Energy Security in Nova Scotia
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> June 2007 Energy Security in Nova Scotia By Larry Hughes About the author Dr. Larry Hughes is a Professor in the Department of Electrical and Computer Engineering at Dalhousie University in Halifax, Nova Scotia, Canada. He leads the Department’s Energy Research Group, which Nova Scotia Office examines energy and environmental concerns relating to energy security and climate change. P.O. Box 8355, Halifax, ns b3k 5m1 tel 902-477-1252 fax 902-484-6344 Acknowledgements email [email protected] The author would like to thank Dr. Peter Berg of UOIT (University of Ontario Institute of Technology in Oshawa), Dr. Alex Pavlovski of Green Power Please make a donation... Help us continue Labs, Mr. Steve Foran of NSCC, and the following to offer our publications free online. members of the Energy Research Group for their valuable comments and suggestions in earlier We make most of our publications available free versions of this report, Niki Sheth, Mandeep on our website. Making a donation or taking out a Dhaliwal, Aaron Long, Tyler Wood, Keshab Gajurel membership will help us continue to provide people and Alain Joseph. The four anonymous reviewers with access to our ideas and research free of charge. from the Canadian Center for Policy Alternatives You can make a donation or become a member on-line provided excellent suggestions and feedback. at www.policyalternatives.ca. Or you can contact the National office at 613-563-1341 for more information. The author would also like to thank the editor, Sandy Suggested donation for this publication: $10 or what Cook, the copy editor, Anne Webb, and the layout you can afford. person, Tim Scarth, for their contributions to the production of this report. isbn 978-0-88627-552-5 This report is available free of charge from the CCPA website at www.policyalternatives.ca. Printed copies may be ordered through the National Office for a $10 fee. 410-75 Albert Street, Ottawa, on k1p 5e7 tel 613-563-1341 fax 613-233-1458 email [email protected] www.policyalternatives.ca 5 Summary 9 1 Introduction 13 2 Energy Security 17 3 Achieving energy security 21 4 Nova Scotia’s energy requirements 25 5 Energy security and Nova Scotia 33 6 Nova Scotia’s indigenous energy sources 45 7 Achieving energy security in Nova Scotia 57 8 Climate change 59 9 Concluding Remarks 63 References 71 Notes Glossary b/d – barrels per day BCF – Billion Cubic Feet CAPP – Canadian Association of Petroleum Producers CBM – Coal Bed Methane Emera – The parent company of NSPI ETS – Electric Thermal Storage GAAP – Generally Accepted Accounting Principles GJ – Gigajoule or one billion (109) joules (a unit of energy) HST – Harmonized Sales Tax (Nova Scotia’s sales tax: 8% provincial plus 6% federal) ha – hectare IEA – International Energy Agency kWh – Kilowatt-hour (a unit of energy) LDV – Light Duty Vehicle, typically an automobile, light truck, or SUV Mt – megatonne or million tones MW – Megawatt (a unit of power) NAFTA – North American Free Trade Agreement NRCan – Natural Resources Canada NSPI – Nova Scotia Power Incorporated PJ – Petajoule or a million billion (1015) joules (a unit of energy) PV – Photovoltaic (usually solar panels that generate electricity from the sun) RES – Renewable Energy Standard RPS – Renewable Portfolio Standard RPP – Refined Petroleum Products S.N.S. – Statue of Nova Scotia t/ha – Tonnes per hectare TCF – Trillion Cubic Feet Summary This report examines energy security in Nova Scotia is obtained from sources outside the prov- Scotia: the province’s vulnerability and how this ince, with most originating outside of Canada. vulnerability can be overcome. World energy pric- Sixty-three percent of the province’s energy sup- es are rising because of increasing demand and ply is derived from petroleum products, 25 per- tighter supply. As a result, energy security — the cent from imported coal, with less than 2 percent availability of a regular supply of energy at an af- from provincial offshore natural gas and less than fordable price — is becoming an issue in many 6 percent is obtained from renewables. jurisdictions. This report reviews Nova Scotia’s The infrastructure available to access ener- 1) existing sources, suppliers and supplies of en- gy resources is also unevenly distributed across ergy; 2) existing energy services; and 3) potential Canada. For example, all natural gas and oil pipe- indigenous energy supplies. The report examines lines from Western Canada end in Ontario and energy demand reduction strategies, specifically Quebec — they do not extend into the Maritimes. energy conservation and energy efficiency, and it Similarly, the Maritimes have limited access to examines strategies to replace imported energy Quebec’s hydroelectricity. with provincial supplies. Nova Scotia’s inadequate energy connections Ultimately, the success or failure of an ener- to the rest of Canada means that it will be difficult gy security policy depends upon energy supply for the rest of the country to help Nova Scotia and the associated energy infrastructure. Al- should energy shortages occur in the province. though the need for energy security in Canada This, coupled with Canada’s NAFTA energy- is downplayed due to the country’s immense en- export obligations, means that access to West- ergy wealth, the fact that this wealth is unevenly ern Canadian energy supplies — notably crude distributed means that some regions are more oil — would require supply cuts across Canada. vulnerable than others to the impact of rising Despite these shortcomings, Canada is the only energy costs and supply shortfalls. member of the International Energy Agency that Nova Scotia is particularly energy insecure. has not established national legislation or regu- Ninety percent of the energy consumed in Nova lations to ensure a 90-day supply of oil as spec- energy security in nova scotia ified by the International Energy Program’s oil gas infrastructure needs to be in place; however, stockholding requirements the lack of an adequate and secure supply cannot Nova Scotia’s reliance on imported energy justify the construction of infrastructure. makes it vulnerable to changes in world ener- The uncertainty surrounding Nova Scotia’s gy prices and supply shortfalls. Further, Nova offshore natural gas exploration and produc- Scotia’s present energy infrastructure is ill- tion, the lack of natural gas distribution infra- prepared for the growing intensity of extreme structure in Nova Scotia and the inability to weather events exacerbated by climate change. find suppliers of LNG, make it clear that Nova Although energy security should be an issue in Scotia should not base its future energy security Nova Scotia, government policies are doing lit- on natural gas. tle to address it. As part of its greenhouse gas reduction strat- To achieve energy security in industrialized, egy, the Province has developed renewable energy net-energy importing countries, the World Bank policies that promote wind energy as an alterna- recommends four priorities: avoid disruption of tive to Nova Scotia Power Inc.’s (NSPI’s) reliance energy supplies, diversify energy supply sources, on coal for electrical generation. The intermittent maintain energy infrastructure, and reduce de- nature of wind, coupled with the difficulties of pendence on imported energy supplies through generating accurate wind forecasts, means that technology. to successfully integrate large volumes of wind Nova Scotia’s energy policies do not focus on energy, a utility requires rapid response genera- energy security. The provincial government’s en- tion facilities, such as hydroelectricity or natural ergy strategy document, Seizing the Opportunity, gas turbines. With limited hydroelectricity and concentrates on the promotion and exploitation natural gas, NSPI argues that there are limits to of off-shore natural gas and crude oil, and export what it can reasonably accommodate. If this is to the United States. In fact, the existing energy true, the Province should be looking for other strategy document discusses energy security in ways of using energy generated from intermit- the United States and how Nova Scotia can help tent sources such as the wind. contribute to it! Nova Scotia has a reasonable solar resource Natural gas and liquefied natural gas LNG( ) when compared with other regions in Canada, cannot be considered as reliable sources of en- offering the potential for both electrical genera- ergy for the province. First, the supply of indig- tion using photovoltaic panels and thermal heat- enous natural gas from Sable is declining rapid- ing. Given the costs associated with solar electri- ly. Annual production has decreased by over 30 cal generation, solar thermal is the most likely percent, from a high of 193 billion cubic feet in route to contribute to energy security. 2002 to 133 billion cubic feet in 2006. The pos- The report argues that instead of concentrat- sible addition of natural gas from Deep Panuke ing on supply, the Province should examine how will only increase production marginally. Sec- the energy is used — energy services — and then ond, before LNG is imported, there must be an match the service to the appropriate supplies. LNG regasification facility and a source ofLNG : A good example is space heating — the second Anadarko has mothballed its proposed LNG fa- largest consumer of energy in the province — much cility at Bear Head because no supplier could be of which is met by imported oil products. By us- found, and little has been said in months about ing electric thermal storage heaters — which can the 4Gas/Maple corporate consortium’s proposal. be charged periodically — with intermittent sup- For natural gas to make any significant contribu- plies of wind-generated electricity, the province tion to energy security in the province, natural would be able to reduce its reliance on imported canadian centre for policy alternatives–nova scotia fuel oil for space heating and increase the pen- ergy security benefits are questionable.