Ottawa’s plan to replace coal-fired power with renewable energy will impose substantial costs on Canadians while only making modest cuts in greenhouse gas emissions—a far cry from its climate targets, a study suggests.
The Fraser Institute study, titled “Canadian Climate Policy and its Implications for Electricity Grids,” noted that should the federal government shut down coal-fired power plants and replace them with wind and solar to generate electricity, greenhouse gas emissions will be reduced by 7.4 percent, but the costs of operating the electricity grid will increase significantly by between $16.8 billion and $33.7 billion a year—depending on the weather conditions.
From another perspective, by removing coal-fired power plants, which accounted for 9.2 percent of the electricity generated in Canada in 2017, wind and solar will slash less than one-fifth of the Liberals’ target—40 to 45 percent below 2005 emissions levels by 2030. The cost would equal about one to two percent of Canada’s entire annual GDP, the study said.
“Simply put, we need another source of power when the sun doesn’t shine and the wind doesn’t blow. That means maintaining sufficient energy capacity in a parallel system usually run on natural gas,” they wrote.
“This requirement—of building and maintaining a parallel source of energy, namely natural gas—causes overall energy costs to increase when jurisdictions transition from reliable fossil fuels to more renewables.”
In his study, van Kooten noted that California, Germany and the UK are among jurisdictions that require backup power from natural gas to avoid blackouts when renewable energy sources fail to deliver.
The author also noted the need to incentivize the construction of wind turbines and solar panels for Canada to transition to wind and solar. Using Ontario’s experience with subsidies for renewable energies, the study estimated an additional cost of $2.4-$2.6 billion annually added to Canada’s costs, which totaled up to $19.2-$36.3 billion, or “$0.5-$1.0 trillion over the 60-year life of the system.”
The study referred to an analysis by Gordon Hughes, an economics professor at the University of Edinburgh, who predicted that “bailouts of wind farms and financial institutions are inevitable.” Van Kooten said due to the high failure rate of equipment and poorer wind regimes than forecasted, the operating costs of wind farms often exceed their revenue after 12 to 15 years.
“To prevent the closure of wind farms, the government will have no option but to ‘bail out failed and failing projects to ensure continuity of electricity supply,’” the study said, quoting Hughes, adding that the costs of bailouts and subsidies will be paid by Canadians in the form of increased taxes and electricity bills.
Van Kooten also observed that whenever there is a reduction in carbon dioxide emissions by Canada, the UK or the European Union, it will be offset by an increase in emissions by China, Russia, India, and other countries in Africa and southern Asia. For example, he said the shift toward electric cars by rich countries caused the demand and price for gasoline to fall, which led to those in developing countries consuming more petroleum, with associated carbon dioxide emissions.
Human health costs related to wind turbines, environmental costs associated with bird and bat strikes, and mining of rare earth minerals to produce electric vehicle batteries are among other key concerns, the study said.
