freight locomotives?
There are no commercially-viable, large-scale alternatives to diesel for this equipment. Other than reducing operations, there is no way to avoid paying it and paying it makes Canadian companies less competitive.
For the record, there is no meaningful reduction in GHG emissions without a commercially-viable alternative. It simply ends up being a cash transfer from export-focused businesses to urban residents. Or a shift from operations in Canada to outside of Canada. That’s what really chafes.
CANADA GETS REALLY, REALLY COLD
Relying on electricity to decarbonize also isn’t a solution because Canada gets cold. Really cold.
Heat pumps can “work” at -40 C, but their efficiency drops to near that of electric baseboard.
From an energy systems perspective, heat pumps absolutely reduce the amount of energy required over the year, compared to fossil gas furnaces or electric baseboard, but they do little for the peak heating load and lead to even larger electricity demand spikes than electric baseboard.
When it gets cold, more heat is needed at the exact same time the efficiency of heat supply drops. The electricity grid must have the capacity to meet that extreme peak in demand.
Ensuring dispatchable electricity capacity is available when required costs money. Currently, electricity only accounts for 17% of Canada’s energy consumption. In Alberta, it is only 7%.
In Alberta, heating buildings alone consumes almost twice as much energy as electricity and the peak heat load is several times higher than current installed electricity capacity. It is simply not reasonable to develop electricity capacity required to meet the extremely high demands of bitter- cold days in Canada. Yes, it can “work” for some buildings, but the system-wide numbers don’t add up.
Even if capacity to meet peak demand was developed, it’s highly likely fossil gas would be the generating source. No one has ever made it through a winter in Saskatchewan without burning something.
IF NOT ELECTRIC HEAT, THAN WHAT?
How does an existing 40-storey commercial building in downtown Edmonton avoid paying the carbon tax?
Even if it could get the capacity, an electric boiler would be completely uneconomical and would actually increase GHG emissions given the carbon intensity of the marginal electricity supply.
A biomass boiler is an option, but are we really going to deliver wood chips or wood pellets to every urban building?
The renewable natural gas (RNG or biomethane) crowd will make that case, but multiple studies have shown the maximum potential volume for conventional RNG in Canada is 3% to 4% of current fossil gas consumption. It’s several times more expensive.
The proven approach, as implemented across other northern countries, is district heating.
District heating consists of a network of underground hot water pipes connecting central energy facilities to hundreds, thousands, or even hundreds-of-thousands of residences and commercial buildings.
In most other northern countries, 55% to 95% of the population is connected to district heating systems, with solid biomass — wood chips — by far the most common fuel in low carbon systems.
The lowest carbon, greenest cities, like Stockholm in Sweden, and Copenhagen in Denmark, are heated with wood.
Almost every town and city in Sweden is heated with biomass and/or solid waste, and district heating. If Canada wants to decarbonize urban areas, district heating with biomass is not only the proven approach, it is the economically viable approach for many towns and cities.
Unfortunately in Canada, governments have completely and utterly failed to develop the necessary widespread infrastructure — district heating systems — to allow building owners to avoid the carbon tax economically.
PLACING THE ONUS ON THE PUBLIC WON’T WORK
Governments must be involved in district heating system development. Cities didn’t get water and sewer systems by telling everyone to install a pipe in front of their home.
Governments have installed linear infrastructure and connected buildings in the past. Putting all the responsibility for decarbonization on individuals is not only inefficient, it just won’t work.
Most of the heat networks in the Nordics are not-for-profit and/or owned by municipalities.
If municipalities can be in the water and sewer business, why can’t they be in the heat-supply business? It is just another two pipes — and the network is much simpler than water and sewer because it is a closed loop, requiring no water extraction or treatment.
The reality is that in most cases, there is no choice when it comes to linear infrastructure. Citizens aren’t allowed to have their own well or septic tank in most urban areas in Canada.
People don’t call that socialism, like they do the carbon tax. They call that urban planning. Why should heat be any different than water or sewer?
Even if we do want to retain choice on heat supply, it is entirely reasonable to charge people a carbon tax if they choose not to connect to an available heat network.
Until that choice is actually available however, it’s hard to justify a carbon tax on building heat.
Sweden already has a carbon tax equivalent to C$170 per tonne of CO2 emitted — the price planned for 2030 in Canada — but there a very few carbon tax complaints related to building heat because barely anyone pays it. The majority of people are connected to district heating systems fuelled by sustainable biomass.
TAKE IT ONE STEP FURTHER WITH BECCS
OK. So if district heating can address building heat emissions, what do we do about transportation emissions, the other primary source of consumer and commercial emissions? Bioenergy with carbon capture and storage, or BECCS, is the only technology that supplies both energy and permanently removes carbon dioxide from the atmosphere.
It generates carbon dioxide removal (CDR) while simultaneously supplying heat and power to reduce fossil fuel use. In other words, the biomass combined heat and power plants decarbonizing cities can also decarbonize consumer transportation.
It harnesses the awesome power of plants — principally trees — to store both solar energy and carbon.
By adding carbon capture and storage to biomass combined heat and power plants, heating (via district heating) and supplying electricity to urban areas, energy supply becomes negative carbon.
Is heating cities with wood chips, transported from rural areas, and then capturing the CO2 and transporting it for storage 2- to 3 kilometres below the surface of the Earth, too complicated to be implemented?
In the Nordics urban biomass combined heat and power plants already exist, and capture additions are in construction.
In Copenhagen, tech giant Microsoft has entered into a purchase agreement with renewable energy company, Ørsted, for a large portion of its incoming carbon dioxide removal credits through a BECCS project attached to its Avedøre Power Station.
Microsoft is targeting zero carbon for its entire history.
CO2 will be liquefied and shipped by marine tanker to the North Sea for permanent storage below the seabed. Through the sale of CDRs, the local cost of heat and power can actually become lower due to the additional revenue – and income – from CDRs. (See related news Page 8).
GOODBYE CARBON TAX, HELLO CARBON REMOVAL CHARGE
Canadians must come to grips with the notion meeting climate goals will have costs, but higher energy costs are OK if we also have higher income and per capita GDP.
Canada can be the world leader in BECCS due to its abundant biomass resources, attractive onshore CO2 storage geology, and climate regulations with rule of law.
By becoming a BECCS carbon dioxide removal exporter, we can grow the Canadian economy and lower the carbon intensity of our economically-critical exports of oil, gas, and derivatives.
A Canadian BECCS industry must start with the home market, and beyond provincial industrial carbon markets, there must be a source of funds to purchase CDRs.
Canada needs a Carbon Removal Charge on consumer fossil fuels as a realistic and impactful alternative to the carbon tax.
The charge would initially target transportation fuels, such as gasoline sold in urban areas where there is a viable commercial alternative to gasoline-fuelled internal combustion engine vehicles, such as light-duty electric vehicles.
Unlike the carbon tax, which applies to all fuels but does not necessarily lead to a GHG reduction, a Carbon Removal Charge would only be charged in proportion to the GHG emissions actually removed via BECCS.
Ultimately, the CDR industry — as well as the broader carbon capture and storage industry — must be viewed as a garbage disposal service.
Paying for garbage removal is something the public understands. It fits with the North American world view of choice, but paying for the consequences. It’s also in stark contrast to policies designed to manipulate behaviour without actually reducing emissions.
By having a source of revenue for the CO2 (garbage) removal, the BECCS industry can grow.
It will be small at first. A microscopic Carbon Removal Charge per litre of gasoline, because another major problem with the current carbon tax policy design is its rapid pace.
Carbon price increases have not been consistent with the rate of vehicle and heating system turnover. Abandoning a three-year-old fossil gas furnace or minivan is not a realistic option for most Canadians.
A Carbon Removal Charge, linked to growth of the domestic BECCS industry, would inherently rise more slowly than the current carbon tax has done and better align with the turnover of vehicles.
A Carbon Removal Charge is not a get out of jail free card. It is an economically- efficient means of reducing national fossil fuel emissions while providing critical revenue for biomass combined heat and power plants and linked district heating infrastructure.
It would also provide an essential, valuable market for the low-grade biomass generated by Climate Smart Forestry, active forest management operations necessary to reduce our nation’s largest source of GHG emissions: wildfires.
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