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The Economic Fallout of Ontario’s Long Term Energy Plan

Posted by Kazi Nasir on April 11, 2014

In December 2013, Ontario’s Ministry of Energy released its updated Long Term Energy Plan (LTEP), “Achieving Balance”. As the name suggests, the focus of this initiative is to develop equilibrium between energy supply and demand through the implementation of a five-prong approach. Specifically, demand management is put in the forefront, as a means of mitigating the need for new energy generation infrastructure, and conservation, cost-effectiveness, reliability, clean energy and community engagement were selected as the guiding factors for decisions pertaining to the future of Ontario’s energy sector.

To offset the majority of electricity demand over the next 20 years, as well as reduce daily peak energy demand by 10 per cent, the Plan will assist in implementing wide-scale conservation programs and standards. On the supply side, the Plan will focus on reducing greenhouse gas emissions through renewable energy sources while maximizing energy independence, thus reducing the need to import raw fuels such as natural gas and maximizing domestic employment.

Unfortunately, the LTEP’s definition of energy consumption and energy production is based solely on electricity consumption and electricity supplied to the grid, respectively. This leads to a great under-representation of the needs of the province as well as an inaccurate gauge of possible energy supply options. For example, approximately 900PJ of energy is consumed by the transportation industry, which is not accounted for in Ontario’s LTEP. Furthermore, the LTEP does not address the growing demand for natural gas in the agricultural industry nor for space heating (which accounts for 900 PJ of energy in the residential and commercial industry).

This shortcoming is further amplified by the fact that the United States has exponentially increased their natural gas production by implementing horizontal drilling and fracturing (aka fracking). If fracking were to be implemented domestically (within Ontario), lower end-user costs (for both individual and industrial consumers) would result. It would also allow for energy independence from the United States and neighbouring provinces (from which the majority of natural gas is currently being supplied) and would create countless jobs in industries foreign to Ontario thus far.

Unfortunately, these potential savings and economic growths (jobs, exports, spending, etc.) are counteracted by the LTEP, which focuses on strengthening a renewable energy mix and condones the implementation of fracturing technologies and horizontal drilling. This is because fracking is a direct contradiction of the LTEP’s initiatives – rather than decreasing greenhouse gas (GHG) emissions, fracking would lead to increased GHG’s.

As a result of the LTEP, the cost of energy for everyone will undoubtedly increase for both consumers and the commercial sector (which collectively represents 74 per cent of electricity usage). Fortunately, heating bills may remain steady, reduced by a recent decision to allow shale-extracted gas into Ontario (three recent projects have been announced, one of which is with Enbridge). However, the savings will be significantly lower than the potential savings fracking technology would have resulted in. Prices will also increase as a result of the LTEP’s decision to refurbish the Darlington and Bruce nuclear reactors and close Pickering Nuclear rather than build two new nuclear reactors (nuclear currently produces the base load of Ontario’s electricity supply at 39.3 per cent)

Additionally, under the LTEP more jobs will be lost than created. In the nuclear industry alone, “while the refurbishment phase will create 9,000 new jobs at the Darlington and Bruce Stations, according to the Conference Board of Canada's 2005 Report, a Canadian nuclear new build project for two units would create more than 64,000 person-years of employment”. Outside of the nuclear industry, the success of green initiatives have the negative consequence of displacing jobs in traditionally competitive sectors, especially those currently experiencing significant growth, such as natural gas. Studies have shown, “1.97 jobs will be lost in non-renewable energy sectors per job gained in the renewable energy sectors, largely as a result of the higher energy costs flowing from the FIT program”.

Overall, while the LTEP advocates sustainability for the future, it focuses too much on environmental sustainability at the cost of economic (and resulting social) sustainability.

Edited from original submission.

Filed under: Students on Sustainability