The Case for Action Now
Despite uncertainty in the many variables that will affect the future of Canada’s electricity system, Vision 2050 sheds light on the urgent need for action both in policy development and infrastructure investment.
For a start, electricity infrastructure must be maintained and renewed just to sustain the reliability of what we have today. This will require substantial new capital investment at unprecedented levels.
The Conference Board of Canada estimates that, over the next 20 years, some $350 billion must be invested just to maintain the reliability of the system we have today.
It is in our collective interest to be serious about these issues today, understanding that less-than-reliable electricity would create its own costs through economic losses and opportunity costs, to say nothing of the potential costs of brownouts and blackouts. In addition, the practical reality is that citizens in an advanced economy like Canada expect nothing less than reliable electricity across a wide array of applications.
Furthermore, long lead times for planning for refurbishment and new construction suggest that we do not have the luxury of many years of assessment before making decisions. It can sometimes take up to a decade or more to build large facilities. And looking ahead, we know that most of our current electricity assets will have reached the end of useful life by 2050.
Electricity public policy is politically charged. Other than taxation, it is probably the largest area in which public policy impacts directly on consumer spending and disposal income; and virtually all stakeholders are consumers. Power is a significant business input cost and is a large factor in business investment decisions. The blending of energy and environmental policy has significantly complicated the political dynamics, requiring solutions that address both factors.
The net result is a broad coalition of interests that is predisposed to withhold social license and to resist significant price increases, including those that result from capital investment. In times of fiscal constraint and difficult political choices, governments have tended to limit their direct investment and have tried to manage the rate of price increase, with a resultant shortfall in renewal of infrastructure, particularly by public utilities.
The lead times for planning and construction preclude quick responses to a crisis in supply. Sensible choices will only come when we are able to depoliticize the discussion, but reducing political risk and shoring up social license will take time and disciplined effort.
Read more about the urgent need for action both in policy development and infrastructure investment in the full Vision 2050 report. Download Vision 2050.