MARCH 2021 Engineering Net Zero CANADIAN TECHNICAL REPORT ENGINEERING NET ZERO | SNC-LAVALIN OUR NET ZERO BLUEPRINT FOR THE FUTURE 2 Contents 1. WHAT DOES CANADA LOOK LIKE TODAY? 1 A. Key Drivers.................................................1 B. Implications of Doing Nothing .................................2 C. Approach and Methodology ...................................2 D. The Canadian Context ........................................3 E. Canadian Trends in Greenhouse Gas (GHG) Emissions .............5 F. Canadian Policy Framework ...................................5 G. COVID-19 Considerations .....................................6 H. What is the current situation in Canada? ........................7 H1. Oil and Gas ................................................7 H2. Transportation .............................................9 H3. Buildings .................................................10 H4. Heavy Industry ............................................12 H5. Agriculture and Forestry ...................................13 H6. Waste....................................................14 H7. Electricity ................................................15 2. CUTTING DOWN EMISSIONS ACROSS ECONOMIC SECTORS 17 A. Oil and Gas ................................................17 A1. GHG Reduction Approach ...................................17 A2. What’s in Store for the Long Term? ..........................18 B. Transportation .............................................19 B.1 GHG Reduction Approach ...................................19 B2. What’s in Store for the Long Term? ..........................21 C. Buildings..................................................23 C1. GHG Reduction Approach ...................................23 C2. What’s in Store for the Long Term? ..........................24 ENGINEERING NET ZERO | SNC-LAVALIN D. Heavy Industry ............................................25 D1. GHG Reduction Approach ...................................25 D2. What’s in Store for the Long Term? ..........................26 E. Agriculture and Forestry ....................................27 E1. GHG Reduction Approach ...................................27 E2. What’s in store for the long term? ...........................28 F. Waste ....................................................28 F1. GHG Reduction Approach ...................................28 F2. What’s in Store for the Long Term? ..........................29 3. THE CANADIAN ELECTRICITY LANDSCAPE 31 A. Snapshot of the Electricity Sector. 31 A1. Power Generation Mix ......................................31 A2. Electricity Demand ........................................34 A3. Energy Trading ............................................34 A4. Existing Transmission and Distribution .......................34 A5. Electricity Market Structure ................................37 B. Existing Generation Mix .....................................40 B1. Hydro ...................................................40 B2. Nuclear ..................................................43 B3. Natural Gas...............................................43 B4. Wind .....................................................44 B5. Solar. .44 B6. Wave, Tidal and Geothermal Energy..........................44 C. One Canada, One Transmission Network .......................46 D. Development Challenges ....................................48 E. What’s in Store for the Long Term? ............................50 E1. Electrification across-the-board .............................50 E2. Support accelerated development of new clean power projects ..51 E3. Pan-Canadian transmission network .........................51 E4. Smart grid and IOT technologies to better manage distribution assets .........................................51 E5. Grid-scale energy storage ..................................51 E6. Hydrogen-powered combined-cycle power plants ..............51 E7. Renewable distributed generation and microgrid developments ..51 E8. Research and Development for clean generation ...............51 4. TRANSITION TOWARD A NET ZERO CARBON ECONOMY 53 A. Moving Toward a 2050 Net Zero System .......................53 B. What would a 2050 Net Zero System Look Like?.................56 B1. Electrification.............................................57 B2. Power Generation .........................................58 C. Power Transmission ........................................62 C1. Hydrogen .................................................63 C2. 2050 Net Zero Carbon System ..............................63 D. The Urgent Need for Immediate Infrastructure Projects ..........65 E. Recommendations for Immediate Action .......................66 REPORT CONTRIBUTORS 69 APPENDIX 1 OVERVIEW OF EMERGING TECHNOLOGIES FOR NET ZERO 71 A. Hydrogen .................................................71 A1. What are Green and Blue Hydrogen? .........................71 A2. What is the Role of Hydrogen in Decarbonization?..............72 A3. Hydrogen Production Techniques ............................73 A4. H₂ Deployment Challenges..................................74 B. Carbon Capture ............................................75 B1. What is Carbon Capture and Storage (CCS)? ..................75 B2. CCS Process Overview .....................................76 B3. CCS Technologies and Challenges ...........................76 B4. Canadian Carbon Capture and Storage Projects ................79 ENGINEERING NET ZERO | SNC-LAVALIN C. Digitalization: IoT, Big Data and AI.............................79 C1. Big Data/IoT/AI Benefits for Decarbonization ..................80 C2. The Example of Digital Electric Utilities ......................80 C3. Challenges in Digitalizing Infrastructure ......................82 D. Energy Storage ............................................82 D1. Energy Storage Benefits for Decarbonization ..................83 D2. Challenges for Energy Storage ..............................83 REFERENCES 85 Figures FIGURE 1 TRENDS IN GHG EMISSIONS PER ECONOMIC SECTOR [REF. 5] ....... 4 FIGURE 2 OIL AND GAS SECTOR GHG EMISSIONS BREAKDOWN [REF. 9] ....... 6 FIGURE 3 TREND OF GHG EMISSION FOR TRANSPORTATION SECTOR - CANADA [REF. 12] ............................................. 8 FIGURE 4 BUILDINGS SECTOR TIMELINE .................................. 10 FIGURE 5 BREAKDOWN OF BUILDINGS COMMERCIAL SECTOR ENERGY CONSUMPTION [REF. 15] ........................11 FIGURE 6 ELECTRICITY SECTOR GHG EMISSIONS BREAKDOWN [REF. 12] ..... 15 FIGURE 7 GHG EMISSIONS INTENSITY OF CANADIAN LIVESTOCK [REF. 38] ... 27 FIGURE 8 CANADIAN ELECTRIC SUPPLY MIX. NRCAN 2017 [REF. 40] ......... 32 FIGURE 9 TOTAL ELECTRICITY DEMAND IN CANADA 2017 [REF. 49].......... 35 FIGURE 10 EXISTING AND PROPOSED TRANSFER CAPABILITY (MW) BETWEEN CANADIAN AND U.S. JURISDICTIONS [REF. 50]. 37 FIGURE 11 PROVINCIAL MARKET STRUCTURE AND GRID OPERATORS ......... 39 FIGURE 12 CANADIAN HYDROPOWER POTENTIAL [REF. 51] .................. 41 FIGURE 13 CANADA NUCLEAR POWER PRODUCTION ADDED TO THE GRID 1971 TO DATE [REF. 54] ........................... 42 FIGURE 14 WIND CAPACITIES ADDED TO THE GRID 2008-2019 [REF. 40] ....... 45 FIGURE 15 SOLAR CAPACITIES ADDED TO THE GRID 2008-2019 [REF. 40] ..... 45 FIGURE 16 EAST-WEST CANADIAN NETWORK CONCEPT .................... 47 FIGURE 17 GENERATION CAPACITY BUILDING: HISTORIC VS. FUTURE NEEDS .. 56 FIGURE 18 INDICATIVE 2050 VS. 2020 GENERATION BY SOURCE.............. 60 FIGURE 19 A VISION OF 2050 NET ZERO ENERGY SYSTEM ................... 64 FIGURE 20 HYDROGEN PROCESS EFFICIENCY .............................. 75 FIGURE 21 CARBON CAPTURE AND STORAGE PROCESS [REF. 101] ........... 78 FIGURE 22 CONVENTIONAL POWER GRID .................................. 81 FIGURE 23 MODERN POWER GRID ........................................ 82 FIGURE 24 SERVICES OF THE BATTERY STORAGE TECHNOLOGIES............ 83 Tables TABLE 1 AGRICULTURAL SECTOR / EMISSION SOURCES AND SINK BY ACTIVITY [REF. 22] ............................... 13 TABLE 2 EMISSION CONTRIBUTION BY PROCESS IN CANADA – AGRICULTURE SECTOR [REF. 20] ............................... 14 TABLE 3 EMISSION CONTRIBUTION BY PROCESS IN CANADA – WASTE SECTOR [REF. 5] ....................................... 14 TABLE 4 CHALLENGES & OPPORTUNITIES IN BUILDINGS SECTOR .......... 24 TABLE 5 PROJECT DEVELOPMENT CHALLENGES ......................... 50 TABLE 6 OVERVIEW OF CCS CAPTURE TECHNIQUES ...................... 77 TABLE 7 CCS PROJECTS IN CANADA .................................... 79 ENGINEERING NET ZERO | SNC-LAVALIN LEADING A LOW CARBON FUTURE If we are to realistically reach a net zero 1. What does carbon target for Canada, then we will need to rely on the following areas of interest: Canada look • Emerging and disruptive technologies which like today? will need to be deployed simultaneously – this will not happen without significant government intervention; A. Key Drivers • Greater coordination across industries, sectors, provincial governments, In December 2019, the Canadian Government and communities; announced plans to transition the Canadian • Well-defined economics and financial economy toward a “net zero” Greenhouse frameworks along with tools such as carbon Gas (GHG) Emissions target by 2050. taxes and other incentives, aimed at driving This ambitious target has the potential to forward the necessary change; effectively end Canada’s contribution to • Introduction of Canada-wide legislation to global warming and help position Canada as reduce demand for energy across all aspects a global leader in low-emission technologies