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Energy
| 03/15/17

BC Hydro electrification incentives aim for deep decarbonisation

TCE

The British Columbia government has amended the Clean Energy Act to enable BC Hydro to begin offering incentives to households and industry to electrify equipment, vehicles and operations.

For almost a quarter century, British Columbia’s electric company has operated a range of incentive programmes to encourage customers to reduce their energy consumption, and the new legislation aims to help the crown corporation now encourage fuel-switching to clean electricity for a raft of processes that currently use fossil fuels.

The amendment alters the Greenhouse Gas Reduction Regulation (GGRR) section of the act, which was introduced in 2012 to allow utilities to offer grants or zero-interest loans to transportation fleets to purchase compressed natural gas (CNG) or liquefied natural gas (LNG) vehicles, buses, trucks or ferries. The amendment extends this provision to provide funds to cover investments in electrification.

The move will encourage, but not require, industry and transport to electrify. However, this carrot may in the future be accompanied by the stick of a clean fuel standard regulation at the federal level. Ottawa recently issued a clean fuel standard discussion paper exploring various scenarios for how to legislate a ratcheting up of decarbonisation, while leaving precisely how operations decarbonise, whether by electrification or other methods, up to the enterprise itself.

A second amendment to the Clean Energy Act covers the build-out of additional transmission lines in northeastern BC to help the natural gas sector electrify its processes. While any deep decarbonisation programme has to ultimately involve an end to almost all combustion of fossil fuels, on the way there, the carbon intensity of the oil and gas industry needs to be reduced. In BC, this sector is responsible for the second greatest amount of greenhouse gas (GHG) emissions (7 megatonnes in 2014, or 18 percent of emissions) after road transportation (15 Mt/37 percent).

BC Hydro is already in discussions with a number of industries and businesses that want to electrify their operations, and is exploring the possibility of using a “capital incentive” to help oil and gas customers switch their production and processing operations from gas or diesel power to clean, renewable electricity.

For residential and commercial buildings, responsible for about 10 percent of BC’s carbon emissions, the utility is likely to launch trials in the coming months to test whether various products and systems, such as heat pumps, are optimum.

More than two thirds of BC’s GHG emissions come from the combustion of fossil fuels by the transport, industrial and heating sectors. Two studies by BC Hydro suggest that in the near term, the increase in demand for electricity by these sectors will not require much of an increase in generation. However, by 2050, an up to 80 percent reduction in BC GHG emissions (the province’s long-term legislated target) would likely result in an increase in demand of 18-62 TWh per year. In the utility’s analysis, this very wide range is the result of a large number of unknowns. These include the scale of a carbon price increase, the amount of success in energy conservation efforts, how the cost of natural gas changes in the future, and how close the province actually gets to its 80 percent target.

To put these numbers in context, such an increase in demand would be equivalent to between 2.5 and 8.5 times the annual generation of the Mica hydroelectric dam, the tallest dam in the country. Current annual electricity demand in BC hovers around 60 TWh per year, so at the upper end of projections, this would amount to a required doubling of generation. For comparison at the national level, the federal government projects a two- to four-fold increase in clean electricity generation needed to achieve deep decarbonisation by mid-century (80 percent reduction on 2005 levels).

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BC government encouraging industry, households to electrify equipment, vehicles that currently use fossil fuels

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